Defining a business strategy is one of the most important pillars of a company. Indeed, organizations that want to stay active and grow in their line of business need to have a set of plans that establish their behavior, activities and processes, so that they make it possible to achieve a better position in the market. But how to do it in practice?
In fact, establishing an efficient business strategy allows the organization to evolve and meet these challenges. In this sense, it is important to point out that the word “strategy” is used indiscriminately to talk about different things, thus mixing it with other concepts such as a business model.
If you have not yet managed to understand its true meaning and would like to learn more details about this topic, continue reading our article until the end!
In the next lines, we present abundant information about the business strategy and in the last part of this guide, you will find fantastic tips to create it and generate excellent results.
What is a business strategy?
Essentially, we can say that a business strategy is a recipe in which we choose the “ingredients”, activities and processes necessary for the final product to have excellent quality and stand out from the competition.
Likewise, it is possible to consider it as an adaptation of the military strategies dictated by governments with the aim of winning a war, therefore, its detailed nature is a consequence of the intention of not giving the enemy an opportunity.
In an increasingly competitive market, this adaptation has contributed —and a great deal— to organizations staying on top of the wave in terms of profitability and competitiveness, as well as positioning themselves efficiently in the minds of consumers.
That said, it’s easy to understand its real meaning, right? This is the definition of the main objectives and goals that the company must achieve in a certain period of time considering the use of a limited amount of resources and the adoption of specific actions.
Do not confuse model with business strategy
As we said at the beginning of this post, it is common for managers to mix the concept of business strategy with others related to the management area. Indeed, this is the case of “business model”.
The business model encompasses the logic of an organization, the methods it uses to create shareholder value, and the way it operates in the marketplace. What bidding strategy should tracy, a pizzeria owner, use to get more people to call her business?. Then, the business strategy is the selection of the model with which the organization wishes to develop in its field and stand out in the market.
In short, the strategy is the set of decisions that the manager must make to create a plan whose structure helps the organization to achieve its objectives by following a certain business model. In other words, the latter makes up said plan, for which you first need to establish your strategy and then select the business model that best suits your purposes.
What is the best strategy for my company?
Business strategies can be incorporated in different ways, since each company has specific needs and an exclusive profile. This means that defining a strategy is a complex process that requires deep reflection.
Indeed, the starting point should be to carry out a detailed analysis of the current situation of the company. For this reason, before starting the development of the strategy, it is recommended to review the history of its results and understand the current landscape of the processes and their contribution to the development of the company.
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In this situation, it is necessary:
- Evaluate all areas of the business;
- Identify which measures have produced positive results;
- Verify ineffective actions;
- Find good opportunities for improvement.
Likewise, to adopt the best alternative, the company will have to analyze several positioning mechanisms and identify how it wants to start its path in the market.
In this sense, you must keep in mind that the demands and expectations of the consumer are changing, therefore, the market has a dynamic nature. In other words, the organization needs to choose a business strategy in accordance with its reality and its objectives, maintaining a structure that is flexible enough to adapt to a world in constant evolution.
As it is a process that requires the contemplation of different points, many managers look for success stories to be inspired and thus define their business strategy. But, attention!
This can often be a dangerous choice, especially since a very effective solution for one company does not always offer the same results in another business with a different context and supported by different principles and values.
Having said that, before making a decision monopolizing a certain strategy, see if the adopted solution is very well founded on solid and reliable data, as well as on a rigorous verification of the internal and external context of the company.
5 steps to create a sublime business strategy
Businesses are increasingly demanding in terms of the quality of the businesses that make them up, a fact that leads to the opening of new ventures with the aim of meeting the new demands. This heightened competition requires organizations to pay more attention to their business strategy.
Indeed, when decision-making is well prepared and executed, it generates better prospects in terms of profitability and contributes to the recognition of the company in the market. However, how to develop an efficient strategy that allows the organization to achieve its objectives?
This question is extremely relevant and is usually one of the main concerns of managers who need to implement a business excellence strategy. Below, learn the 5 essential steps to create it and get fantastic results.
1. Do a SWOT analysis
Known in Spanish as a SWOT analysis, this type of study allows evaluating both the internal environment — Strengths and Weaknesses — and the external environment — Opportunities and Threats — . In fact, it is an extremely easy-to-use and intuitive tool that makes it possible to think about and, in some cases, review business strategy.
Here are some examples of each of its dimensions:
This positive point covers aspects such as the positive reputation in the market, the privileged location and the products with competitive differentials.
In the group of weaknesses, that is, the internal weak points, we highlight as main drawbacks the limited financial resources, the difficulty in obtaining raw materials and the reduced investment in technology.
Opportunities constitute a dimension that offers a positive perspective on the environment in which the company works, such as bills that benefit its sector of activity, new technologies and an increase in the level of consumption.
Threats are the external factors that negatively impact the development of the company in the market and are not under the control of the company. Some of the main examples are the increase in inflation, increase in unemployment and the entry of new companies, thus strengthening competition.
Indeed, the SWOT analysis is a very useful resource when it comes to finding out the scenario of action of a company, since it allows:
- Anticipate problems;
- Detect opportunities;
- Prepare to face possible difficulties either by virtue of competition or market misfortunes.
Therefore, this tool provides a very complete diagnosis of your business.
2. Make a strategic plan
The strategic plan is a very important document for the strategy, since it includes all the data and information inherent in both the internal and external environment. Among the main points that need to be considered in the document, we highlight:
Corporate mission and vision
The definition of these three aspects are essential for the company to establish its culture, structure its behavior, as well as define its internal policies. But ultimately, what does each mean?
- Mission: It is the reason why the company exists.
- Vision: Defines how the company wants to be seen in a few years.
Notice that, by establishing these two aspects, you begin to draw the north — or course — that the company must adopt. As a result of the correct definition of both points, it is possible to establish other components of the strategic plan.
Ultimately, corporate objectives refer to the quantitative and qualitative results that an organization wishes to achieve in order to actually fulfill its mission considering a certain period and the environment in which the company operates.
As a manager, you need to make sure goals have the SMART characteristics: Specific, Measurable, Achievable, Realistic, and Time-Related. In addition, it is important that they include factors such as KPIs, consider the mechanisms for obtaining resources and cover the financial demands required for their scope.
Likewise, it is essential that the business objectives are strategic, that is, that they guide the company towards a successful path . For this reason, to prepare them, it is essential to keep in mind the results obtained when carrying out the SWOT analysis and the definitions of mission and vision.
The cost-benefit of a product or service
At this point, it is necessary to understand the profile of the consumer served by the company and verify whether the benefits provided by the products or services offered by the company are in accordance with the sale price.
Therefore, it is worth asking if customers are willing to pay the amount established by the company to acquire a certain item or hire a service.
Likewise, the preparation of a strategic plan includes other points such as marketing studies, competitive analysis, financial projections, resource demands of different types, thus providing an integrated and broad vision of the business.
As you can see, the strategic plan is a very complete and fundamentally important document for the company , and must therefore be disseminated among the different corporate spheres —strategic, tactical and operational— so that all employees can understand where the company wants to go and What challenges do you want to conquer?
3. Translate goals into short-term plans
According to what was pointed out in the previous stage, the definition of objectives plays a decisive role in the business strategy and, therefore, in the organizational future. But, it is not enough to determine them expecting them to be fulfilled by themselves, it is essential to think about how they will be achieved and develop plans that can bring the organization closer to their fulfillment.
For this, it is necessary to establish short-term plans that include actions and functions for each of the sectors. In this sense, the idea is to “divide to add” by creating fewer and easier goals to meet. In this way, the company manages to focus on achieving measurable feasible results one step at a time.
4. Define how the company should position itself in the market
Market positioning is closely related to how the company projects itself to the general public and to the competition. To do it correctly, it is essential to align marketing actions to the results obtained in the SWOT analysis and in accordance with what is established in the strategic planning.
At this point, it is interesting that the manager answers what is his main goal: attract new customers, build consumer loyalty or differentiate his brand from the competition?
The positioning plan should include both regular and seasonal campaigns – for example, Mother’s Day, Christmas, Summer. In both types of actions, it is essential to define the general and specific objectives of each one and determine the target audience.
From its definition, much more effective actions can be implemented to meet the different demands of customers, thus generating a more positive experience and promoting the growth of the brand.
5. Monitor the results
When you reach this last stage, you probably think that the hard work has been finished. However, for a business strategy to fulfill its role, it is necessary to regularly verify whether its actions, processes and objectives are aligned with the path previously defined to achieve the organization’s general challenge.
Indeed, creating, managing and reviewing a strategy demands a lot of attention from professionals, so you should put a lot of focus on:
- capture the relevant data;
- divide the information to process it more effectively;
- to plan;
- prioritize relevant content for decision making;
- Have a clear strategic vision.
For this reason, many managers, directors and leaders choose to adopt alternative methodologies such as the integration of specific software.
Therefore, the creation of an effective business strategy is essential to direct the company towards the consolidation of its objectives, achieve the expected results, increase its level of competitiveness in the market and optimize the quality of the products and services offered to customers. customers thus causing more satisfaction.
7 golden tips to optimize the quality of your strategy
Now that you know the concept of business strategy and how to implement it, it’s time to learn how to maximize your results. For that, look at the following 7 tips and try to adopt them as soon as possible:
1. Segment your target audience
This seems obvious, right? However, many managers have problems when implementing their business strategy precisely because they leave this point aside. Essentially, defining the target audience with extreme accuracy is one of the most efficient techniques to answer the following question: “Who will buy my product or hire the service offered by the company?”.
In short, it is not enough to determine the public, it is necessary to keep in mind their characteristics, needs and expectations when drawing plans, processes and organizational actions.
2. Set challenging goals
Before going fully into this point, it is necessary to understand that goal is not synonymous with objective. In this way:
- An objective is what the company wants to do or achieve;
- A goal is the specification of the objectives under a quantitative system considering the steps and deadlines for reaching the first ones.
Therefore, it is clear that any business strategy needs to have short, medium and long term goals in accordance with the respective objectives.
Regarding this point, the goals must be challenging, so that they take the officials out of the comfort zone without losing sight of the reality of the business, thus avoiding generating negative feelings such as demotivation.
3. Maintains standardized behavior
As we said before, the behavior of the market is dynamic, therefore, it is essential that the strategy is adaptable to different moments. In fact, difficulties are inevitable and it is essential to be prepared to deal with the unexpected effectively. For that, it is advisable to develop an orientation policy.
The adoption of a standardized posture is important to guide decision-making when complex and unusual circumstances arise. This pattern can be linked to corporate values or a list of competencies can be created to add them to the recruitment and selection processes, thus ensuring that all people who join the company are aligned with its principles.
4. Take care of your relationship with suppliers
In addition to considering internal factors, a modern company needs to create a strategy considering its stakeholders, especially suppliers.
Actually, establishing a closer link with the supplier companies allows the business to develop a differential with other enterprises in the field, thus increasing its competitiveness in the market.
These alliances are also important to achieve a balance in costs, since a good negotiation involves aspects of price, discount, payment and delivery terms, among other relevant points.
5. Monitor the competition
The deep knowledge of the competition is essential for the elaboration of the strategy of your business. Among the main actions you must undertake, focus your attention on:
- The monitoring of your products and services;
- Your disclosure system;
- The relationship with customers;
- Your innovation system.
Indeed, the intention is not to copy the good ideas of others, but to be inspired by their processes or actions , thus being able to serve as a parameter to see how efficient your company is in these dimensions. In administration, this technique is called Benchmarking and is widely used by the main organizations worldwide.
Likewise, monitoring the competition allows you to understand its direction in the market, either to occupy a space that your company dominates or because it discovered an attractive, innovative and profitable market niche. In this sense, the sooner you identify the intentions of the competition, the faster you can adjust your strategies, thus preventing the competition from gaining space in the market.
6. Amplify your network of contacts
It is not enough to immerse yourself in corporate waters, it is necessary to interact with other professionals and companies. To connect with the world and stay within the news in the area, it is essential to invest in the network of contacts.
In essence, the network is a support system in which services are shared, as well as information is exchanged between individuals and between groups with common interests.
If you want to increase your influence and increase your circle of professional relationships, you must:
- Participate in fairs and workshops ;
- Take courses;
- Read books;
- Follow blog and interesting sites;
- Be present on social networks.
Therefore, expanding your network of contacts is a task that requires dedication, however, the results are usually fantastic.
7. Strengthens the financial management of the business
To implement all the plans of the strategy, it is essential to have sufficient financial resources, which implies managing capital efficiently, either by investing a certain amount or using the income obtained through sales.
For this reason, business strategy must be closely related to financial planning. In this way, at any sign that your box will enter the period in red, you can reorganize your actions.