Combination Strategy

Combination Strategy

Definition: The Combination Strategy It is the simultaneous use of grand strategies such as stability, expansion, or retrenchment. A combination strategy is simply the use of multiple grand strategies in the same company at the same time, or at different times, with the aim to increase efficiency.

This strategy is used when an organization is complex and large and includes many businesses in different industries that serve different purposes. Take a look at the following example to get a better understanding of the combination strategy.

Combination Strategy

* A diaper manufacturer company offers diapers for babies in addition to its existing product line. (Stability). It also produces diapers for the elderly, so it covers the rest of the market segment. (Expansion). The diapers division will be restructured to allow the company to concentrate more on diapers. (Retrenchment).

The company follows all three major strategies in the above example with the goal of improving its performance. Because the combination strategy includes the analysis of the business environment and the challenges faced by each operation, the strategist must be careful. You can follow the Combination strategy in a sequence or simultaneously.

A combination advantage includes a differentiation strategy. This strategy is a deliberate effort by a company to position its product or service as innovative and unique in a market full of similar products. This perception or feeling of uniqueness can be achieved by companies using a variety of methods. These methods can include clever promotions, mystery ingredients and unique packaging. Uniqueness is what makes a product or service unique.

A cost leadership strategy is another component of a combination strategy. This strategy allows a company to set out to use all resources to make its products as cost-effective as possible. These resources could include outsourcing labor or finding production plants in low-cost countries. They also may help to manage distribution costs by identifying the most efficient distribution channels. Reduced operating expenses can result in lower costs for consumers. This strategy can help companies earn competitive profits while still attracting customers because of its low price.

A combination strategy may also include a third component, the focus strategy. This is where the company chooses a specific niche to concentrate. This niche can be determined by geographic factors or by identifying a segment of the market. A company producing female apparel might choose to focus on products that are geared towards teenage girls. Segmentation is based on the belief that a company can perform better if it concentrates all its resources on a single market segment.

Combination strategies are the use of all of these strategies together. A company may decide to use both a focus and differentiation strategy simultaneously, rather than focusing on one. It could be between cost leadership and focus or any other combination that the company deems appropriate.

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