Successful Business Strategies

The Different Business Strategies

According to business theory there are basically four different business strategies that exist. There is the Prospector Strategy, the Analyzer Strategy, the Differentiated Defender strategy, and the Low-Cost Defender Strategy. Each strategy, if implemented effectively, making use of all favorable external factors, can make for an industry leading company. Additionally, each business strategy focuses in on a select segment of the market; therefore it is possible for two competitors in the same industry to be equally successful if they are using different business strategies to target different segments of the market.

Business Strategy Development

Take for instance the vehicle manufacturers Toyota and Tata Motors. These are two companies that do basically the same thing. They make and sell automobiles. The difference between the two is that Tata is a Prospector company entering the low-end consumer markets of the developing world. Tata is focused on providing a new (relatively speaking) technology (the automobile) to a new low-wage class of consumers in the developing world. Their vehicles are very inexpensive and target a very specific market that Toyota is not vying for.

Toyota, on the other hand, in recent years has become the Differentiated Defender of the auto industry as we know it here in the United States. For years Ford, GM, and Chrysler have been the stalwarts of the American auto industry but recently Toyota has grown to be the largest auto manufacturer in the United Sates by differentiating themselves from the big three with their early emphasis on smaller cars with higher gas mileage. Early in the current decade this trend was not forecasted by the big three US automakers, Toyota differentiated themselves and they now lead the market.

Business Management Strategy

This of course leads to the concept of the Analyzer and the Low-Cost Defender. This business strategy is well known for its goal of increasing customer lifetime value. Interestingly to the auto industry the big three auto makers, Ford, GM, and Chrysler, have all had their problems of late. One might expect them to be low cost defenders but I would argue they are acting like Analyzers as though they are mature companies they are undeveloped in certain key markets. They also are not quite financially savvy enough o be considered low-cost either as their current balance sheets suggest they can't really drop their sales tags much these days; their sales and marketing strategy is fairly limited.

Hyundai might be an excellent example of a low-cost defender as they offer a quality vehicle in the United States markets for a far lower price than the other manufacturers. Their clientele is generally different from the clientele of the mare mature companies as they don't seek as many luxuries in their vehicles as they value basic need fulfillment at rock bottom prices over the extra features of a complete and full priced automobile from the GM's and Toyota's of the world.

Each business strategy has its own strengths and they all have valid places in the business environment. So long as management employs proper total quality management and customer retention marketing and adapts its strategy to sound industry forecasting methodology then the company should succeed. Not all business strategies are the way to go obviously but identifying one specific strategy and following it is a great start.

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