A strategy is an outline of how a firm plans to achieve its objectives. It involves a system of activities, including resource allocation, that will help a company reach its goal. The strategy may be a formal or a non-formal document, and it can include both short-term and long-term goals.
One strategy example is Southwest Airlines. This airline serves convenience-sensitive travelers. Its strategy is to focus on serving customers who want a hassle-free experience. Rather than using a slogan or marketing message to attract people, it focuses on developing solutions to the customer’s needs.
Among other things, a business strategy can be viewed as a way to improve efficiency or increase profitability. These types of strategies also serve to define the course of an organization’s business. In order to be successful, a firm must know its market. It also must know its competitors. By analyzing these competitors, it can determine how to compete in the market.
Although a strategy may look vague in the early stages, it can evolve over time. Developing a strategy requires a firm’s leaders to clearly communicate the plan to all employees, and it requires discipline and commitment. A firm’s leadership should never leave its strategy to chance. If the strategy is not properly defined, it can result in a company with limited opportunities for success.
One strategy example that is particularly useful is Porter’s Five Forces. This analysis helps firms understand their competition, as well as the various market entry and regulatory barriers that they must overcome. The five forces are market focus, cost leadership, technology, demand, and regulation. By understanding each of these, a firm can better identify its unique strengths and weaknesses, and determine where it should spend its resources.
Another strategy example is the Three C model, developed by Kenichi Ohmae. It focuses on three key factors that lead to success. It can be a good idea to review the 3C model with your staff. Ideally, it will be balanced in the form of a strategic triangle. It will provide a basis for each department to make decisions that contribute to the overall strategy.
While many managers might describe a strategy in terms of customers, the best strategy is one that involves a comprehensive analysis of the entire enterprise. A strategy that fails to account for the needs of the entire firm, as well as the impact of the environment on its operations, can lead to unintended consequences.
A strategy may be viewed as a ploy to provoke a competitor’s reaction. For example, a company might decide to construct a new facility that would sway its competitors to choose it over other competitors. Or, it might plan to offer a new service, like the smartphone. It might be based on a marketing slogan, but it will not survive the competition.
The most important part of any business strategy is to define the target market. This information can be derived from demographics, industry, and business model. It can also be gleaned from a firm’s internal analysis. A company should consider if it has a competitive advantage, as well as the value that it offers to its customers.