The success of the company is not a coincidence, but a consequence of extensive activities based on reliable, carefully prepared planning. This planning is the preparation of the strategy. Business strategy defines the direction of activity and also facilitates company development on many levels. Here's everything you should know about her.
What is a business strategy?
Strategy is a word that comes across all too often in business. We can distinguish, among others marketing, pricing, sales, image and business strategies. The very word "strategy" is derived 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 kind of leadership. The entrepreneur has to face many challenges, including numerous and specialized competition. Working in the dark 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. While both are used to manage a business, they are significantly different from each other. A business strategy is a long-term development plan for a company, usually 3-5 years, while a business plan is a document that describes how to start a business. The business strategy serves the company and its employees as a kind of guide in running the company and carrying out its mission. The business plan is aimed at specific entities, mainly investors and banks, in order to convince them of the profitability of investing in a given venture.
3 features of a successful 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).
Planning a business strategy in a nutshell
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.
Professional strategic consulting the key to success
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. First consulting agencies They were created at the turn of the 19th and 20th centuries and were already very popular at that time. Today, in the era of a highly competitive and constantly developing market, the support of a professional consulting company may prove to be an invaluable asset of the company. Consultants do not follow beaten paths, do not use universal solutions, but 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.