The Theory of Business Strategy in Use

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The more successful we want our company to be, the more planning we will have to do. The factor of strategy as a serious factor of any business well-being is regarded by numerous economists and thinkers. Nowadays, all steps of an average entity’s life are previously drafted, checked and explained. Due to the existing theories of strategy, which industrial leaders use in planning their activities, it important to choose the one that covers all the gaps in the given circumstances , otherwise a single gap that was left behind can become a reason for failure.

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Donald Hambrick in his works defies the understanding of strategy itself. He states that such notions as R&D budgets, capacity and pricing decisions should not be made in isolation from each other. I believe, Hambrick has a rather critical attitude towards the methods of decision making, which were sound at that time. He also mentions Porter’s scheme, calling it “narrow” and regarding such approach to strategic planning as much more simple than it should be. Strategy, in his view, obtains its meaning not from the objective theory, but from expectations and desires of every single “strategist” (Hambrick and Fredrickson 52). I see that he considers it as utmost important to put a strategy in its place. The thinker puts a strategy right after defining targets of a specific business. His basic elements of a strategy are economic logic, areas, vehicles, differentiations and staging. Together, the elements form a diamond that was created by Hambrick, as I believe, for making the theory clearer (Carpenter, Bauer and Erdogan par. 3). To every element, he attaches a question, which, due to strategic thinking, is to be answered. He also defines supporting organizational activities to cope with strategy. They include dealing with people, symbols, rewards, functional policies and processes. The given theory seems to be well-thought, rather optional and applicable. It differs from the other two with a direct approach and even stress to all the elements.

Michael Porter in his views gives much attention to a competitive market. He puts rivals in the number of key forces, on which a strategy should depend (Porter 79). These forces are substitute products, suppliers, potential entrants, customers and, as it was previously stated, rivals. In my opinion, Porter actually believes that the most determining force is a rivalry because this factor is the most highlighted in his works. Like Hambrick, Portes speculates on the meaning of “strategy” (“Michael Porter Asks, and Answers: Why Do Good Managers Set Bad Strategies?” par. 6) But if Hambrick centralizes economic logic, putting it in the middle of his diamond, Porter states relations with competitors as central in his studies. Such approach is sound in the present of economics, tending to live some of the existing theories behind, as it happened before (Warsh par. 6). Explaining suppliers, Porter explains that there is basically a choice of entering the market on a large scale, in order to be a considerable competitor, or to accept a disadvantage of cost. He also pays attention to incumbency, noting that a company may have advantages without being as large its competitors. As examples the economist names such examples as technology, access to better raw materials and geographic position, which has specific benefits (Ingram par. 8). Porter also makes efforts to separate forces from factors. It seems he wants to underline by this what is primary and what is secondary. As factors, he treats Government, innovations, industries’ growth rate. Porter’s Theory seems to be rather “aggressive”, always oriented on rivals, but it provides an efficient strategic technique, teaching entrepreneurs how to be ahead.

A different point of view on the meaning of strategy was presented by Frederic Frery. Instead of parting it into determining elements, as Porter did, he divides it into dimensions (Gonzalez par. 1). The first one is value creation, which Frery puts as a goal of any strategy. He states that the creation of value basically can be directed to either shareholders or customers, but the final result is to meet satisfy them both. Moreover, he argues that focusing on one and neglecting another may cause failure in business. If both shareholders and customers are satisfied, the balance of incomes and customers’ satisfaction is achieved. The second dimension is imitation handling. The thinker here speaks about the uniqueness of a business, stating the prevention of imitation as determining in planning a strategy. He explains that a business must be as unlikely to others as possible. I think that the importance of given dimension is somewhat exaggerated and, if to compare with Porter’s views on a rivalry, Frery is stressing the wrong aspect of competition. Moreover, he leaves out of strategy optimization, cost saving and similar decisions, noting that competitors can do the same. The last dimension is the perimeter definition. Due to Frery, two questions are to be answered here: what is the business and where it stands in the network of value. After defining that, a way to a group of strategic decisions is opened. These are refocusing, outsourcing, diversification, integration and others. Frery’s theory seems to be much weaker than those of the previous economists. It does not provide a guideline for all important aspects and decisions of businesses’ lives.

For an example of market strategy fulfillment was selected a company “Mary Key”. The business of the given company deals with selling beauty and body care products (“The Marketing Strategies of Mary Key Products” par. 9). A feature of the company’s marketing is presenting the product in a way to create desire not to use the product, but to grant it as a gift to friends, relatives and beloved ones. This approach is relatively new to the world’s markets, so we can link it to the uniqueness dimension of Frery. I regard it as one of the key decisions determining the company’s success. Another feature is the detailed work with every customer in trade centers of the given business. Every customer feels privileged this way, and that benefits to the loyalty to “Mary Key”. Regarding customers’ benefits is an important issue (Berry par. 2). This is precisely what Porter talked about, explaining demand-side scale benefits. Another way of making value was a set of distributing channels. The method of direct selling with an ability to purchase products during one-on-one or group consultations and phone calls allows the entity to be ahead of its competitors. As the benefits of this strategy, we can name convenience, speed and access to the information of comparative pricing, which is another point of Porter’s theory that he uncovered in his view of distribution channels.

All in all, “Mary Key” is now a world-famous entity not in the last instance because of its strategic planning, creating value for customers by caring about them. The marketing strategy of the business seems to be more alike to the Porter’s way of thinking, and it gave the desired fruits. As for Porter himself, I find his views the most compelling and his methods the most detailed and efficient.

Works Cited

Berry, Tim, Focus on Customers’ Benefits. 2015. Web.

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Carpenter, Bauer and Berrin Erdogan, Formulating Organizational and Personal Strategy with the Strategy Diamond. 2015. Web.

Gonzalez, Victor, The Fundamental Dimensions of Strategy by Frederic Frery. 2011. Web.

Hambrick, Donald C., and James W. Fredrickson. “Are You Sure You Have a Strategy?” Academy of Management Executive 19.4 (2005): 51-62. Print.

Ingram, David, The Advantages of Geographical Organizational Structure. 2015. Web.

Michael Porter Asks, and Answers: Why Do Good Managers Set Bad Strategies? 2006. Web.

Porter, Michael. “Five Competitive Forces That Shape Strategy.” Harvard Business Review 86.1 (2008): 78-93. Print.

The Marketing Strategies of Mary Key Products. 2015. Web.

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Warsh, David, The Rivals. 2015. Web.

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