Companies have a number of different options as they chart their course, seeking to maximize their advantages and limit their liabilities. Two of the major strategies that companies can follow are deliberate strategies, which consist of a systematic course of action that is pursued to allow a company to reach a desired object of goal. Another basic strategy approach is that of the emergent strategy, which involves a company's responding to the particular conditions and dynamics of a particular situation. This paper describes three companies (in three different sectors) that are pursuing a deliberate strategy and three that are pursuing an emergent strategy.
Deliberate Strategy deliberate strategy may be seen as one that is initiated from within a company and that accords with the company's intrinsic goals. Of course, it is unlikely to be the case that any company can ever pursue what might be considered to be a perfectly deliberate strategy given that any new entrant into a market will always be affected by the marketplace as it is currently structured. However, it is certainly true that some companies pursue strategies that are close to being fully deliberate.
An example of an apparel company that is pursuing a deliberate strategy is the women's clothing company CP Shades. While the clothing that this company produces and sells in its stores is relatively expensive it is also relatively casual in look: The company aims its wares at professional women in occupations that allow them to present themselves creatively in the workplace. The company, by selling its clothing only in its own stores and by creating a distinctive and almost unvarying look (with only the palette of the clothing changing) from year to year has created a clothing universe that is entirely separate from all other clothing stores. It does not define itself vis-a-vis other brands or seek to compete with them. Rather, it defines itself vis-a-vis the philosophy and needs of its clients.
A food that has pursued a deliberate strategy is Nutella, which is a hazelnut and chocolate spread used in sandwiches and desserts. The company has only recently begun to market its product in the United States and has gone about this process as if Americans had been waiting all of their lives for a hazelnut and chocolate spread and was simply - until that first taste of Nutella - unaware of this fact. Rather than compare itself to peanut butter and seek to compete within the established market of sandwich spreads (which would have been an emergent strategy) Nutella has presented itself as something entirely (not merely partially) new.
This strategy has proven to be relatively successful:
Although Nutella sales have shown double-digit increases for many years, it's apparent that there still is a lack of awareness for the product and its uses. Generally, Americans consider Nutella a snack or dessert spread on fruits, pretzels, toast and crackers or used in recipes. Marketing studies consistently have found that consumers' purchases of Nutella dramatically increase after trying the product. And, brand adoption takes place after three to four purchases. Therefore, sampling and product demonstrations (in-store and elsewhere) as well as couponing have been critical to marketing efforts (http://www.prssa.org/resources/bateman2003-info.asp).
A health and beauty aid that is being sold through a deliberate strategy is Celestial Seasonings tea. The company has combined a number of different marketing concepts - primarily aromatherapy, hot-drink bonanza started by Starbucks, and the politics of agriculture - to create a product that stands by itself. Celestial Seasonings does not market itself as the "Starbucks" or the "Peet's" of the tea world, however. Rather, it markets itself as the only product that combines sensual pleasures, responsible environmental politics and an ethic of self-care in as effective a way as it does.
The company's own description of its teas refers only to its own virtues, declining to compare them to other beverages:
At Celestial Seasonings, we are committed to providing the highest quality, most environmentally responsible product possible. We know that you are concerned about what you and your family eat and drink, so we want you to know what makes Celestial Seasonings teas so special.
Our teas are all-natural, and we use natural flavors when needed. Our decaffeination process is safe and environmentally friendly, and we never use irradiated botanicals in our teas (http://www.celestialseasonings.com/whoweare/csdifference.php).
Each of these companies presents its products as unique, not merely one choice in a crowded field.
An apparel company that is currently using an emergent strategy is Vans, which is continually shifting its strategy. In the arena of youth fashion in which Vans operates, producing shoes as well a clothes for the segment of the youth market that associates itself with skateboarding, being the "in" label is the most important thing. It is the most important thing for the company but it is also the most important thing for those who wear Vans products. There is actually relatively little that a company can do to guarantee this "in" status: Such a designation as being in is made by the young men (and some very few young women) who identify with this brand. It is consumers who make a company's products "cool" - even as (of course) they are engaging as advertisement for that company, thus necessitating the constant shifts.
A food company that is using an emergent strategy is Coca Cola, which is constantly setting its course not only to match what its consumers want but what its archrival, Pepsi, is coming out with.
Finally a health and beauty company that is pursuing an emergent strategy is INAMED, a firm that manufactures silicone breast implants and that in reintroducing them is responding to the recent legal challenges to their having been banned for use in the United States.
In a number of important ways those companies that offer services are very similar to those that offer tangible products: Both types of companies (and of course a number of companies offer both goods and services) have to compete with other, similar firms to attract customers, both are bound by certain federal, state and local regulations (both paying a minimum wage, for example, and having proper business licenses), both must seek to balance innovation with continuity.
However, there are also important differences in terms of the effects of situational factors on service-related as opposed to product-related businesses. This paper explores three of those, emphasizing the fact that overall service-sector companies are more subject to the influence of situational factors.
1. Service-sector industries are more subject to the influence of geography, one of the key situational factors simply because service providers have to be located where the service itself is needed. Companies that provide a tangible product, on the other hand can relatively easily locate, and often do. We can see this distinction if we look at medicine (which is a service industry as well as a science and a profession) and compare it to clothing manufacture.
One of the reasons that health-care costs have risen so dramatically in the last generation is that the business aspects of medicine are highly constrained by situational factors. In order to provide health care for people living in Manhattan, for example, one has to pay rent or mortgage and taxes at New York levels and one has to pay one's staff at a sufficiently high level to allow them to live in New York. Other costs - such as insurance and utilities must be paid at local rates. All of these geography-related factors tends to drive up the cost of health care because a hospital or a clinic cannot simply decamp to a place where it is cheaper to provide medical services. (There are other reasons why medical costs have gone up, of course, but this is an important element of them.)
The rising costs of education and especially of post-secondary education is another example of how geography tends to affect service-sector industries. (Again, although colleges do like to think of themselves as being the same as for-profit companies in many key ways they are.)
In contrast to an organization like a clinic or a college, we might look at a company like the Levi jeans company, which just closed its last U.S. manufacturing plant and now makes all of its products outside of the U.S. - even as it continues to sell to customers both inside of and outside of the United States. A company that makes tangible goods has the option to make those goods wherever it is cheapest to do so: This accounts for the fact that nearly all clothing worn in the United States is made in other countries where the labor costs are lower. Of course, American consumers have the option of retaliating against companies that move out of the country and take American jobs with them, but this has not in fact generally been proven to be what consumers (eager for spiffy goods at cheap prices) are inclined to do.