Understanding Three Main Types of Business Strategies

Having earned MBA and BA degrees from the University of Minnesota, Carlson School of Management, and Macalester College, Aaron Eichler is an experienced businessman and the founder of Strategic Consulting, based in Minnetonka, Minnesota. As the leader of his firm, Aaron Eichler helps clients to maximize growth, create value, increase operational efficiency, and improve business performance through an effective business strategy.

A business strategy is an outline of decisions and actions that a company takes to achieve desired objectives. Here are three types of business strategy.

Cost strategy: In cost strategy, companies seek to cut costs to a minimum level to provide customers with lower prices and boost their savings. To build an effective cost strategy, a company must have high productivity, the bargaining power to negotiate lower prices for production outputs, high-capacity utilization, effective production processes, and effective distribution channels.

Differentiation strategy: For a business to be a leader in the market, it needs to be different and unique. This strategy aims at adding unique value to the services or products so that the company stands out from its competitors. This strategy also supports quality over cost.

Focus strategy: The focus strategy is a combination of cost and differentiation strategies. The focus strategy aims at managing costs while being able to have different and unique products and services. This strategy is most effective when dealing with a particular audience or niche of products or customers.