Business strategy is a word that is mentioned a lot by business owners in business forums. Coming up with smart business strategies is a skill every business owner must have to bring their business to success.
Here is a summary article from A – Z about the concept of business strategy, how to build an effective business strategy for businesses.
1.What is business strategy?
Business strategy is the art of coordinating activities and directing them to achieve the long-term goals of the business. Can be viewed as a long-term plan to achieve defined business goals. Business strategy shows the strengths of the business, the resources it can mobilize, the opportunities as well as the weaknesses and threats faced.
Business strategy is the overall content in a business plan in sequence, including a series of methods and ways of doing business throughout a long time. This term is a concept that belongs to the science of strategy and specifically refers to strategy in the field of business. It is for this reason that it is not fundamentally different from the basic concepts of strategy.
A business strategy is successful when it helps a business grow, compete with its competitors, and be financially effective. A full business strategy must include how to achieve your goals, how to differentiate yourself from the competition, and how to bring in revenue.
2.Must-have business strategies
Any business model, you also need to build yourself a really right business strategy. Here are 7 important and basic strategies that you can refer to to implement:
2.1 Business strategy: Compete to be different
Many people believe that the business strategy of an enterprise is to become the best, most outstanding unit of that industry, however, that task sometimes cannot be realized.
In sports, there is only one winner, but in business, it is normal for 2 or 3 leading businesses to benefit.
The worst business strategy, is to try to knock out the strongest competitor in the industry by copying their every move. Approach different values for success.
2.2 Business strategy: Competition for profit
Doing business isn’t just about having the largest share of the market, or a business that’s growing at breakneck speed, it’s about the profits you make.
So after all, if all the strategies you’ve come up with don’t have a clear purpose in terms of how much money you can make, it’s best not to waste time and effort implementing them.
Understand the market before building a business strategy.
Every business is part of an economic-market ecosystem. Each market will bring its own characteristics and personality. And these characteristics will be related to the profits that you can achieve in the future.
Understanding the market, competitors will form strategic thinking for your business, on how to help you survive and compete.
2.3 Define target audience
You need to define exactly who you are targeting, and how you will serve this audience. You cannot sell your product or service to everyone, because you only have a limited number of potential customers with the same need.
Therefore, it is necessary to identify the steps to make customers feel satisfied with their needs with the products and value you bring.
2.4 Learn to say no
When you have understood the market, understood the customer, built the value of the commitment of the business, you will gradually realize that there are many things that we have to say no to.
There will be a lot of customer files you don’t serve, activities you don’t need to perform, and products and services you shouldn’t offer.
In business strategy, determining what to do and what not to do is equally important.
2.5 Change for success
Competitors evolve, customer needs and behaviors change, and technology improves, so an essential element in determining a company’s business strategy is the acumen to spot new trends. can be applied to the business model.
When you don’t change, you are standing still and standing still. Nokia was once the leading mobile phone brand, but was defeated by apple, this is a prime example of fear of change.
Changing their own products is also a way for brands to extend the life cycle of their products.
2.6 Thinking system
Last but not least, the business strategy is the formation of systems thinking, building data and correct data to make assumptions for the growth of the business.
Your judgments cannot always be 100% accurate, so you need real data to judge about customers, about market trends, about everything, ..
3 Features of business strategy
After understanding what the basic concept of a business strategy is, the next basic content to understand is its characteristics. As mentioned above, strategy in business is a concept of strategic science, so it is not too different from the original concept of strategy. However, the strategy in the business field still possesses its own distinctive characteristics, typically stability over time rather than the implementation of a business tactic.
Therefore, the characteristics of a business strategy are not the form of an immutable model. If there is volatility in the market, if it is small and medium, it is necessary to change tactics to adapt, not strategy. Strategy formulation changes only when market volatility is too great.
Another feature of a business strategy is that it needs to be approved by a collective. This is the exact opposite of a business tactic as it can be suggested and applied by individuals. The reason why strategic business has this feature is because its influence on the business is much larger than that of business tactics. Therefore, when planning a business strategy, it is necessary to carefully calculate and consider carefully the management board combined with the participation of the most capable experts in the business.
4 Role of business strategy
The role of business strategy is to reference the past experience of the business itself or of other outside businesses. Thereby, it can indicate directions for future business activities. In addition, this strategy also has the role of assigning and allocating human and financial resources to implement specific tactics.
Note that trading strategies will only last for a short period of time. Certainly, the market will constantly appear other businesses and change constantly, making the business’s strategy also in a state of readiness to change to maintain its viability. A business strategy is not only the purpose of capturing markets and customers, but also being competitive, eliminating competitors. Therefore, another role of strategy is to counter the opponent’s attack strategy.
5 Business growth strategies
|Current products||Related Products||
|Existing Customers||Market penetration||Product Expansion||Product development|
|Relevant market||Market expansion||Business expansion||Business development focused market|
|A new customer||Market development||Business development: product focus||Diversification|
Business goals can be achieved in two ways:
- Best management of current jobs or find new jobs to do in the business. To choose either or both, the business must decide whether to focus on existing customers, or to seek new customers, or both.
- The table above shows the growth strategies that businesses can choose. It is known as a product market matrix that indicates the types of strategies a business can pursue to achieve its goals.
This matrix shows that a business can grow in the market in different ways by focusing on existing or new products and on existing or new customers.
6 How to build an effective business strategy
To build a good business strategy, you basically need to follow these 4 steps:
6.1 Define long-term goals
It is necessary to define the goals the business wants to achieve after a specified period of time. Goals as mentioned above can include: sales, competitive position (market share), scale …
S.M.A.R.T rule for goal setting is as follows:
S = Specific: the goal must be clearly defined
M = Measurable: must be measurable
A = Attainable: the goal is challenging but achievable. That is, when setting goals, it is necessary to pay attention to factors such as: the resources of the enterprise, the level of competition of the competitors …
R = Relevant: the goal is relevant to the business, has actual results, not expressed in numbers of activities.
T = Time bound: has the time to be reached.
A common mistake at small businesses is not setting goals. They have enough reasons to justify such as: “small businesses do not need goals”, “survival is already a difficulty”.
A good goal is like a guideline for business activities, helping to shorten the road to success.
6.2 Market survey and analysis
To have an effective business strategy, you need to understand the market, your competitors and your competitive position in the market. SWOT analysis can help you in this.
SWOT is the word that stands for:
S – strengths: what are the strengths of your business?
W- weaknesses: what weaknesses of the business can be exploited?
O – opportunities: what opportunities are there in the market that can be exploited?
T – Threats – what threats can affect your business.
There are many other analytical models such as PEST or BCG matrix, but SWOT is the most commonly used.
6.3 Build product strategy
Once you understand the market, its strengths and weaknesses, businesses need to develop product strategies to concretize competitive advantages and achieve business goals.
Product and service strategy is an extremely special and important part because it is the foundation of business strategy. Any business that goes to the market will also trade in a certain type of product or service. Therefore, the product and service strategy helps businesses determine the direction of development, design products to suit the needs and tastes of the market, as well as limit the risks that may arise. may encounter.
In addition, businesses must also focus on factors affecting the products and services themselves in order to improve sales efficiency. These factors are: product quality, cost, packaging and product brands, etc. A good product or service strategy is when it answers the following three key questions:
- What is the goal achieved?
- Who are the competitors?
- What is the company’s competitive advantage and how can it be used to beat the competition?
6.4 Evaluate, Measure, and Optimize
This is the final step in developing a business strategy for the business, and it is also the step to determine whether the management’s strategic choices are in line with the goals of the business. This can be seen as a process of censorship and addition.
Nowadays, there are a lot of software on the market that help to automatically make statistics of the above data, making it easy for managers to track and update accurately. Thereby making appropriate adjustments at the right time, in order to bring the best effect to the content of the business strategy.
If necessary, adjust the execution plan or even the strategy to achieve better results.
7. 3 popular business strategy models
There are three basic types of strategy that any leader must really understand: (1) common strategy, (2) corporate strategy, and (3) competitive strategy. This section will define the differences between the three types of business strategy and raise some helpful questions.
7.1 Common strategy
Popular strategy – concerned with how a particular goal is achieved. Therefore, this type of strategy is more concerned with the relationship between the ends and the means of implementation, between the results and the resources to be used.
Strategy or Tactics both involve taking necessary actions to achieve specific goals. Mostly, strategy is concerned with how you deploy and allocate resources at will while tactics are concerned with how you use them.
Strategies and tactics bridge the gap between ends and means.
Strategy and tactics are terms formed from within the military. However, in business, it is the basic foundation of any success.
7.2 Corporate strategy and competitive strategy
Corporate strategy will determine which market segment the business operates in, how its business model is. Competitive strategy will define the core values that are used to compete.
Corporate strategy typically determines issues related to the vision and strategy of the business, telling customers what they do, why they exist, and what they will become in the future.
Competitive strategy is the sum total of capabilities, strengths and weaknesses of an enterprise when compared with direct competitors in the same industry.
According to Michael Porter – professor of Harvard University, competitive strategy is influenced by 5 main factors:
- Threat from new entrants to the market.
- Threat from substitute products or services.
- Supplier strength.
- Buyer Power.
- Competition between businesses exists.
He also emphasized that, to solve the above 5 factors, a competitive strategy needs to possess: (1) focus, (2) differentiation, and (3) leadership.
8. Factors affecting business strategy
Here are some basic factors that directly affect the construction of your business strategy:
- Products/services offered.
- Natural resources.
- Marketing and Sales Methods.
- Production capacity.
- Customer responsiveness.
- The goal is to increase sales.
- Distribution method.
- Technology platform.
- Type and market demand.
- Profit target.
- Online business strategy.
Michael Treacy and Fred Wiersema suggest that there are 3 principles to absolutely follow in business strategy including:
This strategy depends on the ability to produce and deliver the product/service. The goal is to lead the market by price and convenience.
This strategy focuses on providing products and services that are really suitable for selected customer segments. The goal is to build lasting relationships and build customer loyalty with the business brand.
Product Leadership Generation
The strategy focuses on developing superior, innovative products and services. The goal is to quickly commercialize product ideas belonging to the enterprise.
9. 6 notes for a successful business strategy
9.1. Know your opponent
Understanding the competition will find the appropriate plan to overcome the competition.
9.2. Pay attention to cash flow
Monitor cash flow closely, optimize operations to minimize costs, and always have a reserve for unforeseen circumstances. After all, no matter how good a business plan is, it is also a forecast for the future, and nothing is 100% guaranteed, especially when you have a strong competitor or complicated macroeconomic developments. miscellaneous
9.3. Applying new technology
Technology is changing every aspect of life, so it can also make your business more efficient. There are many business management software that can help run the company.
9.4. Start with a niche
Growing a business with a niche is often more cost-effective, especially if you know it can cost very little if you keep the following in mind:
- Offer a unique product to a small group of customers.
- Understand the unique needs of this customer group
- Deliver the right message
9.5. Pay attention to customer feedback
The purpose of business is to satisfy the needs of customers. So it doesn’t make any sense if customers don’t like and don’t buy your product.
Collect customer opinions, identify new trends… to adjust their products to be more suitable.
9.6. Adapt quickly to change
The world is always moving and changing, and the business environment is changing even faster. Entrepreneurs must prepare for and accept change and modify business practices and business strategies accordingly.
Be flexible! If a transformation in your products and services is a must, don’t miss it. Slow adaptation can cause you to lose customers or even bankrupt your business.
10 Frequently asked questions about business strategy
Answering these questions will help you better understand business strategy
10.1. Relating to the brand’s vision and mission
- Who are we?
- What do we do?
- Why are we here? (this market)
- What sector does the company operate in?
- What do we want the business to be in the future?
- What do we want the business to become in the future?
10.2. Relating to popular strategies
- What are the business goals?
- Current business strategy?
- What actions can help us achieve our goals?
- What facilities and resources should be used?
- Is your business limited by no means or resources?
- What serious risks do we need to prepare for in advance?
10.3. Relating to corporate strategy
- Current business strategy?
- What are the assumptions about the feasibility of the new strategy?
- What happens in different environments (different social, political, technological, and financial)?
- Business growth and profit goals?
- Where is the target market?
- In what particular industry or sector?
10.4. Relating to competitive strategy
- What is the current competitive strategy?
- What are the assumptions about the feasibility of the new strategy?
- What is the general situation of competitors and the market?
- Business growth and profit goals?
- What type of products and services does the business provide?
- What target customer segments does it serve?
- How are buy/sell decisions made?
- How do businesses distribute products and services?
- What is the technology platform businesses use?
- Core platforms required?
- Basically what are we going to compete with?
Determine who your main customers are! At this time, businesses can focus all necessary resources to meet the needs of this customer group, avoiding the distribution of resources to secondary customer groups.
Hopefully with the above article, businesses and business stores can build themselves an effective business strategy.