How to Develop Business Strategies for Success
Strategy is a Roadmap for Businesses to Go Where They Want to Go
Jan 25, 2009
Business strategy development starts with a look at the existing situation of the business by answering questions like:
- Do the businesses in existing portfolio constitute a good fit?
- Does the company have any competitive strengths?
- What approach is best for exploiting opportunities in tomorrow's world?
Strategy Development for Big Businesses
Big businesses formulate strategies at different levels.
Corporate Strategy: The CEO and top management work at developing:
- A Vision Statement outlining the likely scenario in tomorrow's world
- A Mission Statement setting down the role the business wants to play in that world
- A statement of objectives translating that role into specific goals in terms of business portfolios and business results
- A strategy report specifying the policies, resources and plans to achieve the objectives
Business Unit Level Strategy: Each business unit of the corporation will develop a competitive strategy. Typical strategies are (i) Gaining a cost advantage, (ii) Differentiating one's offers from competition and (iii) Focusing on a particular segment. The strategy report will identify the kinds of projects and programs for implementing it.
Functional Strategies: The projects and programs are implemented through actionable functional strategies for Marketing, Product Development, Human Resources Development, Financing, Legal aspects, Supply Chain Management and IT Management
Operational Strategies: Operating managers adopt PERT/CPM, Operations Research and other approaches to achieve their targets within given budget and resource constraints.
The above is a simplified view of big business strategy development.
Strategy Development for Small Business
The key element of the strategy development process involves answering the questions:
- Where is the business now?
- Where does it want to go?
- How does it get there?
A tool known as SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is used to gain insights into existing situation
- What strengths such as technical know-how, marketing skills, business contacts or financial liquidity have the business accumulated?
- What weaknesses such as lack of business and marketing know-how or financial or time constraints can prevent it from achieving its potential?
- What opportunities such as growing market demand or a gap in existing offers provide an opening to build on the accumulated strengths?
- Are any business threats foreseen such as obsolescence, competitor actions, or changes in economic or political environments?
By the time it completes the SWOT analysis, the business will have a good idea of where it wants to go. This idea is converted into specific goals. A separate article discusses small business strategy development in more detail.
It is at this stage that detailed project reports and financial projections are prepared. These plans and estimates provide actionable programs and sets down the goals to be aimed for.
Business strategy development thus essentially involves looking at where the business is now, and where it wants to go. Actionable projects and programs are then developed to exploit market opportunities by leveraging its strengths, taking care to remedy its weaknesses and guarding against perceived business threats. Strategies, when complemented by Performance Management, lead businesses to success.
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