Case Study: Organizational Culture in Montenegrin Companies
Business Strategy
"Strategy is a planning decision on basic ways of achieving company's goals". According to Robbins strategy is "a broad concept of behavior which sets out manners of achieving goals". Strategy is the most important planning decision through which a company is managed, i.e. company's objectives realized. The strategy shows the extent to which a company managed to harmonize its skills and resources with the environment in which it operates. It is a dynamic process through which a company seeks to take advantage of all opportunities and avoid the dangers. In this sense, we say that the strategy is not formulated in advance, but it must be formulated.
Determining of company's strategy means choosing one of strategic options. The company needs to make the right strategic choice that will allow it to achieve its goals, and thereby take advantage of opportunities and avoid dangers from the environment. The company can do this through:
1. Positioning - meaning to position its resources and activities in such a business environment in which the influence of unfavorable factors or circumstances is the weakest.
2. The influence on the balance of given factors - representing the impact of certain factors. Namely, in an attempt to improve its positions through various types of innovations, the company can develop business in a particular industry, thereby improving its position.
3. Strategy of timely use of new opportunities. This strategy is based on the fact that a company recognizes and takes advantage of its opportunities before others do. The company will choose a strategic option that will enable it to achieve a competitive advantage. In this sense, strategic choice should be focused on:
- efficiency of capitalization, which means provide the position in the industry through cost and pricing advantage,
- differentiation of its offering in order to move the demand curve in favor of own offering through promotion of difference of its own products compared to other competitive products,
- orientation on an enough large market segment with the expectation to strengthen itself in a given market and provide a competitive position through activities marketing.
Basically, as it has already been mentioned, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus. Which of strategies will the company choose depends on the structure of industry, demand and possibilities of a company.
According to Miller and Dess a cost leadership strategy is based on abilities and expectations of the company to gain competitive advantage as a result of lower costs because the same product is offered at lower prices. In fact, it is the pretension of a company to build the position of its business within a given industry, through the possibility of gaining competitive advantages based on lower costs and selling prices. Namely, a company expects that, using economy of scale it will gain cost advantage that allows it to provide greater market share due to lower selling prices. Product differentiation represents orientation in which a company seeks to make the same product different from competitive ones through functional and aesthetic properties of the product. Doing so, the company expects to provide affection and loyalty of its customers to the brand of its products. Market Focus is a strategy that starts from the assumption that the market is not homogeneous but that is made of larger or smaller number of recognizable parts. The essence of this strategy is that a company strengthens its position by engaging in certain market segments. That is, the focus here is on the narrow market or on one enough large segment where the position will be provided through either differentiation or lower selling prices.
It is important to mention the so-called stakeholders of a company that can significantly influence the choice of business strategy of the company. They function in sense to provide the necessary resources and services for the company, and in return they expect their goals to be adequately met. The following are the above mentioned stakeholders of the company: shareholders, customers, suppliers, etc.