Management in the conditions of market segmentation is associated with certain specifics of the enterprise. In other words, the specialization of the company is determined by the number of sectors of the economy that it serves. At the same time, a situation is very common when enterprises operate in one segment. In this case, it is called a strategic economic zone. SZH is always a separate segment in which activities are conducted (or is it just planned to get access to this area).
general information
Well, let's move on to the main subject of the article. So what is a strategic economic zone? SZH-organizations - what are these structures? What are they characterized by? Strategic management zones have certain qualitative and quantitative parameters. The main ones can be mentioned:
- Dynamic characteristics of demand (decreasing, stable, growing).
- The company's competitive position in the market segment.
- Capacity SZH, which can be characterized by the volume of current demand.
- The volume of sales expected in the current and future periods.
- Actual (in case of activity) and forecast values of profit, profitability, as well as all other necessary indicators.
And what does it give?
Strategic segmentation and analysis of the attractiveness of the strategic business zone allows us to formulate specific approaches arising from their characteristics and the company's ability to act in a certain way in the market. But in any case, it is necessary to take into account the features of the modern environment. Although for enterprises that specialize in one product, it is one and the same. In such cases, a strategy of concentration (focusing, specialization) in a particular area of activity is chosen. It should be borne in mind that in this case there are both disadvantages and advantages. For example, multidisciplinary and diversified enterprises have a common strategy, which is the union of a certain set of SZH. At the same time, the inherent disadvantages and advantages of the individual components are incorporated into it. Additionally, this situation requires the use of more advanced management methods.
About the formation
The traditional approach provides for highlighting the strengths and weaknesses of the enterprise, after which the boundaries of its activities are determined. In this case, you can safely assess the limits of diversification and growth. But modern conditions require better approaches. Strategic business areas include segmentation in order to highlight a part of the environment in which enterprises can sell their products. This is a natural result of the formation of a whole group of markets, each of which has different perspectives.
Therefore, the very first stage when evaluating activities in strategic business areas is the allocation of various segments. Then they are investigated, and the architecture of the enterprise and its current products are not taken into account. As a result, an assessment is made of the attractiveness of the strategic business area for a particular business entity in terms of organizing activities, increasing output, as well as revenue and profits. These data are needed in order to solve a number of applied issues of enterprise functioning, for example, to assess competitiveness.
Small workshop
It’s hard to talk dry and get an understanding. Especially when it comes to strategic business areas. An example will help to understand the practical implementation of the subject of the article. Suppose we have an enterprise that operates in several markets. At the same time, consumers decide to purchase certain goods regardless of the purchase of other products of this company. In this case, the cross elasticity of demand acts as a criterion for the relationship between markets. It shows how much the sale of product B will increase if the price of product A is raised by one percent. If the level of cross elasticity exceeds 0.2, then it is difficult to talk about the autonomy of the markets. It is rather an activity on different segments of one whole. Therefore, initially it is necessary not to determine the industry, but to develop an idea of the totality of the various types of activities that the enterprise is engaged in.
About meaning
The formation of strategic areas of the organization’s management is important from the perspective that this is the economic space in which the identification, enhancement and implementation of competitive advantages is carried out, on which the viability of the company depends. The most important property in this case is the homogeneity of the object, which can be characterized using parameters. Their combination should allow distinguishing SZH from one or several market segments. This concept in the formation of the strategy allows you to:
- Purposefully analyze various levels of the enterprise.
- Provides opportunities to rationalize the organization while diversifying its activities.
- Helps to identify the interaction of the enterprise in different industries.
- Reduces the complexity of preparing a developed and adopted strategy.
Achieving Well-Being
To conduct a successful business, you need to take care of the benefits. With their help, you can acquire the necessary resources in the market of factors of production and successfully compete with other companies. Here the issue of quality comes to the fore. If there are good factors of production on the market, this allows you to get significant competitive advantages in your strategic economic zone. In this case, it is necessary to pay attention to the following issues:
- Finance.
- Labor
- Materials (components).
For example, if we are talking about the financial market, you should pay attention to the reliability of the enterprise, high (sufficient) return on investment, punctual loan servicing. In the case of labor resources, the benefits are social guarantees, higher wages, borders and working hours, the validity period of the labor contract. That is, with a careful and thorough approach, all the components can be subjected to a detailed classification. And this plays an important role in achieving the well-being of the company.
What do they pay the closest attention to?
This is currently the products of the enterprise. Strategic segmentation and the allocation of strategic economic zones usually involve the formation of a list of parameters that allow to characterize the state of affairs and take into account aspects of the organization of sales of goods. They should give a constructive-technological concept of:
- Distinctive features of the products that are created within the strategic economic zone.
- Competitive advantages available to partners or customers of the enterprise.
The analysis also allows you to:
- Determine the rational scale of output for the organization.
- Assess the value of production profitability and costs individually and as a whole at the enterprise.
But this is far from all that one should know about activities in strategic economic zones.
Role analysis
Research and analysis of the situation allows us to evaluate the effectiveness of the used pricing strategy, trademark, advertising, distribution channels. In addition, analysis is needed to justify investment and innovative solutions that are closely related to updating the enterprise’s products and its production base. It is difficult to successfully implement it without a well-developed financial strategy, as well as without a competent personnel policy. Ultimately, the totality of these points allows you to identify and maintain competitive advantage. In this case, the criteria used during the analysis should be mentioned:
- Technological capabilities;
- Competition factors;
- Unified strategic planning;
- Appointment of products;
- Relatively close strategic goals;
- Common key success factors.
Specific moments
It should be noted that when strategic economic zones are evaluated, geographic reference to a specific region of production and marketing is significant in terms of importance. Sometimes the enterprise is located near the point of sale, time it is removed from it. This factor is crucial both for the industry as a whole and for companies that operate in the same field. The same considerations apply to the markets of factors of production, which are capital, labor and materials. As a result of the interaction of an array of different moments, it is often not the coincidence of the physical location of the enterprise and the sales area of its products.
Development and evaluation
The definition of a strategic economic zone should always include a characteristic of a certain type of demand. In addition, it is necessary to include the creation, production and sale of competitive products. All these important points should be worked out by the strategic economic center. He is an intra-company organizational unit, which is responsible for the development of strategic positions of the enterprise in one (several) business areas. This allows you to solve issues with promising nomenclature and the formation of their own architecture, optimal for the implementation of tasks. This concept allows you to distribute the structural units and business units of the enterprise (workshops, technological and design services, production, sales units).
Highlighting the target audience.
Victory loves preparation. A high-quality approach to solving the tasks in many ways allows for future success. In this case, an adequate definition of the target market segment is very important. This is the name of the set of consumers who differ in the same type of reaction to the product they offer. This approach allows you to clearly outline the boundaries of activity. When studying the strategic economic zone, it is always necessary to assess the growth prospects, which are associated not only with the pace of change, but also with the features of the product life cycle, product group, the market itself or its segment. It should be noted that there is a pronounced downward trend. So, the life cycle of technology and goods is reduced. This is due to the acceleration of scientific and technological progress, increasing the efficiency of enterprises, better promotion.
Conclusion
So it was considered what the strategic economic zones are. Let us briefly go through their designation once again. SZH - are certain market segments that are of great importance for the enterprise in terms of achieving satisfactory results. A careful choice of the field of activity and allocation of the necessary resources is what the top managers of the company have to decide.