Every business starts with an objective or a goal to achieve. In simple language, business strategy helps achieve the organisational objective. It is documented plan which describes that what and how to achieve.
Once the business strategy is formed they are required to be revived after every interval for time both internally and externally.
Role of business strategy:
- Business strategy acts a guide map to review the business externally and internally, how well the organization is making profits, competition analysis and other important factors.
- It helps in forecasting the future and deal with uncertainties. There may be changes in the economic, political and technological and social factors. It develops tactics to deal with future needs.
- It provides the mission and vision to the organization so that everyone moves towards the similar goals. It provides clear directions and goals.
- It defiantly provides a competitive advantage to the organization.
- Basis business strategies organizations expand. With rigorous research and marketing strategies business expands itself in to the new markets and customer segments. For example: A computer repair organization makes a business strategy to be the Internet service provider also in next 5 yrs.
- It helps leverage the strengths of the company and identify and fill the gaps of weaknesses.
In the new modern age, along with technologies there are changes in the old business ideologies. Shareholder capitalism and stakeholder capitalism is one amongst them. Shareholders are the people who are the owners of the organization through stocks whereas stakeholder can be suppliers, employees, creditors, competitors. Shareholder theory is an old way, where the purpose of the business is to earn the profit for the shareholders only. Now-a day’s organization are more towards corporate social responsibilities that improves the reputation and name of the organization. The reason behind such a shift is that it helps organization achieve the sustainable growth with its responsibilities for all the stakeholders of the company. Those who contribute for the organizational goals are called Stakeholders. Hence it is important to create their worth and grow together for the future strategies. The new generation capitalizes more on needs of company and values, the old capitalism and business is not liked. This new type of capitalism looks at the more holistic approach , not only increasing the profits but also successful on the areas like sympathy, friendship, kindness and love. This is the new demand of Millennial.
There is a difference between the strategic issues and operational issues. Strategic issues are long term in nature. They are directly linked with the goals of the company and needs the intervention of higher management or leader in the resolution whereas the operational issues are day to day problems that arise while doing the job. It does not always involve top management intervention. Managers play an important role in timely taking the corrective action on the issue. Be it operational or strategic the right stakeholder is to be informed.
Strategy plays an important role in coping with the uncertainties of the business in the way that it provides a vision for identifying the future uncertainties in advance by studying the external and internal factors and it provides backup plan. It helps by identifying the level of uncertainty and by tailoring the strategy according to uncertainty.
Deliberate Strategy is the age old formula where the strategy is built in advance with planned design and architecture. Like Trend analysis, Swot etc., this is generally done by the Top Management. Emergent strategy is the one which is not planned, it change in the environment happens and the organization deals with it with strategic conditions and business needs. As per my understanding, both the strategies are required by any organization. For any large scale project where there is heavy investment required deliberate strategy that allows design and architecture. Customer prefrences, competitors, technology changes can be addressed with emergent strategy where the changes are at small frequency.
In my words, Business strategies are the principles that outline the procedure to achieve the objective. Business strategy provides the picture to the organization about their performance, growth and capabilities. Strategies are future oriented .Business strategy is the part of management function.
For example: Achieving customer satisfaction can be one business strategy where the organization will make the plan to achieve the customer satisfaction and long term customer relationship.
Henderson, Bruce (1970). Perspectives on Experience. Boston Consulting Group.
Porter, Michael E. (1985). Competitive Advantage. Free Press.
Hamel, G. & Prahalad (1990), C.K. The Core Competence of the Corporation, Harvard Business
Henry Mintberg. (1994) The Fall and Rise of Strategic Planning -Harvard Business Review
BCG-Phillip Evans-Rethinking Strategy for an Age of Digital Disruption-March 2014
Zhexembayeva, N. (2014). Overfished Ocean Strategy: Powering Up Innovation for a Resource-Depleted World. San Francisco, CA: Berret-Koehler Publishers.