Business strategy can be understood as the course of action or set of decisions which assist the entrepreneurs in achieving specific business objectives.
Businessstrategy is a master plan that a company implements to attain a higher competitive position within the market, to carry on its operations in the market, please its customers and at the end achieve their desired results. In businesses, business strategy is the long-term strategy of the desired image, direction and destination that the organisation wants to achieve. It is a scheme used by organisations of corporate intent and action which is carefully, minutely planned and conveniently, flexibly designed with the purpose of:
A business strategy basically is a complied set of competitive moves and actions that a business uses to attract its customers, compete with other businesses successfully, strengthening its performance and achieve their organisational goals.
Corporate level strategy is long-range, action-oriented, integrated and comprehensive plan formulated by the top management. It is used to ascertain business lines, expansion and growth, takeovers and mergers, diversification, integration, new areas for investment and divestment and so forth.
The strategies that relate to a particular business are known as business level strategies. It is developed by the general managers, who convert mission and vision into concrete strategies. It is like a blueprint of the entire business.
Developed by the first line managers or supervisors, functional level strategy involves decision making at the operational level concerning particular functional areas like marketing, production, human resource, research and development, finance and so on.
A business strategy is a combination of proactive actions on the part of management, for the purpose of enhancing the company’s market position and overall performance and reactions to unexpected developments and new market conditions.
The maximum part of the company’s present strategy is a result of formerly initiated actions and business approaches, but when market conditions take an unanticipated turn, the company requires a strategic reaction to cope with contingencies. Hence, for unforeseen development, a part of the business strategy is formulated as a reasoned response.
A growth strategy entails introducing new products or adding new features to existing products. Sometimes, a small company may be forced to modify or increase its product line to keep up with competitors. Otherwise, customers may start using the new technology of a competitive company.
For example, cell phone companies are constantly adding new features or discovering new technology. Cell phone companies that do not keep up with consumer demand will not stay in business very long.
A small company may also adopt a growth strategy by finding a new market for its products. Sometimes, companies find new markets for their products by accident. For example, a small consumer soap manufacturer may discover through marketing research that industrial workers like its products. Hence, in addition to selling soap in retail stores, the company could package the soap in larger containers for factory and plant workers.
Small companies will often use a product differentiation strategy when they have a competitive advantage, such as superior quality or service. For example, a small manufacturer or air purifiers may set themselves apart from competitors with their superior engineering design. Obviously, companies use a product differentiation strategy to set themselves apart from key competitors. However, a product differentiation strategy can also help a company build brand loyalty.
A price-skimming strategy involves charging high prices for a product, particularly during the introductory phase. A small company will use a price-skimming strategy to quickly recover its production and advertising costs. However, there must be something special about the product for consumers to pay the exorbitant price. An example would be the introduction of a new technology.
A small company may be the first to introduce a new type of solar panel. Because the company is the only one selling the product, customers that really want the solar panels may pay the higher price. One disadvantage of a price-skimming is that it tends to attract competition relatively quickly. Enterprising individuals may see the profits the company is reaping and produce their own products, provided they have the technological know-how.
A small company with extra capital may use an acquisition strategy to gain a competitive advantage. An acquisition strategy entails purchasing another company, or one or more of its product lines. For example, a small grocery retailer on the east coast may purchase a comparable grocery chain in the Midwest to expand its operations.
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