Four Building Blocks to Business Strategy
Business Strategy analyses the available ways of improving the company on behalf of its owners by the top management. The process requires use of resources and better understanding of both internal and external environment of a company. Before any strategic plans can be made, the company needs to develop clear organizational mission, vision and objectives that are in line with the development policies. It is through these goals that the company a program or projects that are aimed at achieving them. To evaluate an organizations program or projects a balanced scorecard should be used, thus ensuring all the projects are in line with the expectations of all stakeholders. The stakeholders in a company begin with the company owners, company employees and customers or target market. In ensuring that a business strategy satisfy all these people it is wise to incorporate the four business strategy building blocks; efficiency, quality, innovation and responsiveness (Drucker 149).
Business efficiency requires monitoring company actual production or performance and relating to resources utilized such as time, labor and money. The main idea of an effective business strategy is one that assists in reducing resources utilized will at the same time increasing production. An effective strategy will ensure a company maintains an accelerating pace of competition with the larger firms in the same industry, while at the same time ensuring stability of the existing market. Efficiency will also require proper network in the company so that real time data is available from customers, employees and suppliers, thus making it easier for the company to monitor any negative or positive change from an early stage. To achieve business efficiency there are several measures that a company can take while developing new strategies.
Easy access to information is one of the easy channels that an organization can undertake to enhance efficiency in its strategic plans. Access to information will ensure all employees are able to respond faster to customer needs and customers too are made aware of the available products and services of the organization. Good communication network minimizes loss of opportunities and yields satisfied staff and customers. Creating efficient business process will further benefit the company by ensuring easy partnerships. Some companies such as Ventura are great companies that may benefit a firm that partners with them, however these companies require certain efficiency procedures in some areas such as supplies, marketing and quality assurance for them to partner. In that light, maintaining business efficiency in all strategic plans by constant comparison of production and resources utilized can benefit a company in multiple ways.
Quality is another major building block in strategic planning; it refers to fitness for purpose. Company strategies will be evaluated on quality by different persons; customers, competitors, producers and support personnel. Customers will tend to be more attention on determining how accurate the product or service of the company is in relation to specified quality. Before a customer purchases a product he or she already has an expectation and if it is not met then the customer concludes the product to be of low quality. Company products are generally evaluated on quality by monitoring how reliable and maintainable they are. In any company success of its plans and achievement of desired goals depends on several aspects beginning from customer satisfaction, competitive advantage and stability of support personnel. All these groups pay attention on quality and that tends to dictate their attitudes towards the company and its products. To achieve good business quality image from all stakeholders the company should implement the five aspects of quality; producing, checking, quality control, quality management and quality assurance. These aspects of quality ensure that the company strategic goals include maintaining, high production standards, continuous evaluation, analysis and improvement of products. According to Chowdhury, top management can guarantee total quality by encouraging dependability on quality support, encouraging quality speeds in production and service delivery, embracing flexibility in operations and flexible costing system to cater for unexpected challenges. In addition to maintaining efficient standards that are of high quality, it is also essential to maintain continuous innovation to ensure constant growth and stability (Chowdhury, 34).
Innovation is another important building block in business strategic development. Innovation refers to adding value to the existing strategies. Value can be added to even good procedures to make them better and to incorporate new changes in the market, in technology and in the economy in general. Most companies can make innovations in products, processes, technologies and services. Innovation is different from invention since it simply calls for a change of the strictly stated procedures while invention requires a totally new idea. Companies benefit from innovation in different ways. It becomes possible to maintain target market or existing clients who in most cases may be lost to new companies for the sole reason of wanting some change. It also assists in expanding current market; an improved product will look as good as new it will therefore attract new clients who would like to calm their curiosity. Innovation may be focused embraced in different ways in a company; some companies prefer to change the packaging or brand, improve quality through production or change distribution channels. Whichever method a company chooses in innovation, thorough analyses are essential to ensure the move is responsive to meeting organizational goals such as cost reduction, market expansion and gaining competitive advantage.
Responsive strategies require selected business strategies to be able to quickly respond to changes in the industry, customer interactions and in technology. Business strategies involve a wide range of sectors which are bound to change within short periods, these strategies should therefore be designed to best adapt and embrace these changes to continuously yield positive result in an organization. A good business strategy should quickly and effectively adapt to business opportunities as they arise. McDonalds Corporation Inc is one of the companies well known for embracing this strategic aspect. The company ensures that its production, marketing and distribution channels comfortably accommodate market changes in terms of preference and size in its multiple branches. Responsive business strategies assist in cost reductions, maximizing sales revenue and achieving customer satisfaction, which are essential stepping stones to attaining desired company goals (Hamel, 198).
Business strategies provide good opportunity for the management to set organizational goals and tactics. The strategies should incorporate the four key building blocks for them to be effective in achieving the set goals. The four building blocks: efficiency, quality, innovation and responsiveness need to be linked or related for them to be effective. Strategies developed should be effective meaning that there should be reasonable relation between production and cost. In reducing cost, the company should ensure quality of products and services is not compromised. Even with stable products continuous growth should be maintained through innovation, which refers to continuous improvements and embracing changes. Finally the strategies should be evaluated to ensure they can comfortably respond to internal and external environmental changes.
Drucker, Peter The Practice of Management, Harper and Row, New York, 1954
Chowdhury, Subir . The Ice Cream Maker: An Inspiring Tale About Making Quality The Key Ingredient in Everything You Do. New York: Doubleday, Random House.2005
Christensen, Clayton The Innovator’s Dilemma, Harvard Business School Press, Boston, 1997.
Hamel, Gary Leading the Revolution, Plume (Penguin Books), New York, 2002
Johnson, G, Scholes, K, Whittington, R Exploring Corporate Strategy, 8th Edition, FT Prentice Hall, Essex, 2008