Options for organizational strategy

You have just been hired as an information manager and your supervisor has asked you to provide the following information for your company.

  •  Describe three (3) options for organizational strategy.
  •  Provide three (3) examples of companies that follow each of the selected strategies for which you would want to work.
  •  Provide a description of how three (3) companies used their strategies for competitive advantage.
  •  Provide one (1) description of how you would employ a different or unique strategy, for one of the companies, for competitive advantage that has not been stated in your previous answer.

Answer

Organizational Strategies

In the rapidly evolving business world, organizations employ different strategies to achieve their goals and objectives and remain competitive in the market. Given that information technology plays a pivotal role in shaping an organization’s success, it is important for information managers to understand various organizational strategic options and how they can be leveraged by an organization to gain competitive advantage. While there are several conventional options for organizational strategy, an organization that explores unique strategies ultimately gains competitive advantage in the marketplace.

Options for Organizational Strategy

Lynch (2018) emphasizes three fundamental strategic options available to an organization, including cost leadership, differentiation, and focus strategies as proposed by Porter. The cost leadership strategy allows a company to gain competitive advantage in the industry by being the lowest-cost producer. An organization that pursues this strategy sells its products at relatively lower prices than those of competing firms while still maintaining the industry standard, thus making profits. The ability to offer lower prices is derived from a company’s ability to operate on lower costs at every stage of the value chain, making it possible to still make profits for low-priced products or services.

A differentiation strategy involves creating unique products or services that are perceived as superior by consumers in the market (Henry, 2018). Thus, an organization is able to charge higher prices when its products or services meet customer expectations better than what competitors offer. Companies differentiate their products or services in a variety of ways, including offering better levels of services, better performance or using luxurious materials. Essentially, customers are prepared to pay more for distinctive high quality products and services that meet their expectations more closely.

            A focus strategy allows an organization to focus on a specific niche in the market place and develops products or services that target that market segment (Henry, 2018). The segment may be defined by a specific product line, geographical market, or a particular customer group. (Lynch, 2018) posits that companies that adopt this strategy may further use a cost focus approach or a differentiation approach to seek a cost advantage or differentiation in the target market respectively.

Examples of Companies that Follow the Selected Strategies

            Walmart, RyanAir, and McDonalds are examples of companies that implement cost leadership as a generic strategy. Apple, Tesla, and Nike are companies that implement a differentiation strategy to set themselves apart from other companies offering similar products in the market. Lastly, Rolex, Rolls-Royce, and Ferrari are examples of companies that focus on particular niches in the market place.

A Description of how Three Companies used their Strategies for Competitive Advantage

            Walmart’s competitive advantage is derived from different factors but the leading driver is its cost leadership strategy (Gooderham et al., 2019). Since its establishment, the company adopted cost-saving accounting strategies and continues to develop these strategies, building up its competitive advantage over time. For instance, the company buys directly from producers and suppliers in bulk, acquiring those products at relatively lower prices.  Additionally, it manages its logistics, thus controlling operational expenses and saving money. Reducing costs at every stage of the supply chain enables it to sell its products at relatively lower prices than competitors.

            Apple Inc. has continued to follow a product differentiation strategy since the 1980s (Daim &Meissner, 2021). The company manufactures differentiated products such as Macintosh home computers, iPod music players, and iPad and iPhone mobile devices that target a section of the consumer market. This differentiation enables the company to charge premium prices for its products, and helps the company capture market share from its competitors and grow the overall demand for its products.

Rolls-Royce is a niche player in the global car market offering products that cater to a small market segment with a penchant for quality, prestige, and engineering excellence (Daim & Meissner, 2021). It represents a good example of a focus differentiation strategy targeting buyers from the ultra-luxury segment of the market. Through its luxury automobiles, the company has positioned itself as a symbol of excellence and prestige appealing to high-end consumers who seek status symbol and unparalleled quality.

Description of how one would Employ a Unique Strategy for Apple

            Apple Inc. can implement market penetration as a viable strategy to increase its market share within the existing market and enhance its competitive advantage (Griffin, 2022). For instance, the company can bundle its products and offer discounted prices for purchasing apple devices together, such as a bundle for iPhone, iPad, and Apple watch. The company can also adjust the prices of its products through promotional pricing and periodic discounts to make them more appealing to a larger customer base. Lastly, the company can also enhance its market penetration strategy by expanding its distribution channels to reach new market segments and regions without moving out of its current range of products.

Conclusion

              The development of strategic options aims to explore various options available for organizational strategy and is a fundamental part of the strategic process. Porter proposed three generic strategies open to any business including low-cost leadership, differentiation and focus strategies. Although such rational approaches are usually used to develop strategic options, in practice, it is important to develop creative options to ensure that the organization has an edge over its rivals. Continuous development of creative strategic options builds a company’s competitive advantage and helps it achieve business growth over time.

References

Daim, T. U. and Meissner, D. (2021). Innovation management in the intelligent world: cases and tools. Cham: Springer.

Gooderham, P. N., Grøgaard, B., and Foss, K. (2019). Global strategy and management: theory and practice. Cheltenham: Edward Elgar Publishing Limited.

Griffin, R. W. (2022). Management. Boston: Cengage.

Henry, A. E. (2018). Understanding strategic management. Oxford: Oxford University Press.

Lynch, R. L. (2018). Strategic management. Harlow, England: Pearson.

 

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