Strategies

https://consulterce.com/business-strategy

A strategy is a carefully designed plan or course of action, often encompassing long-term goals, that aims to achieve specific objectives or outcomes in a competitive environment.Before a company decide on any new strategy it is important to assess the current position, in other words scrutinise the internal factors to understand what are its strenghts and weaknesses. It also crucial analyse the external factors to figure out the opportunities and threats that arising from your market, your competition, and the wider economy.(https://www.mindtools.com/pages/article/newTMC_05.htm)

Growth Share Matrix

https://www.bcg.com/about/our-history/growth-share-matrix

The growth share matrix is, put simply, a portfolio management framework that helps companies decide how to prioritize their different businesses and which strategy is better to choose. It is a table, split into four quadrants, each with its own unique symbol that represents a certain degree of profitability: question marks, stars, pets (often represented by a dog), and cash cows. By assigning each business to one of these four categories, executives could then decide where to focus their resources and capital to generate the most value, as well as where to cut their losses.

Each of the four quadrants represents a specific combination of relative market share, and growth:

1. Low Growth, High Share. Companies should milk these “cash cows” for cash to reinvest.
2. High Growth, High Share. Companies should significantly invest in these “stars” as they have high future potential.
3. High Growth, Low Share. Companies should invest in or discard these “question marks,” depending on their chances of becoming stars.
4. Low Share, Low Growth. Companies should liquidate, divest, or reposition these “pets.”

Cost strategies

Successful retailers rely on a cost strategy. Firms such as Walmart and Costco excel at economically providing products to their customers. They pass along a lot of the benefits of this economy to their customers in the form of lower prices. Not all the cost savings get passed along to the consumers, however. A significant portion of the cost savings, achieved through incredibly efficient operations, are retained by the business and, therefore, become profits.

Such cost leadership or low-cost operation is one of the three basic strategies. And it’s a strategy available to any business — and particularly those businesses that have achieved economies to scale.

The key thing to note about a low-cost strategy, however, is that the firm needs to retain some of the cost savings in order to earn a higher profit level than its competitors. Thus, simply being a low-cost producer isn’t enough. A firm needs to be a low-cost producer and still be able to price products and services at a level high enough that some of the cost savings are retained as profits.

Differentiated products and services strategies

The second basic strategy is product differentiation. Product differentiators often sell a very unusual product or service. The Nordstrom department store chain is a good example of this because it offers unsurpassed service, and often (although not always), it offers a great and high-quality selection of items. However, Nordstrom goods cost more. But consumers happily pay the extra amount. Why? Because they get so much more for their money. A firm that relies on a differentiation strategy competes on the basis of the special features of its products or services. The key to making this strategy work is being able to charge your customers more for those special features than the special features cost you. Differentiation needs to produce increased revenues in excess of increased costs.

Focus strategies

The focus strategy is really a hybrid of the cost and differentiation strategies. This strategy states that in some ways, a firm is really good about managing costs; and in other ways, this firm is really good about differentiating products or services. A firm may choose to take this hybrid approach because it understands a particular audience or niche of customers or category of products; in other words, the firm can, through this focused approach, serve a particular market better than anybody else. This firm is going to be the best at serving a particular niche. As a focus strategy retailer, Target focuses on suburban, middle-class customers by offering those consumers almost the perfect combination of cost savings and differentiated products.

Distinctions between transnational and global multinational international companies

Although these four types of companies share common characteristics, there are important differences:

• Transnationals: They are distinguished by operating through local subsidiaries, adapted to each market.
• Global: They tailor their products and strategies to local markets, with less emphasis on global uniformity.
• Multinationals: They distribute their production in several countries, but maintain homogeneous products. (IDE)
• International: They start in a single country and expand their trade globally due to the need for growth.

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