When companies develop a strategy, they typically analyze environmental and industrial conditions, assess internal strengths and weaknesses, and define a strategic position based on competitive advantage. This process follows an alignment of the value chain according to the selected business model and setting of financial targets as well as budget allocations. For example, if an organization aims to become a dominant player in the mass market, it needs to focus on efficiency (exploitation) and cost reduction based on centralized decision making. If a firm instead aims to excel by constantly harvesting new opportunities and expanding its existing markets, it needs to focus on flexibility (exploration) and product innovation, which require decentralized decision making.
KeywordsStrategic Management Budget Allocation Mass Market Underlying Logic Dominant Player
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