The Underlying Principles:
There are many components to a business strategy however it is important to define the broad context of the Business Strategy.
In simple terms, it is the businesses’ documented plan that sets out the future goals of the business as enunciated by management.
We are often asked the reason for establishing a business plan and why we consider it so important. And whilst there may be a number of reasons the principal reason is that the plan sets the direction and underlying strategy for continued growth and profitability. This then can be measured against actual outcomes while allowing management to adjust their plan consistent with changes such as legislative that may occur along the way.
The old saying that “He who fails to plan, plans to fail” really sums up the need for establishing a business strategy.
As indicated above a well-defined business plan creates the road map to the future against which outcomes can be measured. To achieve this there are some basic guidelines for establishing the plan:-
This is the bedrock of any business plan as management’s vision sets the direction for the whole organisation. It also underpins the goals and aspirations of the organisation giving all staff a clear picture of where the organisation is headed combined with the plan of how they are going to get there.
The plan also assists in identifying business trends and opportunities and risks in the future. Inevitably there are constant changes in the market particularly in technological advances which can have a significant impact on your strategy (Uber and the Taxi industry is a classic example) however there are equally positive outcomes from advancing technology. Also, political risk can have a major impact where governments both local national, and foreign can create legislation that can have either positive or negative impacts on your business strategy. Identifying all of these trends early is critical to the long term success of the plan.
Unique Selling Propositions
In creating the plan it is self-evident that if you can gain a competitive advantage through a unique selling proposition then your strategy will need to establish the methods by which you exploit such a proposition.
Part of the business strategy must be the constant measuring of performance against the business strategy. This is essential as it also identifies market and other changes that can impact the success of the plan and subsequently the organisation itself.
The business strategy is symbiotic with the ultimate success of the organisation. Management in constructing the plan must avoid dream targets and stick with reality and what is actually achievable. Significant thinking time is the precursor to creating a winning business strategy.