Understanding the Types of Business Strategies | Raymond Skjærstad

Raymond Skjærstad is an experienced Director of Corporate Finance with a history of showing work in the financial services industry. She is skilled in Asset Management, Management, Leadership, Trade, and Structured Finance and vigorous financial professionals who graduated from INSEAD. Raymond Skjærstad executes buying and beautifying demand for stocks and various protections for the benefit of clients.

Practically speaking, only there are three basic business strategies: cost strategy, product or service is differentiated strategy, and focus on a niche strategy. Understanding this strategy is very important to write a good strategic business plan.

Cost strategies

Successful retailers rely on cost strategy. Companies like Walmart and Costco economic excel in providing products for their customers. They convey a lot of economic benefits to their customers in the form of lower prices. Not all of the cost savings can be passed on to consumers, however. Most of the cost savings, achieved through highly efficient operation, maintained by the business and, therefore, be an advantage.

Such as cost or operating cost leadership is one of the three basic strategies. And the strategies available to any business - and especially businesses that have achieved economies of scale.

The key thing to note about the low-cost strategy, however, is that the company needs to maintain some level of cost savings to earn a higher profit than its competitors. Thus, it's just being a producer is not enough. A company needs to become a low-cost producer and can still be products and services at fairly high prices that some cost savings retained as profit.

Differentiated products and services strategies

The second basic strategy is product differentiation. product differentiators are often selling a product or service that is highly unusual. The department store chain Nordstrom is a good example of this because it offers unparalleled service, and often (though not always), it offers a lot of choice and high-quality items. However, Nordstrom goods cost more. But consumers are happy to pay the extra amount. Why? Because they get more for their money.

A company that relies on competitive differentiation strategies based on the special features of the product or service. The key to making this strategy work is being able to charge your customers more for special features of the special features of charge. increased product differentiation needs more revenue from increased costs.

Focus strategies

The focus strategy is really a hybrid of cost and differentiation strategies. This strategy states that in some ways, a firm is really good about managing costs; and in other ways, this firm is really good about differentiating products or services. A firm may choose to take this hybrid approach because it understands a particular audience or niche of customers or categories of products; in other words, the firm can, through this focused approach, serve a particular market better than anybody else. This firm is going to be the best at serving a particular niche.

As a focus strategy retailer, Target focuses on suburban, middle-class customers by offering those consumers almost the perfect combination of cost savings and differentiated products.