What is a business strategy? A business strategy is an articulation of the overall direction of an enterprise in the medium and long-term. It basically specifies the way an entity competes in an industry. In other words, strategies define the rules and guidelines by which the mission, objectives etc may be achieved. Such strategies can cover the whole business or can relate to functional areas such as operations, marketing, finance or human capital. Strategies differ from tactics which are short-term approaches. Your organization requires a unique strategy to be able to differentiate itself properly in the market. But what are the eight key elements of a good business strategy? What constitute the salient features of a good business strategy? The guidelines are contained in this article.
1. The vision, mission and values of your enterprise are vital. You need to define the purpose of your enterprise. Your vision is where you want to be in the future while your mission is the fundamental reason why you exist. Your enterprise values signify the guiding beliefs that underpin its culture.
2. A SWOT analysis is another important element of your business strategy. You need to analyze your strengths and weaknesses – which are internal, and your opportunities and threats – which are external. What industry are you operating in and how profitable is it? What is your competition? Where are you now? What constitute your core competences? Competitor evaluation for example considers aspects such as the products, operating costs and pricing.
3. Your unique value proposition is another big issue. This relates to the products and services that you offer or intend to offer. How are you different from the rest of the enterprises? What unique value do you offer – which is vital to the needs of your target customers? Your value proposition provides for you the competitive advantage.
4. What about your value chain? This denotes the succession of activities to design, produce and market, deliver and support your products or services. Your value chain constitutes the sequence of activities through which value is added. Your value chain should be consistent with your customer needs. Activities that enhance value are called value drivers. These are tools for identifying ways to create more value. The value chain comprises primary activities and support activities. Analyzing activities along your value chain also help identify competitive advantage.
5. The market or the customer is also a key element of your business strategy. Where are you going to be active? What are the demographics? Are there any expansion opportunities? What will you do – and not do? Are there segmentation issues? Do you understand the purchase criteria, for example?
6. The economic aspects are a must. You should state your desired quantified results. Consider the resources available and also effective resource allocation. Take into account your competencies and capabilities. Is there any leverage you can take advantage of? Do you have in place methods of monitoring and evaluating your financial or monetary performance?
7. Now, what about the implementation including the operational processes? How are you going to do it? How do you want to get there? You may for example opt for accelerated growth or alternatively organic growth. Issues such as the policy framework that guides how the organization will operate become important. You have to balance risk with your desired outcome. You also consider and choose among several business options. Your programs set out the implementation plans for the key strategies. These should cover budgets, performance targets, resources, objectives and other relevant issues.
8. Finally, the last vital element of your business strategy is the cornerstone of continuous improvement in implementation and execution. Business strategy is a dynamic process. It is never static. You should be able to sense change and modify your strategy accordingly over the years. You should be flexible and open to change. When you assess progress through reviews, you can implement new plans.