A firm that has operations in more than one country is known as a multinational corporation (MNC).The largest MNCs are major players within the international arena. An example of a market penetration strategy is when a restaurant tries to get its customers to consume desserts besides the main meal. To sacrifice responsiveness to local preferences in favor of efficiency. Adopting this strategy results in decreased profit. These competitive advantages in turn can help the organization enjoy strong profits, especially over . Thus, the concept of competitive strategy (as opposed to cooperative strategy) has a competitor orientation. Branding plays a crucial role in articulating strategic alternatives. Business strategies are composed of competitive and cooperative strategies. Answer and Explanation: 1 Brands may also decide to expand their distribution to new geographical locations. A global corporate-level strategy emphasizes. Corporate level strategy is the foundation of your business. Retrieved from http://www.standardandpoors.com/ratings/en/us?rpqSearch=NO&pageNav=No&searchText=Walmart%20stores%20Inc.&searchField=Entity, Wal-Mart Stores Inc. (2014). This tactic focuses on strengthening the way departments interact with one another and view their role within the company while setting guidelines . Cost Leadership. This strategy requires your company to improve existing products by improving the quality control and testing processes. Such a strategy describes the companys overall direction regarding its various businesses and product lines. This might be the reason it wants to maintain its current market position, notices the environment as stable in near future, or the firm is happy with its current profitability. They include: It is important to note that these examples provide various alternatives that companies can use to increase their revenue and consumer base. Its like a teacher waved a magic wand and did the work for me. Managing and nurturing a portfolio of business. There are various alternative branding strategies and ways companies use to create awareness and improve their image. In addition to these, there are also other strategies that a company can employ when deemed necessary, such as strategic alliance, collaborative partnerships, mergers, acquisitions, vertical integration, outsourcing strategies, etc. For the Focus strategy to be effective, you have to create something special in your strategy to serve that market. We've encountered a problem, please try again. A firm's generic strategy (based on Porter's model) defines the basic strategy used to maintain competitive advantage. 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Classification of Strategic Alternatives. Business strategy defines the basis on which firm wilt compete. Firms choose between the potential trade-offs between efficiency in production/distribution and responsiveness to local market preferences. The strategy may also not pay off, and the company might have wasted a lot of resources on getting a new distributor. A firm opts for a retrenchment strategy when it seeks to cut down or reduce some of its products or activities to reduce excessive expenses to attain financial stability. We also have separate articles on all 3 levels if you're only interested in learning about a certain level. password. Figure 1: Bartlett and Ghoshal's Typology of Multinational Companies: Global, Transnational, International and Multidomestic Strategy. It is designed to ensure that the basic objective of the enterprise are achieved through proper . Choosing the cost leadership strategy, you target a broad market (large demand) and offer the lowest possible price. For example, a restaurant grows its own ingredients. Examples of competitive strategy include differentiation strategy, low-cost strategy, and focus or market-niche strategy. A business-level strategy is the set of strategic alternatives an organization chooses as it conducts business in a particular industry or market. container.style.width = '100%'; As a member, you'll also get unlimited access to over 88,000 It is also known as grand strategy. A product development strategy example includes a company that sells televisions deciding to develop home theatres. The SlideShare family just got bigger. Involves balancing the desire for efficiency with the need to varying preferences across countries. 2 common types of business-level strategy include: Lets continue with the above example. If Kia were a country, its current sales level of approximately $42 billion (in 2012) would place it in the top 75 among the more than 180 nations in the world (Wal-Mart Stores Inc., 2014). However, this strategy is not as easy & less risky as the stability strategy, and firms adopting a growth strategy need to invest. Resource-based theory. Each strategy involves a different approach to trying to build efficiency across nations while remaining responsive to variations in customer preferences and market conditions. Practical strategic alternatives analysis is based on the strategy that can . It addresses the diverse environmental conditions of an organization. It is a "wide view" of the company and includes determining where to compete in product or service markets and where to operate in geographic areas. Alternative branding strategies are initiatives that companies can use to improve their image and awareness. The business strategy encompasses all the actions and approaches for competing against the competitors and the ways management addresses various strategic issues.if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'iedunote_com-large-leaderboard-2','ezslot_9',130,'0','0'])};__ez_fad_position('div-gpt-ad-iedunote_com-large-leaderboard-2-0'); As Hitt and Jones have remarked, the business strategy consists of plans of action that strategic managers adopt to use a companys resources and distinctive competencies to gain a competitive advantage over its rivals in a market. for only $16.05 $11/page. It helps in determining what should be done, how it should be done, what employees to hire in order to accomplish the set goals, and how resources will be allocated effectively. Standard & Poors Ratings Services. Corporate level strategy. Co-branding involves a branding partnership between companies. On the other hand, PepsiCo's intensive growth strategies are a . ins.style.display = 'block'; Continuing with the diversification-into-new-markets example, the business level strategies that support this goal (this corporate level strategy) would be: Rebrand for a new demographic. The following are some of the most important characteristics of strategic plans:if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[336,280],'iedunote_com-box-4','ezslot_6',128,'0','0'])};__ez_fad_position('div-gpt-ad-iedunote_com-box-4-0'); Strategy-making involves identifying the ways an organization can undertake to achieve performance targets, weaken competitors, achieve a competitive advantage, and ensure the organizations long-term survival. It is a business-unit level strategy, formulated by the senior managers of the unit. A business-level strategy is the framework a firm uses to organize its activities, and it is developed by the firm's top managers. Once you do this, you'll know what position you're in to capitalize on a strategy. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. It is the most widely used marketing strategy, especially when companies seek to dominate a new territory. Market development is a marketing strategy that aims to attract new consumers to current products. The SWOT analysis is one of the most successful strategic tools for creating alternative strategies. In, Privacy For example, the production department of a manufacturing company develops a production strategy as the departmental strategy, or the training department formulates a training strategy for providing training to the employees. It can be used to generate sales in larger volumes from existing customers or increase the rate at which the current customer base purchases products. var pid = 'ca-pub-3593500811848044'; Click here to review the details. Their HR department prioritized productivity, and hence Tesla has an intense work culture and high-level TQM metrics. Its challenging to get familiar with different levels and types of strategies, as well as how to tie them together. They also help to enhance the growth and success of a brand. Competitive Advantage: The Importance of Strategic Marketing, Internal & External Analysis | Process, Advantages & Disadvantages, Strategic Decision Making | Management & Process. Create your account. This strategy attempts to coordinate all of a firms resources to a corporate objective with external environment opportunities aiming to change the overall direction. Functional strategies are adopted to support a competitive strategy. Tap here to review the details. She has a Bachelor of Science in Economics and Finance from College of Charleston. ins.dataset.adClient = pid; Another strategic alternative is market development which focuses on companies looking for new customers for their existing products. Lets quickly go through each of them. There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational ( Figure 7.23 "International Strategy" ). D - lacks responsiveness to local markets. When planning, the first level of strategy you need to think about is corporate level strategy. Four generic business-level strategies emerge from these decisions: (1) cost leadership, (2) differentiation, (3) focused cost leadership, and (4) focused differentiation. var slotId = 'div-gpt-ad-iedunote_com-medrectangle-3-0'; succeed. (2014). A global strategy . Michael Porter, a Harvard professor, developed three options, including Cost Leadership, Differentiation and Focus. Some of the implementations of the method include sending coupons, offers or free samples to competitors' customers. Therefore, although it is a risky venture, it is one of the most rewarding marketing strategies. Growth Strategy. It provides a base for the organization to deal with multiple business conditions. For example, a company following a low-cost competitive strategy needs a production strategy that emphasizes reducing the cost of operations and a human resource strategy that emphasizes retaining the lowest possible number of highly qualified employees.if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'iedunote_com-large-mobile-banner-2','ezslot_11',134,'0','0'])};__ez_fad_position('div-gpt-ad-iedunote_com-large-mobile-banner-2-0'); 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. 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