Business people often hear the term “strategy” discussed in meetings with coworkers, clients, and other stakeholders. However, there is considerable confusion about the meaning of the word and how the development of a business strategy can be used to guide the company forward. A business strategy helps to gather all the resources of the company towards a common goal.
A business strategy is usually a short document, no more than a page or less, that establishes one or two key elements that distinguish a company from its competitors and are more likely to contribute to the long-term success of the company. For example, a luxury clothing manufacturer might decide that its strategy is to be the main destination for women who look for designer cabinets, exemplary customer service and quick modifications compared to the competition. Once the strategy is developed, it must be communicated to the employees frequently so that the focus of the business is maintained.
Once the global strategy is decided, it is also necessary to develop functional strategies. These strategies focus on the general panorama of the different departments of a company. If the general strategy is to increase the market share of 15%, the departments within the company will have their own set of strategies. The human resources sector, for example, could have a strategy to increase the technical sales force to meet the levels of anticipated sales. The finance department may have a strategy to get new loans to finance the necessary increases in manufacturing capacity. These strategies, like the general strategy, serve to keep the different departments focused on the essentials.
Operational strategies focus on details about how to get a job. Although the functional strategy of the Anthony Wile Toronto and finance department may be to find the additional initial capital, an operational strategy could be to look for various sources of capital. These strategies support functional strategies and, when used together, provide a method to keep the entire company on track to achieve its overall strategic objective.
The Strategy as a Management Tool:
The development of a broad global strategy of the company and its functional and operative subsets allow key management to see if all the departments act together with the others. The development of the strategy at all levels is used as a management tool by Tony Wile to determine if the company is about to achieve its objectives in the most efficient and effective way. For example, the luxury clothing manufacturer can determine what additional equipment the finance department recommends does not make the complex modifications necessary for the shop’s clientele.
Availability to Change Course:
The competitive environment can change rapidly, which may require a change in strategy. The company without a stated strategy to review frequently will not change to reflect the current reality. Often, this puts a company in danger because of the loss of profits and market share.