A business plan or strategy is nothing but an outline of a plan of action to help achieve an organization’s vision or business goals. All this is done to help improve the financial position of a company or consolidate its position in an industry or the market.
How is a Business Strategy Different from Tactics?
Although both terms are used interchangeably, they are in fact very much different. A business strategy is an organizations long term goals and aspirations while tactics are specific actions a business would have to take to reach the long-term goals mentioned in the strategy.
Levels of Business Strategy
There are three levels in which business strategies are typically used. They are corporate, business, and functional levels. A corporate level strategy Is made wealth organizations top management. It consists of all the long-term goals and visions that the management may have. They are used to help guide the firm in cases of acquisitions or diversification etc. A business service strategy will incorporate the corporate vision, but with a focus on specific business areas. In this, the vision of the top management is converted into strategies that will help a business flourish. Functional level strategies explain how specific departments like marketing, research and development can support the company and at the same time work with the strategies organised by the corporation’s top management. Although there is a risk of conflict of priorities on various levels if specific clear instructions are given then it can help in mitigating the risk.
Is Having a Business Strategy Important?
Having a business strategy for an organization is particularly important as it essentially works as a SWOT plan for the company. It helps in reflecting the strengths and weaknesses of the company and at the same time it makes clear on how the organization is going to respond to any threats or opportunities in the market in which the organization operates. A business strategy also helps a company in managing its resources. If a company would not have a business strategy, then the whole company would effectively be in chaos and the organisation’s effectiveness would be limited this would often result in a loss of market share in the industry.
Six Elements Needed to Create Good Business Strategies
1 – Leadership vision-in this a business strategy should come from its top management clear vision from the top management is important starting point for the major questions like why and where we are going in wire which can be answered.
2 – Culture- The company culture is an important driver for implementing a successful business strategy, without a company culture in which there is harmony and supportiveness the company will achieve nothing.
3 – Strategic Marketing Plan- A strategic plan is not of any use if there is no marketing plan for the organization. The marketing plan directs all the business resources with need to be.
4 – Management- the top management of the organization needs to be strong and at the same time inspire the entire organization to help achieve its business goals.
5 – Systems- Every organization needs efficient business system running behind it to successfully implement its business strategy and goals
6 – Resources- every business organization also needs plenty of resources to execute its business goals and aspirations and a lack of resources of resources can significantly hamper the business’s ability to scale its operations or grow.
How to Create a Business Strategy
Define the vision- Before creating a business strategy a company must first consider its core values and what its future position in the market is to be. This is also known as the company’s vision. This is a key step in the whole strategy building process because it will make sure that the strategy which the companies working on reflects its actual needs.
Offer & Value Proposition- is what the company offers in terms of goods and services. While the value proposition is. Why people should buy them in the first place. The value proposition also answers why a company even exists in the first place and what differentiates its from Its rivals and other competitors.
Customers- Defining what type of customers a firm serves is also an Important step. There are two types of customers. They are either categorised as consumers or businesses. have different. Criteria, as in reasons for purchasing goods and services. If a firm knows what these are, then it can Address their needs and wants more specifically.
Target Market- top management is building his strategy, it needs to be clear on what type of customers it is selling its products to. organization is selling it to consumers. Its market can be defined in demographic terms and social economic terms such as gender, age, occupation, etc. However, if the organization is selling it to businesses, then the customers can be defined by factors like industry or business model, etc.
Identify its competitive advantage- A company that works in a competitive industry should make clear its advantages and disadvantages. It also needs to answer questions like how it can compete in the market or create demand and increase their sales margin Etc.