Strategy variants

Depending on the organization, we can distinguish the following variants of strategy:

Strategy at the level of corporation

It is shaped by the head managers, which oversees whole organization rather than one type of business. It deals with the activities undertaken by the organization as a whole, and seeks to define the role it plays and roles of particular business units.

The strategy at the level of the strategic business unit (SBU)/business level strategy

It is used to control of interests and activities of a single business unit. Strategic Business Unit SBU) groups all types of economic activities, designed to produce a specific type of product or service and treats them as a single unit.

Strategy at the functional level

It creates a framework for the management of such areas as: finance, research and development, marketing, ecology, etc. This strategy consists in determining how the function is to be implemented, to foster the desired competitive advantage, and on the coordination of the function with other functions in company.

Comparison of the basic types of business strategy

Aspect	Corporate strategy	SBU strategy / business level strategy	Functional strategy
Scope	selection, in which areas of economic activity company should be positioned, business development strategy	selection of products, services and on what markets they should be sold, SBU development strategy	specify the target market, breadth and depth of the product range, product brand policy product recall
Goals and tasks	aggregated business objectives (e.g.. development, profitability, earnings per share)	limited by objectives of the corporation, aggregated around the products/markets (e.g. the increase in sales, profitability, cash flow)	limited by objectives of the corporation and SBU aggregated around specific product/market (sales, market share, customer satisfaction)
Resource allocation	allocation between SBU areas of activity allocation between the functional departments working for different areas of the business (for example research and development)	allocation between products/markets within the particular SBU allocation between the functional departments within the SBU	the allocation between the instruments of the marketing mix for each product/market
Sources of competitive advantage	mainly thanks to financial and human resources, better organization and management, and synergistic effects	mainly thanks to the strategies of competition, better competences than competitors',	mainly thanks to an efficient product placement, superiority of marketing activities relative to competitors
The main areas of decision	financial policy organization matters diversification of activities, diversification of products, technologies	design of the production system, policy mix development of the market, distribution policy	price policy, promotion, managing stocks.

Examples of Strategy variants

1. Corporate Strategy: Corporate strategy outlines the overall direction of a company, which often includes expanding into new markets and developing new products to drive growth. A corporate strategy typically involves setting objectives, assessing available resources and formulating plans that can be implemented over multiple years. Example: Apple’s corporate strategy is to create innovative products and services to address customer needs, while maintaining a competitive edge through a focus on design and user experience.
2. Market Penetration Strategy: A market penetration strategy involves increasing the market share of existing products in existing markets, often through price cuts and increased marketing and advertising. Example: Amazon’s market penetration strategy includes discounts, free shipping, and aggressive advertising to increase its market share and compete with other online retailers.
3. Product Development Strategy: A product development strategy involves creating new products that meet the needs of customers. This strategy is often used when new technologies emerge or customer preferences change. Example: Tesla’s product development strategy involves designing and selling innovative electric vehicles, such as the Model S, to meet the needs of customers who are looking for an eco-friendly alternative to traditional gas-powered vehicles.
4. Mergers & Acquisitions Strategy: A mergers and acquisitions strategy involves combining two or more businesses to create a larger entity with greater market share, economies of scale, and cost savings. Example: Walmart’s mergers and acquisitions strategy includes acquiring companies such as Jet.com and Flipkart to expand its reach and increase its market share.
5. Diversification Strategy: A diversification strategy involves expanding into new markets or products to reduce risk and increase potential profits. Example: Microsoft’s diversification strategy involves developing new products and services, such as its cloud-computing platform Azure, to reduce its reliance on its core Windows operating system.

Advantages of Strategy variants

The following are the advantages of various strategy variants:

• Corporate strategy is the highest-level strategy, which provides direction and guidance to an organization. It is beneficial as it provides a clear vision for the company and its stakeholders, helping them to plan for the future and make decisions that are aligned with the company’s long-term goals.
• Business strategy focuses on the markets and products an organization will pursue. It allows organizations to gain competitive advantage by developing a unique strategy that best meets customer needs.
• Functional strategy enables organizations to improve their operations by focusing on the specific functions that are necessary for success. This strategy allows organizations to capitalize on their strengths, develop new capabilities, and identify areas for improvement.
• Tactical strategy is the most actionable strategy, as it outlines the specific steps and activities that need to be taken in order to achieve organizational goals. It is beneficial as it provides a roadmap for specific short-term objectives, allowing organizations to stay on track and efficiently execute their plans.

Limitations of Strategy variants

Strategy variants come with certain limitations. These include:

• Long-term strategy: This type of strategy may be difficult to implement due to the long timeframe and potential changes in the organization's environment.
• Short-term strategy: This type of strategy may be difficult to implement as it requires quick decision-making and rapid adaptation to changes in the organization's environment.
• Tactical strategy: This type of strategy can be difficult to implement due to the complexity of the tasks and the need to quickly respond to changes.
• Innovative strategy: This type of strategy may be difficult to implement due to the lack of resources, knowledge, and experience needed to successfully innovate.
• Global strategy: This type of strategy can be difficult to implement due to the challenges of operating in multiple markets and understanding the complexities of different cultural and legal environments.

Other approaches related to Strategy variants

Introduction: Strategy can be classified in many different ways, depending on the organization. The following are some of the most common approaches to strategy variants.

• Market-Based Strategy: A market-based strategy focuses on responding to the needs and preferences of customers. It involves analyzing customer demographics and preferences in order to create a product or service that meets those needs.
• Competitive Strategy: A competitive strategy involves analyzing competitors in order to gain an advantage over them. This approach involves understanding competitors' strengths and weaknesses and developing a strategy to outpace them.
• Business Model Strategy: A business model strategy focuses on creating a business model that is profitable and sustainable. This approach involves understanding the costs associated with a product or service, as well as the potential return on investment.
• Organizational Strategy: An organizational strategy involves understanding the organization's strengths and weaknesses and developing a strategy to leverage those strengths and address the weaknesses. This approach involves understanding the organization's culture and resources, as well as its goals and objectives.
• Resource-Based Strategy: A resource-based strategy focuses on developing and leveraging the organization's resources, such as technology, talent, and capital, in order to create a competitive advantage.
• Innovation Strategy: An innovation strategy focuses on developing and leveraging new ideas and technologies in order to create a competitive advantage. This approach involves understanding the potential for new ideas and technologies, as well as the risks associated with them.
• Social Responsibility Strategy: A social responsibility strategy focuses on developing and implementing policies and practices that are socially responsible. This approach involves understanding the potential impact on stakeholders, as well as the potential for social change.

Summary: Strategy can be classified in many different ways, depending on the organization. Common approaches to strategy variants include a market-based strategy, competitive strategy, business model strategy, organizational strategy, resource-based strategy, innovation strategy, and social responsibility strategy. Each approach focuses on different elements to create a competitive advantage.

Strategy variants — recommended articles

Types of strategies — Strategy — Beam of objectives theory — Functional strategy — Strategic decision — Strategic management — Importance of strategic management — Strategy of the organization — Organizational strategy

References

• Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard business review, 72(1), 107-114.

Author: Krzysztof Wozniak