Having a defined plan within the organization represents a turning point when it comes to achieving the proposed objectives. The strategy is part of the daily work of the companies in their eagerness to make an impact in the market and that leads them to achieve profitability and sustainability over time.
Enrique Ogliastri, Academic Director of the program How to make a strategic plan, at INCAE Business School, explains three classic strategies used over time in companies.
This occurs when a company allocates a fundamental part of its resources to the development of a competitive capability in the same products or markets with which it is currently working. The expansion can be in market scope or in new uses for the same product.
The specialization strategy requires a strong position of the company in terms of high efficiency, an extraordinary or unassailable service, or the difficulties that another company may face to enter to compete and displace it (the sector's entry barriers). In specialization, the company obviously runs the risk of staying in one business, but it probably does so because it finds better possibilities within the sector than in other alternatives.
It consists of the investment of strategic resources to complement existing products or capabilities. Integration can be horizontal or vertical. In horizontal integration, the company completes its product lines with other similar products, such as the publishing house specializing in fascicles that decides to open a new division to produce magazines.
In vertical integration, the company allocates its strategic resources to the development of new companies that produce the raw materials or inputs (backward vertical integration) required by the company at the time; an example is the printer that decides to become a publisher. In forward vertical integration, the company invests in new activities that bring it closer to the consumer, such as the publisher that opens a mail distribution system.
It consists of the investment of the company's strategic resources in the development of new activities or businesses that are unrelated to the current ones. Often the integration strategy leads to a diversification strategy, as companies begin to operate independently and conduct operations in the open market. A company diversifies to hedge a weakness or to take advantage of available strengths.
Excerpt from the book: "Strategic Planning Manual. Seven models to make a strategic plan", written by Professor Enrique Ogliastri, Academic Director of the program How to make a strategic plan?
