Approaching Business Strategy – Analysis

Many people talk about business strategy but have a great failure to realise exactly what this is – is it surprising that a great deal of business people have a huge problem discussing this when they do not exactly know what this is!

Questions that should be asked may include the determination of the fact that is there even a strategy in existence or if so, is this the correct one? Additionally, how do we determine what a strategy is and how does one go about developing one?

It is important when developing strategy to look at some of the issues and why a chosen path can go wrong-if one keeps doing the same thing, one will get the same results.

Many complaints about strategy range from the fact that it is difficult to determine, it gets messy and unfinished, and many people involved either do not contribute or attempt to dominate proceedings and a general feeling of the future and the failure of any future chosen path.

Broadly speaking, some schools of thought hold with notion that there are three main reasons for a failure of strategy.

Managers often fail to realise what these differences are; business schools talk about corporate-centre strategy and business-unit strategy. Business-unit strategy is for controlled organisations that may be part of conglomerates or single-business units whereas the other is for conglomerates planning growth through the use of single business units.

Another is often no clarity of purpose; for example there is no point in using models that are simply intellectually attractive when the purpose of the task is to discover options and directions and gather proof to support decisions about the future.

The business – unit level requires methods that are relatively straightforward and the only real obstacles are intimidation by “professionals” and their jargon. Most means of analysis are in excess of 35 years old but there is a general lack of understanding of them amongst business people and most of them do not know how to use them.

So how do we correct this anomaly?
Initially, the ground rules need to be set so participants need to arrive with open,clear minds. Strategymay be likened to seeing everything around, from every angle available and even into the future and the following requirements must be met to be successful: Customers are paramount and form the basis of market uuderstanding, practicality must take priority over theory, the business needs of now and the future need to be thought about and the strategy needs to be measurable.

It is worth at this point to touch on the philosophy behind a strategy.

The best place to start is to take the old adage of begin with where you want to be and work backwards to where you are now.

If, on the other hand, one believes that strategy is an analytical process then start with where you are and work forwards. However there is a difficulty with this approach as straightforward arithmetical thinking stifles creativity.
Perhaps, in the real world, a combination of both methods is probably a necessity.

This is all, of course, driving towards growth of the business and that is largely down to marketing. So why are not all growing firms good marketers and why have not they developed a good strategy?

Very briefly, this begins with a failure to understand the difference between selling and marketing – marketing is about developing products or services that customers will want where selling is about simply getting people to but the product.

The rest, for the moment, I leave you to ponder on.

Why do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive?
When you look at your business, whether it’s a new venture or a company with a long history, can you answer the following questions?

  • What does my company do better than anyone else?
  • What unique value do I provide to my customers?
  • How will I increase that value next year?

Companies that fail to answer these questions, and don’t believe they are of paramount importance, relegate themselves to marginal profitability at best and failure at worst. But companies that can answer these questions are able to raise the value bar for their customers and reap the benefits of success.

Of course, being able to answer 3 simple questions does not ensure success, but it is an important step in creating a strategic and focused operation which leads to a successful business. With today’s business environment being so competitive, businesses need to re-invent the rules on which they compete in order to be successful. Companies like Wal-Mart have figured this out and have redefined competition in their market by delivering a unique value to a selected customer group. By maintaining a focus and discipline, they make it difficult for other companies to compete under old competitive terms.

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