What is Business Strategy?
A company’s strategy is their plan to achieve and sustain comparative advantage in the markets they compete in. Or in simpler terms: it is what the company is going to do in order to “win”. This strategy is an overarching theme that guides the actions and decisions of a firm.
A good strategy provides answers to the following questions;
- In what markets do we compete?
- What is the unique value we offer to customers?
- What resources and capabilities do we have to provide our unique value?
- What barriers are there for others to imitate our unique value?
What is the difference between a Strategy and a Goal?
If we think about the decisions of a firm as rungs on a ladder, the Goal would be the top rung, and the ones beneath it, strategies. Strategies are the means of carrying out or executing a goal. Each department (Marketing, Purchasing, Human Resources, etc..) may have its own strategies and programs to execute such goals, all which are in conjunction with an overarching company-wide goal.
What are some approaches to developing a business strategy?
Conduct a SWOT analysis of your company’s current situation by pinpointing the main internal Strengths and Weaknesses and external Opportunities, and Threats. This analysis will allow you to set a course of strategic options that will mitigate the weaknesses and threats, while exploiting strengths and weaknesses.
Porter’s Five Forces Framework
One of the best known business strategy frameworks, Porter’s Five Forces, helps a company recognize and develop a strategic plan of action, by evaluating their market’s attractiveness. Develop your strategy by evaluating the following five areas within your market:
- Threat of new entrants
- Threat of substitutes
- Supplier power
- Buyer power
- Rivalry among existing competitors
Generic Competitive Strategies
Another way to develop a business strategy is to evaluate your company’s strengths and select one of the three generic competitive strategy that would best fit and pursue it. These strategies are as follows:
- Low Cost: becoming the lowest-cost producer in an industry through a cost advantage
- Differentiation: providing a unique service or product, with few close substitutes
- Value: a combination of low cost and differentiation, providing a product/ service at the best value for its specified price
Once you have developed your strategy, KPI Fire will provide you with the tools to organize, report, and evaluate execution efforts. Follow this link to watch how easy it is to input a strategic goal into KPI Fire: https://youtu.be/ef-_92b0Lf0