Business Strategy

Overview

A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order to accomplish key objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

Definition

The definition of business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives. Strategy is management's game plan for strengthening the performance of the enterprise. It states how business should be conducted to achieve the desired goals. Without a strategy management has no roadmap to guide them.

Formulation

Formulating a business strategy involves a series of steps that managers follow to include:

1. Analysis of the organization's external environment. 2. Analysis of the organization's internal environment. 3. Analysis of the organization's mission statement and goals. 4. Analysis of the organization's strategic intent and strategic mission. 5. Selection of strategic actions.

A group of professionals discussing business strategy in a meeting room.

Implementation

Implementing a business strategy requires a series of actions by management. These actions relate to the use of the company's resources, the management of its business or product portfolio, the implementation of its business model, and the management of its strategic relationships.

Evaluation and Control

Evaluation and control of a business strategy involves the collection of data to assess the performance of the enterprise and the implementation of necessary corrective actions.

Types of Business Strategies

There are several types of business strategies including:

1. Cost leadership 2. Differentiation 3. Focused cost leadership 4. Focused differentiation 5. Integrated cost leadership-differentiation