What Are 3 Organizational Strategies?
May 4, 2023
Organizational strategies are an essential tool for businesses that want to set the stage for sustainable growth, streamlined decision-making, and effective resource allocation.
Organizational strategies make it easy for business leaders to motivate their teams with a shared sense of direction, track and analyze employee performance and productivity, and ensure their day-to-day activities are aligned with the company’s overarching goals.
However, organizational strategies aren’t one-size-fits-all solutions. Unlocking the benefits of organizational strategy requires implementing a strategy that plays to your company’s strengths, minimizes the impact of its weaknesses, and aligns with your unique company culture, goals, and vision.
To help you zero in on the perfect organizational strategy for your company, we’ll examine three types of organizational strategies businesses can use across industries to take their operations to the next level.
3 Organizational Strategies
Let’s break down three of the most popular types of organizational strategy examples: broad cost leadership, focused cost leadership, and product differentiation. These organizational strategies can be leveraged by almost any company to generate more sales, steadily capture market share, and gain a competitive edge in your industry.
Broad Cost Leadership
Broad cost leadership is an organizational strategy that aims to stimulate sales by aggressively cutting expenses at every possible opportunity, including during research and development, production, delivery, branding, and marketing.
This massive reduction in overhead expenses then allows companies to pass a portion of their savings along to customers in the form of the lowest-cost option on the market. A crucial identifier of broad cost leadership is an emphasis on reducing costs across the board without shrinking an organization’s market share or narrowing its scope of business.
Focused Cost Leadership
Focused cost leadership is an organizational strategy that aims to capture a niche segment of an organization’s total market by offering a suite of products or services at the lowest price available, allowing companies to narrow their target demographic while capturing cost-conscious shoppers.
The improvements to operational efficiency and aggressive reduction in overhead expenses created by focused cost leadership positions businesses to dominate their target niche or sub-market by providing cost-effective products that are expertly refined to appeal to their ideal customers.
Product Differentiation
Product differentiation is a powerful organizational strategy that enables businesses to distinguish themselves from their competitors, enhance brand perception, cultivate customer loyalty, and gain a powerful pricing advantage.
Product differentiation accomplishes this by promoting the creation of innovative and distinctive products that capture your target demographic’s attention with exciting and innovative features and benefits. Companies that pair these industry-leading products with exceptional customer experiences can look forward to skyrocketing customer loyalty that translates into strong sales.
What Is An Example Of An Organizational Strategy?
Let’s look at real-world examples of some of these organizational strategies in action.
Broad Cost Leadership – Walmart’s Secret to Success
Walmart has spent decades leveraging its size and scale of operations to aggressively negotiate vendor prices, build an efficient and cost-effective distribution network, minimize waste and expenses, and invest in emerging technologies to provide products and services at the lowest possible prices in a range of categories – without sacrificing quality or customer satisfaction.
Walmart’s ability to offer products at significantly lower price points than their competitors has helped the company attract a wide, multi-faceted customer base that includes the majority of cost-sensitive consumers interested in maximizing the value of their money. As a result, Walmart has maintained an enduringly dominant presence in the $6.5 trillion retail industry that includes an increasingly vast network of stores and an extremely loyal customer base.
Product Differentiation – How Apple Built Its Business
Apple’s success in the consumer electronics industry can be attributed to its effective use of a product differentiation strategy.
The sleek and instantly recognizable design of Apple products, coupled with memorable marketing tactics such as product names like iPod, iPad, and iPhone, helped Apple to stand out from its competitors. This approach allowed the company to capture consumers’ attention during its pre-boom phase and establish a strong brand identity.
After its meteoric rise in popularity, Apple’s reputation for high-quality and innovative products further empowered the company to maintain its competitive advantage as its brand matured. By consistently introducing new and improved products, Apple was able to keep its customers engaged and loyal while continuing to attract new customers.
How Medallion Partners Can Help Your Organization Define an Actionable Organizational Strategy
Are you considering a new organizational strategy? Congratulations. You’re already on a path toward steady growth, rising profitability, and improved efficiency.
But if you want to make it across the finish line, you’ll need someone in your corner with the experience, expertise, and passion for helping organizations like yours identify and implement the ideal organizational strategy for your company.
Medallion Partners has over 15 years of experience providing strategic consulting and executive search services to businesses across industries. Our roster of world-class organizational strategy consultants is prepared to help you uncover the perfect organizational strategy to capitalize on your company’s strengths, minimize the impact of your weaknesses, and bring you closer to realizing your mission and values.