Whether you are a small-scale entrepreneur or a start-up founder, business strategies form the very crux of your ventures whilst building the foundation of success (sometimes failures too). They are basically the course of actions or decisions which help entrepreneurs in achieving specific business objectives. To ensure a competitive advantage in the market, to plan ahead expansion and scaling of the venture, to generate revenue and customer satisfaction thus achieving the end goals of business, every company has a master plan or business strategy that makes them stand out from the rest of the companies and paves the path of success for them.
What are Business Strategies?
Just like an artist before painting a picture draws an outline and decides the colour palette he wishes to work with, in businesses, strategies act as an outline sketch that provide direction and image of the venture. It builds a rough idea of the intent and action which is then orchestrated or carefully painted by the company in order to achieve an effective workspace that optimises opportunities, mobilizes resources, reaches a position of advantage, meets threats and challenges with a proper plan, directs efforts and behaviours in lines of that of the company and commands control over unprecedented situations.
As it is often said, if you fail to plan, you plan to fail. A business strategy is basically a plan that involves moves and actions that a business uses to attract customers and strengthen its performance while achieving their organisational goals. It gives the business an outline as to how it should function in order to reach its desired ends. Most strategies occur within the top tier of management so as to provide a base framework for discovery and development in order to analyse and optimise opportunities. Another main focal point of business strategy is to help meet potential as well as unprecedented threats and counterbalance weakness.
Just like an artist before painting a picture draws an outline and decides the colour palette he wishes to work with, in businesses, strategies act as an outline sketch that provide direction and image of the venture.
Importance of Business Strategies
You cannot achieve your dreams without a plan to achieve them. After you set your business objectives, you must focus on strategies to achieve them lest your objectives end up being a dream. When you are investing large amounts of money into your ventures, it is necessary to implement smart business strategies that up your game and help you become successful.
Choose strategies that make you stand out from the crowd and increase your revenue traction. With more and more people venturing into the business landscape, it is becoming increasingly difficult to come up with newer and better strategies. However, we still have not reached saturation in the strategy market. There are several reasons why business strategies are important.
Knowing your Strengths and Weaknesses
While formulating your business strategy, you can focus more on your strengths and weaknesses. This helps you optimise in areas where you excel and figure out ways to cope with your weaknesses so that your chances of success increase.
Business strategy is a part of a business plan. Business plans help you analyse and set your goals and objectives while strategies will help you figure out how to achieve the said objectives.
Efficiency and Effectiveness
Strategies help you allocate how much resource should be allocated at every step, assigns jobs to every person in the company, and ensures smooth functioning of the business. This increases efficiency and effectiveness of the business operations especially in the long run.
As mentioned above, business strategies focus on optimising and playing on a company’s strengths thus giving them a competitive advantage that helps them stand out from other ventures. This also helps in brand marketing and advertising giving a unique recognition to the brand and creating traction amongst consumers for the brand.
Levels of Business Strategy
Although it may seem like there is only one solid set in stone strategy for the entire business, there are multiple tiers at which multiple strategies work simultaneously to run the business. Business strategies usually pan out to three different levels:
Business level strategy:
Strategies related to any particular business are known as business-level strategies. They are developed by the general managers who transform the company vision into realistic strategies. These act as the map to success for the entire business. These strategies are unit specific strategies which differ for different units of the business.
Corporate level strategy:
These are long-range, action-oriented, integrated and comprehensive plans that are strategised by those sitting in the top tiers of management. The corporate level is the highest and most broad level of the business strategy. They set the mission, vision, and corporate objectives for everyone. They focus mainly on ascertaining business lines, expanding, scaling, growth perspectives including takeovers and mergers, diversification, acquisitions, integration, investments and more.
Functional level strategy:
These strategies are developed by the first-line managers or supervisors, and help in the decision making at the operational level. They focus on day-to-day business issues around certain functional areas like marketing, production, human resource, research and development and finances. They are needed to deliver unit level and corporate level strategies. These strategies also help maintain relationships between different departments and help the business move forward as a whole.
Key Components of a Business Strategy
Strategies answer all the what, why, whose, when, where and how of reaching your business goal. The key components of any business strategy include:
Vision and Business Objective
As we have discussed before, the main duty of any strategy is to help achieve a business goal or objective. They set the stepping stones that lead up to fulfilment of the company goals with a clear vision or blueprint that tells us what and how things need to be done and by whom.
Business strategies are the perfect embodiment of a company’s core value. They reflect all the dos and don’ts of the business and highlight the morals and visions of the business.
A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a rundown of the company’s current situation. It forms a core component of a business strategy as it highlights the strengths and opportunities which the company can optimize on and the weaknesses and threats which the company should tread carefully by.
Unit and functional business strategies delve deeper into how the work needs to be done such that the results obtained and the process involved take place in the most effective and efficient manner. Since everyone knows what exactly needs to be done and how it should be done, it saves a lot of time and effort.
Resource Procurement and Allocation
Business strategies also imply from where resources will be procured from across the landscape and how these resources will be distributed for various functions between different departments. And who will look into procurement, allocation and distribution of said resources.
Business strategies are the perfect embodiment of a company’s core value. They reflect all the dos and don'ts of the business and highlight the morals and visions of the business.
Business strategy examples
1. Cross-sell more products
Some organizations focus on selling more products to the same customer. They increase the amount of product sold per customer thus increasing the average cart size. This increases profitability without looking for new customers.
3. Grow sales from new products
Investing in research and development in order to constantly innovate, even with your most successful products will up your business sales in more ways than one.
4. Improve customer service
Another good business strategy is delivering quality customer service. You can build a strong reputation for having exceptional customer service like online support or a more effective call center.
5. Cornering a young market
Some large companies are buying out or merging competitors to corner a young market where they had no strong position before whilst retaining old customers. This is a common strategy used by Fortune 500 companies to gain leverage in a rapidly growing market.
6. Product differentiation
B2C businesses differentiate their products by highlighting the fact that they have superior technology, features, pricing or styling. This is called product differentiation which was used by Apple to differentiate its smartphone operating system iOS by making it really simple as compared to Android.
7. Pricing strategies
Pricing strategies involve either very high prices to channel exclusivity of product or very low prices to increase traction. With low prices, high volumes of sales are required to earn profits. High prices maintain exclusivity of the product, keeping them from ordinary customers whilst retaining a large profit margin per product.
8.Buying the Competition
You can buy your competition or pioneers in technology instead of creating one on your own and competing. Facebook’s buy the competition strategy has led to notable acquisitions Instagram, WhatsApp, Oculus, etc which increased its reach and user base.