The simplest definition of business strategy is the plan by which the company will develop in the coming years. This is a set of goals, objectives, principles and results that will help a business not only successfully start, but also gain a foothold in the market, outperform competitors. A company without a plan can be compared to a ship that sets off on a long voyage on the high seas without a goal, a compass, or a route. Some aspiring entrepreneurs assume that "just open and work" or "start producing" is enough.
They expect that customers will find them themselves, sales will improve "by itself." This is a deeply erroneous and misconception. This approach quickly leads to the curtailment of business, bankruptcy and closure. All issues, from the target audience and its attraction up to the expected profit, must be resolved in advance. Planning, or rather setting goals and determining ways to solve them, will help the entrepreneur to work more efficiently. A well-thought-out approach will save you from wasting energy on small current tasks.
What is a business strategy?
It can be developed in several forms: long text: a list of goals and principles; keynote presentation. It is recommended to give preference to the first option. A good strategy involves a comprehensive analysis and target settings in at least 5 areas: The purpose of the business, its mission, the key setting. Organizational structure and personnel. Products - assortment, qualities, advantages. Consumers - target audience, methods of attraction. Tactics of work and development - a plan of action for the coming months and years. It is better to develop a business development strategy on your own, based on reference information from the Internet and specialized literature. Only the entrepreneur himself knows what his project should become. Some companies offer turnkey strategy development, but such projects are often not viable. Developers do not know your goals, do not understand exactly how you represent your business. However, the help of professionals in any case will not hurt: if possible, show the finished strategy to an experienced entrepreneur and get his opinion.
Types of strategies
In practice, there are dozens of different strategies. All of them can be classified according to the underlying goal or principle of operation:
Concentrated growth. The company focuses on the development of the product (one or more categories), makes every effort to get the maximum profit from it. For example, it finds new competitive advantages or moves to another market. At the same time, all the characteristics of the product are improved and the optimal price is determined. Great option for small businesses.
Portfolio. The essence of such a strategy is that the company has several business units - goods and services that complement each other. Their complementarity helps to sell them on the market at a higher total cost, creating the so-called synergistic profit effect.
integrated growth. The increase in profits and business development occurs by joining or creating new companies, branches, subsidiaries. Suitable for large enterprises. diversified growth. The essence of the strategy is the simultaneous development of several directions. For example, several categories of goods and services that may not be related in any way. Business growth through a diversification strategy is achieved in such a way that if one of the goods turns out to be unprofitable, the entrepreneur compensates for the costs of it at the expense of other industries and ultimately makes a profit. Suitable for medium and large businesses that can fully invest in the development of several industries. Small companies are not capable of such a task.
Abbreviations.This is an intermediate strategy that is used by an already operating enterprise in order to regroup forces. Some of the structural divisions or subsidiaries are closed, sold or merged. The range of products changes according to new installations or market needs. Thus, the strategies differ in the set intermediate tasks and methods for achieving them. Some options are great for small businesses, while others are best for medium and large businesses. In business planning, it is much more important for an entrepreneur to set goals and formulate methods for achieving them than to know the correct name of the strategy he has chosen. Practice in this matter is much more important than theory.
How to choose a business development strategy
Choosing a business strategy should be based on the following data: the scale of the planned business; available methods of work; opportunity to expand and diversify.
For example, a small coffee shop is unlikely to develop along the path of integrated or diversified growth - its products are very homogeneous, and there will be no resources for expansion (for example, creating a chain of coffee houses) in the coming years. It would be wiser to follow a strategy of concentrated growth: focus on promoting a single business or a business unit - a coffee shop with its set of goods. A business-level strategy is a set of plans and tasks, as well as methods for achieving them, that need to be addressed at the current stage of work.
