Every business organization needs to implement various types of management practices and policies in their organization in order to be able to run their business successfully and to fulfill their ultimate goal of theestablishment. As the term management suggests it deals with managing all the tasks of the organization tactfully in a planned and systematic manner and therefore every business and business organization is dependent upon efficient and systematic management in order to achieve the aims and objectives of the organization. There are various types of management issues which an organization has to deal with among which some of the main issues are marketing management, financial management, Human resource management, operations management, customer relationship management and strategic management (Hill, Jones and Schilling 2014). All these management issues combine and integrate together with each other which helps the businesses to achieve its ultimate goals and objectives and also help in accomplishing their mission and vision statement. Among the various types of management which are practiced in the organization one of the most important types of management practice is strategic management (Baker 2014). Strategic management helps a business organization to achieve their business goals and tactics in a systematic and timely manner by formulating and implementing different types of strategies according to the strength of the organization and the objectives of the organization.
This project is aimed towards the understanding the importance of strategic management in an organization which is considered as one of the most important management practices which are followed in an organization. Strategic management is a very vital management practice which is followed by every business organization in order to reach their ultimate goals and objectives. Therefore this project helps in gaining a proper knowledge about the importance of strategic management and the various types of business strategies which an organization can adopt.
The strategic management policies of a business organization contain all the necessary blueprint and techniques which the organization follows in order to be successful and to outperform their competitors. The strategies which are adopted by an organization depends upon various factors such as the strength of the organizations, the long term and short term target of the organization, the position of the company in the market, the nature of the competition in the market and also depends upon the policies implemented by the competitors of the organization at that moment of time. The strategic management policy of a company provides guidelines to the business organization to achieve the targets they set for themselves and to outperform their competitors in order to gain a competitive advantage in the market (Baker 2014). The process of strategic management involves a series of steps which begins with market research by the business organization in order to gather every minute information about the company and their products and services from the market. After the market data from the market is gathered then the next step which is followed in this process is analyzing the data collected. After the data on target market and audience which is collected through market research gets analyzed then the findings of the data are discussed by the top management of the organization and accordingly future targets and objectives are formulated and also the steps and strategies which are to be followed in order to achieve those targets and objectives are finalized. (Hill, Jones and Schilling 2014).
There are different types of strategies such as cost leadership, product differentiation, price skimming or acuquisition which a business organization can adopt depending upon various factors such as strength of the company, market demand, nature of the market, position of the company in the market, perception of the customers regarding the company, competitive rivalry in the market, uniqueness of the product or service of the company in the market and the policies adopted by their competitors. In order to formulate an effective strategy, a business organization needs to access all the above-mentioned condition and accordingly formulate a strategy which will help in achieving the goals and objectives of the business organization (Baker 2014). In order to effectively implement the strategy the most vital task which a business organization must follow is aligning the strategies of the companies with their business goals otherwise the strategies of the organization will not be implemented successfully which will result in failure of achieving the goals and objectives of the company.
There are different type’s business strategies which a business organization can adopt such as acquisition strategy, differentiation strategy, growth strategy, price skimming strategy, cost leadership, cost focus strategy and differentiation focus strategy. The success of a business organization lies in the proper management and the implementation of the above-mentioned strategy (Chang 2016). The strategic management process is a very important process from the point of view of the business organization as it is involved with the success of the strategies implemented by the business organization.
The strategic management process contains different elements i.e. situation analysis, strategy formulation, strategy implementation and strategy evaluation (Chienwittayakun and Mankin 2015). which help in properly designing and implementing the strategies adopted by the company. The primary step which is involved in the strategic management process is the goal setting of the company in which the business organization sets various goals and objectives for them to achieve for the company (Chienwittayakun and Mankin 2015). The next step which is involved in the strategic management process is the analysis of the goals of the objectives in accordance with the data and inputs which are available to the company from the market. The next step which is involved in the strategic management process is the strategy formulation process in which the top level management of a business formulates the best possible strategies which will be beneficial in accomplishing the goals of the organization. After the strategy is formulated then the next step in the strategic management process is the implementation of the formulated strategies in a systematic and orderly manner and this step is one of the most vital steps in the strategic management process as without proper implementation of the strategy no strategies will be effective however strong or effective the strategy might be to the business organization (Rothaermel 2015). The final step in the strategic management process is the evaluation and control in which the business organization evaluates the success of the strategy using various techniques such as the performance management, continuous review of the internal and external issues of the organization and taking remedial and corrective measures in order to prevent the issues. Therefore if all the elements and steps which are involved in the strategic management process are followed in a correct manner then it results in the success of the strategies and the entire strategic management process of the business organization (Bettis, Ethiraj, Gambardella, Helfat and Mitchell 2016).
As discussed above there are various types of business strategies such as growth strategy, differenttaition strategy, acquisition strategy, cost skimming, cost focus and cost leadership strategies etc (Chang 2016). which can be adopted and therefore it is very necessary to understand the characteristics and importance of these business strategies which can be adopted by a business organization. The different types of business strategies and their characteristics are as follows (Chang 2016).
4.1 Growth strategy- A company implements growth strategy in order to outperform their competitors and to gain a competitive advantage in the market. The growth strategy involves the addition of new products to the product line of the company or by adding new features to already existing products of a company. The growth strategy of a company helps in finding a new market for its products or to find new customers in its already existing market. Therefore the growth strategy is one one of themost widely adopted business strategy by the various business organization (Rosemann and vomBrocke 2015).
4.2 Differentiation strategy- A business organization implements differentiation strategy in order to gain a competitive advantage in the market over other competitors by differentiating their products from their competitors. In order to implement differentiation strategy, a business needs to have certain unique qualities in their product or service which will differentiate them from other available product orservice and thus help in gaining a gaining a competitive edge in the market. Hence differentiation strategy is also considered one of the most widely followed businessstrategies by the various business organization (Engert, Rauter and Baumgartner 2016).
4.3 Acquisition strategy- A business organization may adopt acquisition strategy as a part of their business strategy in which they acquire various competitors in order to gain superiority in the market and to reduce the number of competitors in the market which will help the organization to gain a competitive advantage in the market. Mostly it is observed that a business organization tries to adopt acquisition strategy and acquire a number of small competitors to increase its market share and in turn gain a competitive edge in the market (Rosemann and vomBrocke 2015).
4.4 Cost Skimming strategy- In this particular strategy various business organization charges a higher price for their products in the introductory phase in order to recover the advertising and marketing costs associated with the product. In order to follow price skimming strategy, a business organization must some unique quality or feature in their product or feature which are innovative in nature and new to the customers so that they can charge a higher price for their products from the customers compared to other competitive products. The price skimming strategy is a very effective strategy for companies as it helps in recovering their marketing and advertising costs relatedto their products or service (Engert, Rauter and Baumgartner 2016).
4.5 Cost Leadership Strategy- The cost leadershipstrategy is one of the most widely followed business strategy in which a business organization aims to be the market leader by offering their products and services to the customers at the lowest possible price in order to attract more customers and to increase its market share which will ultimately help in gaining a competitive advantage in the market. In order to follow cost leadership strategy, a business organization needs to manufacture its product and service at the lowest possible cost in order to offer the products or service to the customers at a lower price than its competitors.
4.6 Cost Focus strategy- The cost focus strategy is a type of business strategy in which a business organization targets to be the market leader by offering their products and services and the lowest possible price to a particular market segment in order to improve the brand value of the company and also to outperform their competitors in that particular market segment (Frynas and Mellahi 2015).
4.7 Differentiation Focus strategy- The differentiation focus market strategy is also a type of business strategy followed by various business organization in which a company targets to become the market leader in a particular market by offering differentiated products to the customers of a particular market segment which helps in improving the brand value of the company which in turn helps to gain competitive advantage in that particular market (Long, Ng and Downing 2014).
Therefore a business organization can adopt any of the above-mentionedstrategies according to their objectives and according to the strengths in order to gain a superiority in the market and outperform its competitors.
The above research is aimed towards understanding the importance of various types of management issues which are essential for the smooth running of a business. This particular research is aimed towards understanding the importance of strategic management which is one of the most vital management issues for a business organization. However, this research does not discuss in detail about the best possible business strategy for different sectors and also does not discusses the demerits of the different businessstrategies. This research would have been better accepted if it provided details about the best possible business strategy for different sectors.
From the above research, it is clear and evident that business and management are two inseparableterms in the modern business scenario as no business could not flourish properly without proper management. There are various types of management policies that a business organization can adopt in order to achieve its aims and objectives. Among the various types of management policies practiced in a company one of the most important and vital management policy is strategic management which deals with the effective formulation and implementation of the perfect strategy which fulfills the requirements of the organization and hence helps in achieving the goals and objectives of the organization. In order to formulate and implement the perfect strategy for themselves, a business organization must be aware of their strengths and capabilities and also should be aware the external atmosphere in which they operate.
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Strategic management process- The strategic management process is defined as the process by which an organization defines their strategy.
Strategic Management- Strategic management is defined as the continuous planning, monitoring and analyzing and assessing all the necessary factors which are required to meet the goals and objectives of the organization.