Business Strategy – Its Components Levels and Examples
Every business has its distinctive goals and it takes unique ways for a business to achieve those goals. These unique ways comprise the business strategy of each specific business.
Although the definition of sounds simple to understand, it is difficult to establish one and even more challenging to accomplish a fruitful one.
This article will help you understand the business strategy in a better manner.
Definition of Business Strategy
A business strategy is a set of all the routes chosen and measures the business takes to realize business goals. Also, gain a competitive position in the market.
It is the cornerstone of a business as it is the master plan which leads the way to the required goals. Any flaw in this master plan can cause a business loss in the herd of stupendous competitors.
Why is Business Strategy Important?
A business goal without a well-planned strategy is just a fantasy, and it is like gambling if you set foot into the market without an effective working plan.
In an environment of increasing competition, the significance of business strategy is becoming evident. Here is the rationale for the importance of business strategy for a business.
Part of Your Business Plan is an element of your business’ groundwork that is your business plan. While the groundwork sets the aims and objectives, the strategy provides you with a path to achieve that aims. It is the scheme to reach the targeted plan.
Helps in Learning about Your Strengths and Weaknesses
When you formulate your business strategy, you learn about your strengths and weaknesses most of the time. Furthermore, it helps you take advantage of knowing what you are good at and utilizes that to conceal your weaknesses and try to overcome those weaknesses.
Makes Your Business More Effective and Efficient
When every move is pre-planned, each resource is allotted, everybody is conscious of their roles. Then every business action becomes more effective and efficient spontaneously.
Gives You a Competitive Advantage
A business strategy brings into focus taking advantage of the business’s strengths and utilizing it as a competitive advantage to strengthen your company’s position in a distinctive way. It gives recognition to your business and makes it unique in the customer’s eye.
Controls the Business Activities
Business strategy also helps in deciding the path to follow and achieve the milestones. It makes it easy to direct the business activities and administer if they are progressing as planned.
Difference between Business Strategy, Business Plan & Business Model
The business strategy is an essential element of the business plan, a component of the more considerable conceptual structure known as the business model.
The business model is a conceptual framework that describes how the business works, makes profits, and how it plans to accomplish its goals. An effective business plan clarifies those goals, and business strategy contours the roadmap of how to attain them.
The Three Levels of Business Strategy
The business goal is accomplished by the successful implementation of various business strategies. While every team member, partner, and stakeholder of the organization focuses on achieving a single business goal, their actions are defined by different business strategies according to their level in the company.
Business Strategies – Categorized Into Three Levels
Level 1- Corporate Level
The corporate level is the broadest and the topmost level of the business strategy. It sets the directions to accomplish and how how to achieve the target. It sets the goals, vision, and corporate objectives for every stakeholder.
Level 2- The Business Unit Level
This level has the specific strategy of a particular unit that varies for various units of business. A unit can be a specific department, channel, or product that has completely unique operation. These units form strategies to distinguish themselves from the competitors using competitive strategies and line up their goals with the overall business goal as defined in the corporate level strategy.
Level 3- The Functional Level
Various departments of the unit set the functional level strategy. The departments incorporate but are not constrained to sales, marketing, finance, operations, etc. Functional level strategy is limited to day-to-day activities and decisions required to deliver corporate level and unit level strategies. It maintains connections among various departments and achieves functional goals.
The Key Elements of a Business Strategy
The goal is defined clearly in the business plan; the strategy is the key to all the questions related to the execution of that goal. Now, let us discuss about the key elements of the business strategy.
Vision, Mission & Business Objectives
The business strategy focuses mainly on fulfilling the business objectives. It gives your business a vision, direction, and guidelines. It provides a clear direction to perform duties, when and how it needs, and who is responsible for it.
Core Values
Core values define the ‘must’ and ‘must not’ of a business. The core values of a business clarify the doubts and thus show a clear way to the units, top-level, and the departments.
SWOT Analysis
The SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is an idea of an organization’s current condition. Therefore, it is an essential element of a company’s business strategy. It shows the strengths and opportunities that can be useful to the company; and the weaknesses and threats that the company should be careful of.
Operational Tactics
Functional and unit strategies deeply involve the operational details leading to the most effective and efficient work methods. It saves sufficient time and effort as every person knows what is the requirement to achieve the goal.
Allocation Plan & Resource Procurement
The strategy also guides you about the procurement of the needed resources, their allocation plan, and stakeholders.
Measurement
A business strategy is of no use unless some controlling measures access the viability of that plan. A good business strategy always incorporates the methods to track the business’ output and functioning against the set goals.
Examples of Business Strategy
Creation of New Market
Hubspot established and accomplished a unique strategy where it designed a market that was not even existed- inbound marketing. Indeed, it has created an online resource guide that describes the restrictions of interruption marketing and informs about the advantages of inbound marketing. The company also provided free courses helping the target audience understand its offers better.
Buying the Competition
Facebook adopted “Buy the competition” strategy and this buy the competition strategy of Facebook has proven to be very successful. It is all about buying the innovator or the competition instead of creating its own innovation to compete with it. There are many remarkable acquisitions by Facebook, including Instagram and WhatsApp, to increase its reach and user base.
Cost Leadership
OnePlus launched OnePlus 6T in India with features similar to iPhone X but at a price that is half the price of an iPhone X. Thus, this strategy worked like a wonder for OnePlus and made it the top phone brand in India other countries.
Product Differentiation
Apple distinguished its smartphone’s operating system by making it more straightforward as compared to the iOS of an android phone. This step differentiated the company and established its followership. Apple follows a similar strategy for its other products too.
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