One indicator of a healthy business is the sense of direction the business if pursuing as felt by all those emotionally or financially invested in the business, from shareholder to employee. An official direction not only unifies the company, but it also helps leaders filter opportunities to those most appropriate. A company direction starts with the setting of objectives in alignment with the vision of the company. The road to reaching those objectives is paved through the business strategy.
This post serves as a list of business strategies listed in groups. Later posts about strategy formulation will reference the options listed below.
Intensive Set of Strategies
Implementors of a Market Development strategy seek new customers within their existing markets. Practically, new customers are found via expanding the company’s reach or targeting new segments within the same market.
Market Penetration strategy attempts to gain greater market share through the selling of the product/service deeper into the existing targeted market segments. Businesses implementing a market penetration strategy hold a competitive advantage and attempt to drive out competition through unique positioning.
A Product Development strategy attempts to meet a validated need within the existing market. The fulfillment of the need is met via upgrade existing products or the creation of completely new products.
Integration Set of Strategies
Company’s seeking to maximize profits, increase market share and take control of downstream distribution utilize a forward integration strategy through the removal of intermediary layers between the business and the customer/client.
Company’s seeking to reduce overall cost and take control of upstream producers/suppliers of products/services employ a backward integration strategy. The move entrenches the company within the market through increasing barriers to entry.
Horizontal integration is a mechanism for increasing market share and reducing competition through the acquisition of businesses on the same competitive level.
Diversification Set of Strategies
Concentric (related) diversification
Concentric diversification attempts to drive growth through the adding of new but associated products/services on top of a business existing product/service offering.
Horizontal (related) diversification
A horizontally diverse strategy adds products/services that are unrelated to the existing array of products or services but still targets the same target market.
Conglomerate (unrelated) diversification
Businesses implementing a conglomerate strategy add products/service that are significantly different from the current business offering.
Defensive Set of Strategies
Businesses under threat seek to fight off direct competitors through the implementation of a defensive strategy. Businesses entrench themselves by blocking competitors using price cutting, discounts, incentive, and strong marketing drives.
Retrenchment strategies attempt to bring financial stability to the business through aggressive cost-cutting measures.
A liquidation strategy is a final resort and involves the operational shutdown and selling of company assets.