In this content, we cover what a business strategy is and why it matters. In addition, we present the components of a business strategy. Plus, 10 examples of business strategies to help you generate ideas for your own company.
What are business strategies?
A business strategy refers to the actions as well as decisions that a company takes to achieve its business objectives and be competitive in its industry .
It defines what the company needs to do to achieve its goals, and what can help guide the decision-making process for hiring and allocating resources.
A business strategy helps different departments work together, ensuring that departmental decisions support the overall direction of the company.
Why is a business strategy important?
There are dozens of reasons why a business strategy is important for organizations, including:
- Planning: A business strategy helps you identify key steps to take to achieve your business goals
- Strengths and Weaknesses: The process of creating a business strategy allows you to identify as well as assess your company’s strengths and weaknesses, creating a strategy that capitalizes on your strengths and overcomes or eliminates your weaknesses.
- Efficiency: a business strategy allows you to effectively allocate resources to your business activities, which automatically makes you more efficient
- Control: It gives you more control over the activities you are carrying out to achieve your organizational goals, as you understand the path you are taking and can also practically assess whether your activities are approaching your goals.
- Competitive Advantage: By identifying a clear plan for how you will achieve your goals, then you can focus on capitalizing on your strengths, using them as a competitive advantage that makes your company unique.
What are the components of a business strategy?
There are six main components of a business strategy.
Check the list of components of a business strategy:
- Business vision and goals
- Core values
- SWOT Analysis
- tactics
- Resource allocation plan
- Measurement
1. Vision and business objectives
Business strategies aim to help you achieve your business goals.
With a vision for the direction of the business, you can create clear instructions in the business strategy for what needs to be done and who is responsible for it.
2. Core values
The business strategy guides high-level executives and departments on what should and should not be done, in line with the organization’s core values.
3. SWOT analysis for business strategy
SWOT analysis stands for strengths, weaknesses, opportunities and threats. This analysis is included in all business strategies as it allows the company to trust its strengths and use them to an advantage.
It also makes the company aware of any weaknesses or threats.
4. Tactics for business strategy
Many business strategies articulate the operational details of how work should be done to maximize efficiency.
The people responsible for the tactics understand what needs to be done, saving time as well as effort.
5. Resource Allocation Plan
A business strategy includes where you will find the resources you need to complete the plan, how the resources will be allocated, and in addition, who is responsible for doing so.
6. Measurement in business strategy
The business strategy also includes a way to track the company’s production, thus evaluating its performance against the goals set before the strategy is launched.
10 examples of business strategy
Check out 10 examples of great business strategies below.
- Cross-sell more products
- Most innovative product or service
- Increase sales of new products
- Improve customer service
- Cornering a youth market
- product differentiation
- pricing strategies
- technological advantage
- Improve customer retention
- Sustainability
1. Cross-sell more products
Some organizations focus on selling more products to the same customer. This strategy works well for office supply companies and banks, as well as online retailers.
By increasing the amount of product sold per customer, you can then increase the average cart size. Even a small increase in cart size can have a significant impact on profitability, that is, without having to spend money to acquire more new customers.
2. Most innovative product or service
Many companies, primarily in the technology or automotive sector, are excelling by creating the most advanced products.
To use this as your business strategy, then you will need to define what innovative means for your organization or how innovative you are.
3. Increase sales of new products
Some companies like to invest in research as well as development to always innovate, even with their most successful products.
4. Improve customer service
This can be a good business strategy if your company has trouble providing quality customer service. In this way, some companies have built a strong reputation for exceptional customer service.
It is common for companies to have a problem in a specific area; therefore, a business strategy focused on improving customer service often focuses its goals on something like online support or a more effective call center .
5. Cornering a youth market
Some large companies are buying up or merging competitors to corner a young market. This is a common strategy used by Fortune 500 companies to gain an advantage in a new but also rapidly growing market.
The acquisition of a new company allows a larger company to compete in a market where it previously did not have a strong presence, thus retaining the users of the product or service.
6. Product differentiation
This is a common business strategy, even for retail ( B2C ) companies. Then they can differentiate their products by highlighting the fact that they have superior technology, features, pricing or styles.
7. Pricing Strategies
When it comes to pricing, then companies can keep their prices low to attract more customers or give aspirational value to their products by pricing them beyond what most ordinary customers could afford.
If companies plan to keep their prices low, they will need to sell a much larger volume of products, as profit margins are often very low.
For companies that choose to price their products beyond the reach of ordinary customers, they can maintain the exclusivity of their products, thus maintaining a large profit margin per product.
8. Technological advantage
By gaining a technological edge, it is possible to achieve better sales, improved productivity, but also market domination.
This could mean investing in research as well as development, acquiring a smaller company to gain access to its technology, or even acquiring employees with unique skills that will give the company a technological edge.
9. Improve customer retention
In general, it is much easier to retain a customer than it is to spend money to attract a new one, which is why this is a great strategy if you see opportunities to improve customer retention.
This strategy requires you to identify key tactics as well as designs to retain your customers.
10. Sustainability
You can launch an entire business strategy that aims to sustainably grow your business. Example: the objective could be to reduce energy costs, but also decrease the company’s presence by implementing a recycling program.
