The Timeless Principles of Successful Business Strategy

The Difficulty of Management

The management of a business, especially a new one, is a highly challenging task. According to Hisrich and Ramadani (2017), approximately 80-85 of new ventures in the U.S. cease to exist as independent entities within the first five years. However, even well-established companies may struggle with rapid changes in their target markets or suffer significant economic consequences when a poorly planned project fails. Recent history can provide numerous examples of companies such as Nokia, which has completely lost its dominant position in the phone market over several years of poor decision-making. Helping the company to overcome the challenges that arise is the primary duty of a manager.

Business Strategy

A business strategy is a core component of managing a company, as it provides a framework for its operations. It defines the company’s aims and the methods that it should use to achieve the objectives. The existence of a clearly defined plan allows for better evaluation of propositions and their alignment with the company’s intents. Furthermore, a business strategy should identify the measures that should be taken in case of unfortunate events befalling the company to avoid panic and further errors. To achieve that, the document should be revised and adapted to the changing circumstances as necessary.

Benefits of Creating a Business Plan

Business strategies have various purposes, all of which directly benefit the company. Hisrich and Ramadan (2017) name five primary factors: obtaining finances, evaluating necessary resources, establishing a company’s direction, evaluating the success of its projects, and finding joint venture partners. Investors, as well as other companies, prefer plans that have clearly stated goals and roadmaps that can be checked as the ventures progress. In addition, a business strategy can help a company concentrate on an area without spreading its resources too thin. Lastly, clearly stated resource allocations and goals allow a manager to see which projects are more or less successful easily.

Elements of a Business Plan

A business strategy should include a description of the business as well as the industry it is operating in and the plans for technology, marketing, finances, production, organization, and operation. The company should clearly state its products, type, mission, and business model. It should also evaluate the industry trends as well as the venture’s competitors and market forecasts. The plan should describe the company’s technology and compare it to contemporary offerings. Then, it should plan the marketing campaign and predict the expected income and costs. The strategy should also cover production and outsourcing as well as the flow of orders and goods. Lastly, it should clearly define the company’s organization, including the form of ownership, partners, the background of the management, and the roles of the members.

Common Weaknesses

The existence of a business strategy does not necessarily lead a company to success. According to Leinwand and Mainardi (2016), most major executives do not believe that their policy is a winning one. The common issues identified in surveys include the lack of capabilities to support the company’s stated values and the plan’s failure to identify opportunities in the market and seize them. Furthermore, the strategy is not understood well in many companies even if it exists due to a combination of unclear writing and a lack of efforts to convey the information to the employees. Overall, these issues are primarily caused by the difficulty of putting a plan into practice, which many managers struggle with.

Successful Implementation Factors

Successful companies provide examples of values to work towards to create and implement strategies. According to Leinwand and Mainardi (2016), these are primarily internal improvements, such as improved coordination and correctly using the company’s strength. The identification and commitment to an identity as well as correct use of the company culture allow an enterprise to learn what it does best and leverage the advantage to obtain a competitive advantage. The ability to consider strategy when planning activities lets a manager keep the company’s best interests in mind, as doe cost management and removal of unnecessary luxuries. Lastly, a company’s continued success relies on continuous growth and advancement, and a manager should avoid letting the enterprise stagnate.

Corporate Strategy

Corporations differ from traditional companies in both scale and organizational structure. They are a union of multiple full-sized companies, which act with varying degrees of independence. According to Viardot (2017), corporation managers typically do not need to concern themselves with the enterprise’s immediate or short-term survival due to the company’s vast available resources and therefore prioritize sustainability and creating profits and growth in the long term. According to Rugman and Verbeke (2018), this can mean including goals that do not align with the company’s profits, such as sustaining declining industries. Corporate strategies usually do not control the operations of the individual units within the structure but set performance goals, allowing the companies to create their own plans.

Core Components

A corporation is an established and sizable entity, which means that its failures are not fatal, but its successes are not highly influential, either. Therefore, informed and rational risk-taking is essential for its continued growth. The sustainable core of the company that supports these risks is established by maintaining a base of loyal customers who continuously generate profits, which requires the company to understand its target audience and address it adequately. Corporations also have to be mindful of the financial and political environment, especially if they are international and have to comply with the norms and requirements of different countries. Lastly, the size of the enterprises requires a higher degree of resource coordination than the one necessary to manage a traditional company.

Types of Corporate Strategies

The types of strategies commonly used by companies can be divided into four categories based on their goals and targeted environment. According to Rugman and Verbeke (2018), a plan can, and usually does, include several classes of approaches at once. Cost-effective approaches in a market work in a fashion similar to traditional business strategies and the company seeks to offer better services than its competitors. Efficient policies in non-markets primarily concern interactions with governments, and firms may have to comply with regulations or bargain for better positions. Inefficient approaches in markets are usually observed in declining industries and aim to limit competitive pressures. Lastly, inefficient strategies in non-markets are attempts to have the government protect the company.

Usefulness of Approaches

Cost-effective approaches aim to improve the functioning of the company. They are beneficial and often critical to its operation and continued success. On the other hand, according to Rugman and Verbeke (2017), the use of inefficient policies often leads to the eventual exit of the corporation from the market. Furthermore, the overall decline it creates reflects negatively on the economic performance of the country. However, a case can still be made for their use, particularly in situations where the adverse conditions are temporary, and the industry can eventually stabilize. Another case for the employment of inefficient approaches involves situations where a corporation’s assets are challenging to redeploy, and the government would benefit from sheltering and protecting it.

References

Hisrich, R. D., & Ramadan, V. (2017). Effective entrepreneurial management: Strategy, planning, risk management, and organization. Cham, Switzerland: Springer.

Leinwand, P., & Mainardi, C. (2016). Strategy that works: How winning companies close the strategy-to-execution gap. Watertown, MA: Harvard Business Review Press.

Rugman, A., & Verbeke, A. (2018). Global corporate strategy and trade policy. New York, NY: Routledge.

Viardot, E. (2017). The timeless principles of successful business strategy: Corporate sustainability as the new driving force. Berlin, Germany: Springer-Verlag.

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NerdyTom. (2022) 'The Timeless Principles of Successful Business Strategy'. 15 July.

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