What is business strategy?
The term ‘strategy’ has several facets. It refers to a plan or tactics in common parlance. It may be a technique used to get a specific goal. If you want to understand a strategy, you have to take the meaning in a broad sense. The term business strategy has been used by both common and business people. Business strategy can be understood as the course of action or set of decisions which support the entrepreneurs in achieving specific business objectives. A business strategy can be defined as the mixture of all the decisions taken and actions performed by the business to achieve the business goals and to secure a competitive position in the market. It is the spine of the business as it is the roadmap which leads to the anticipated goals. Any mistake in this roadmap can result in the business getting lost in the crowd of overwhelming competitors.
Business strategy is a master plan that a company executes to secure a competitive position in the market, smooth going for its operations, satisfy customers and attain the key objectives of the business. Different businesses have different goals and take different means to accomplish those goals. These means constitute the business strategies of these businesses.
Business strategy is a scheme that has developed for attaining your goal. It is the corporate intent and action, which is sensibly framed and flexibly designed with the aim of:
• Gaining effectiveness
• Activating resources
• Perceiving and utilizing opportunities
• Obtaining an advantageous position,
• Meeting challenges and threats,
• Directing efforts and behavior and
• Achieving command over the situation.
Business strategy own the top management with a cohesive framework, to learn, discover, analyze and utilize positive opportunities, to sense and meet possible dangers, to make ideal use of capitals and assets, to counterbalance weakness.
Importance of business strategy
Without a proper business strategy, you can’t achieve your desired ends. A business goal without a strategy is just a dream. If you are entering to the market without having a strategy, it is no less than a gamble. With the increase in the competition, the significance of business strategy is becoming obvious and there’s a huge increase in the types of business strategies used by the businesses. Here are 5 facts about why a strategy is essential for your business.
Business strategy is a part of a business plan. While the business plan frames the aims and objectives, the strategy gives you a way to fulfil those goals. It is a plan to touch where you want to reach. The business plan contains all about your business including sales and marketing plans.
Efficiency & Effectiveness
When every step is scheduled, every resource is allocated, and everyone identifies what is to be done, business activities become more efficient and effective habitually.
Strengths & Weaknesses
Most of the times, you get to know about your real strengths and weaknesses while shaping a strategy. Besides, it also helps you capitalize on what you’re good at and use that to outshine your weaknesses. You have to include SWOT analysis in your strategy framework.
A business strategy focuses on developing the strengths of the business and using it as a competitive benefit to position the brand in an exceptional way. This gives branding to business and makes it unique in the eyes of the buyer.
It also selects the path to be followed and interim goals to be realized. This enables it easy to control the activities and see if they are going as strategic.
The business strategy is a part of the business plan which is a part of the big theoretical structure called the business model.
The Business Model is a conceptual construction that explains how the company operates, makes money, and how it intends to realize its goals. The business plan defines those goals, and business strategies sketch the roadmap of how to achieve them.
Levels of business strategy
The business objective is realized by the effective implementation of different business strategies. While every worker, partner, and investor of the company focus on fulfilling a single business objective, their activities are defined by various business strategies according to their level in the organization.
Business strategy can be categorized into 3 levels:
1. The Corporate Level
The corporate level is the uppermost and most general level of the business strategy. It is the business plan which sets the guidelines of what is to be attained and how the business is estimated to achieve it. It sets the mission, vision, and corporate objectives for everyone. It is the long-range action plan shaped by the top management. It includes takeovers and mergers, expansion and market penetration, diversification, investment, divestment and so on.
2. The business level
The business level is a unit-specific strategy which varies for different units of the business. A unit can be different products or networks which have totally different operations. These units form strategies to differentiate themselves from the competitors using competitive strategies and to bring into line their purposes with the overall business objective demarcated in the corporate level strategy. It is like a blueprint of the entire business.
3. The Functional Level
The functional level strategies are established by different departments of the units. The departments include but are not limited to marketing, sales, operations, finance, CRM etc. These functional level strategies are confined to day to day actions and decisions required to deliver unit level and corporate level strategies, maintaining relationships between different departments, and fulfilling functional goals.
Key Components of a Business Strategy
Mission, Vision, & Business Objectives
The main focus of a business strategy is to achieve a business goal. It gives the vision and direction to the business with clear guidelines of what needs to be done, how it needs to be done, and who all are accountable for it.
The business won’t get its desired ends if you are not keeping ethics and values. Core values refer to musts’ and ‘must nots’ of the business which explain most of the doubts and give a clear direction to the top level, units, as well as the departments.
A SWOT (strengths, weaknesses, opportunities, and threats) analysis is an evaluating tool of the company’s current situation. It is a needed component of a business strategy as it exemplifies the current strengths and opportunities which the company can make use of and the weaknesses and threats which the company should be wary of.
Unit and functional business strategies get deep into the operational details of how the work wants to be done in order to be most effective and competent. This saves a lot of time and energy as everyone knows what needs to be done.
Without control measures, the feasibility of a business strategy can’t be assessed properly. A good business strategy always includes ways to track the company’s output and performance against the set goals.
Steps for creating a marketing strategy
1. Identify all target market: When you are creating a marketing strategy, first you have to define who is your real customer or your ideal target market. As per the Pareto rule 80% of the business coming from 20% of the customers. So, sensibly direct your time and energy toward those customers who are most important.
2. Qualify the Best Target Markets: the objective of this step is to further qualify and define which customer profile lights the best chances of achievement. The strategy is to place your business at the same level as the majority of the customers you are targeting. It is important to figure out who your best customers are and how to best position your company in the marketplace.
3. Classify Tools, Strategies and Methods: a market you cannot entrée is a market you cannot serve. Marketing is the process of finding, communicating and teaching your primary market about your products/services. Select a combination of tools and strategies, that when combined, increase your chances of success.
4. Test Marketing Strategy and Tools: if we are failed to verify our business assumptions, it may potentially create business problems. Set the time to test all business assumptions, especially when you are making major expenses.
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Businesses are creating its strategies on the basis of their experience and research. But when market conditions take a surprising turn, the company needs a strategic reaction to cope with emergencies. Hence, business strategies are not pre-planned; it is formulated on the basis of market trends and responses.