Business Strategy

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Scope of Business

Business Strategy

Business Strategy is a tool for a business to reach a strategic advantage. According to the Business Strategy theory, there are basically two kinds of competitive advantage which an enterprise has to choose between: Cost Leadership and Brand Leadership. In cost leadership, an enterprise focuses on cost reduction as a means of increasing its competitive advantage; on the other hand, in brand leadership, an enterprise emphasizes its quality or the perceived quality of its products or services as a way of increasing its competitive advantage. Business Strategy therefore aims at identifying opportunities to gain cost leadership and brand leadership at the same time. Thus, if you aim to increase your competitive edge, it is essential that you adopt Business Strategy.

Business

 

Business Strategy is actually a generic strategy that is used by enterprises of all sizes. Therefore, it covers a wide range of strategies. The scope of Business Strategy covers general, narrow, and medium-scale business activities. In broad perspective, Business Strategy is used to define a general approach to strategic planning. In narrow perspective, Business Strategy is used to specify specific aspects of an enterprise’s strategic planning. Finally, in medium-scale perspective, Business Strategy is a strategic framework that helps an enterprise to evaluate and understand its organizational structure and compare it with the competition.

 

The strength of each Business Strategy depends on its definition. Thus, it is essential that enterprises develop unique strategies that address key competitive issues and business development needs. Below are some of the common Business Strategy terms:

 

Long-term strategies refer to those strategies that last for more than one year. Strategic business plans are generally long-term strategies because they contemplate how strategies adopted earlier will affect future market conditions. Thus, the long-term strategic perspectives help an enterprise to better understand and evaluate its competitive environment.

 

Market-share based strategy refers to a strategic business-level strategy that focuses on a company’s ability to generate a profit from a specified segment of the market. Market share strategies allow a company to exploit certain segments of the market at lower prices than competitors. Therefore, a market-share strategy is an essential element for a firm to acquire, expand, and retain market shares.

 

Business strategies are a general framework on which organizations construct their specific business objectives and actions. A strategic framework consists of a set of strategies that are designed to achieve specific business objectives. Therefore, it is essential that all the strategies of a business strategy are aligned with company objectives.

 

All the strategies of a strategic plan should be feasible under the given circumstances. In other words, all the strategies should be mutually dependent. This means increasing the value of the existing assets and reducing the cost of capital while trying to create additional working capital (LFC).

 

Ebitda is the final element of the strategic framework. It is the summation of all the strategies and their contributions to overall business growth. Ebitda is the primary performance indicator of a company’s competitiveness, operational efficiency, customer satisfaction, and value creation strategies. To measure the effectiveness of its ebitda, a company should calculate its ebitda margin and compare it to its competitors’ margins to identify its competitive strength.

 

The fourth element of a strategic plan is the cost strategy. A cost strategy, which can also be called the revenue strategy, is designed to increase the revenues of the organization by minimizing the cost of production. A cost reduction strategy also implies the reduction of the cost of goods or services to consumers. This can be done by decreasing prices of products or services, either by fully eliminating the costs of production or by minimizing the costs of marketing.

 

A fifth strategy is innovation strategy. Innovation strategies are usually related to new product development, increased production, research and development, and quality systems change. An example of distinctively differentiated products is a good example product or services, which has a significant advantage over competing brands or products. Examples of good examples are superior technology, superior quality, and/or better service.

 

A variety of business strategies exist. Each strategy has its own advantages and disadvantages. A firm should therefore determine the relative importance of each of the five strategies in each specific situation and determine the appropriate mix of strategies based on the objectives of the firm and the competitive environment.

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A firm must remember that each strategy has an effective implementation strategy and an evaluation strategy. Therefore, the effectiveness of any business strategy is dependent on the success of the implementation strategy and on the value of the evaluation strategy. A variety of business strategies exist. Each strategy has its own strengths and weaknesses. A firm should therefore determine the relative importance of each of the five strategies in each specific situation and determine the appropriate mix of strategies based on the objectives of the firm and on the competitive environment.