Company strategy is Definition of the term, goals, objectives, formation process

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The planning process is important for every organization. It is carried out from a different perspective. The basis of the planning process is the choice of the company's strategy. This is a prerequisite for the harmonious development of the organization. Strategic planning allows you to set the main goals of the company, to identify ways to achieve them. What is the strategy, the features of its choice of implementation will be discussed further.

Approaches to definition

The company's strategy is a specific model of the organization's actions, integrated to existing internal and external conditions. It determines the direction for achieving the goals set for the enterprise. The content of this concept is determined by a number of rules that are taken into account when making decisions in the process of determining the main course of development.

In modern specialized literature, there are two opposite approaches to the definition of strategy. In the first approach, this conceptIt is considered as a long-term, well-defined plan that an organization develops to achieve certain goals. For this, the degree of development of the company in the long term is considered. This approach is based on the fact that the goals and strategy of the company are based on predictable phenomena. All processes in this case are deterministic, manageable and controllable.

The second approach involves considering the strategy as a direction for the long-term development of the company, which concerns the means, scope and form of its activities. This progress is determined, among other things, in the organization of intra-production relations, the position of the organization in its environment.

In other words, we can say that the strategy of the company is characterized as the direction of its functioning. As part of moving along this intended path, the organization is as close as possible to its goals. To develop a strategy, an analysis is carried out using BCG matrices, as well as a study using the SWOT method.

This procedure is interpreted in the business world as a concept that allows an organization to achieve its goals. So she can predict the most likely problems, constraints on the path of its development. Long-term planning allows you to choose methods to prevent negative impacts. The strategy allows you to properly distribute the available resources, as well as to control at each stage of the plan. To do this, a system of goals is being built. It includes, first of all, the mission. This is followed by the goals of the corporate andspecific type.

The second element of the formation of the strategy is the chosen policy of the organization. This is a set of rules that she chose to carry out her activities.

The strategy is being developed with a perspective of several years. Its horizon depends on the characteristics of the market in which the company operates, as well as the characteristics of the organization itself. This type of planning is specified in various projects, practical actions. The strategy is rarely adjusted, so it only expresses the general concept.

Varieties of strategies

The company's strategy is the main master plan of the organization, which indicates the range of priority tasks, the resources for their implementation.

It defines the sequence of steps that lead to the achievement of the goal in the long term. Strategies may vary. There are only 4 varieties of this type of planning:

1. Concentrated growth. These strategies involve strengthening the position of the organization in the market where it operates. It can also be long-term planning for the development of the market itself or the promotion of a specific product.
2. Integrated growth. This is a vertical type reverse integration development plan. She might as well go ahead.
3. Diversified growth. Such strategies involve the development of a centered or horizontal separation of goals. This allows you to reduce risks, but in this case, resources are distributed in several different directions.
4. Abbreviations. This strategy is also called "harvesting". It can also be the liquidation or reduction of the company's activities. In some cases, they resort to it to reduce the number of expenses.

Also, the main strategies of the company can be divided into three levels:

1. Corporate. Defines the values of the company, which are expressed in financial or other purposes. It involves the allocation and acquisition of the required resources, appropriate capabilities. This strategy determines in what directions the company plans to act. There may be several of them, they may be interconnected. During this direction of planning, it is determined which areas of production will be allocated resources. Some of the company's projects need to be scrapped, while others need more funding.
2. Competitive. This strategy determines the principles on which the company's competitive struggle in the market will be built. It allows you to choose ways to create an advantageous position of the organization in the industry. Consumer groups are determined for which finished products will be produced or services will be provided, as well as methods for promoting products. During the development of this strategy, appropriate activities are identified that will attract new customers and retain existing customers. This allows you to strengthen the potential advantages of the company in the market.
3. Functional. They reinforce competitive strategies, identify areas of activity that will help to get the most out of the company's position in the market. This planning allows bettercoordinate different functions.

How is the strategy evolving?

The company's management strategy puts into practice different approaches to development. This can be an analysis of the profits in the industry, competitive positioning of the organization, identifying the main opportunities for production, etc. There are many approaches to building a strategy. This is a creative process that depends directly on the manager who develops it. The fact is that with the help of strategic planning it is impossible to answer all the questions that arise in the process of managing a company. To do this, the procedure is reinforced by analysis, and discoveries happen as insights.

It is worth noting that different approaches to building a strategy to a greater or lesser extent allow the manager to survey the future prospects of the company. The understanding of this process cannot be stereotyped, built on frozen beliefs. This is due to constantly changing conditions both inside and outside the enterprise.

When developing a company's business strategy, some managers are guided by the latest, popular methods. But when thinking about the company's prospects, this can also do a disservice. All opponents can choose this approach to strategy development. Much better to stick to your own style. The original approach allows you to find an unusual, hidden way to achieve a competitive advantage. Although some fashion trends should be considered to understand how other organizations mayworking in the industry.

To win in the competition, you should choose such consumer groups for which no one else produces anything. The original strategy of the company in the market allows you to find unoccupied niches. For this, unique marketing and production methods are used.

Creativity in strategy development is also encouraged. To do this, take several elements of analysis and combine them into a single system. Regardless of the chosen approach to understanding the prospects and opportunities in the future for the company, the development of a long-term plan is carried out in 7 stages.

Planning stages

A company's financial strategy or other type of long-term planning goes through 7 main steps:

1. Market analysis now and in the future.
2. Search for competitive edge.
3. Studying the behavior of competitors in the past and predicting their actions in the future.
4. Sustainability and market impact.
5. Analysis of existing opportunities, review of new sales markets, directions for development.
6. Assessing new prospects for the future.
7. Make a strategic decision.

Considering the strategies of companies on the example of different companies, it is worth noting that the rate of profitability in different industries is not the same. The reason for this is structural differences. So, for example, the profitability of investments in the pharmaceutical industry is 25%, and in road transport - 5%. For this reason, it is necessary to analyzeindustries. The main thing for the company is to achieve above-average performance within its market. If the profitability is higher than that of competitors, this is considered a significant advantage.

An analysis of the industry allows you to determine what indicator the company should strive for. Success is relative and is determined only against the background of competitors. Market research provides information about the factors that affect the economic performance of a company. Moreover, it is important to assess what will affect the level of profitability in the future. These factors significantly influence the choice of strategy for the organization's behavior in the market.

It is also worth noting that in every industry there are attractive and unattractive segments. The analysis identifies the most promising areas for the company.

Research allows you to assess the degree of influence of the organization on the market. In some cases, the potential is quite large. This allows us to improve the structure of the market and prevent its deterioration in the future. The influence of a company can extend to the entire industry or its specific segment.

Positioning

The company's strategy in the market involves the search for competitive superiority. This stage of research is called positioning. In the course of this analysis, it turns out to answer the question why some companies have higher profitability than others. This is due to the high competitive position of the company. It invests resources in new product lines, which allows it to maintain its leadership position.

Toto position their own organization as having superiority, its products must be of increased value to consumers. This, for example, can be a low price, special quality, product characteristics, its uniqueness. It is worth remembering that low-quality products cannot be sold even at a low price. Also, some unique products will not be sold at a high cost. An incorrectly chosen strategy in this direction will make the company unprofitable.

To increase the value of a product or service for the buyer, there are 2 factors. This is quality differentiation and cost reduction. When choosing a course of action, you need to determine what value products can bring to consumers, which competitors cannot offer them.

In the course of analyzing the strategies of companies, it can be noted that competitive blocks are often formed within the same market. Several disparate companies come together to gain control of their industry. They are opposed by another bloc. Unions make common strategic decisions that can add value to their products for the consumer.

Analysis of past competitors

A company's growth strategy cannot do without competitor analysis. Moreover, it is necessary to start such a study from the past periods. This allows you to make a forecast on the behavior of the main players in the market in the future.

Insufficient analysis of competitors' actions leads to strategic mistakes. This leads to the saddest consequences. Therefore, it is necessary to evaluate the likely responsecompetitors on the current market environment, as well as possible behavior in the future. Competitors are also developing strategies that can help them win the fight for market dominance. Therefore, a good manager will definitely consider carefully both the past actions of rivals and assume their moves in the future.

This approach, as practice shows, allows you to influence the decisions of competitors. This work will allow you to look at your own company from a different angle.

In the course of analyzing the actions of rivals, it is necessary to identify their strengths and weaknesses, past goals and actions. Consider and evaluate the following:

• Strategy of competitors, their market position and advantages.
• Is there a change in leadership.
• Rival capabilities, price range, product features, exclusivity and promotional features.
• Goals pursued by them in the present and future.
• Imagine the future of the market.
• Signals sent by an adversary company to other companies.

Analysis of one's own position

In the course of building a company management strategy, an analysis of its own strength, stability in the market is carried out. At the same time, the manager must assess the situation in the industry, the position of competitors and his own organization. For the calculation, the financial results of the company are taken. Their analysis provides information about strengths and weaknesses, as well as comparing them with the performance of other market participants.

If within the industrythere are unions of competitors, one's own position is considered against their background. It is necessary to consider who in this situation can become an ally. After that, an analysis of the actions of the cooperative is carried out. Close cooperation, exchange of information, change of some processes allows us to improve our own position in the market, to strengthen our position. It also allows you to manage the price, expenses.

It is extremely important to consider the prospect of such cooperation or our own autonomous position in the industry. It is important not only to win advantageous positions, but also to be able to keep them in the future. Even the undisputed leaders are vulnerable to changes in market conditions. New products are able to displace the former leader, taking his place in the industry. There are many examples that without modernization, investment in innovative projects, a company quickly loses its position. Competitors will not stop investing in their own development. Only the one who is better and faster will be able to conquer the consumer.

Opportunity Analysis

The company's strategy is a special plan, which is also based on research of its own capabilities. New groups of consumers, directions for the development of production are determined. It is important to find unique distribution channels, promising technologies and other areas of excellence.

Assessing future opportunities

In the course of implementing the company's strategy in the future, it is required to realize the full potential of the organization. This requires new manufacturing capabilities. They are not created in one day. Atstrategic planning takes into account opportunities for the production of new goods.

Choice of strategy

The final stage is cutting off inexpedient, less profitable options for the company's development. The chosen directions are coordinated. However, they cannot imitate the strategies of other players. This is obviously a losing proposition. Your own strategy should be unique, thought out to the smallest detail.