This is for businesses looking for advice on business strategy.
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A business strategy is a long-term busines plan that a company sets out to acheive it's objectives. On average a business strategy can cover a period of about 3-5 years.
A business strategy focuses on major resource issues such as raising the funds to build a new factory or plant. Strategies also focus on deciding what products to allocate major resources to and the scope of a business' activities basically what and where they produce.
Two main categories of strategies are:
- Generic (general) strategies
- Competitive strategies.
The main areas of generic strategies that companies look at are:
- Growth - the expansion of the company to purchase new assets and to develop new products.
- Internationalisation/globalisation -. moving operations into more and more countries.
- Retrenchment - cutting back to focus on your best lines.
Competitive strategies focus on doing things better than rivals. To be competitive a company shouldn't just copy the ideas of rivals but seek to out compete rivals.
The two main ways of being competitive are:
1. Selling goods at lower prices than competitors, this is possible in particular when a company is the market leader and benefits from economies of scale, which are the advantages that large firms have from producing large volumes of output enabling them to spread their costs over more units.
2. Differentiating your products from those of competitors, making your products different enables you to charge a higher price if desired.