Any enterprise should follow the developed development strategy in strict accordance with its terms, otherwise you can lose both profits and customers. Business strategy is formed taking into account the mission of the company, the specificity of the activity and the presence of competitors.
Terms and goals
The business strategy is a development plan of the company, reflecting the order of performance of the tasks that are aimed at increasing profits. It is approved by the head of the organisation or holder of it. Business strategy takes into account not only a new level of production, sales and customer base expansion, but also possible ways out of crisis or action in an emergency situation.
There is such a factor as the period in which the strategic plan is included, and it depends on the general market situation. If the economic situation is unstable and the company is in trouble, it is better not to make plans for more than two years. In this case, you can easily adjust your strategy when the situation at market changes.
Goals of strategy development:
- Selection of priorities and directions for development.
- Defining how to manage an organisation.
- Planning specific tasks for each division of the company.
- Coordination of the work of the Divisions.
- Risk assessment and prevention.
Forming a business strategy is a must for both large companies and small startups.
Types of business strategies
The choice of a strategy depends on the type of business activity, the goals you set and the growth rate of your company. Staying at one type or another is not necessary as you can always try to combine several strategies for the development of your business.
There are some types of business strategy:
- Basic strategy. It is a development plan of the company as a whole and its subdivisions. Takes into account distribution of resources between branches, change of management structure, introduction of new business processes.
- Defines internal processes in an organisation, ensures uninterrupted operation and aligns them according to the nature of the unit.
- Aims to bring the company to the top of the market. Can be done by minimising costs, creating a new unique product or focusing on a narrow group of customers.
Feasibility and effectiveness of business strategy is the main criterion of its analysis. Most importantly, it should not use resources that the company cannot save.
Business strategy creating
You should analyse the strengths and weaknesses of the company in order to create a precise development plan.
Research and evaluation of results
Here are some techniques that will help you identify external and internal factors that may affect the development of your firm:
- Study of the external environment. This includes the current state of the economy in the country and the world, the possibility of a crisis. You should pay attention in a timely manner to the appearance of new laws that can change the licensing of goods and services, changes in the level of income of the population, the actions of market leaders to conclude transactions, the opening of additional branches and divisions, merger.
- Analysis of other market participants. These include everyone with whom your company’s activities intersect, such as suppliers, middlemen, consumers, competitors and employees. Marketing research will allow you to assess the demand, new market trends and working methods of competitors correctly and efficiently.
- Use of SWOT analysis. This is a method of strategic planning that helps users to analyse the strengths and weaknesses of their firms, determine the prospects for development and possible risks correctly. For SWOT analysis use a four-column table, where they record: strengths and weaknesses of the enterprise, threats, growth factors.
- Ansoff’s growth strategy matrix. It defines the strategic positioning of the product in the market through the choice of one of four directions.
You should try to compare all the results, and then you will be able to determine the correct direction of development for your company.
When you do strategic planning, you should form clear and achievable goals that will lead you to effective results. Among them, this is a threefold increase in profits during the year.
After that, you should plan those tasks that will help you achieve your goals. There are such goals as:
- modernization of production;
- increased storage capacity;
- new ways of promoting goods and services;
- contract with suppliers on more favourable terms;
- expansion of the sales department;
- change the management structure;
- risk management;
- staff development.
You will never be able to predict the market with perfect forecasting accuracy. This is the reason why the strategy must have the appropriate flexibility to allow you to adjust this in an emergency too. These are the methods by which you can achieve the planned results.