Business strategy, operational strategy, and transformational strategy are three essential types of business strategy that can help companies achieve a sustainable competitive advantage. A functional strategy is how a functional division of a company will reach its objectives. It focuses on developing competition in search of competitive advantage and the main functional areas include marketing, accounting, finance, operations, research and development, and human resources. An operational strategy is how the components of an organization effectively apply corporate, business, and functional strategies in terms of resources, processes, and people.
It sets periodic short-term objectives for their achievement. Generic Porter strategies are commonly used by many companies around the world. Porter suggested that any commercial company can use only one strategy at a time and that using several strategies is not advisable and would ultimately lead to the failure of the product or company in the market. The types of business strategies used will depend on the objectives: in the short and long term, the target market, the industry, and the company's competition. Differentiation is a type of business strategy used by companies such as Apple that promise differentiated products to their customers. It is divided into two parts: focused cost strategy and focused differentiation strategy.
Companies such as Walmart and Amazon use cost leadership as a type of business strategy by selling products with the promise of low costs. Business strategy refers to decisions and commitments related to markets, businesses, and the very nature of the company. It is one of the strongest types of trading strategies because it has definite demand in the market. The choice of strategies and their application are crucial for companies since it will help them achieve a sustainable competitive advantage and make business decisions in the short and long term. To make the most out of these three essential types of business strategies, it is important to understand how they work together. A functional strategy should be used to identify areas where a company can gain a competitive advantage.
An operational strategy should be used to set short-term objectives for achieving those advantages. Finally, a transformational strategy should be used to ensure that those advantages are maintained over time. It is also important to understand how each type of business strategy can be applied in different contexts. For example, a cost leadership strategy may be more appropriate for a company operating in a highly competitive market while a differentiation strategy may be more appropriate for a company operating in an industry with few competitors. Finally, it is important to remember that no single type of business strategy is suitable for all companies. Each company must assess its own situation and determine which type or combination of strategies will best help it achieve its goals.
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