Here is an article to help you understand business stratagem
to fullest by answering your questions and clearing your doubts about
everything related to it.
What
Is Business Strategy?
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 the spinal column of the business as it is the roadmap
which leads to the desired goals. Any fault in this roadmap can result in the
business getting lost in the crowd of overwhelming competitors.
Importance
of Business Strategy
The value of business strategy is becoming perceptible and
there’s a huge increase in the types of business strategies used by the
businesses. Here are four reasons why a strategy is necessary for your business.
·
Planning
Business strategy is a part of a business plan. While the
business plan sets the goals and objectives, the strategy gives you a way to fulfill
those goals. It is a plan to reach where you intend to.
·
Ecological examine
Too many CEOs don’t take the time to truly know the external environment
that can have a positive or negative impact on performance. This is not to say
that leaders are not in tune with their customers, or not aware of their
competition. The question is how thorough an analysis is they doing? Jack Welch
had it right when he asked his division leaders to dig deep to understand how
things might change before they really happened. Being aware and prepared for
potential shifts in your market or industry provides the opportunity to take
action before it happens.
There is a huge opportunity for CEOs/Owners to excel in performance with
a well-crafted strategy. Bottom line, execution without strategy is
aimless. Let us know what you think of these five reasons strategy is important
and share with us some of your own experiences. We would love to hear from you.
·
Resource
allotment
One thing is clear about any company, large and
small—resources are finite. We wish they were infinite, but that will never be
the case. Strategy is about making choices. What products, services and markets
will be a part of the future and what we should not do? These types of
decisions are critical to ensuring that limited resources are being deployed to
the most promising opportunities that will provide the greatest return.
·
Strengths and Weaknesses
Most of the times, you get to know about your real strengths
and weaknesses while formulating a strategy. Moreover, it also helps you capitalize
on what you’re good at and use that to overshadow your weaknesses (or eliminate
them).
Levels
of Business Strategy
Business strategies can be classified into three levels –
Level 1: The Corporate Level
The commercial level is the uppermost and most extensive altitude
of the business strategy. It is the business plan which sets the guidelines of
what is to be achieved and how the business is expected to achieve it. It sets
the mission, vision, and corporate objectives for everyone.
Level 2: The Business Unit Level
The business entity level is a unit specific strategy which
differs for different units of the business. A unit can be different products
or channels which have totally different operations. These units form
strategies to differentiate themselves from the competitors using competitive strategies and to align their objectives with the overall
business objective defined in the corporate level strategy.
Level 3: The Functional Level
The functional level strategies are set 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 limited to
day to day actions and decisions needed to deliver unit level and corporate
level strategies, maintaining relationships between different departments, and
fulfilling functional goals.
Key
Components of a Business Strategy
Here are the key components of a business strategy.
Task, Idea, & Business Objectives
The main focus of a business strategy is to fulfill the
business objective. It gives the idea and path to the business with clear commands
of what needs to be done, how it needs to be done, and who all are responsible
for it.
Core principles
It also states the ‘musts’ and ‘must not’ of the business
which clarify most of the doubts and give a clear direction to the top level,
units, as well as the departments.
Measurement
Unless there are no control measures, the viability 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
targets.
SWOT
A SWOT (strengths, weaknesses, opportunities, and threats)
analysis is a rundown of the company’s current situation. It is a necessary
component of a business strategy as it represents the current strengths and
opportunities which the company can make use of and the weaknesses and threats which
the company should be wary of.
Operational strategy
Unit and functional business strategies get deep into the
operational details of how the work needs to be done in order to be most
effective and efficient. This saves a lot of time and effort as everyone knows
what needs to be done.
Final Thoughts
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.
