Company business strategy: what is it
The company’s business strategy is a document that describes the company’s long-term development plan. Some refer to this document as a business plan. And, in fact, yes, in part, the points from the business plan – intersect with the points from the organization’s business strategy. But still, the business strategy is based on the company’s goals in the medium term (1-5 years) and long-term (10-20-30 years), as well as the company’s mission. In this article we will describe you the types of business strategies.
Simply put, we can say that the strategy answers the question: “How?”. How will the company achieve its goals? How will the organization achieve sustainable profits and show long-term growth? A business strategy is essentially a detailed action plan. A waybill from point “A” (current situation) to point “B” (bright future).
Types of business strategy
In business planning, it is customary to share 4 main business strategies. Let’s talk about them below.
1. Concentrated growth strategy
The concentrated growth strategy is focused on the company’s products, its improvement. This strategy recommends focusing on the development of goods and services offered to the market.
According to this strategy, the company should work in several directions: development of internal regulations, improvement of production (reduction of costs and operating losses). It is also useful to know your competitors and, periodically, conduct competitive intelligence.
2. Integrated growth strategy
This strategy is based on the development of the company in the external environment: the opening of new sales offices, expansion into new markets, the “absorption” of competing companies, and the like.
A good example of an integrated growth strategy would be the takeover of Instagram by Facebook, which immediately gained access to an additional “fresh” audience that can be monetized (start making money on it).
3. Diversified growth strategy
A diversified strategy for a business organization involves risk reduction . That is, as a rule, this is expressed in the development of several directions by the company at the same time, each of which may not be strongly connected with others.
A good example of a diversified growth strategy is Yandex, whose product line includes: its own browser and search engine, ad network, taxi, grocery delivery, payment system, and more. Each of the products diversifies risks and allows the company to develop even at times when competitors suffer losses.
4. Reduction strategy
But what if you understand that your company is operating unprofitable and does not bring in the amount of profit that would cover all costs? In this case, the strategy of reducing and optimizing inventories will help.
In the context of this strategy, everything that does not directly affect profits is subject to reduction (inefficient employees; unprofitable activities of the organization ; advertising channels that are out of control and eating up an unacceptably large budget; and much more). Downsizing is hard, but very often this painful step allows you to survive the “storm” and optimize the company, making it stronger and more ready for new challenges.
We hope that you have understood the types of business strategies.
