Ans-4

The previous sections have examined the role of strategy in management and looked at
common frameworks for analyzing the external and internal environment of business
organizations. But what are the specific steps in the strategic management process?
How do managers decide what to do, when to do it, and make sure it is happening the
way they want? This is what the strategic management process is all about.

The Strategic Management Process

The strategic management process consists of three, four, or five steps depending upon
how the different stages are labeled and grouped. But all of the approaches include the
same basic actions in the same order. A brief description of these steps follows:

Five basic strategic approaches:

1. A low-cost provider strategy:
A low-cost provider seeks to sell its products at the lowest price it can, while still making
a profit so that it can draw customers to the market. This is the broad version of the low-
cost strategy because such companies try to appeal to a broad market. For example, if
two companies make essentially identical products that sell at the same price in the
market place, the one with the lower costs has the advantage of a higher level of profit
per sale.
2. A broad differentiation strategy:
A broad differentiation strategy consists of building a brand or business that is different
in some way from its competition. It is applied to the industry and will appeal to a vast
range of consumers. For example, Starbucks goes beyond selling coffee by providing a
unique coffee experience in their coffeehouses.
3. A focused low-cost strategy:
This is a strategy where businesses selling similar products in a given
niche lower their prices in order to increase revenue and gain a competitive advantage.
Instead of compromising on value or throwing already scarce money into improving a
product, lowering costs is a better way of attracting customers. A focused low-cost
strategy is when the firm focuses on a narrow customer segment and provides low-
cost services and products. They are able to improve their costs by focusing on a narrow
market. They leverage experience, and predictability to be able to offer low-costs.
4. A focused differentiation strategy:
A focused differentiation strategy requires offering unique features that fulfill the
demands of a narrow market. Some firms using a focused differentiation
strategy concentrate their efforts on a particular sales channel, such as selling over the
Internet only.

Types of Focus Strategy

  Focused Low-Cost Strategy. ...
 Focused Differentiation Strategy. ...
 Consumers' distinctive preferences. ...
 Competitors' apathy. ...
 Profitable niche. ...
 High growth potential. ...
 Availability of different niches in the industry. ...
 Inability or unwillingness of competitors to serve a niche market.

5. A best-cost provider strategy:

Best-cost provider strategy is often called 'best-cost strategy', the best-cost strategy is
the strategy of increasing the quality of products while reducing costs. This strategy is
applied to give customers “more value for the money.” It is achieved by satisfying customers'
expectations on key attributes of products.