What Business Strategy Really Meansposted by Anna Mar, April 18, 2013
Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.Business strategy conjures up images of suspense and intrigue — companies locked in bitter competitive battles using complex techniques and tactics.
~ Sun Tzu
It's true that business strategies sometimes resemble battle. However, the majority of business strategies are a little less dramatic than that. Most strategies are plans to innovate, produce, improve and establish products, brands, reputation and relationships.
The following overview and examples illustrate how businesses use strategy to achieve business objectives.
Strategy OverviewStrategies are driven by factors such as competition, technological change, regulations and goals (e.g. generating profits).
Strategies such as new product development, adopting innovative technology, improving processes and establishing customer relationships are designed to produce business results such as revenue and sustainable competitive advantage.
Levels of StrategyIt's common for everyone in an organization to contribute to strategy at one level or another.
Most organizations try to align all strategies with a master organizational strategy.
Tactics are micro-strategies that take advantage of opportunities as they arise. In many cases, tactics are used to address gaps in strategy.
Examples of StrategyStrategies are any plans a business makes that are important to its mission. The following examples illustrate common business strategies.
|Innovate New Products||A commercial aircraft manufacturer plans to develop aircraft that use light composite materials to improve energy performance.|
|Improve Products & Processes||A candy manufacturer replaces artificial food coloring with natural coloring agents including beetroot juice.|
|Mergers & Acquisitions||A software company acquires small innovative companies to fuel its product innovation.|
|Achieve Sales Targets||An enterprise software company's strategy focuses on improving sales of its existing products.|
|Achieve Marketing Targets||A construction company uses social media to establish customer relationships to reduce customer acquisition cost.|
|Control Risk||An energy company focuses on risk management to reduce the risk of an oil spill.|
|Improve Quality||A coffee shop that's losing business to a popular competitor focuses on improving its customer experience with a new decor and menu.|
|Build Leaders & Grow Careers||A car manufacturer that's struggling to innovate shifts its focus to its people. It establishes programs that quickly commercialize innovative ideas from any level in the company. All employees are encouraged to step up and lead innovation.|
|Ethical & Responsible Conduct||A hotel chain in the South Pacific establishes strategies for ethical business conduct including an employee healthcare program, good environmental practices and a strategy of supporting communities by purchasing local foods and products.|
|Reduce Environmental Impact||A brand of bottled water attributes its success to its reputation for ethical & responsible conduct. It establishes an aggressive sustainability program to minimize the ecological impact of its operations.|
|Improve Decision Support||A retail bank establishes a knowledge management program to support decision making at every level of the firm.|
|Automate processes||A car manufacturer automates assembly to improve quality and reduce costs.|
|Improve Productivity Tools||A real estate company invests in a customer relationship management system to measure & improve the productivity of its agents.|
|Innovate Corporate Culture||A government agency known for its low levels of service and high levels of inefficiency embarks on an aggressive program to realign its organizational culture to customer service goals.|
|Build & Protect Reputation||A small private bank develops strategies to build its reputation for service and investment returns.|
|Improve Productivity||An airport embarks on a program to improve the productivity of its baggage handling operations.|
|Improve Efficiency||A 84 year old landmark building in New York undergoes a major renovation to leverage sustainable building technologies. Its energy efficiency is dramatically improved.|
|Build & Improve Customer Relationships||A flower shop in a small town engages other local businesses such as wedding planners to build & improve customer relationships.|
|Innovate Strategy||A software company updates its strategy on a continual basis and maintains short strategy implementation cycles. Its products improve every few weeks and its strategy is responsive to customer needs and technological change.|
Next: What are strategic drivers?
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