Business-Strategy

Principles
What are Business-Strategy Principles?
Strategy principles are the fundamental rules and guidelines
that serve as a foundation for reasoning and decision making
about the longer-term direction for an enterprise. When used
properly, strategy principles help organizations grow and
achieve competitive advantage in the marketplace. Business-
strategy principles help executives decide where to compete
 (markets, geographies and products) and how to compete
(cost leadership, customer service or product performance).
The strategy principle of “differentiation,” for example,
suggests that businesses that offer unique services or special
product features that appeal to customer needs stand out in
the marketplace and command a premium price. This
strategic principle enables an organization to create more
value and outmaneuver rivals and competitors.

Some business leaders believe in the “first mover” business-

strategy principle. This principle suggests that if a firm can be
innovative and introduce new solutions and services, they will
achieve superior results. However, some business leaders
believe that first movers usually fail and it is the fast followers
who will ultimately gain a competitive advantage.
Understanding fundamental business-strategy principles
helps leaders formulate actions, initiative, and priorities that
ensure long-term sustained success.
What do you mean by business
strategy?
Business strategy is essentially a plan to win! It
is the responsibility of business leaders to
formulate a plan of action and define what
winning means for their line of business. A
more in-depth meaning of business strategy
consists of additional elements. For example:
Achieving long-term success by leveraging
new sources of competitive advantage while
anticipating shifts, opportunities, and
disruptions in the economy as you shape the
strategy of your business.”  Business strategy
also means developing innovative solutions
that help customers solve problems and
create value while enabling your own
organization to grow and deliver a superior
return on investment.
What are the Key Elements of a Strategic
Plan?
A good strategic plan should incorporate the following
elements:
1) An overarching mission, vision, and list of values of the
enterprise.
Highly successful organizations have a “north star” to build
a strategy around.  This helps energize people and give
them a sense of purpose and clarity about the overarching
direction and principles that govern the enterprise.
2) Clear goals, objectives, and outcomes to achieve.
After they have identified the organization’s purpose and
vision, the leaders of the enterprise or leaders of key
functions need specific and clear goals to accomplish a
strategic agenda.
3) Corresponding measures or indicators used to monitor
progress.
Defining clear goals alone is not enough to ensure long
term sustained success. It is essential that leaders are
specific about the measures of effectiveness to track
progress.
4) Clearly identified customers and market segments.
Good strategies focus on the customer. However too many
organizations try to be all things to all people. Highly
successful organizations focus on the customers or
emerging customers that will be critical to future growth
and opportunities.
5) A unique value proposition.
Strategic organizations are keenly aware of how they add
value and contribute to the economic success of key
customers and stakeholders. Organizations create a
lasting bond and loyal customers when clients and
customers believe in its promise to help them succeed.
6) A way to differentiate the business stand out in the market.
Differentiation goes to the very heart of strategy. Everyone
associated with the business including suppliers,
competitors, and customers (especially future customers)
need to be aware of the things that set it apart.
Differentiation reduces the perception of “sameness.” 
Sameness tends to make the business’ products and
services a commodity which requires it to compete on cost
alone. This makes it more challenging to achieve a
superior return on investment.
7) Awareness of opportunities and threats in the external
business environment.
Businesses operate in a dynamic and changing world.
Organizations that recognize and adapt to the challenges
and see new opportunities will be better equipped to
maintain a competitive advantage over their rivals who are
slow to see shifts in the environment.
8) A thorough assessment of strengths and competencies as
well as vulnerabilities.
Changes in the environment combined with competition
from rivals means that the enterprise must reinvent itself,
develop new competencies, and restructure the way it
operates. This means leaders must be open to change and
ready to let go of practices that may have worked well in
the past but won’t work in the future.
9) A roadmap or guide with corresponding actions, initiatives,
and timelines that are communicated, understood, and
accepted by organization members.
Ultimately strategy is everyone’s job.  As such, everyone in
the organization needs to understand the game plan. Then,
having a clear line of sight, everyone needs to know how
they can contribute and have a personal plan that is aligned
with the direction the business is moving in.
10) A mechanism that enables leaders to meet periodically,
discuss new insights, and amend the strategic plan.
Good strategy requires more than good tools, concepts, and
skills. The heart of good strategy is conversation and the
exchange of ideas. Strategy is a fluid process and leaders
at all levels need opportunities to discuss modifications
and additions to the strategy plan. Normally, leaders set
aside time on a regular basis to check in and share their
thoughts about the future and ensure that the enterprise
will be vibrant and relevant in the future.
These ten elements define the essence of a highly effective
business strategy.