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Business Strategy

What is a business strategy? The definition

A business strategy is explained as the course of action or a set of decisions or guiding principles that help managers achieve business goals. It is the means by which organizations try to realize their vision for the future. A simple definition of the word business strategy is long-term business planning. A business strategy usually spans at least a number of years.

What is a business strategy? The definition

A business strategy is explained as the course of action or a set of decisions or guiding principles that help managers achieve business goals. It is the means by which organizations try to realize their vision for the future. A simple definition of the word business strategy is long-term business planning. A business strategy usually spans at least a number of years.

A business strategy generates a desired pattern of decision-making, provided it is effectively communicated and adopted within the organization. It is therefore about enabling people throughout the organization to make decisions and allocate resources based on the guiding principles to actually achieve the objectives. A good business strategy then functions as a North Star and roadmap. It defines actions people should take and prioritizes activities.

Business strategy in practice

The roadmap of business intentions and actions is being designed in business for some other purposes as well. These goals reflect why good business strategy is so important to organizations. Firstly, the strategy serves the planning process. It helps identify steps required to achieve business goals. The process of preparing the business strategy furthermore leads to the identification of strengths and weaknesses. This insight helps in positioning the organization. In addition, having a good business strategy helps in controlling activities that are carried out to achieve the objectives as efficiently as possible.

There are different types of business strategies. Michael E. Porter defined three general business strategies in 1980. The first is Differentiation. Companies that use this strategy prove to the customer that they are different and better than the competition. Such a strategy is less focused on price than the other types of strategies. The long-term vision of companies with this strategy is to cut costs in the areas that do not contribute to the differentiation. The second type is Cost Leadership. The aim of this strategy is to be the cheapest provider of products or services. An example of this is Wal-Mart. They focus on supplying almost all products at affordable prices. Such a strategy works well for large companies that sell products on a large scale. The last type of strategy is Focus. A niche company then mainly focuses on a small share of the market. They fulfil the needs of fewer people than other companies, but enjoy less competition. Think of craft beer or paint brushes intended for a special type of material.

Every organization forms its own strategy, but not all companies are successful in executing it. Many companies in the technology sector differentiate themselves from the competition by creating the most advanced products. The overall strategy is therefore close to innovation orientation. Other companies focus on developing and selling new products and others focus on sustainability. A strategy can also be to contract out certain production or business processes. This is called outsourcing.

Whatever the strategy, it is important that the strategy is right. Tools used in developing and assessing a business strategy include Mintzberg’s 5 Ps of Strategy, the Rockefeller Habits, the EPRG Framework and the Ashridge Model.

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Strategy theories, methods and tips

The articles linked to business strategy are about the different types of strategies, the conditions in which each can be optimally used, methods of adapting strategies and general supportive methods and models. How do I know if I have chosen the right strategy? How can I learn from my competitors’ strategies? How can I optimize my strategy in order to achieve my objectives? How can I implement strategy theory in my field or position?

Crowdsourcing explained including the definition

March 16th, 2023

Crowdsourcing: in this article you will find a practical explanation of the Crowdsourcing business model. Next to what it is (Meaning and definition), this article also highlights the importance, the advantages, jobs and good crowdsourcing examples. After reading, you will…

Delta model explained: the acronym and elements

March 7th, 2023

Delta Model: this article explains the Delta model by Dean Wilde and Arnoldo Hax in a practical way. Next to what it is, highlights this article also the four elements and the importnace of the combined forces. After reading it,…

Outsourcing explained: the definition and advantages

March 6th, 2023

Outsourcing: this article provides a practical explanation of outsourcing. Next to what it (definition) is, this article also highlights why this interesting is, outsourcing versus Offshoring, a decision matrix and the advantages. After reading, you’ll have a basic understanding…

Contingency Plan: Definition, Meaning & Example

January 13th, 2023

Contingency Plan: this article describes the concept of a Contingency Plan in a practical way. It cover what a business disaster and a contingency plan are, what the components of a contingency plan are and who makes the plan. It…

OGSM Framework: Template, Example & Explanation

December 15th, 2022

OGSM Framework: this article provides a practical explanation of the OGSM Framework. The tool was popularised by Proctor & Gamble, and can be applied to an entire organisation, but also to a person’s personal development. This article covers what…

High Reliability Organizations: Principles & Examples

December 2nd, 2022

High Reliability Organizations: in this article, you will find a practical explanation of High Reliability Organizations (HROs). It covers what a HRO is, the role of communication skills and the principles, examples and benefits of High Reliability Organizations. After reading…
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