A "business strategy" may be described as the means through which the business intends to achieve its desired objectives and goals. It may also be simply stated as business planning for the long-term. Usually it is found that business strategies covers periods of 3-5 years. However, it may be of a longer duration.
Business strategy is formulated to confront the major issues related to the resources. Such a strategy helps to make final calls on decisions regarding the determination of the products to which the major resources should be allocated. It is also focused on the scope of the activities of a business like where and what to produce.
Strategies may be generically divided into two main categories namely-
- General or generic strategies and
- Competitive strategies
Generic strategies may primarily be of three basic types:
This involves how companies expand their focus in order to acquire new assets and businesses and also for the development of new products.
Internationalization or globalization as it is more popularly known as if expanding to your business to newer countries.
This is involved in refocusing on the core area of competency. This may simply stated to be concentrating on the tasks that you do the best.
The importance of competitive strategies also should not be determined. They are most concerned about doing things better than their competitors in the market. This is not simply a cut and paste job of copying the ideas pursued by rivals and out-competing them. This may be achieved in three main ways.
- Through sale of goods at prices that are lower than other competing businesses. This is best done when a firm is already the leader in the market and stands to benefit from the economies of scale.
- Make your products stand out from those provided by competing corporate organizations through differentiation. This also lets businesses command a higher price if that is their desire.
Description of Technical Terms
Economies of scale denote the inherent advantages that large firms may boast of due to the production of the huge amounts of output that allows them to spread the costs over the additional units that are produced by the company.
Differentiation simply refers to the elements that differentiate a product from its competitors like packaging, customer perception, labeling and additional features and other things.
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