Introduction
In the dynamic business market, an organisation needs to have a good strategy as it serves as a guide for them to reach and achieve their set of goals and objectives.
What is a business strategy
A business strategy can help an organisation to make better decisions and set the tone for them towards providing and creating products or services that match with customers, one which holds value. You can check our blog on Marketing Essentials to know what is a value proposition. This will give organisations a competitive advantage which will benefit them since surviving in the business arena these days is quite hard.
Key Concepts
- Competitive advantage
Unique selling points (USP) will have to be used by businesses if they wish to differentiate themselves and stand out, they will have to add new features to their product or add extra facilities in the service that they provide. Taking into consideration customer taste and preferences is an important factor, as they are the ones who define the market.
For example: Nowadays people value the importance of saving our planet therefore, businesses can come up with good, innovative, and useful sustainable products.
- Strategic planning
It is a process through which an organisation manager will define the following:
- Vision of the business
- Goals and objectives
Specific, Measurable, Achievable, Relevant, and Time-Bound (SMART) concepts can be used to achieve the objective of the company.
This will give the organisations direction and help them to make decisions on how to allocate resources such as money, and labour.
- SWOT Analysis
Swot analysis is a technique that is used to determine the strengths, Weaknesses, opportunities, and threats that can affect a business both positively and negatively. By using SWOT analysis it helps a business to identify both its internal and external factors, and your strengths and weaknesses can be controlled but your opportunities and threats are uncontrollable.
- Porter’s Five Forces model
Porter’s five forces model is used to analyse and understand the competitive industry, it can help an organisation to identify the profitability of their concurrent as well as their product offering, that make customers buy their products. By using this method an organisation might be able to find new marketing strategies to attract the attention of their potential customers or come up with innovative products that they will find only in your stores.
As the name already indicates there are five stages that represent a competitive market:
- Threats of New Entrants
If competitors can easily enter the market in which you are operating, you might suffer from pressure that might lead to lowering prices to survive or improve your products by adding new features, and facilities. - Bargaining power of suppliers
Suppliers have a great influence over the products that they sell to businesses, if there are few materials available they can set a higher price. - Bargaining power of buyers
Customers influence price, since there are substitutes and alternatives to a product they can easily switch from one buyer to the other if they are not satisfied with the price, therefore, salespersons will have to make customers understand their pricing strategies. - Threat of substitute
Since the market consists of lots of buyers, they can sell similar products to customers, but these alternative products will create competition and at the same time give customers the option of choosing whom to purchase their products. Therefore, businesses will have to create products that have a unique selling point and add value to their product, so as to differentiate their products from those of their competitors. - Competitive Rivalry
It refers to the intensity of the competition among existing companies, this has an impact on the profit and market share of an organisation. This competition means that businesses always have to look out for customer’s needs and come up with innovative products and services.
Factors such as exit barriers: can make an organisation stay in the market even if they will gain a low profit because the cost of getting out of the market is high.