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Four Popular Strategy Models for Modern Business

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The world of business is changing- enterprises are finding it much easier to find support for their enterprises and go global, much of which can be attributed to the minds that have helped shape the world of business strategy on an international scale. There are theories that allow global businesses to run their daily operations. They are called business strategy development frameworks, and they are finding homes in other companies as well. Here are four of them-

1. Porter’s Five Forces Model- Extensive used in analysis, the Five Forces model helps determine the competitiveness of an industry is based on five different factors: the competition, potential entrants, the threat of replacement products (alternatives), the bargaining ability of suppliers, and the bargaining ability of buyers. If these factors are high, competition can be considered strong within the industry. This may cause several companies to reconsider their verticals and overall strategy. According to this model, industries with little competition allw greater room for both profit and expansion.

2. Hambrick and Fredrickson’s Strategy Diamond- The Strategy Diamond is an attempt to explain what the phrase strategy means by isolating its elements and identifying them. According to this strategy model, there are five aspects of strategy which must be influenced to make the most of businesses and their approaches- Arenas, Vehicles, Differentiators, Staging and Economic Logic. Analysis of these elements help enterprises understand the dos and donts of their particular organization. Moreover, it is vital that decisions made in one element should align with the goals of another or at least complement it to make it better. The only way companies can develop a sustainable strategy is by understanding the reason why they take specific sets of decisions and what they gain from it.

3. Treacy and Wiersema’s Value Disciplines- This strategy model relies upon completely understanding what a company stands for and what it strives to excel towards. A company that commits time and resources to too many or multiple contradicting values, they are likely to end up with mediocre results. This particular strategy categorizes the various elements of business strategy into three broad categories- Product Leadership, Operative Excellence, and Customer Relations. Choosing each one of these has immense impact upon company performance, structure and policies.

4. Ansoff Matrix- According to Igor Ansoff identified four primary strategies for organizational growth and he summarized them as the Ansoff Matrix, also called the Product/Market Expansion Grid. It permits managers to easily assess the impact each type of strategic approach would have by accounting for the broad factors at work, and then come to a decision after debate and analysis. These four strategies are Market Penetration (increase of market presence in established ecosystems), Market Development (introducing the existing products to new ecosystems), Product Development (providing fresh products for existing markets) and Diversification (selling new products in new ecosystems). Ansoff promotes the idea that the larger the number of verticals across which companies are performing, the more likely they are to be suffer from inefficient growth. As companies grow across verticals, both vertically and horizontally, it becomes a huge task to analyze what is wrong and why. Hence, the strategy plans for different phases in a company’s business lifetime.

Latest Activity: Jul 09, 2018 at 1:03 AM

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