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What is Business Strategy – Definition, Importance and Levels
There are many examples of successful businesses globally. While a solid team and finances have been important factors in their success, there is one more aspect that ensures that businesses achieve what they have set out to do – a fool-proof business strategy.
Moreover, as every business has distinct goals, they adopt different strategies to achieve them. It is the business strategy that differentiates successful businesses from the “have-beens”.
What is Business Strategy?
Although it is easy to define, forming and executing it is what sets a business apart. A business strategy refers to all the decisions taken, and actions undertaken by a business for achieving the larger vision. Knowing what business strategy is and how to execute it properly can help businesses become market leaders in their domain. Precisely, a business strategy is the backbone of every business, and any shortcomings could mean that the business goals get lost midway.
Importance of Devising a Business Strategy
Once you commence a business, the importance of business strategy cannot be ignored. Any leader who is unaware of the importance cannot ensure the long-term sustainability of their organization.
As the business environment, today is becoming increasingly competitive, the importance of business strategy cannot be underplayed. We’ve put together some reasons why devising should be your first priority.
- In the initial phase of a business, a lot of planning is required. While a plan clarifies the goals, it is the strategy that helps in executing and reaching the vision.
- When leaders formulate a strategy, it helps them understand their strengths and weaknesses. This way, they can capitalize on what they are good at and improve on their weaker aspects.
- It ensures that every aspect of a business is planned. This means more efficiency and better and more effective plans. Everyone in the team is aware of what they need to do, and the capital is allocated properly.
- It can help businesses gain a competitive advantage over others in the segment. It also makes them unique in the eyes of their customers.
- It ensures that leaders have control over the processes. This means they will also go as planned.
Business Strategy vs. Business Plan vs. Business Model: The Difference
Let us now understand the difference between the above three. Business strategy is part of a business plan. And, both of these are in turn part of a business model. A business model is basically an outline that indicates how a company operates, earns revenue, and achieves the desired outcomes. As a part of the business model, a business plan defines all of these, and it sets the roadmap on how to achieve all the goals.
Different Levels of Business Strategy
Different business strategies are deployed at every level of a business. The levels of business strategy will depend on the goal that every part of an organization wants to achieve. Based on common parameters, there are three levels of business strategy.
This is the highest of all levels. It defines the goals and the ways to achieve them. Precisely, this level defines the mission, vision, and corporate objectives for the entire organization.
Business Unit Level
At this level, the business strategy will be different for every unit of the organization. This is because every unit has different processes and operations and therefore, different strategies can be deployed for every unit to achieve higher efficiency. However, every business strategy should be in alignment with that of organizational goals and objectives.
At the functional level, the strategy is set by departments such as marketing, sales, operations, finance, etc. These kinds of functional level strategies are needed to ensure the efficiency of day-to-day functions within the organization. All of these overarch towards a common goal.
Key Aspects of a Business Strategy
A business strategy is an answer to what, how, why, where, and how. This is where all-embracing leadership courses come into the picture. These courses help leaders understand the key aspects and other nitty-gritty of a business strategy. You can pursue these leadership courses to update yourself on recent developments in this domain.
- The first component is – the mission, vision, and objectives. This will have clear instructions on what is to be done when it is to be done, and how it is to be done.
- The second component is – the core values of a business, which should be clear right at the outset.
- The third component is – a SWOT analysis. SWOT refers to strengths, weaknesses, opportunities, and threats. This will give an idea of the business’s current standing.
- The fourth component is – operational tactics which refer to how the company will achieve the defined objectives efficiently and effectively.
- The fifth component is – resource procurement and allocation. It will provide answers about how many resources are needed, how will they be distributed, etc.
- The sixth component is – measurement, which refers to how every activity of the business will be kept on track and measured against milestones that have been set.
Explore Leadership and Business Management Courses
There are many ways for leaders and other individuals, including graduates to understand how to develop an effective business strategy. One such way is to pursue a leadership development program that will give detailed insights into leadership. Moreover, an extensive leadership development program can also upskill business owners and make them well-rounded to run an organization.
Emeritus offers many leadership courses for equipping leaders with the skills they need.
The key to succeeding in today’s dynamic business landscape is the futuristic understanding and extensive practice of contemporary management concepts and strategies. That is how you can effectively decode complexity and transition into senior managerial roles.