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Business Strategies

A business strategy describes how a particular business intends to succeed in its chosen market place against its competitors. It therefore represents the best attempt that the management can make at defining and securing the future of that business. A business strategy should provide clear answers to the questions:

1. What is the scope of the business (or offering) to which this strategy applies?
2. What are the current and future needs of customers and potential customers of this business?
3.What are the distinctive capabilities or unique competence that will give us competitive advantage in meeting these needs now and in the future?
4. What in broad terms needs to be done to secure the future of our business?
These questions should have been addressed during the process of strategy formulation. The processes and techniques and processes described in Part III may have contributed to answering them. In this chapter, we are concerned with some of the practical issues that arise when thinking and analysis leads into action and commitment. We are concerned also with what makes the difference between good and indifferent business strategies. We suggest that a good business strategy will meet six tests of quality:
1.It will be correctly scoped.
2.It will be appropriately documented.
3.It will address real customer needs.
4.It will exploit genuine competencies.
5.It will contribute to competitive advantage.
6.It will lay the ground for implementation.
The scope of business strategy
Each separate ‘business’ should have its own business strategy so that a multiple business enterprise will have a number of separate business strategies. This raises the practical question of how to define the scope for each such business.
Ziga info have examined this question rigorously. They suggest that there should be a separate competitive strategy for each ‘offering’ defined as the unit of customer choice. The unit of customer choice depends on what the customer is comparing when he or she makes the buying decision. Their many examples of offerings suggest, for instance, that a 100g jar of Nescafé might be a separate offering from a 200g jar of Nescafé if the closest substitute for the customer is the same size jar of another make of instant coffee. They see the two different sizes of jar as being different offerings and therefore requiring different business strategies. This is certainly theoretically elegant but may present a few problems in practice. To divide businesses so finely is likely to be too much work and it is unlikely that it would be possible ever to implement such fine-grained strategies. There is often a conflict between theoretical rigour and practical constraints.
In practice, the problem is more often the reverse of the Nescafé example in that a business is defined too broadly and, consequently, a single strategy is expected to apply to all its facets. One reason for this is that a division or region considers a ‘business strategy’ for its business that includes several distinct offerings. If the genuinely different needs of the different offerings are not separated, the resulting strategies can only be muddled and less useful than they might have been.
There is a need for a balance in choosing the scope for each ‘business’. If the scope of the business is defined at too low a level, the work becomes too much. If the level is too high, the analysis loses its rigour. In practice, the problem is usually that this question of scope is never clearly posed, not that it would be difficult to provide a workable answer.