A business strategy is formulated by selecting the target audience of the product and assembling the marketing mix. A firm can assemble marketing mix elements in many different ways so that the relative weightage of the different elements will be different in the different combinations. Because of this reality, business firms are employing an abundance of strategies and strategy stances. It is a relentless race to stay ahead of competition.Basically, however, there are only two broad routes available for forging business strategies. They are the price route and the differentiation route. In other words, any strategy has to be ultimately either a price-based strategy or a differentiation-based strategy.Companies taking the price route compete on the strength of their pricing and the price cushions they enjoy. Normally, those who resort to the price route and compete on price will enjoy substantial cost advantages, giving them flexibility in pricing and marketing. The differentiation route, on the other hand, revolves around elements other than price. The product with its innumerable features is one major source of differentiation. In fact, any of the ever-so-many activities performed by the business unit can constitute the nucleus for differentiation.In other words, differentiation allows the company the freedom and flexibility to fight on the non-price front. Differentiation, therefore, is a crucial option for a firm in its search for a rewarding strategy. A good majority of business battles are in fact fought with a differentiation-based strategy rather than a price-based strategy.As already mentioned, a business unit that opts for the price route in its competitive battle will enjoy certain flexibilities in the matter of pricing of its products, and use price as the main competitive lever. It will price its products to suit varying competitive demands. It will enjoy certain inherent cost advantages, which permit it to resort to a price-based fight.
You can greatly increase your chances of business success by creating a business strategy and adopting a habit of keeping that strategy up-to-date.The purpose of a business strategy is so that you can use it regularly to assess your company’s performance against the goals you have set. It can also act as an early warning system to alert you against going astray and gives you a guide to why you’re not keeping on track.Having a business strategy will be useful and sometimes vital to investors and banks when you need them to consider funding your business. It is also a useful tool in allocating resources and identifying growth potential. On a practical note, it will help to ensure that you meet certain key targets and manage business priorities effectively.A good business strategy should have a time-frame, typically 12 or 24 months, and should include:o A summary – what your business does, its development, where you want to take it, strategy for improving sales and the process to achieve the desired growth.o Marketing plans – your aims and objectives.o Operational details – Is the location of your business relevant? What suppliers, premises and equipment are needed?o Financial forecasts – including profit and loss, cashflow and sales forecasts and audited accounts.o Main objectives – Clearly define your aims and objectives for your business with dates for completion.o Exit plan – Some business owners like to include a departure date and circumstances into their business strategy. For example, family succession or floatation.Most businesses choose to assess progress every 3 or 6 months. These meetings should involve key members of staff and the same goes for setting up the original strategy. It is important to include those people who will be responsible for implementing your business strategy on a day-to-day basis.