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Types of Business Strategies

Updated on October 13, 2010

Business Strategies

Various authors have proposed various strategies for effective business. Each has its own unique pros and cons. When managers adopt any one of the strategy they have to tailor it according to their own business requirements. Michael Porter’s strategies for business have been very famous which includes: differentiation, focus and cost leadership management strategy. 

Business Success lies in Proactive Approach

Types of Business Strategies

Proactive Approach:

A proactive approach looks for problems that can occur in the marketing environment and before the problem actually occurs a solution is sought out. A proactive approach is also called as opportunity seeking approach. Companies that follow proactive approach do not look at the problem as only a problem but an opportunity to become successful. Companies that follow differentiation strategy are usually based on this approach. In today’s competitive business environment staying stable and finding new niches in the market is not an easy task. Most of the new business demolish within the first year of beginning because they cannot compete with the big guns. Look around yourself most of the big businesses that have made their name and are quite successful are the ones who follow proactive approach. They find new markets and even develop markets by bringing into the markets new and innovative products. Innovation thus has become a key to success in modern business terminology.

Most of the time companies give time to their clients by conducting surveys on regular basis in order to know about the customer needs and to plan strategies accordingly.

1. Incremental Innovation:

An incremental innovation is an innovation that is brought about in a product that is already available in the market. The features of the products are enhanced in one way or other or else the manger may bring changes in the product by changing its price or in promotion.

2. Original Innovation:

An original innovation is one in which an altogether new product is launched in the market which has all new features which replaces the previous products. When Sony launched its first walkman it brought a new era of portable music and later on many other portable music systems and gadgets were introduced by other companies and Sony as well.

Reactive Approach:

In reactive approach the manager may only react to a situation if it is inevitable. In this case the organization will try to have a peaceful environment for the business and any change in environment is taken as a problem and not as an opportunity. Companies that follow cost leadership strategy are usually following reactive approach because they reduce their cost to reduce the price of the final product. With reducing cost they cannot ensure innovation approach. They have limited budget in which they usually avoid risk taking.

Advantages of Proactive Approach:

  • In proactive approach the organization can easily make its niche in the market.
  • Companies repute is ensured with proactive approach.
  • Proactive approach ensures long-lasting business relationships.
  • Customer satisfaction is at maximum.

Advantages of Reactive Approach:

  • It avoids risk.
  • Small companies can better prosper with this approach.
  • It gives steady success but once the company is established a selected group of consumers especially the mediocre will be successful with it.


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    • gulnazahmad profile image

      gulnazahmad 6 years ago from Pakistan

      I am sure gonna read this hub of yours and thanks for the comment.I definitely agree that business environment is quite competitive and we need to be well informed in order keep with the pace of business change.

    • Suppliers profile image

      Suppliers 6 years ago from USA

      Nice hub and wonderful information about business strategies and it's essential in today's competitive work environment to be informed about all these business strategies and adopt the best one regarding overall business environment. I personally prefer pro-active approach but it doesn't always suitable especially during the times of recession. I have also written a hub about this very topic at and I hope that this can also be helpful for readers of this topic.

    • profile image

      universty of lahore 6 years ago

      proactive approach is definitely one f the best ways of staying ahead!!!!good job