Definition: Business strategy can be understood as the course of action or set of decisions which assist the entrepreneurs in achieving specific business objectives.
It is nothing but a master plan that the management of a company implements to secure a competitive position in the market, carry on its operations, please customers and achieve the desired ends of the business.
In business, it is the long-range sketch of the desired image, direction and destination of the organisation. It is a scheme of corporate intent and action, which is carefully planned and flexibly designed with the purpose of:
- Achieving effectiveness,
- Perceiving and utilising opportunities,
- Mobilising resources,
- Securing an advantageous position,
- Meeting challenges and threats,
- Directing efforts and behaviour and
- Gaining command over the situation.
A business strategy is a set of competitive moves and actions that a business uses to attract customers, compete successfully, strengthening performance, and achieve organisational goals. It outlines how business should be carried out to reach the desired ends. Business strategy equips the top management with an integrated framework, to discover, analyse and exploit beneficial opportunities, to sense and meet potential threats, to make optimum use of resources and strengths, to counterbalance weakness.
Levels of Business Strategy
- Corporate level strategy: Corporate level strategy is a long-range, action-oriented, integrated and comprehensive plan formulated by the top management. It is used to ascertain business lines, expansion and growth, takeovers and mergers, diversification, integration, new areas for investment and divestment and so forth.
- Business level strategy: The strategies that relate to a particular business are known as business-level strategies. It is developed by the general managers, who convert mission and vision into concrete strategies. It is like a blueprint of the entire business.
- Functional level strategy: Developed by the first-line managers or supervisors, functional level strategy involves decision making at the operational level concerning particular functional areas like marketing, production, human resource, research and development, finance and so on.
In business, there is always a need for multiple strategies at various levels as a single strategy is not only inadequate but improper too. Therefore, a typical business structure always possesses three levels.
Nature of Business Strategy
A business strategy is a combination of proactive actions on the part of management, for the purpose of enhancing the company’s market position and overall performance and reactions to unexpected developments and new market conditions.
The maximum part of the company’s present strategy is a result of formerly initiated actions and business approaches, but when market conditions take an unanticipated turn, the company requires a strategic reaction to cope with contingencies. Hence, for unforeseen development, a part of the business strategy is formulated as a reasoned response.