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Organizations establish strategies to outline the approach to be applied in achieving its goals. An effective objective should be realistic, measurable, and congruent across the organization. Objectives enable an organization to stay on course, minimize conflicts, optimize resource allocations, and enhance evaluation. A comprehensive analysis of both external and internal environments enables an organization to establish effective strategies in achieving overall success (David, 2013).
Types of strategies and Guidelines:
An organization may not be able to pursue a combination of strategies simultaneously. However, based on information collected from analyzing the external and internal factors, a firm may select the most appropriate strategy to achieve success. Strategies can be applied at different levels of an organization, to include the corporate, divisional, functional, and operational level; also determining the individuals with authority and responsibility to implement the process. A firm may seek to extend ownership and control either backwards, horizontally, or forward in a value chain.
Forward integration involves increased control and ownership over retailers and distributors. Forward integration is particularly appropriate when distributors' profit margin is high, limited availability of distributors, and when the industry is fast growing. Backward integration involves seeking ownership and control over suppliers of raw materials. It is most often applied when suppliers are unreliable, few suppliers, sensitive product prices, and when raw materials are key to business success (Fogg, 2009). The strategies would strategically position a firm in an industry over its rivals.
A firm can also apply intensive strategies, such as market penetration, market development, and product development ("Types of Strategies," 2016). Market penetration involves enhancing markets of existing products through aggressive marketing operations, in order to increase market share. This strategy is appropriate when usage rate may significantly be increased; an increase in economies of scale leads to a competitive advantage, and when the current market is not saturated. Market development introduces new services or products into a new geographical area. Many organizations have applied market development strategy in extending to global markets. Market development may be applied when an organization has strengths to capitalize on such as available channels of distribution; the necessary capital to expand operations and when an organization has the high capacity to produce.
An organization may also choose to enhance the quality of its products or services in order to increase sales. Product development may seek to perfectly address market needs and changing lifestyles. However, a firm may opt to implement defensive strategies to address challenges. Some key examples include retrenchment, divestiture, and liquidation. Defensive strategies may be applied when a firm or its unit is weak in an industry and is poorly performing (Porter, 2014).
Conclusion:
By using these strategies, a firm can gain a competitive advantage through making extensive efforts in improving its existing products.