Sunday, 28 October 2012

Business Strategy


Business Strategy

Business:-

  • The activity of making, buying, selling or supplying goods/ services for profit maximisation.
  • It comprises with Idea, Asset and Income.
  • Every idea is not business idea.
  • Business idea is an Idea which meets the unmet need of a market at profit.
  • Business Model  => Idea+ Asset+ Income
  •  Low price always for a galaxy of products that most people need or want (Wall Mart)

Strategy:-

  • A plan and its movement that is intended to achieve a particular purpose.
  • The process of planning something or carrying out a plan in a skilful way.
  • This word comes from Military.

 

Business Strategy:-

·        Describes how a particular business intends to succeed in its chosen market place against its competitors.

·        A course of action or sequence of action towards achieving the objectives.

·        Shows how a Firm compete within an industry.

·        It is a selection of ideas and assets to meet our Long term goal.

·        It is a designed frame work within which all plans execute.

·        We can say it is an array of  decisions which designed to execute at particular time

·        It is like full proof war strategy( Defensive warfare, Offensive warfare, Flanking warfare and Guerrilla warfare )

·        Making cartel is one of the advance Business Strategy.

 

Constituents of Business Strategy:-

  • Scope
  •  Resources
  •  Uniqueness
  •   Synergy.

Scope:-

  • Scope refers to Functional, Geographical, Product/ Service and Relational limits.
  • Functional limits- marketing, Production etc.
  • Geographical limits- market covered.
  • Products limit- Product line and range.
  • Relational limit- business dealings are internal or external
  • So, Scope refers to span of activities of the Organisation.

Resources:-

  • Domestic or Foreign capital
  • Fresh equity
  • Raw materials
  • Senior or Middle level of employee
  • In house R&D or outsourced R&D

 

Uniqueness:-

  • Shows distinctive competence over competitors.
  • Shows the advantage over competitors.
  • Uniqueness comes due to different Vision and Missions of the Firm.
  • Alternative Plans
  • Close through customers through Retail chains, Speed of action, Internet and Technology

Synergy:-

  • Refers to combinations of sub systems within an organisation, which are sufficient to achieve the objective.
  • Means instead of single, working together.
  • Company to company relationship is also an example (making Cartel).

 

Strategic Mix and Strategy Formulation:-

  • Strategic Mix having 3 levels; Corporate, SBU and Functional level
  • Corporate level- Charted for whole organisation, Deals with “What to do”, It is a Grand Strategy, Retrenchment of Strategy, Curtailment of Goal
  • SBU(Strategic Business Unit) level- Concerned with “ What to do for particular Unit”; Defender, Reactor, Analyser and Prospector Strategies
  • Defender Strategy- Satisfied with present situation; Market leader; perhaps in niche market; don’t want to take risk; they are market leaders.
  • Reactor Strategy-No opportunities perhaps threats are faced
  • Analyser Strategy- Firm is not silent; modifying course of action; want to take risk; new companies
  • Prospector strategy – looks for new opportunities; imbibe with old and modern working culture.
  • Functional level- Concerned with “ How”; Functional areas like Marketing, production, Finance, Personnel, and R&D
  • Board of Directors and CEO formulates corporate level strategy, The CEO and Functional heads formulates Business unit level Strategy and Functional heads and his subordinates formulate Functional level strategy.

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