An international organization can use a number of business strategies, based on its situation. New organizations will face different challenges than organizations that are old. Therefore, the strategies they implement are often different from the ones of key competitors.
There are mainly four types of business strategies an organization may choose from.
Growth Strategy
A growth strategy refers to adding new products or finding and implementing new features to existing products. Sometimes, an organization may be compelled to modify or increase its product line to fight with its competitors. Otherwise, customers may shift to a new technology of a competitive company. For example, mobile phone companies need to keep adding new features or discovering new technology. Those who do not keep up with consumer demand will go out of business soon.
A growth strategy can also be implemented by finding a new market for the company’s products. Sometimes, it can happen by accident. For example, a consumer soap manufacturer may discover that industrial workers prefer its products to others. Hence, apart from selling the soap in retail stores, the company should ship the soap in larger containers for factory and plant workers.
Product Differentiation Strategy
Product differentiation strategy can give a competitive advantage to companies, such as superior quality or service. For example, an air purifier manufacturer may differentiate from competitors with a superior engineering design. Product differentiation strategy is usually used to set oneself apart from key competitors. It is found that product differentiation strategy can also help a company build brand loyalty.
Price-Skimming Strategy
A price-skimming strategy refers to charging higher prices for a product in comparison to competitors, especially during the introductory phase. A company may use a price-skimming strategy to quickly derive its production and advertising costs. However, there must be something special about the product.
For example, a company may introduce a new type of solar panel. If the company is the only one that is selling the product, customers may pay the higher price.
One disadvantage of this strategy is that it attracts competition relatively quickly. Enterprising individuals who have technological knowledge may see the high profits the company is reaping and launch their own products.
Acquisition Strategy
An organization with enough capital may use an acquisition strategy for competitive advantage. Purchasing another company or one or more product lines of another company is the major policy in such a kind of strategy. For example, Facebook’s acquisition of WhatsApp is a part of Facebook’s acquisition and growth strategy.
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