It is the resolution of the business as it is the roadmap that drives to the desired goals. Any error in this roadmap can lead to getting lost in the multitude of crushing competitors.
Significance Of Business Strategy
A business goal without a plan is just a thought. It is more limited to a gamble if you join the market without a well-planned strategy. With the rise in the competition, the value of the business strategy is becoming apparent. There’s a considerable improvement in the types of business strategies adopted by the businesses.
Reasons For a Business Strategy
- Planning: Business strategy is a component of a business plan. While the business plan establishes the goals and objectives, the strategy furnishes you with a plan to fulfil those intentions.
- Strengths & Weaknesses: Most of the time, you get to know about your natural strengths and weaknesses while forming a strategy. Moreover, it also assists you to capitalise on what you’re good at and apply that to overshadow your flaws (or eliminate them).
- Efficiency & Effectiveness: Every step is outlined, every resource is earmarked, and everyone comprehends what is to be done; business activities grow more efficient and productive automatically.
- Competitive edge: A business strategy concentrates on capitalising on its strengths and using them as a competitive advantage to position the brand uniquely. It provides identification to a business and delivers it novel in the eyes of the client.
- Control: It determines the path to ensue and interim goals to be achieved. It makes it easy to control the activities and see if they are going as planned.
Business Strategy Levels
Activities of employees, partners, and stakeholders of the company try to fulfill a single business objective. Various business strategies define these according to the level in the organization. Business strategies can be categorized into three levels –
- Level 1: The Corporate Level is the highest and most broad level of the business strategy. It establishes the mission, vision, and corporate aspirations for everyone.
- Level 2: The Business Unit Level is a unit-specific strategy that differs for different business units and aligns their objectives with the overall business objective defined in the corporate level strategy.
- Level 3: The Functional Level is set by diverse departments of the units. The departments comprise but are not restricted to marketing, finance, sales, operations, CRM etc. & are limited to day-to-day actions and decisions.
Components Of A Business Strategy
While an aim is defined explicitly in the business plan, the strategy answers all the what’s, where’s, when’s, why’s, who’s, & how’s of fulfilling that objective. Here are the critical components of a business strategy.
Mission, Vision, & Business Objectives
The main focus of a business strategy is to fulfill the business objective. It gives vision and direction to the business with clear instructions of what and how it needs to be done. It also sets the responsibility for it.
- Core Values: It also states the ‘musts’ and ‘must nots’ of the business, which clarify most of the doubts and give a clear direction to the top level, units, and departments.
- SWOT: A SWOT is strengths, weaknesses, opportunities, and threats analysis. It is a rundown of the company’s current situation. The company can make use of and the weaknesses and threats which the company should be wary of.
- Operational Tactics: Unit and functional business strategies get deep into the operational details of how the work needs to be most effective and efficient. It liberates a lot of time and effort as everyone knows what needs to be done.
- Resource Procurement & Allocation Plan: The strategy also answers where and how will you procure the required resources, how they will be allocated, and who will be responsible for handling them.
- Measurement: Unless there are no control measures, the viability of a business strategy can’t be adequately assessed. A good business strategy always includes ways to track the company’s output and performance against the set targets.