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the competitive advantage.

Organizational Strategies

Before we move on, it’s worth looking at two other commonly mentioned categories of organizational strategy. Arguably, they could fit into Porter’s definitions, but they’re worth considering on their own.

Growth Strategies

When considering a growth strategy, you can look at several options to pursue:

  • Increase sales of existing products.
  • Increase the range of products and services you offer.
  • Increase the size of the geographical area you serve.
  • Buy out a competitor.

Remember, growth strategies are invariably costly. When choosing to adopt a growth strategy, be sure to think through the financial and personal price you will have to pay to achieve growth. Of the approaches listed above, the latter two can also be classed as “diversification” strategies.

Acquisition strategies can also fall under this heading. In this instance, the company considers buying one or more competitors in order to strengthen its position.

Rationalization

Rationalization is not necessarily the opposite of the growth strategy, at least, in terms of the results it produces. Sometimes, businesses that have been following a growth strategy find that they have become overly complex. It’s even sometimes possible to decrease turnover and yet make more profit – both in absolute and percentage ROI terms.

In this situation, businesses will think about discontinuing products, laying off staff, reducing their number of outlets, and generally streamlining to make the business more profitable and more focused on what it does best. Ironically, this can mean financial growth as the business becomes more efficient.

Organizational Strategies by Business Function

Whatever your overarching strategy may be, ALL the functions your business undertakes must contribute to its goals. That means your organization will have several functional strategies that all contribute to a defined result. These would include:

  • Financial strategies
  • Marketing strategies
  • Sales strategies
  • Production or service delivery strategies
  • Research and developments strategies
  • Purchasing strategies
  • Human resource management strategies

Just to make your life even more interesting, there will be sub-categories for each of these. So, for example, your marketing strategies would look at price, distribution, product, packaging, and promotion. There might be a specific strategy for each.

HR management will have a set of strategies too. These could include recruitment, retrenchment, remuneration strategy, or training strategy. And each of these would be guided by the primary organizational strategy you’ve chosen.