At the very beginning, the term “strategy” was used only in the military sphere. He designated the art of the commander, the ability to manage military operations, to develop and, of course, direct the movement of troops. Subsequently, this term began to apply to the leaders of almost any organization. The leader must be proficient in this art.
The goals set should indicate the direction of movement, the direction of the organization. The result depends on this: whether the organization will achieve the results that have been outlined. Obvious is the fact that you can move towards the same goal in different ways. The goals set for the organization answer the question: “What will the organization strive for?”. The action plan answers the question: "What to do to achieve the goals?" The strategy answers the following question: “In what way and how will the organization act and move, striving to achieve its goals?”
The strategy should:
1. Link past and future.
2. Indicate the development path of the organization.
What is a strategy?
This is a general direction, it is a set of rules, principles, guided by which, the achievement of competitive advantages, and sustainable ones, is ensured. As well as other goals set for the organization, based on the opportunities that it really possesses. Also important are the relationships that have developed with the elements of the external environment.
There are many strategies that can achieve competitive advantages, but the basic competitive strategies are as follows:
- Cost Leadership.
- Differentiation.
- Focusing (concentration).
- Early market entry (innovation).
- Synergism.
The competitive strategy “Leadership in costs” is aimed at achieving competitive advantages due to the fact that the cost of important elements of the product should be low. Accordingly, the cost of goods will also decrease, compared with competitors. In short, with the help of lower costs to get maximum profit. But this strategy is acceptable in such conditions when the demand for products is highly elastic in price and also homogeneous. At the same time, the difference in trademarks does not play a significant role for consumers. But the company must have access to cheap raw materials, labor, use unique equipment, as well as advanced technologies. All these factors allow you to reduce costs. The main focus, in this case, should be on reducing costs, and quality, service here are not so significant.
In contrast to the “Leadership in costs”, aimed at serving the entire market using standard products, the competitive strategy of “Product Differentiation” is aimed at the production of special products (goods) for consumers who present specific requirements that are willing to pay for uniqueness. In this case, the cost increases, and the price, respectively, too. It was this strategy that determined the variety of products on the market. She also provided branded products of high quality.
The following types of differentiation are distinguished - there are four of them:
- Product differentiation (the basis is the product range of the enterprise).
- Service differentiation.
- Staff differentiation.
- Differentiation of the image.
For each industry, sources of uniqueness are unique. But the application of this strategy may be unsuccessful if the increased price does not cover the additional costs.
The competitive strategy “Focusing” (or narrow specialization) is a choice limited by the scope of the sphere of our own economic activity. The circle of consumers is sharply defined.
“Focusing” is radically different from the above strategies. It is based on the choice of narrow competition within a sectoral market niche inherent in small enterprises. The choice of this strategy is mainly due to a lack of financial resources, but the barriers to entry into the industry are a more important reason.
The competitive strategy of innovators is as follows: the company offers the market an original product (service), while receiving a sustainable competitive advantage, is growing rapidly, and receives monopolistic high profits. Features are: a high degree of risk, the danger of imitation by competitors, unstable quality. A similar strategy is inherent in large and small enterprises. But here you need highly qualified personnel, as well as large financial resources.
The competitive strategy “Synergism” is a combination of two or more business units under the common leadership. In business practice, this means that (2 + 2)> 4. This is the transition of quantity to a new quality. It assumes the efficient operation of the enterprise, contributes to high profitability, but reduces the efficiency and flexibility of management.
The development of a competitive strategy is a continuous, adaptive and creative process that takes into account changes in the external as well as internal environment of organizations.
A strategic plan is a program of socio-economic activity of an enterprise (organization) and all departments, which is aimed at achieving the goals.