The company's success is not a coincidence, but a consequence of extensive activities based on reliable and carefully prepared planning. That planning is to prepare the strategy. The business strategy defines the direction of the activity and also facilitates the development of the company on many levels. We present everything you need to know about her.
What will you learn from the article?
In the dynamically changing business world, developing and implementing an effective business strategy is becoming an essential element of achieving success on the market. A business strategy is not only a company's action plan, but the foundation on which competitive advantage and long-term value of the company are built. Unlike a business plan, which describes in detail the steps needed to achieve specific goals, a business strategy directs the entire organization to achieve defined ambitions within a given time horizon.
An effective strategy is characterized by three basic features: clarity, flexibility and adaptability. Business strategy planning, although it may seem complex, is a process that can be effectively mastered by using appropriate methods and tools. For companies that have difficulty planning an effective business strategy on their own, the answer may be to use the services of experts, which is the key to success and sustainable growth.
What is a business strategy?
Strategy is a word that appears very often in business. We can distinguish, among others: marketing, pricing, sales, image and business strategies. The word "strategy" itself comes from Greek and literally means "the art of command", mainly in military operations. How can this be related to market realities? Managing a company is a specific type of command.
An entrepreneur must face many challenges, including numerous and specialized competition. Acting blindly, without planning, does not guarantee success. The key to running an effective business is to base each area of the company's activity on carefully prepared, reliable and realistic strategies.
Business strategy, as one of the most important strategies, has had many definitions. J. Stoner, R. Freeman and D. Gilbert define it as "a broad program of setting and achieving the goals of the organization" and "the response of the organization in time to the impact of its environment". According to WF Gluck, "it is the overarching and integrative plan that defines the benefits of the company in relation to the expectations and calls of the environment." What exactly does that mean?
A business strategy is, in short, a well-thought-out, detailed action plan, a kind of map of the company's development. The document is a set of clear, measurable, long-term goals corresponding to the general directions of action and based on the resources necessary for their implementation. In other words, company's strategic plan is a company management guide. It specifies methods of achieving individual goals, resources that can be allocated to individual activities, environmental policy and pricing policy. In addition, it indicates what to do in the event of a crisis, and sets out the channels and methods of communication with the environment. The strategy gives a certain rhythm to the functioning of the company. Thanks to it, the activities of individual departments are coherent and effective.
Business strategy and business plan
Many people confuse the concept of a business strategy with the concept of a business plan. Although both elements are used to manage a company, they are significantly different from each other. A business strategy is a long-term plan for the development of an enterprise, usually for 3-5 years, while a business plan is a document specifying how to start a business.
A business strategy serves as a guide for the company and its employees in running the company and implementing its mission. The business plan is addressed to specific entities, mainly investors and banks, in order to convince them of the profitability of investing in a given venture.
What makes a good business strategy stand out?
A good business strategy is distinguished primarily by its effectiveness in achieving set goals. However, in order to talk about it, it is worth paying attention to several key aspects that determine its success. First of all, it is worth having a strategy that is not only ambitious, but also realistic, based on a thorough analysis of the market and customer needs and expectations. It is also important that it is flexible and can be adapted to the rapidly changing business environment.
It is also worth emphasizing that an appropriate business strategy should promote innovation and creativity in approaching problems and challenges, as well as enable effective communication and cooperation within the company. Finally, the key to success is the ability to translate strategy into specific actions and initiatives that bring measurable results and allow for long-term growth in company value.
What are 3 characteristics of an effective business strategy?
Create a consistent and effective one development strategy companies are a real challenge. It is a multi-stage, demanding process that should be based on reliable market research and other analyzes. What strategy is most likely to be successful?
Industry literature distinguishes three basic factors that determine a high-quality business strategy. These are:
- simplicity - the strategy should be logical, understandable, reliable; individual elements of the strategy should perfectly harmonize with each other, reinforce each other and easily adapt to the changing environment,
- internal consistency, i.e. a properly defined goal - the goal should be conscious, based on a thorough analysis; should take into account current and future market conditions,
- external consistency, i.e. a rational forecast horizon - the strategy should be long-term (e.g. 5 years).
How should a company's strategy be built?
The first stage of building a business strategy is to define the substantive strategic goals of the company, including the direction of development, creating the company's value, priorities and importance in the market on which it operates. Goals should be consistent with the mission and vision of the company.
Then, a situational analysis of the company is prepared. The analysis covers, inter alia, examination of operational possibilities, selection of tools necessary to achieve specific goals, determination of the target group (including determination of a market niche, if there is one), preparation of the concept of optimization of the company's operating costs.
To assess the company's capabilities, a SWOT analysis is performed. SWOT is an acronym for the English words:
- strenghts - the company's strengths, features that give it an advantage on the market,
- weaknesses - weaknesses of the company, features that may possibly reduce its chances of success,
- opportunities - opportunities arising from the environment that may facilitate the company's implementation
- threats - threats arising from the environment that may hinder its implementation of the set goals.
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The company's capabilities are assessed on the basis of the SWOT analysis. The strategy must strengthen strengths and be based on opportunities, and at the same time it should reduce the risk of failure in the process strategic management in the enterprise.
The next stages of work on the business strategy are:
- preparation of a tactical plan, taking into account individual processes,
- analysis of factors increasing the company's performance,
- creating a marketing concept, promotional plan and other elements related to reaching customers.
Why is it worth entrusting strategic planning to experts?
Strategic planning requires experience and extensive knowledge in many areas related to company management. For an entrepreneur, especially a beginner, this can be a difficult task. Fortunately, there are organizations that deal with this professionally.
Complex strategic consulting is the foundation of professional activities consulting agencies. The first consulting agencies were established at the turn of the 19th and 20th centuries and already enjoyed a lot of interest. Today, in the era of a highly competitive and constantly developing market, the support of a professional consulting company may turn out to be an invaluable asset of the enterprise. Consultants do not follow the beaten paths, do not use universal solutions, and focus on an individual approach to each case.
A strategic advisory service provided by a consulting agency typically includes:
- conducting detailed analyzes, including the analysis of the company, industry, competition and target group,
- setting the directions of development,
- preparation of a business strategy based on realistic goals,
- full support at every stage of the strategy implementation.
Business strategy by itself does not guarantee success, but it is undoubtedly one of the most important determinants of success. Therefore, if you want to be a conscious entrepreneur, fully engage in the process of building a strategy and implement it step by step.