Having a strategic plan is important for any systematic approach. And it becomes mandatory where you invest your money, time, and all your efforts. Thus, a business strategy is much in need of a business. It could be a small business like a coffee stall or a huge enterprise. The size does not matter here. A business strategy is required for all businesses if you want to make it large with time.
It will make your dreams come true with implementing your strategy in the right place at the right time.
The work of a business plan is to set goals for the future.
And the work of a business strategy is to find out the realistic and approachable ways to reach that goal.
Thus, without a proper business strategy, you cannot implement your business plan in reality.
Therefore, a business strategy is equally desirable for an established business, just like a start-up business.
So if you are interested, make your business strategy ready for your business then continue to read.
Here you will get detailed and complete information on business growth strategies and some successful types of business strategy.
What is a business strategy?
A business strategy is the combination of goals and actions to fulfill the goals.
A company set their business strategy to achieve their pre-planned motives, retail their marketplace, and overpower their competitors.
Thus, a business strategy is a road map for a business that leads it to its desired destination.
A business strategy explains in practical ways how your business is different from others, what are its strengths and weaknesses.
It shows how the business earns its revenue, and from where it earns margins.
So if there is any mistake in the business strategy, then the result might be a severe loss of money.
Generally, the business owners design their business strategy for about 3 to 5 years.
In the business strategy, they set some guiding principles for successful implementation, which can bring them the desired profit.
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Thus, the success of a business strategy relies not only on how you make it but also how you convince employees to implement it.
It depends on how the people throughout the organization accept it, make decisions, and allocate resources to achieve the goals.
A business strategy is more like a guidebook that advises the employees what to do and what not to, whom to prioritize and whom not to.
Why is a business strategy important?
A business strategy is a fundamental success formula for any enterprise because of the following reasons-
It helps you understand your business and your industry well.
You need to research properly and write down your research systematically.
Thus a well-researched business strategy will give you a clear idea about your business’s scopes in the market.
You will better define the core capabilities of your business in front of your employees.
You can identify and troubleshoot the weaknesses easily, and the market risks causing by them.
A business strategy will help you structure your business better so that you can focus on the right things.
This will bring the best performance in your business.
Along with you, your team members and general employees have their ideas clear on how they should perform.
The productivity and profit share will also thus increase with a proper business plan.
It retains your growth in a continuously changing world.
The market is always changing.
Thus to understand what is happening in the external world is important while making a business strategy.
The business strategy is going to guide you and your business for the upcoming few years.
Thus it needs to be flexible for changes according to the market.
Only then you will get success for the long term.
Therefore a well contemplated and flexible business plan will help your business to stand still among the uncertain changes in the market.
The advancement of television had taken the place of radio once.
And now the advancement of smartphones and the internet is taking the place of televisions.
Thus, to cope with the situation, television manufacturers invent smart TVs that will act exactly like a big-screen smartphone.
Therefore, to maintain your position in the market and grow, you will have set a short time strategic plan.
It creates a vision and mission for the entire organization.
As mentioned before, a business strategy is like a road map that directs every employee towards their destination.
Without a strategic plan, thus they will work aimlessly.
They will not understand what will be the outcome of their works.
They will not feel enthusiastic without a proper goal in front of them.
Thus eventually, the growth and development of your business will pause.
But with a strategic plan, all the staff of your business will understand their destination, purpose, and the course they will have to go through to reach there.
By providing them with a common purpose or goal.
You can encourage them to work for the same outcome, i.e., the success of your business.
Thus a strategic plan will ensure that every dollar or minute you spend for your business does not go in vain.
The benefits of a business strategy are huge.
From creating scope for new businesses to streamlining the operations and encouraging the staff, a strategic plan will do it all.
It is thus mandatory for the development, management, productivity, and profit of your business.
The need for a business strategy in the present day
In the pre-internet era, you may sustain without a business strategy, but it is impossible for now.
Here are the reasons why even marketing strategies for small businesses is necessary.
To retain customer loyalty.
Dealing with customers without any strategy means you are risking your business.
Any competitor of yours can anytime snatch them from you with a better customer caring service.
Thus to keep in touch with your existing customers, you can develop a robust system of follow-up.
With it, you can call or email your customers to deliver them notifications of your upcoming product launching.
You can get feedback from them and ensure whether your products are working properly or not.
Thus you can show that you care for them and want to provide them with better services.
You can even send greetings cards and gift cards on special occasions like Christmas or New Year.
Management of resource allocation.
Managing resources is equally important for big and small companies.
No matter how many resources you are working with, the lack of a strategy can make you a beggar.
A business strategy indicates how much resources you should invest in to achieve one particular goal.
It will give you better management of your resources like employees, clientele, brand value, trademarks, and supply partners, etc.
For business expansion.
For making your business large with the time, you need a perfect business strategy.
The strategic plan should cover every topic related to your business.
There should be a detailed discussion about it.
This will help the team leaders and executives to seek new opportunities to expand your business.
A business strategy will give you clarity.
With a business strategy, you will get clarity of mind.
You don’t need to ponder on matters every time trouble comes as you have a solution list in your hand.
The business strategy will direct you throughout your business career.
Business strategy will give you an extra drive and impetus.
If you have a clear destination in front of you, then it becomes easy to arrive there.
The same happens in the business world.
You set your destination in your business plan.
And the business strategy shows you the roads and transports to take for reaching the destination.
A business strategy will give you and your team extra enthusiasm in their work as they know that they are not working in vain.
It is like an agreement with the future.
A business strategy is an agreement.
You make this agreement with the future.
In a business strategy, you systematically plan your business position in the next few years.
How much you want to expand your business?
Based on your aspirations, your business strategy works.
And based on your business strategy, you will take your future steps.
You will get a better understanding of your present.
To set goals for the future, you need to have a clear idea about your business’s present condition.
Thus the process of making a business strategy will give you insight into your present.
You will learn the information like a present market place, brand value, conversion rate, customer turnovers, and employee strength.
This will ultimately enrich your idea about the actual position of your business.
Then your strategy will be based on facts and not on lucid dreams.
You will be keener for discussion and debate.
The process of researching and writing a strategy will make you understand the importance of discussion.
You will have to discuss your strategy with others unless you are the sole investor of your company.
And it is always better to debate and discuss strategy before implementing it.
You can even find that the topics you neglect can be essential for your business in the long run.
Then the decisions you take will get the appreciation from your entire team.
After it, even if you fail, no one will be solely responsible for that.
Thus making a strategy for your business evolves a good habit in you.
You will get a chance to reflect on your past.
Writing a strategy will give you a lot of time for introspection.
You will not only have to analyze the present and future actions but also on your past.
Whatever decisions you take in the past will affect you in the present and your future.
And your future goals should be set in relation to your past actions.
Creating a business strategy will give you relief from day to day business management job and some free time for re-look into your past.
The types or classifications of a business strategy:
Harvard professor Michael E. Porter in his 1980 book “Competitive Strategy,” differentiates business strategy into 3 types.
These are differentiation, overall cost leadership, and focus.
Each of these has its resource allocations and priorities.
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And each of them has the potentials to be effective in the long run.
Read them here and decide what business strategy is best for you.
In this type of business strategy, a business tries to prove that they are different and better than the rest.
In this business strategy, product price is not a concerning factor.
A business can demand high prices on their products if they prove the good quality and better performances.
You can command extra money if you stand out from your competitors in some way.
In a long time strategy, you can cut down the costs that are not complimenting or contributing to your differentiation.
Thus you can balance the annual cost of your business.
For example, Starbucks charges much more than Dunkin’s Donuts for a single coffee cup.
But people are yet ready to spend extra money on Starbucks coffee as they made their name in that way.
They differentiate themselves by focusing on good quality food, sustainability, and by creating a brand image.
It makes an image that its coffee is quick and good for on the go for busy professionals.
And now Starbucks has its branches in all most all developing countries.
This strategy is very easy to explain but difficult to implement in reality.
This is one of the toughest strategies to implement.
Here you will have to produce and provide products at the cheapest price possible.
This strategy is the exact opposite of the previous one.
Here you will target the audience who try to seek pocket-friendly services and products.
You will have to be the cheapest provider of your services or products.
You can get a large number of customers if you successfully implement this strategy.
But it is not possible for a small business.
It will not give them the return of the invested capital.
And eventually, they will run in the loss.
But for a big enterprise that has already made its space in the market, it can try this method to get more attention.
For example, Wal-Mart is a very well-known goods provider business.
They provide a wide range of products.
You can buy anything starting from basket or casket to designer furniture at very cheap prices here.
But they make it possible in their strategy only because they sell on a massive scale.
With few customers, it will only reduce your profit margin.
Both differentiation and cost leadership strategy targets on a huge number of customers.
But in this strategy, the focus is on one small portion of the market.
Here you target a market that has less competition as fewer people demands that product.
You may get a miniature market to showcase your services, but if your service is good, you can capture the entire market.
The market of nursing scrubs or craft beer is small and competitor less.
Thus you can try your luck in such undiscovered markets to get the whole market.
The categories of a business strategy:
Business strategy is in two major categories.
This classification is made based on its concern about resources.
A business strategy also decides where to allocate major resources.
For example, BIC focuses on 3 main products, pens, lighters, and razors.
Thus they create super factories in important geographical areas in favor of producing these products.
The two main categories of a business strategy are-
An organization can pursue 3 types of generic strategy.
This strategy comes into action after the initial years of development.
You can then expand your business by purchasing new assets, even new business, and the development of new products.
The Inland Revenue will expand from just being a tax collector to other functions like collecting student loan repayments and paying tax credits.
Globalization or internationalization
In this process, you expand your business outside your country.
In this strategy, your focus will be to make your service available in as many countries as possible.
You must have heard the names of Coca-Cola, Gillette, Cadbury, Or Kellogg’s, no matter what country you live in.
This is because their owners made their strategy of business so large that they can globalize their market.
They are now earning profit from throughout the world.
In the retrenchment strategy, you are moving back to what you do the best.
Sometimes companies try their hands in a lot of products and eventually get confused.
They mislead on what to focus on.
Thus, they start losing their market.
If this ever happens to you, then try to go back to your core strength.
Americans named it as “sticking to the knitting” means concentrating on what you do the best.
This will return you your lost fame.
Competitive strategy is important if you run a business that has rivals in the same field.
Here you will have to compete with your rival continuously.
In this competition, you can learn from your rival’s best things and incorporate them into your services.
But producing the same products will not make a difference here.
You will have to out-compete your rivals. For this, you can choose any one of these two ways.
You can sell your products at lower prices than your rivals.
Otherwise, you can differentiate your product from your rivals and charge extra money for the extra facility you provide.
For example, you can look up to the airline industry.
The airline industry uses both of these two strategies in their business.
British Airways focuses on the differentiation strategy.
They offer better service, flight entertainment, more numbers of legroom, and customer facilities.
And for this sophisticated management, they charge extra dollars.
On the other hand, the example of a low-cost producer in the airline industry is Ryanair.
They provide short time destination air rides and try to fly as many times as possible in the 24 hours of a day.
Thus they adjusted the price by giving more frequent services in short term destinations.
The components of a business strategy:
If you still have confusion on what is the business strategy then give it a look.
A business aims to be unique, attractive, sustainable, and approachable by the customers.
And a perfect business strategy will let you understand your business’s performance, the core of the good performance, and how to increase the performance.
There are six main components of a business strategy-
Vision and business objectives
A business strategy intends to help you hit your business objectives.
And with a vision of the future, you can only create instructions in your business strategy for what to do and what not.
The work of a business strategy is to guide the top-level executives and departmental staff about what to do and not according to the company’s core value.
SWOT is the abbreviation of strengths, weaknesses, opportunities, and threats.
This component is essential for creating any business strategy.
It allows the company to focus on its strengths and take advantage of them.
At the same time, it warns the company about its weakness and threats.
To maximize efficiency, you can articulate the operational details of how the work needs to do.
The tactics save a lot of time and effort.
Resource allocation plan
A resource allocation plan should be there in a business strategy.
It includes the place where you can find the required resources, how the resource is allocated, and by whom.
This component in a business strategy tracks the output of the company.
It evaluates how the company is performing in fulfilling the targets before launching the strategy.
If you have already comprehended and written down the possible solutions for future risks, then to act on, it becomes easier.
It will give you last moment guidance and support if you need it.
What should be the marketing strategy for Small Businesses?
To make your marketing strategies for small business and large future worthy, you can include the following components.
- In your business strategy, you should create the objectives and goals of your business both for the short and long term.
- And the instructions or message in the business strategy must be in clear words so that all your employees can understand it easily.
- There should be a detailed fact-checking discussion on the real weaknesses of the business both internally and externally.
- You should also mention your premonitions on the possible risks that your business may face in upcoming years. It can be anything like weakness in the product you manufacture or the service compared to your rivals.
- You should also anticipate the upcoming changes in the market and the possible effect on your business. Then you will have to document your thoughts and solutions about the risks in your business strategy.
- Here you will also have to show your financial requirements and features. You can display present manufacturing costs, profit, and loss, ROI development, etc. of your business. You can also suggest what type of future investments you want to expand your business.
- After you have created your business strategy, then all you have to do is to make it true in reality. The success of the business strategy relies on successful implementations. You will have to monitor your success constantly. The development of your business should always be on track and exactly according to your business strategy.
Different approaches towards a business strategy:
The approach of an organization towards its business strategy can be dispose into 3 groups-
Some organizations focus mainly on their customers.
They try to listen and become close to their customers.
But the problem with this kind of approach is that often they end up trying to be “all things to all people.”
Naturally, you cannot satisfy every customer with one product.
You need to classify products for customers of different ages and tastes.
Most businesses follow this strategy.
They are internally driven organizations as they anticipate the future by their past activity.
They follow the successful strategy of the past in the future.
But the major flaw in this strategy is that often they forget to analyze the market in this process.
As it is already, your previous strength needs to turn into your weaknesses.
Market-driven organizations focus on the market and design their strategy according to the marketplace.
They decide which market they should serve and how they should add value to that market.
To establish a successful business, you will need to create a strategy and understand which one will keep your business forward.
How to create a good business strategy?
Before formulating a successful business strategy, you will have to do these 6 steps.
They are as follows-
Look outside and mark the threats and opportunities.
The external market will always show threats to your development.
But it will also give you scopes for development.
The external market threats are like substitute products, the purchasing power of your customer, new business entries, pressure from suppliers, etc.
The opportunities an external world can present your business are unexploited market, new technologies, etc.
So before framing your strategy, think about the geographical and market environment of your business.
What percentage of profit or development can you manage in this environment?
What are the risks in the environment, and what are the ways of management?
Look inside your capabilities, strengths, and weaknesses.
Your strategy will only run if you have people to follow it.
Thus, implementing a business strategy is a little bit difficult for start-up businesses.
They lack resources like efficient employees and fixed assets.
There are many business strategies books for beginners that you can follow to make a steady start-up business strategy.
Your strategy development relies on the backing of the right set of people.
So, choose employees not only based on their qualifications but also their skill and management capacity.
Thus, you will make your business strong from inside.
Then you can implement any strategy you create.
So, ask yourself questions like what resources of my business are supporting or restraining my success?
What are my plus points?
How are they giving me advantages in competition?
Address the threats with proper planning.
For your safety, create an alternative strategy in your business plan.
If one strategy fails, the other will succeed.
Also, there are many ways to get the same thing.
Try to figure out the ways and write them in your strategy.
Research the facts and address all questions.
Compare your business strategy with others and figure out what important point you are missing.
Discuss your strategy with wise heads before implementing them.
These wise people can the board of directors, your investors, or any outside people.
Often discussing with outside people can give you different aspects of the same strategy.
Include strategy-supporting activities.
You cannot always focus directly on your customers.
And also, you need to include some activities in your business strategy that will support your customer goals.
You will also have to combine these activities into a linking chain for better management.
These activities should be mutually supporting and effective in the development of your customer base.
Your competitive development will increase if these activities fit and reinforce each other.
If you run an airline business and if your strategy is to focus on rapid gate turnaround, then make frequent departures.
Utilize your aircraft assets for the management of low- cost and high convenience to offer your customers.
Here each one activity supports the other for the development of one goal.
Making strategy is the basic thing for a company.
But the real work is to create alignment between the strategy and the employees and the company’s activity.
Every worker of your company should understand your strategy and also their roles in making that strategy work.
You will also create alignment in other resource fields.
For example, you should align your marketing efforts to the right customers, i.e., the customers that have the potentials to buy your products.
You should align the bonus facility with good behaviors and overall performance.
These little thoughts on the development and management of your business will help you in the long run.
Be ready to implement.
The answer to what is business strategy is the rightful and thoughtful implementation of the dreams and wishes you have.
It is your dreams along with the logical methods to achieve it.
To implement your strategy, you will have to hire people with necessary competencies, structure your resources.
And include the necessary equipment, and so on.
The 4s are necessary for the perfect management of a business, according to Alfred E. Osborne.
He said, “I think of the 4S’s: structure follows strategy, and staffing follows structure, and you hold the strategy together with systems”.
If anytime you feel that your strategy is not working, you should immediately reject the strategy.
You can revise the strategy and choose a new one if you feel so.
A start-up business is more like an experiment.
You should never bet everything in this game.
The chances of failure are high here.
And whenever your strategy fails, be ready to change it then and there.
How to implement a business strategy?
For a successful implementation of your strategy, it should always be true to your organization’s structure and culture.
Apart from these, you should always-
- Create various strategies for different groups of the same company
- Finalize what is a business strategy for you only after getting confirmations from all your invested parties
- Set the annual goals after assessing your financial capacity
- Generate your unique scorecard system to track and judge the performance of your employees and business
- Build your separate performance management system and reward system
- Give separate annual plans to separate departments and then align their works.
- Discuss what is a business strategy for you with every department
- You can also set up a monthly performance management system for better analysis.
- Set up a date for the review of annual performance. Held a large group meeting for this review. Include new goals, and celebrate achieving the previous ones.
8 business strategy examples:
Here are some examples of great business strategies-
Cross-sell more products
Here the organizations try to sell more and more products to the same customer.
Online retailers, banks, and office supply companies use this strategy often.
They increase the cart size by increasing the number of products sold per consumer.
Here you don’t have to spend extra money to get new customers.
Instead, you try to convince the existing customers to buy more.
The slightest increase in their cart thus will impact greatly on your profit-making.
Using innovative services or products
This strategy widely implements technology and automotive space.
Here companies try to distinguish themselves from others with their new innovative product launches.
This is a continuous process.
You will have to make new items tirelessly.
Your definition of innovation will determine how innovative your company is.
Growing sales from new products
Here companies invest money for research and development purposes.
With this researches, they constantly innovate.
They even make changes in their already successful products to become up to date.
Improving customer service
By giving importance to customers via online or tele-calling, many companies improve their performances.
No one can better judge you better than your customers.
So, it is a good business strategy to invest in caring for customers’ views.
This will eventually increase your reputation in the market.
To concern a new market
This is one of the successful business strategies.
Here large companies try to buy or merge with companies from other market areas.
Thus, they expand their area in the market.
Fortune 500 companies use this tactic to gain an advantage in a new or vastly growing market.
By this, you can show your presence in a completely new.
And a promising market while retaining your existing market and customers.
Investing in technologies always results in the success of any company.
But for being a techno-improved company, you will also have to hire technologically, skilled employees.
Improving customer retention
It is always better to retain your previous customers, along with striving for the new ones.
And to retain the existing customers, you will need a strategic plan.
Without a business strategy for customer management, you will find it hard to generate customer loyalty
Increasing the sustainability of a company can add some extra money to their profits.
You can reduce expenses on energy costs.
You can develop the idea of recycling in your company to reduce expenses.
In a nutshell
There are no fixed rules on how to create the best business strategy.
It is up to you to structure and implement it.
The strategy will differ from business to business.
The strategy will vary on the goals you set for your business.
But one thing is clear that for any sort of business, a strategy is in need.
It does not matter whether you are beginning your business or acing the market for years; a strategy is for you.
So, start writing your strategy of the business before investing anything.
Then show your strategy to the potential buyers who will believe and invest in your strategy.
A detailed and well-researched strategy is always the best strategy for your business.