Essay Sample on Strategy Formulation

Introduction

Strategy formulation is an integral component in any organization for coordination, marketability, and profitability. The strategies adopted by various organizations vary as the policies and objectives are not the same. The essay will discuss multiple case studies and the approach taken by the organizations analyzed.

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Focusing on the first case study, the sales representative at the food company identified product development and differentiation as strategies that would help them achieve their targets. The reason for selecting product development was to increase sales by introducing new products to the market which are tailor-made according to the customers' need. Additionally, differentiation, in this case, was aimed at producing food products that were unique in the market to help them stand out from the rest of the competitors. The strategies adopted by the food company are crucial to support them in their growth and adding policies like backward integration would help them reduce purchasing costs in the long term, and market development would increase their presence for marketability (Rothaermel, 2015).

For the second discussion, related diversification and forward integration are the user's choice of strategy. The latter involves a business expanding its activities into product lines that are identical to what it offers currently while forward integration consists in gaining control over direct distribution or supply of products. Related diversification increases profit margins projections and competitiveness in the organization. It can also lead to new partnerships with vendors and suppliers and gives room for organizational strength for the resources required. On the other hand, forward integration is used when bilateral trading is envisioned as a long term benefit. It allows the increased effectiveness for coordination, product quality, and performance delivery. Transaction costs will also reduce, and the distribution channels will get better (Chrisman & Su, 2017).

In the third case study, the IT Company focused on market penetration, related diversification, and differentiation to drive decision making. While they are all viable strategies, putting more effort into digital marketing would enhance their presence in the digital world we live in today. Additionally, the IT Company can focus on market development by increasing the geographical area where they offer their products and services to increase sales and marketability of the company. Introducing improved or new high-quality products on the market is also very likely to help them gain new customers in an intensely competitive market (David & David, 2017).

Conclusion

The essay has discussed various business strategies, their pros and cons. Business strategies vary according to organizations and are dictated by the policies and products and services they offer. All approaches have different strengths and weaknesses, and they should be studied keenly before adopting them.

References

Chrisman, J. J., & Su, E. Y. (2017). How Does Diversification Strategy Differ among Different Types of Family Firms?. In Academy of Management Proceedings (Vol. 2017, No. 1, p. 14781). Briarcliff Manor, NY 10510: Academy of Management.

David, F. R., & David, F. R. (2017). Strategic management: A competitive advantage approach, concepts & cases (16th ed.). Don Mills, Canada: Pearson Education Inc.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education,.