What are the different types of strategies in business?

Written by sean russell
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What are the different types of strategies in business?
Businesses use strategies to help them grow. (business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com)

Companies use strategies as a means to grow their business. According to business analysts Gerry Johnson and Kevin Scholes, authors of "Exploring Corporate Strategies," "Strategy is the direction and scope of an organisation over the long term." While all strategies may do this, different businesses require different specific strategies depending on the size and type of business.

Corporate Strategy

Corporate strategy is often held by very large businesses and corporations. This strategy is ownership oriented (i.e., the chief benefactors of the strategy are the stake holders or share holders of the business). If the company is a corporation, the primary investors (most often forming a board of directors) dictate the driving needs of the investors and it is the job of the president or CEO to meet these needs. If the company is privately owned the owner acts as the primary stockholder. While investors' needs are usually only limited to a return on their investment, the direction the company takes in terms of partnerships, goods or services or even mergers are often matters investors decide upon. Long-term corporate strategies are often clarified in a company's mission statement.

Business Unit Strategy

For smaller concerns, like small franchises and local stores, a business unit strategy may be ideal. Business unit strategy focuses on how a business competes with other similar businesses in the area. This strategy employs customer surveys, and places an emphasis on setting prices and providing a variety of goods and services to the customer. From the supply level, this strategy focuses on keeping costs down in individual stores or branches by allowing the "business unit" to determine the best places to procure supplies and purchase advertising. This strategy is often used in insurance companies, law offices, convenience stores and smaller grocery store chains.

Operational Strategy

Especially effective in export companies and trucking services, operational strategy focuses on process efficiency and logistics. Shortening shipping routes, finding faster transportation and cheaper supplies are all part of the strategy's success. In an office or service environment, shortening order taking processes, finding more efficient ways of meeting customers' needs and using better software to reduce work errors are all examples of operational strategy in use. Unlike corporate strategy and business unit strategy, operational strategy is often a support strategy used to facilitate larger needs. This makes it very versatile.

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