What do you think of when you hear the words, "Business Strategy"? Do you think of businessmen playing a ruthless game of chess? This is what many people believe. Many people make the assumption that business strategy is something only evil businessmen would know. The assumption that only businessmen know business strategy is horribly wrong. The concept of business strategy is actually quite simple. They concepts reside in five questions:
1)What will you business do? (Products or services are providing)
2)How are you different from your competitors? (Rivals doing the same thing)
3)What's your market? (What is the market of the product your making) (Example: Skin care, oil, auto parts)
4)What are you going to do to insure you meet your financial expectations?
5)What's your financial forecast? (How much money do you think you'll be making in a few months of opening?)
These five concepts make up the theory of business strategy. As any logical person can tell, the theory is not sophisticated. It relies solely on the basis of “what will make the business suceeed”.
Without an effective strategy, a company will most certainly fail in under two years of operation. This causes a lot of complaining consisting of the owners saying, “But I had a strategy”. Did you have TWO parts of the strategy? Let’s look at how Wikipedia has defined business strategy or “Strategic Management.
“In management theory and practice, a distinction is often made between operational management and strategic management. Operational management is concerned primarily with responses to internal issues such as improving efficiency and controlling costs. Strategic management is concerned primarily with responses to external issues such as in understanding customers' needs and responding to competitive forces. Widely-cited Harvard Business School professor Michael Porter identifies three principles underlying strategic positioning: creating a "unique and valuable position", making trade-offs by choosing "what not to do", and creating "fit" by aligning company activities to with one another to support the chosen strategy. Dr. Vladimir Kvint defines strategy as "a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully."”
If you read through that definition, you read that there is a distinction between operational management-internal business strategy- and strategic management-external business strategy.
Recognizing both of these areas can make or break your business. Every company requires a plan that can address an internal or external issues. Companies that fail to design these plans usually fail themselves. As Benjamin Franklin said, “By failing to prepare, you are preparing to fail”