The impact of a company’s strategy on logistics

A production company’s top-executive leadership bears the responsibility of developing an overarching strategy that sets the business’ future course. Among other issues, these managers will decide whether the company will venture into new markets, develop new products or reduce its investments in particular areas. Most strategic decisions have a direct impact on logistics.

BCG matrix and its impact on logistics

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Growth, stabilization or reduction as a strategy

Overarching corporate strategies are geared toward the development of the entire company and encompass its overall business activities. Depending on the development goals, these strategies can be divided into growth, stabilization and reduction strategies. These strategies - depending on their form - have different effects on logistics and, as a result, require adjustments to be made to logistics systems.
Portfolio concepts play a significant role in evaluation of the overarching corporate strategy. They are based on the assumption that the variety of strategic variables that can be determined with the help of corporate and environmental analyses can be condensed into two key factors: an environmental component and a corporate component. The company’s product-market combinations can be classified by means of a matrix that is created on the basis of these two strategic success factors.
The BCG matrix is probably the best known such matrix. It uses market growth as its environmental component and relative market share - in relation to the market share of the strongest competitor - as its corporate component.
Direct effects on logistics can be derived from the four boxes of the market growth/market share matrix [1].

	Star Basic strategic rules Maintaining relative market share Keeping sufficient funding available Impact on logistics Optimizing material flow while expanding production capacity Optimizing production-management systems Optimizing supplier/customer service Optimizing purchasing management Optimizing product-distribution systems
	Question Mark Basic strategic rules Maintaining relative market share Exploiting cost-cutting potential Releasing funds Impact on logistics Maintaining supplier/customer service Rationalizing all logistics functions and systems Rigorously executing inventory management and valuation policies “Consciously“ raising productivity
	Cash Cow Basic strategic rules Gaining relative market share Accepting losses Impact on logistics Searching for production sites Conceiving / expanding goods-distribution systems Improving delivery service Focusing logistics on special market segments
	Poor Dog Basic strategic rules Abandoning hopeless products Minimizing losses Impact on logistics Minimizing inventories Maintaining delivery service in only selected market segments Minimizing goods-distribution costs