Discuss about the Strategic Management and Leadership for Business.
The report talks about the business level strategies of a company in order to achieve its target and get a profit in the business. The report describes the definition of business level strategy and types of this strategy. It also explains the significance of business level strategy. It explains the various business level strategies such as cost leadership, differentiation, and focus strategies. The business level strategy is considered as a firm position in an organization. These strategies help to obtain and gain sustainable competitive advantages. The business level strategies describe as a detail action which provides value to the customers and it also helps to gain competitive advantages by exploiting core values and competencies. These strategies help to identify and analyze the customer needs, wants and requirements.
Strategic management process is a process that describes the organizational strategies. It is a continuing process in which the firm decides to implement and execute few selected effective strategies in the organization to meet the long-term goals and objectives. Michael Porter has developed a generic strategic model to gain the competitive advantages in the market. Mainly porter focuses on the three core strategies cost leadership, differentiation and focus strategies. The business level strategies play a significant role in every business and trade. According to George &Bock (2011), the business level strategy is a process of decision-making at the strategic business unit level. It identifies and evaluates that how strategic business unit guides and supports organizational goals and objectives (Boons, Montalvo, Quist & Wagner, 2013). This strategy focuses on the specific market, product line and buyer which may show in different forms. The aim of this strategy is to gain the competitive advantages in the market. This strategy monitors and focuses on the business units’ products and competitive position of the company within the specific industry and market segment. To diversify the business, the association creates various business units in the market. It supports and helps to establish competitive benefits among the competitors across the world and it also helps to reduce the cost of production. It develops innovation and modernization with the help of the company (Bocken, Short, Rana & Evans, 2014).
Business Level Strategies are the strategies that are made in an organization for better functioning. It creates a difference between the two competing companies according to the positions. To achieve greater heights what activities to perform to achieve those heights. In a business, every firm has to plan the best strategies as compared to its competitors. The business strategy is a blueprint which shows concern towards the customer by meeting their satisfaction and also thinking about its own position to achieve greater advantage then the competitors (Onetti, Zucchella, Jones & McDougall-Covin, 2012).
After various researches, it has been studied by the George & Bock (2011) that business level strategy is important to achieve the long-term goals and objectives of the firm. The business level strategy focuses and monitors on the needs, requirements, and expectations of the customers in order to gain average returns. This strategy is related to the five forces of competition and competitors. This strategy provides value to customers and gains competitive benefits by exploiting core values and competencies in individual and specific product markets. In business level strategy, top management and managers will have to find a right balance between the quality and prices in order to gain revenue and profits. The various business level strategies have been discussed below (Zott, Amit & Massa, 2011).
The business level strategy based on the price and cost leadership. The cost is based on internal efficiency in order to maintain sustainability in the market. It is the strategy which monitors and evaluates the strategies executed in the association to reduce the cost of product and services in the market (Boons & Lüdeke-Freund, 2013). It helps to differentiate its products in the market on the basis of low prices and cost. The cost of goods is based on the internal efficiency and productivity of the company. In this strategy, the profit margin is managed by the top management of the firm. In the 1970s the cost leadership strategy was universal and common. The low-cost strategy provides various advantages to the company and people as well. Further, the porter five forces model also plays a significant role in business level strategy. It includes the rivalry, customers, suppliers, new entrants, and substitutes. Under the cost leadership strategy, standardized and good quality of products is provided to the customers with the lower prices and cost. It also helps to reduce the competition in the market. Many companies apply this strategy in their management by executing the complex organizational system within the organization. It also controls on the prices of products by minimizing and reducing the various expenses and costs in the market (Wollard & Shuck, 2011).
Cost leadership strategy is completely based on the price which prevails in a competitive market. It relates to the competing factor. A customer tries to reduce the type of cost structure of the commodity. They do so to make the value of the price relatively less. Producers are responsible for managing the price and value of the commodity. Cost leadership is efficient internally. This helps in sustaining the margins. In cost leadership strategy, companies are known for its low prices and higher growth returns. The cost of the product depends on the producers. The cost leadership in critical terms is a concept which is used while making strategies in business. It is a way which creates competition between the companies. Cost leadership refers to the cost of operation in the industry at low cost (Drnevich & Croson, 2013).
It has been studied that rivalry plays a vital role in business level strategy. In this strategy, the association does not prefer the initiate prices of the products. Boons & Lüdeke-Freund (2013) believed that the main reason behind of the companies of achieving success is that the lower cost of operations than those who operate in the same business. It means that they offer the company’s product at a low price to compete with other companies by reducing the cost. In the stock of similar products, customers choose the product which has the lowest price. Customers are always in search of goods and services at a low cost and company’s competitive attitude allows them to meet those services. By gaining a large number of customers they are able to become the leaders in the industry. This becomes the path of winning for the company. Bryman & Bell ( 2015) says, Cost Leadership is simple but it is not easy. With such price, a cost leader is able to meet the target than that of a competitor. Cost leaders usually win as they deal with mainly the price. This makes the company profitable. This makes it innovative and makes them survive with the competitors on a low margin. They try to reduce the cost and just not the prices.
The differentiation business level strategy is also unique and excellent. It provides unique and good quality of products and services to customers in the market. There are various ways to differentiate the several products and services such as features, dealer network, design, and customer service. By using the differentiating strategy, the company can generate unique circumstances and conditions for their competitors and buyers. Further, the company is producing unique and effective products and services to attract the more customers in the market. High-quality product, high customer service, rapid innovation etc. are a few key points of differentiation. A differentiated marketing strategy is when a company creates campaigns that appeal to at least two market segments or target groups. It has been studied by Drnevich & Croson (2013) that differentiation means setting the company, managing the products and also the services. This allows the company to distinguish the company’s brand from other company’s brand. The strategies of differentiation are a set of integration that is created for producing or delivering the goods and services. This becomes important for the customer to perceive the things in better way. It is important to differentiate the product. It is a key to achieve success in the market, to compete with other companies, and in building the sustenance. If the customer is not aware of the superiority of the product or of the service then it is hard to compete in the existing market. It is important to tell the customers about the product’s superiority. The differentness of the company should be different from other company. This will be helpful in customer benefits. This differentness separates the company from its competitors. The difference should meet the company’s growth. The company must find that difference and communicate it to the customer (Carney, Gedajlovic, Heugens, Van Essen & Van Oosterhout, 2011).
It has been analyzed that focus low-cost strategy also plays a vital role in business. It focuses on the specific market, product, and buyers in the market. This strategy serves the competitors with maintaining a wide range of products and services in the market. As a result, it reduces the cost of products and it is better for the clients.
In the opinion of Williams & Naumann (2011) that such kind of strategy gives its services only to those segments of customers that are small and desires the product at a low cost. Focused Low Cost is a strategy related to price in which an organization gives services at a low price to meet the demands and to gain profit in the market share. It is a type of generic strategy that is generally adopted by the company to perform its function on a regular basis. The strategy usually works where the brand has less or no competitors. This increases the scale of the company and is also profitable as it increases the volume of production of the firm. It has been evaluated that Focused low Price is also known as Low Price Strategy. Further, focused cost leadership strategy is a competitive strategy which competes with other company due to the price. They usually have to target in the narrow market. The companies which follow this strategy does not have to charge the prices which are lowest. Rather than this, the company charges low prices relative to other firms that compete within the target market.
The strategy of Focused Differentiation helps the company to compete with other company on the basis of consumer’s targeted segment. The Company is capable of serving the customer’s base than the customers more efficiently. The company has also a risk of segments going out of interest (Bharadwaj, El Sawy, Pavlou & Venkatraman, 2013). The Customers usually lack interest in the company’s product manufacturing. This becomes a risk for them to maintain or achieve the target. A focused differentiation strategy means targeting a small group of customers with a different variety of products. The point of this strategy is described in other sense. It has been analyzed that it is the second strategy among the four. A focused differentiation strategy offers those types of features that are able to fulfill the requirements of the narrow market (Kastalli & Van Looy, 2013).
Integrated cost leadership/differentiation is a business level strategy where differentiated products are offered at a low cost in the market. The products of integrated differentiation strategy provide a unique value to the characteristic of the customer. It is useful in gaining strong customer support (Hrebiniak, 2013). Many other products are also responsible for the growth of the company which helps them in gaining the advantage while competing. This gives a better returns and a profitable business. Products available from companies that follow this strategy of integrated cost differentiation strategy are differentiated less than what products the companies offer. Such products that are offered by the differentiators are at a low price but not as low as the leaders of low- cost. The company which faces risk decides to form or to implement integrated cost differentiation (Grant, 2016). The strategy followed by such differentiation gives a number of advantages to the firm. It has the ability to focus majorly on reducing the cost of the product, adding a variety of features to the product that differentiates it from the other products prevailing in the market for which customer usually have to pay a different amount. The Companies usually fail to pay continues attention toward the requirements which stuck them in the middle. This also avoids them to form generic strategies in the market (Campbell, Edgar & Stonehouse, 2011).
On the above discussion, it has been concluded that business level strategy plays a vital role in business activities and operation. There is a brief description of the strategies planned by the business. The report serves a benefit to those organizations that fail to achieve the target in the selected areas. The business level strategies are important in order to meet the long-term targets and objectives within the organization. Further, strategic management approaches and strategies are integral and significant part of the business and trade. The firm cannot run the business effectively and efficiently without strategic management approaches and strategies.
References
Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N.V., 2013. Digital business strategy: toward a next generation of insights.
Bocken, N.M.P., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-19.
Boons, F., Montalvo, C., Quist, J. and Wagner, M., 2013. Sustainable innovation, business models and economic performance: an overview. Journal of Cleaner Production, 45, pp.1-8.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Campbell, D., Edgar, D. and Stonehouse, G., 2011. Business strategy: an introduction. Palgrave Macmillan.
Carney, M., Gedajlovic, E.R., Heugens, P.P., Van Essen, M. and Van Oosterhout, J.H., 2011. Business group affiliation, performance, context, and strategy: A meta-analysis. Academy of Management Journal, 54(3), pp.437-460.
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George, G. and Bock, A.J., 2011. The business model in practice and its implications for entrepreneurship research. Entrepreneurship theory and practice, 35(1), pp.83-111.
Grant, R.M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Hrebiniak, L.G., 2013. Making strategy work: Leading effective execution and change. FT Press.
Kastalli, I.V. and Van Looy, B., 2013. Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31(4), pp.169-180.
Onetti, A., Zucchella, A., Jones, M.V. and McDougall-Covin, P.P., 2012. Internationalization, innovation and entrepreneurship: business models for new technology-based firms. Journal of Management & Governance, 16(3), pp.337-368.
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Wollard, K.K. and Shuck, B., 2011. Antecedents to employee engagement: A structured review of the literature. Advances in Developing Human Resources, 13(4), pp.429-446.
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