Business strategy

Strategy formerly refers to planning and managing an operation for a

particular purpose such as in a war.
A businesss strategy is the pattern of decisions and actions that are
taken by the business to achieve its goals.
A business may have a variety of goals or objectives, but for many
businesses, the major goal is to improve performance so that
profits increase through designing and implementing strategies.

Types of strategy
1.Functional strategy

Strategies of the functional level developed to improve the

efficiency of a business operations. It is also called operational strategy.
Ex.
Marketing strategy
HR strategy
Production strategy
R&D strategy

2. Business strategy

Plans a company uses to gain competitive advantage over

competitors in a market. It is unlikely that a company can serve an
entire market all the time. Therefore a company must decide which
parts of the market to aim at and how to be different from
competitors.
Ex.
Cost leadership strategy
Differentiation strategy
Focus strategy
Withdrawal strategy
Market penetration strategy
New product development strategy

3.Corporate strategy

Strategies aimed at the long-term development of the organization.

For example, a company may consider where it will be in 10 years
time and how it manages to get there.

Ex.

Internal development strategy

Takeover and merger strategy
Strategic alliances

3. Forward Integration
Gaining ownership or increased control over distributors or
retailers

Example
General Motors is acquiring 10% of its dealers.

4. Backward Integration
Seeking ownership or increased control of a firms suppliers

Example
Motel 8 acquired a furniture manufacturer.

5.Horizontal Integration
Seeking ownership or increased control over competitors

Example

 Palestinian Islamic Bank acquired Cairo-Amman Bank Islamic

transaction branch.

6. Market Penetration
Seeking increased market share for present products or services in
present markets through greater marketing efforts

Example
Ameritrade, the on-line broker, tripled its annual advertising
expenditures to $200 million to convince people they can make
their own investment decisions.

7. Market Development

Introducing present products or services into new geographic area

Example

 Khuzendar Tiles maker introduce his product to Gulf markets.

8.Product Development

Seeking increased sales by improving present products or services

or developing new ones

Example
Apple developed the G4 chip that runs at 500 megahertz.
Khuzendar Tiles maker introduce Ceramic as a new product.

9.Concentric Diversification

Adding new, but related, products or services

Example
National Westminister Bank PLC in Britain bought the leading
British insurance company, Legal & General Group PLC.

10.Conglomerate Diversification

Adding new, unrelated products or services

Example
Consultant Construction Engineering acquired Bisects factory.

11. Horizontal Diversification

Adding new, unrelated products or services for present customers

Example
The El-Awda Co. provide ice-cream product to present customer

12.Joint Venture
Two or more sponsoring firms forming a separate organization for
cooperative purposes

Example
Lucent Technologies and Philips Electronic NV formed Philips
Consumer Communications to make and sell telephones.

13. Retrenchment

Regrouping through cost and asset reduction to reverse declining

sales and profit. Sometimes it is called turnaround or
reorganizational strategy.

Example
A company sold off a land and 4 apartments to raise cash needed.
It introduce expense effective control system.

14. Competitive Strategy --------------- Low cost

Differentiation
Direct competition
Focus on niche
15.Functional/operational Strategies:
Concern with org. internal resources and processes which
effectively deliver the corporate and business strategic direction.

Functional strategies are interrelated.

e.g.: purchasing & materials management, production, finance,
R&D, HR, IT, and marketing.