Every business owner or manager has key objectives and goals they want to achieve to drive the success of the business. The most efficient and cost-effective way to reach those goals is to make and follow a carefully crafted plan of action – otherwise known as a business strategy. Read on to find out what is involved in a business strategy and how it can help your business thrive.
What is Business Strategy?
A business strategy is a clear set of plans, actions, and goals that outlines how a business will compete in a particular market, or markets, with a product or number of products or services. It is a powerful tool for helping you reach your business goals, defining the methods and tactics you need to take within your company to stand out above the rest.
Types of Business Strategy
Generic Strategy
A generic strategy is a general way of positioning a firm within an industry. Focusing on one generic strategy allows executives to concentrate on the core elements of firms’ business-level strategies and avoid competing in the markets better served by other generic strategies.
Cost Leadership
Cost Leadership involves being the leader in terms of cost in your industry or market. Simply being amongst the lowest-cost producers is not good enough, as you leave yourself wide open to attack by other low-cost producers who may undercut your prices and therefore block your attempts to increase market share.
Differentiation
Differentiation involves making your products or services different from and more attractive than those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support, and also the brand image that your customers value.
Focused Cost Leadership
A focused cost leadership strategy requires competing based on price to target a narrow market. A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Instead, it charges low prices relative to other firms that compete within the target market.
Focused Differentiation
A focused differentiation strategy requires the business to offer unique features to a product or service, and it must fulfill the requirements of a niche or narrow market.
Importance of Business Strategy
- A business strategy helps you identify the key steps to take to reach your business goals
- The strategy allows you to identify and evaluate your company’s strengths and weaknesses
- A business strategy improves efficiency by allowing you to effectively allocate resources for your business activities
- Your business strategy will help to define how close you are to reaching your goals
- A strategy will help you focus on capitalizing on your strengths, using them as a competitive advantage
Business Strategy Components
Vision
A vision for the direction of the business helps create clear instructions.
Core Values
Agreement of core values from top-level executives and departments guides the business strategy.
SWOT
In-depth SWOT (strengths, weaknesses, opportunities, and threats) analysis can direct the business strategy.
Allocations
Allocating persons responsible for strategy tactics saves time and effort.
Resources
A resource allocation plan states where to find resources and who is responsible for doing so.
Evaluation
Including evaluation and tracking methods to measure efficacy is vital to assess the business strategy performance.
What Makes A Good Business Strategy?
- Flexibility enables responses to changes in the external environment by committing the necessary resources
- Adaptability to react effectively when business and environmental factors change unexpectedly
- Anchored in up-to-date research to keep up with trends and drive the business ahead of competitors
How to Devise a Business Strategy
- Having a clear leadership vision is key to planning a business strategy
- Supportive company culture is a key driver to implementing a successful business strategy
- A clear marketing plan is an essential concept in devising a business strategy
- A strong and inspiring management team is necessary to implement your business strategy
- You also need effective and efficient business systems to execute your business strategy
- You need plenty of strategic resources that give your business the advantage and are difficult to imitate
The execution of strategic business planning requires discipline, and it is the responsibility of senior executives to promote processes that keep a team focused on the prize. Following your comprehensive business strategy will help you achieve business goals and drive success.
Sources
https://www.imd.org/imd-reflections/reflection-page/business-strategy/
https://www.indeed.com/career-advice/career-development/business-strategy-examples
https://www.divestopedia.com/definition/4906/strategic-flexibility
https://smallbusiness.chron.com/strategic-adaptability-78216.html
https://opentextbc.ca/strategicmanagement/chapter/understanding-business-level-strategy-through-generic-strategies/
https://granite.pressbooks.pub/ld823/chapter/13/
https://www.indeed.com/career-advice/career-development/differentiation-strategy
https://smallbusiness.chron.com/three-basic-strategic-resources-business-47141.html
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