Business Strategy

Definition: Business strategy can be understood as the course of action or set of decisions which assist the entrepreneurs in achieving specific business objectives. It is nothing but a?master plan that the management of a company implements to secure a competitive position in the market, carry on its operations, please customers and achieve the desired ends of the business. In business, it is the?long-range sketch of the desired image, direction and destination?of the organisation. It is a scheme of corporate intent and action, which is carefully planned and flexibly designed with the purpose of:

• Achieving effectiveness,
• Perceiving and utilising opportunities,
• Mobilising resources,
• Securing an advantageous position,
• Meeting challenges and threats,
• Directing efforts and behaviour and
• Gaining command over the situation.

A business strategy is a?set of competitive moves and actions?that a business uses to attract customers, compete successfully, strengthening performance, and achieve organisational goals. It outlines?how business should be carried out to reach the desired ends.

Business strategy equips the top management with an integrated framework, to discover, analyse and exploit beneficial opportunities, to sense and meet potential threats, to make optimum use of resources and strengths, to counterbalance weakness.

Levels of Business Strategy

1. Corporate level strategy : Corporate level strategy is a long-range, action-oriented, integrated and comprehensive plan?formulated by the top management. It is used to ascertain business lines, expansion and growth, takeovers and mergers, diversification, integration, new areas for investment and divestment and so forth.
2. Business level strategy : The strategies that relate to a particular business are known as business-level strategies. It is?developed by the general managers, who convert mission and vision into concrete strategies. It is like a blueprint of the entire business.
3. Functional level strategy :?Developed by the first-line managers or supervisors, functional level strategy involves decision making at the operational level concerning particular functional areas like marketing, production, human resource, research and development, finance and so on.

In business, there is always a need for multiple strategies at various levels as a single strategy is not only inadequate but improper too. Therefore, a typical business structure always possesses three levels.

Nature of Business Strategy

A business strategy is a?combination of proactive actions?on the part of management, for the purpose of enhancing the company’s market position and overall performance?and reactions?to unexpected developments and new market conditions. The maximum part of the company’s present strategy is a result of formerly initiated actions and business approaches, but when market conditions take an unanticipated turn, the company requires a strategic reaction to cope with contingencies. Hence, for unforeseen development, a part of the business strategy is formulated as a reasoned response.

Major Components Of A Business Strategy

There are five key components to help you build an effective business strategy. They include:

1. Business objective

Your business objective or mission statement identifies a gap in the market that your business hopes to address. Any business strategy you set out to implement is required to always link back to this vision. Think of a business strategy as an action plan with detailed instructions on how those responsible require to achieve the organisational goal.

2. Core values

According to the organisation's core values, your business strategy is required to communicate clear guidelines on what people are required to do and need not do. Articulating these values on paper encourages coworkers to hold themselves accountable to the organisation's standards.

3. SWOT analysis

SWOT stands for strengths, weaknesses, opportunities and threats. This analysis is integral to your business strategy, as it represents a snapshot of the company's current situation. Identifying these four key areas prepares you for challenges you may encounter along the way. It shows what strengths you can use to your advantage and exposes weaknesses you require to address.

4. Operational tactics

A business strategy needs to transform a vision and plan into action. Once you identify your resources through a SWOT analysis, you can then allocate them accordingly. Operational tactics prioritise what needs to get done now and what can wait for later. It helps you manage your time and resources efficiently.

5. Measurement

To evaluate your business strategy's effectiveness, you require to incorporate a means of tracking your performance. It works best when you divide your objective into smaller targets that you can measure regularly. For example, you can measure your output through smaller financial milestones.

Business Strategy Examples

A business strategy can highlight strengths for you to employ as a unique selling point for your product and service. Here are six examples of great business strategies:

Product differentiation

Many companies, particularly in the technology or automotive space, differentiate themselves through their innovation. To get yourself noticed using this business strategy, you require to highlight that your products are superior because of their technology, pricing, features or even design. Product differentiation is an effective strategy because it sets you apart from competitors. In return, customers are loyal to you because of the uniqueness only you can offer them.

Improve customer experience

Businesses build their reputation on exemplary customer service. Usually, companies may struggle in a particular area in their customer experience, so a business strategy focused on improving service would usually concentrate its objectives on something like online support or a more effective call center.

Cornering a younger market

Organisations see great value in tapping into customers at a young age so that they continue associating with a brand as they get older. Some larger companies buy out their competitors to gain a share of this lucrative market. Cornering a young market allows you to increase your presence in a new demographic while retaining your existing customer base.

Attractive pricing strategy

The way you price your products and services can impact the way customers perceive your business. An affordable pricing strategy is a great option to attract new customers. Pricing your products beyond what ordinary customers can afford gives an aspirational value to your brand.

Both pricing strategies are powerful, but they require a different business approach. Businesses that keep their prices low require to achieve higher volumes to be profitable. In comparison, companies who choose higher prices can maintain the exclusivity of their product while retaining a large profit margin per product.

Sustainability

As people become more environmentally conscious, the demand for sustainable products has increased as well. A business strategy that positions an organisation as a socially responsible business also demonstrates other desirable values, such as trust and integrity. Some examples of sustainable business practices include goals to reduce energy costs or to decrease the company's carbon footprint by implementing a recycling program.

Cross-sell more products

Some organisations focus on selling more products to the same customer. This strategy is popular among banks, insurance firms and online retailers. By increasing the number of products sold per customer, you can decrease your customer acquisition cost and spend less on marketing.