Analyzing Strategy Shifts

All the living things in the nature follows a very simple, yet very difficult rule of "The Survival of the Fittest". The same applies to the companies and even industries in the world of business, be it Global or Domestic.
In this era where the distances between the nations shrinks year by year, surviving in business is the proirity of any company.

Thanks to the recent recession, although it hit hard on the nations it has definitely helped to open up a new chapter, and companies have emerged much stronger than ever before. All those who couldn't, perished.

But a lot of things goes into such companies which have made them stronger. The first thing is the strong ethical practices the company has followed in business. Secondly, it's about bringing innovation in their strategies. Thirdly it's the "Out-of-the-box" thinking that have really made them stronger in the market.

A lot of strategies has been deployed by companies including reducing the cost to companies in the areas like
restricitng their investments in newer venues, tightening their supply chain, and the most rampant was lay-off of employees based on their performance, putting a halt to their salaries, and incentives.

This has led to the classification of companies into the category of four. For this classification the allocation of following resources are considered.
1. No. of employees
2. R&D Expenses
3. SG&A Expenses ( Sales, General and Administrative Expenses)
4. PP&E ( Plant, Property and Equipment Stock Expenses)
5. COGS Normalized by Sales
6. CAPX

The classification of the companies are:

1. Prevention focused companies:- which cut back on six resources compared to their competitors and hadn't increased expenditure on any one of them more than their competitors had.

2. Promotion focused companies:- which had increased expenditure on at least one of the six and also not reduced expenditure on any of them by more than their rivals had.

3. Pragmatic Companies:- which has adopted both a prevention focus by reducing COGS or employees more than their peers and promotion focus, by increasing SG&A, R&D, CAPX, or PP&E more than their peers had.

4.Progressive Companies:- reduced COGS, but did not cut employees more than their peers and had also allocated more resources, relative to the competitors, such as SG&A, R&D, and to asset related such as CAPX & PP&E
They stay closely connected to consumer needs - a powerful filter through which to make investment decisions. 

Such Strategies increased the companies' growth rate to 5% to 10% more than their peers.

( Information Courtesy: HBR)