07 Apr What Are The 3 Types Of Strategies In Strategic Management?
Organizational strategy plays a central role in the long-term success of any business. But which strategies should you leverage to ensure your efforts align with your company’s overarching goals?
In this blog, we’ll take a deep dive into the world of strategic management and explore the three main types of organizational strategies every manager should know about.
We’ll also explore a real-world example of the foundational model of strategic management that you can implement today to improve your decision-making process, sales outcomes, and more.
What Are The 3 Types Of Strategies In Strategic Management?
To begin, let’s take a closer look at three of the most popular types of strategies in strategic management.
Corporate Strategy
Corporate strategy is a vital component of a company’s success, encompassing high-level plans and initiatives that determine the overall direction and scope of the organization.
These strategies are designed to manage multiple business units, allocate resources, identify growth opportunities, and optimize organizational efforts from the C-suite level down to new hires.
One example of a popular corporate strategy is vertical integration, which involves expanding a company’s operations into upstream or downstream businesses related to its core operations. This approach can create cost efficiencies, secure supply chains, and enhance the overall value proposition.
Corporate-level strategies are concerned with the organization’s long-term health and success as a whole, ensuring that the company remains competitive and sustainable in the long run.
Business Strategy
Business strategy refers to an organization’s set of action plans to gain a competitive edge in a particular industry or market to drive growth, boost sales, and attract more customers.
It is a subset of organizational strategy primarily concerned with a company’s broader, long-term direction. Business strategy, on the other hand, focuses on leveraging competitive advantages to capture a larger market share, streamline operations, reduce expenses, and generate other beneficial outcomes.
Every business strategy has four key aspects: the objective, the vision, resource allocation, and evaluation. The objective outlines the overarching goal of your business strategy, and the competitive analysis seeks to discover strengths, weaknesses, opportunities, or threats that can be capitalized on to bring your organization closer to its long-term objectives.
Resource allocation is the stage where you outline how you’ll deploy business units and allocate resources to bring the plan created in the previous stage to fruition. Finally, the evaluation stage involves creating a framework for testing and evaluating your business strategy.
Another aspect of business strategy is determining how a company will compete with rivals regarding the goods or services offered, the target market, pricing, and marketing strategies.
By carefully crafting and implementing a business-level strategy, companies can differentiate themselves from competitors, maintain a cost advantage, and create a unique value proposition that appeals to customers.
Functional Strategy
Functional-level strategy refers to the actions and decisions taken by specific departments within an organization to support and contribute to the overall organizational strategy. These departmental strategies are designed to align with and support the company’s long-term objectives.
Put simply, functional-level strategies encourage businesses to take advantage of each of their department’s unique capabilities and resources to drive growth and success.
For example, implementing a new functional-level strategy may mean your marketing department will shift its focus toward promoting new or improved products, while the sales department may begin to prioritize targeting new customer demographics to maximize profits.
Functional-level strategies may also call for updating your departmental processes, tools, technology, and structure to support initiatives like entering new markets, enhancing customer service and satisfaction, and developing new revenue streams.
What Are Basic Models Of Strategic Management?
Now that we’ve explored the types of strategies in strategic management, let’s take a look at the basic model of strategic management. This model is a simple yet effective framework that allows organizations to identify and implement advantageous organizational strategies efficiently and effectively.
The base model of strategic management says the best way to develop an organizational strategy is to conduct an in-depth, comprehensive analysis of your company’s strengths, weaknesses, opportunities, and threats, also known as SWOT.
Businesses can use the insights gained from their SWOT analysis to identify realistic long-term goals, visions, and missions. Once that’s completed, the basic model of strategic management encourages businesses to reverse-engineer their goals to create resource allocation guidelines, organizational processes, and action plans that will bring those goals to fruition.
How Medallion Partners Tackles Organizational Strategy
At Medallion Partners, we understand that crafting an effective organizational strategy can be a daunting task. That’s why we’re dedicated to streamlining the entire process and supporting your success every step of the way with organizational strategy consulting.
With over 15 years of stand-out experience in the executive search and organizational strategy niches, we have the expertise to help guide you toward sustainable long-term success. Let us be your partner on this journey – contact us today to learn more.