What is Business Strategy? A Comprehensive Overview
The only way to succeed in business is to have a solid strategy! What is business strategy? A detailed plan is a blueprint or outline of the ultimate goal of the business and the steps it will take to achieve that goal.
Business strategies and plans typically include market analysis and marketing strategy, as well as detailed information about products and services, plus financial projections. You include the growth objectives and detail how you plan to achieve what you've outlined.
Defining Business Strategy
A business strategy is a plan for short and long-term goals. You have a series of specific goals and objectives, and your business strategy details the plan of action you will take to ensure you achieve those outcomes.
The first step in business planning is your mission statement, and this is known as an executive summary. In the executive summary, you define the mission of your business and your brand vision and values because these are key to the decision-making process.
Established businesses review their strategy annually, but if you're new to the market, your business is growing rapidly, or you're competing in a crowded industry, you should revisit your business strategy once a quarter. It's tough to get ahead, and it's even tougher to stay ahead and understanding your competition is an important part of crafting an effective business strategy.
The Importance of Business Strategy
Your business strategy should be the foundation of success, providing your business with direction and highlighting the focus of your vision statement. When you establish your mission, values, and goals, you have a blueprint for making sound decisions. Does this decision align with our mission? Does it align with our values? Will it further our goals? It also details how to best allocate your resources effectively while building in a way to sustain your growth to maintain the market advantage. If you’re looking to strengthen your strategic thinking, you could also consider upgrading your skills by studying an online MBA.
Your business strategy should detail how you will handle changing market conditions, including your pricing, recruitment, and suppliers.
Key Components of a Business Strategy
There are four components to an effective business strategy: strategic analysis, formulation, implementation, evaluation, and control.
Analysis
A SWOT analysis is the standard starting point, and it assesses your business's internal strengths and weaknesses and an external analysis of your opportunities and threats.
Formulation
What is the best course of action for the business you operate? What are your strategic goals, and how can you achieve them? It's formulating a plan to detail the necessary steps to ensure you achieve your objectives.
Implementation
The implementation stage is the exciting part, it's putting your strategy into action by applying your organisational strategy in terms of the structure of your business, the processes you put in place, and how you allocate your resources to their greatest effect.
Evaluation and Control
It's important to monitor your progress and measure results to make adjustments to your business strategy if you need to. As you get started, you will want to revisit your strategy often, and once you're a more established business, checking in once a year should be sufficient.
By this point, you will already have a handle on the relevant figures, and things should be running smoothly. The only time you need to revisit your strategy more regularly is when your business is new, if you've experienced rapid growth, or if you're facing serious competition.
Different Levels of Strategy
Corporate-level Strategy
Corporate strategy provides the overarching goals and direction for the organisation, strategising what path the business will take to achieve long-term goals and success. It will include decisions about market entry and diversification.
Business-level Strategy
Business-level strategy narrows in on how a business will compete in the market, carving out a position to compete in, how to leverage unique selling propositions and strengths, and how to deliver value in a way your competition can't.
Functional-level Strategy
A functional strategy details how different departments in the business operate and how they will support the larger business strategy. It's about maximising efficiency across financial operations, marketing, IT, human resources, and sales.
Examples of Strategic Frameworks
Strategic frameworks provide a structured approach for strategic implementation, including SWOT analysis, Porter's Five Forces, the Ansoff Matrix, strategic planning, and value chain analysis. The purpose of these frameworks is for a business to understand the competitive landscape, identify areas for growth, and gain a deeper understanding of the business's internal strengths and weaknesses.
The Porter's Five Forces focuses on competitive rivalries, the likelihood of new competitors, bargaining power, and the threat of alternative services or products. The Ansoff Matrix revolves around diversification, product development and market development and penetration.
Developing a Business Strategy
The key to developing a successful business is drafting a solid business strategy, so prepare to do your research and analyse the market before you plan, plan, plan, and communicate your ideas with the rest of the organisation.
A Business Strategy Course can give your business the competitive advantage by arming you with the tools for strategic management.
Final Thoughts
Whatever your industry, you'll know that it's constantly evolving as consumer expectations change and market conditions develop. While you can plan for a lot, you need to be flexible and revisit your business strategy to make tweaks when it's necessary. The only way to get ahead is to stay ahead, and you can't do that without a solid business strategy.
If you want to set your business up for success, then a business strategy is a must, and it isn't enough to define your short-term goals; you need to think about how your business will ensure its long-term success and detail how you'll get there.