Types of Strategies in Strategic Management
In this article, we’ll be discussed the types of strategies in strategic management. There are also tried to give some concepts about the levels of strategy making of strategic management; for a better understanding of the types of strategies in strategic management.
Types of Strategies in Strategic Management:
If we want to mention the types of strategies in strategic management, we can mention it as five types. This may be a one kind of New Public Management (NPM)‘s strategy. The types of strategies in strategic management. Such as:-
- Competitive Strategy
- Corporate Strategy
- Business Strategy
- Functional Strategy and
- Operating Strategy
1. Competitive Strategy:
Competitive strategy is the first of types of strategies in strategic management Competitive strategy refers to a plan that combines the influence of external situation along with the integrative apprehensions of the inner situation of an organization. The competitive strategy aims at gaining competitive advantage in the marketplace against the competitors. And competitive advantage comes from strategies that lead to some uniqueness in the marketplace. Winning competitive strategies are grounded in sustainable competitive advantage. Examples of the competitive strategy include differentiation strategy, low-cost strategy, and focus or market-niche strategy.
The competitive strategy consists of the business approaches and initiatives undertaken by a company to attract customers and to deliver superior value to them through fulfilling their expectations as well as to strengthen its market position. This definition of Thompson and Strickland emphasizes on ‘tactics and ingenuities’ of directors in outlining strategy. This means that competitive strategy is concerned with actions that managers undertake to improve the market position of the company through satisfying the customers. Enlightening market situation infers undertaking actions contrary to competitors in the industry. Consequently, the notion of competitive strategy has competitor-angle. The competitive strategy includes those tactics that prescribe various ways to build the sustainable competitive advantage. Management’s action plan is the focus of the competitive strategy. The objective of the competitive strategy is to win the customer’s heart through satisfying their needs, and finally to outcompete the competitors and attain competitive advantages.
2. Corporate Strategy:
It is second of the types of strategies in strategic management. Corporate strategy is formulated at the top level by the top management of a diversified company (in our country, a diversified company is popularly known as ‘group of companies’, such as Bashundhara Group, Partex Group, Beximco Group, Square Group and 5M Group). Such strategy describes the company’s overall corporate strategy defines the long-term objectives and generally affects all the business-nits under its umbrella. A corporate strategy, for example of Bashundhara, may be acquiring the major tissue paper companies in Bangladesh in order to become the unquestionable market leader.
3. Business Strategy:
Types of strategies in strategic management’s third one is a business strategy. Business strategy is formulated at the business-unit level. It is popularly known as ‘business-unit strategy’. This strategy emphasizes the strengthening of company’s competitive position of products or services. Business strategies are composed of competitive and cooperative strategies.
The business strategy covers all the activities and tactics for competing in contradiction of the competitors and the behaviors management addresses numerous strategic matters. As Hill and Jones have remarked, the business strategy consists of plans of action that strategic managers adapt to use a company’s resources and distinctive competencies to gain a competitive advantage over its rivals in a market. Business strategy is usually formulated in line with the corporate strategy. The main focus of the business strategy is on product development, innovation, integration, market development, diversification and the like.
In doing business, companies confront a lot of strategic issues. Management has to address all these issues effectively to survive in the marketplace. Business strategy deals with these issues, in addition to ‘how to compete’.
4. Functional Strategy:
The fourth strategy is it of the types of strategies in strategic management. Functional strategy refers to a strategy that emphasizes on a particular functional area of an organization. It is formulated to achieve some objectives of a business unit by maximizing resource productivity. Occasionally functional strategy is named departmental strategy since each business function is frequently devolved with a section. Examples of functional strategy comprise production strategy, marketing strategy, human resource strategy and financial strategy.
The functional strategy is concerned with developing distinctive competence to provide a business unit with a competitive advantage. Each business unit or company has its own set of departments and every department has its own functional strategy. Functional strategies are adapted to support the competitive strategy. For example, a company following a low-cost competitive strategy needs a production strategy that emphasizes on reduction cost operation and also a human resource strategy that emphasizes on retaining the lowest possible number of employees who are highly qualified to work for the organization. Other functional strategies such as marketing strategy, advertising strategy, and financial strategy are also to be formulated appropriately to support the business-level competitive strategy.
The organizational plans become more and more detailed and specific when managers move from corporate business to functional-level strategies.
5. Operating Strategy:
Types of strategies in strategic management‘s fifth strategy are operating strategy. Operating strategy is formulated at the operating units of an organization. A company may develop operating strategy. As an instance, for its sales territories. An operating strategy is formulated at the field level usually to achieve immediate objectives. In some companies, managers develop operating strategy for each set of annual objectives in the departments or divisions.
Levels of Strategy-Making:
After a short discussion of the types of strategies in strategic management here will be mentioned about the levels of strategy-making. In a diversified company (a company having different lines of business under one umbrella), strategies are initiated at four levels. The strategies at each level of the organization are known by the name of the level.
At the business-unit level, there are three levels of the organization and obviously, three types of strategies in strategic management are formulated.