How to Devise An Effective Business Strategy

Understanding business strategy

It is believed that only large corporations need a business strategy, but it is a mistake. Small companies are in dire need of strategic management, because they cannot afford to throw money away for experiments and stagnate for years. For some, this may even end in collapse.

Nowadays there is a trend of running email marketing agency in US for a startup. But would it make big time or not? All depends on your strategy making.

What is a business strategy for?

Strategic management is an effective tool for fast and manageable development. The management consists of 2 stages:

  • Planning
  • monitoring the implementation of plans

The latter is carried out by reporting for a certain period.

Business strategy as a guide to action

If the strategy is created by the owner of the company, which is responsible for the mission and ideology, then the strategy can be used as a guide to action in the implementation of goals. That is, in this case, she answers the question: “How?”

Simply put, if the owner wants:

  • To open another store, thinking over a strategy – he must understand how to do it;
  • Bring a new product to the market, drawing up a strategic plan – he is obliged to think about how to implement it, etc.

In the case of strategy, it is not enough to have dreams and desires. The technology that will be used, steps for its implementation are also important.

Business strategy as a plan

When developing it, it is important to focus not on a detailed step-by-step plan, writing down numerous instructions for staff, but on the main points. By the way, most often they are reflected in the mission of the company.

For example, a mission may sound like this: “Provide all the best to customers: product quality, wide range, affordable prices, service.” In this case, when developing a business development strategy, the main nuances should be taken into account:

  • Wide assortment, quality – in order to realize what you have planned, you need to carefully select suppliers;
  • Affordable prices – it is important to analyze the offers of competitors, consider how to give your customers more favorable conditions (work directly with manufacturers, optimize logistics costs, develop interesting promotional offers, loyalty programs, etc.);
  • Service – to provide it, it is necessary to provide customers with the opportunity of round-the-clock ordering, competent technical support, prompt delivery, etc. (for an online store).

To provide service in a retail store, the following will be important: qualified personnel in the hall who will help you choose the right product, additional services related to its specifics (if the company sells computers and laptops, you can also offer a software installation service), etc.

Therefore, the business strategy in this case will include the following steps:

  • Selection of suppliers
  • Competitor analysis
  • Site development with easy navigation, selection of consultants, couriers, organization of coordinated work between technical support and courier service (for an online store)
  • Hiring staff, increasing motivation, organizing courier services, if it is a bulky product, etc. (for an offline store).

Business strategy as a rulebook

In this case, its wording highlights moments that show how management is going to achieve its goals.

For example, a strategy may sound like this: “To produce high-quality goods with minimal costs in the amount of at least 3 tons per year …”

Therefore, the rules for the company to achieve the goals:

  • High-quality goods – production of products that will satisfy the requirements of consumers;
  • Minimum costs – reducing the cost of goods, logistics costs;
  • A volume of at least 3 tons per year – an increase in production capacity to such a size that they allow the implementation of the strategy, etc.

Business strategy as determining development directions

In this case, market needs are analysed to identify products that can best satisfy consumers. Based on this, conclusions are drawn about which direction should be created, which should be developed, and which should be abandoned.

For example, a company is engaged in the manufacture of polypropylene heat-insulating materials, selling them only in season. Therefore, in developing its business strategy, it is desirable for her to introduce additional products that will be in demand in the off season. 

Another option is to work in the off season at the warehouse. By the way, in this case, several business problems can be solved at once: staff selection and training before the start of the season, reduction of marriage at the initial stage of work, when employees do not yet have experience, lack of profit during the off-season, etc.