“Strategy is defined as the determination of the basic long-term goals and objectives of an enterprise” (Chandler, 1990, p. 13).
As the quote by Chandler suggests, strategy is concerned with the alignment of a corporation to the market in order to achieve its long-term targets. Therefore, the adoption of a strategic approach is essential for large organisations (especially retail organisations) as it is fundamental for the development of a company and consequently its success in the long run. With increasing differentiation in product portfolios, notably in the retail industry (e.g. with retailers like Marks & Spencer or Bhs both adding food to an existing non-food offer, or the grocery supermarket chains offering clothing and other merchandise categories) companies are more frequently separating their product range into several corporate divisions, which are also known as independent, market-oriented strategic business units (SBUs). In this strategy (business strategy), the strategy formulation (i.e. how the company can achieve a competitive advantage in each area of business) is carried out by the head of each business segment. The strategic alignment of each business unit is then determined by the top-level corporate strategy, where decisions are made by the upper management. Next to these two areas of strategy formation (i.e. corporate and business unit level), strategy can equally be developed from a functional viewpoint (also known as functional strategy) when making decisions as to which marketing concepts should be used or which capital equipment the company should employ to be flexible and cost-efficient for example. Within this multi-level structure of strategic decision-making there must be a sufficient amount of co-ordination on all three levels (Megicks, 2007, pp. 484-485).
The overall strategic goal of the organisation, as Porter (1980) describes it, is to achieve “a position of sustainable competitive advantage” and therefore differentiate the value a company generates and offers in comparison to its competitors. These activities to achieve a sustainable competitive advantage should fulfil the following criteria: they should (1) be associated to an attribute with value and relate to the targeted customer segment, (2) be sustainable (not easily imitable), as well as (3) be perceived by the customer (Mintzberg, 1996, p. 88).
Table of Contents
1 Introduction and Definition of Strategy
2 Advantages to Retail Organisations of Adopting a Strategic Approach
3 Framework for Strategic Decision-Making within an Organisation
4 Conclusion
Objectives and Topics
The primary objective of this work is to examine the essential role of strategic management within the retail sector. It explores how large retail organizations align their long-term goals with market realities, utilizing specific frameworks to achieve a sustainable competitive advantage in an increasingly competitive environment.
- Theoretical definition and levels of corporate strategy
- Benefits of strategic planning for retail success
- Frameworks for strategic decision-making (SWOT, PESTEL, Porter’s Five Forces)
- Implementation of retail-specific strategic models and the retail marketing mix
- Challenges and operational requirements for effective strategic execution
Excerpt from the Book
1 Introduction and Definition of Strategy
“Strategy is defined as the determination of the basic long-term goals and objectives of an enterprise” (Chandler, 1990, p. 13).
As the quote by Chandler suggests, strategy is concerned with the alignment of a corporation to the market in order to achieve its long-term targets. Therefore, the adoption of a strategic approach is essential for large organisations (especially retail organisations) as it is fundamental for the development of a company and consequently its success in the long run. With increasing differentiation in product portfolios, notably in the retail industry (e.g. with retailers like Marks & Spencer or Bhs both adding food to an existing non-food offer, or the grocery supermarket chains offering clothing and other merchandise categories) companies are more frequently separating their product range into several corporate divisions, which are also known as independent, market-oriented strategic business units (SBUs). In this strategy (business strategy), the strategy formulation (i.e. how the company can achieve a competitive advantage in each area of business) is carried out by the head of each business segment. The strategic alignment of each business unit is then determined by the top-level corporate strategy, where decisions are made by the upper management. Next to these two areas of strategy formation (i.e. corporate and business unit level), strategy can equally be developed from a functional viewpoint (also known as functional strategy) when making decisions as to which marketing concepts should be used or which capital equipment the company should employ to be flexible and cost-efficient for example. Within this multi-level structure of strategic decision-making there must be a sufficient amount of co-ordination on all three levels (Megicks, 2007, pp. 484-485).
Summary of Chapters
1 Introduction and Definition of Strategy: This chapter provides the fundamental definition of strategy and discusses how large retail organizations align corporate, business, and functional levels to achieve long-term objectives.
2 Advantages to Retail Organisations of Adopting a Strategic Approach: This section explains why a consistent strategic approach is vital for retailers to differentiate themselves in a mature, oligopolistic market and achieve sustained competitive advantage.
3 Framework for Strategic Decision-Making within an Organisation: This chapter details the four-stage strategic process, utilizing models like PESTEL, Porter’s Five Forces, and SWOT, while discussing their application to the retail industry.
4 Conclusion: The concluding chapter synthesizes the importance of effective strategy implementation and continuous monitoring as key success factors for retail organizations.
Keywords
Strategic Management, Retail Strategy, Competitive Advantage, SWOT Analysis, Porter's Five Forces, Business Units, Corporate Strategy, Market Positioning, Retail Offer, Strategic Decision-Making, Operational Flexibility, Sustainable Growth, Market Penetration, Product Development, Diversification
Frequently Asked Questions
What is the core focus of this work?
The work focuses on the necessity and application of strategic management within the retail sector, emphasizing how organizations can align their operations to achieve long-term success.
What are the central themes discussed?
The central themes include strategy definition, the advantages of a strategic approach for retail firms, the framework for strategic decision-making, and specific retail strategies like the marketing mix.
What is the primary research goal?
The goal is to explore how retail organizations can navigate competitive challenges by adopting structured, multi-level strategic approaches to ensure sustainable market performance.
Which scientific methods are employed?
The paper utilizes a literature-based analytical method, applying established strategic models such as the SWOT analysis, PESTEL, and Porter's Five Forces to the specific context of the retail industry.
What topics are covered in the main section?
The main section covers the definition of corporate strategy, the benefits of strategic management in retail, the multi-stage framework for strategic decisions, and the practical application of these strategies via the retail marketing mix.
Which keywords define this work?
Key terms include Strategic Management, Retail Strategy, Competitive Advantage, SWOT, Porter's Five Forces, and the retail marketing mix.
How does the author describe the relationship between corporate and business strategy?
The author explains that corporate strategy sets the high-level direction, while business strategy, formulated by individual strategic business units (SBUs), focuses on achieving competitive advantage within specific market segments.
Why is the "retail offer" considered a strategic component?
The "retail offer," consisting of product (merchandise), promotion, price, and place, is identified as a critical tool for retailers to implement their strategies and satisfy customer demands in a dynamic market.
What role does the SWOT analysis play in the described framework?
The SWOT analysis serves as the foundation for identifying internal strengths and weaknesses alongside external opportunities and threats, providing the basis for selecting future strategic options.
- Quote paper
- Robert Stolt (Author), 2009, Adopting a Strategic Approach within Retail Organisations, Munich, GRIN Verlag, https://www.grin.com/document/145270
