Business strategy plans how to carry out a business model.
Business strategy is the set of measures and decisions that a company applies with the intention of achieving its objectives . This is the guide that indicates the steps to follow to carry out what was planned.
It should be noted that the idea of strategy refers to the direction of an issue. Business , meanwhile, is that linked to companies : entities that are dedicated to the development of a commercial or industrial activity to obtain profits.
Through its business strategy, therefore, a corporation establishes what actions it will execute to reach a goal. That is why its design is a key aspect in the success of the company.
Components of a business strategy
A business strategy is made up of several elements. One of them is organizational culture : it is about the values and vision that support a business. These precepts are the ones that stand as the basis for drawing up the strategy and for corporate functioning in general.
The business strategy must also include the objectives : that is, what it aims for. Strategic planning has to be oriented so that these goals can be achieved.
The actions to be developed, the resources to be used (money, technologies, human resources), the direction and the evaluation of the results are other elements that make up the business strategy.
Corporate values are part of business strategy.
Its importance
The design and implementation of a business strategy is very important. It allows you to generate a business plan that guides the steps to follow, establishing deadlines and contributing to the management of resources.
Having a corporate strategy, in turn, minimizes errors, helps improve efficiency and, therefore, shortens the time to achieve the desired results. This is linked to the predictability and structure it brings.
Types of business strategy
It is possible to indicate that the business strategy is subdivided into multiple different strategies. In each area of a company, guidelines can be set and specific objectives determined, and this set of strategies makes up the general or global business strategy .
The main business strategy, as we already indicated, encompasses the philosophy, vision and values of the firm. The rest of the strategic plans emerge from it.
Thus, as part of the business strategy, there may be a marketing strategy , a sales strategy , a communication strategy , a human resources strategy , an investment strategy , an advertising strategy , a supply chain strategy , etc. . Each sector must have someone who assumes strategic leadership and coordinates actions.
A business strategy must include a contingency plan.
Business analytics
Business analytics are the procedures that are carried out to collect, analyze and use data with the intention of optimizing decision making in a company. As part of the business strategy, different types of analyzes are carried out that provide very valuable information for project management.
SWOT analysis , for example, focuses on strengths, weaknesses, opportunities, and threats. It is also known as SWOT analysis (weaknesses, threats, opportunities and threats) or SWOT analysis (for the English words strengths , weaknesses , opportunities and threats ).
The PESTEL analysis , meanwhile, is oriented to the study of political, economic, social, technological, ecological and legal variables. In this way, environmental issues that have an impact on business performance are examined. Typically, the PESTEL analysis is performed before the SWOT.
The analyzes can be very specific. The business strategy may include a cost analysis , a value chain analysis , or a product life cycle analysis , to name a few possibilities.
It is also important to establish key performance indicators (KPIs) to know how the implementation of the business strategy is progressing. Productivity , number of clients, return on investment and profit margin are some of the most used KPIs.
There are other KPIs that relate directly to a type of strategy. The digital strategy , for example, considers KPIs such as the number of visitors to a website, the opening rate of emails and the number of interactions on a social network.
How to improve a business strategy
A business strategy must be reviewed periodically. In this way, it is possible to adapt it to rectify the course if necessary, or make it adapt to the changes imposed by the situation.
This review, therefore, is essential to perfect the business strategy that is current and ongoing. In addition, other issues that help enhance it must be taken into account.
Specialists, in this framework, recommend considering the following points:
- Focus on the customer experience , feeding back the strategy with their opinions and contributions.
- Promote continuous training of the work team and guarantee fluid communication between the various hierarchical levels so that relevant information is available to everyone.
- Bet on innovation and abandon those processes that are inefficient or not necessary.
- Observe the performance of the competition to modify, according to their tactics, one's business strategy when necessary.