What is Business Strategy?
Business strategy involves specifying business objectives and then using plans, programs and projects with a specific set of resources for the achievement of those objectives. Business strategy will often be carried out by managers and entrepreneurs in order to enhance the business in a variety of ways. Typically, strategies will be implemented for a profit seeking objective, but many businesses today are increasingly using strategies to achieve positive impact social goals and environmental goals, too.
Business strategy will often be used and implemented for the business as a whole, but different sections of that business such as departments and branches, may also have their own specific business strategy.
How to Form a Business Strategy?
The business strategy will typically be initiated with the creation of the mission statement and vision of the the business, which will then be shared amongst the employees. Top level managers and entrepreneurs will usually be the ones who initiate and formulate this overall vision and mission of the business. The vision is the long term view of what the business will be like, while the mission is the impact that the business will have in society.
Using the business mission and vision, the core of the business strategy will then be made which will involve 3 key steps:
1. Situational Analysis
This involves researching the current contect in which the business will operate, including the financial, economic, political and social conditions. The demographics and demands of the market should also be taken into account.
Analysis must also be done of the business itself, taking stock of its strengths, and weaknesses. Also a self-evaluation of its current resources and capacities should be researched. A SWOT analaysis is usually favorable for doing this kind of self assessment of the business.
Competitive intelligence and analysis should also be conducted in order to gauge the level of competition, and the differentiating factors that the business will have over its competitiors.
2. Development of Objectives
After conducting the analysis of the situation, a set of objectives can then be set. These objectives will take into account the opportunities available for the business in the achievement of the vision and mission. The objectives must be achievable and realistic, but at the same time, it must be ambitious.
The objectives can be grouped according to the various units within the business such as marketing, product development, finances, but the way that the objectives are to be grouped and devised will depend upon the individual needs of the business and the stage where it is currently.
3. Planning a Strategy to Achieve Objectives
Once the objectives are set, then an actual strategy can be devised. The strategy will include a series of actions, steps, and tactics that will be implemented by various parts of the business in order to achieve the business objectives.
The strategy must have key performance indicators or targets so that on an ongoing basis, the implementation of the strategy can be measured against the target measurements.
Differentiating Business Strategy & Business Tactics
Several entrepreneurs, small to medium business managers, and even managers in larger companies, often confuse business strategy with business tactics. It must be remembered that a strategic business sets objectives and then creates a plan that includes tactics, and then takes actions to achieve the objectives. Tactics are merely actions, steps or techniques that are used in a plan to achieve business goals. In the long-term, businesses that are strategic will succeed over merely tactical businesses.