Strategy is critically important to the success of the organization’s business. Without a strategy, your business may come to a halt or even fail.
A business strategy is designed so that the company may be able to spur their business across the competitive market. Creating a strategy that provides a direct-action plan, prioritizes and aligns activities, defines accountabilities, and providesa framework for ongoing decision-making process is the key to success.
Building a well-planned strategy is the key to a successful business. However, when it comes to doing things in real the situation gets more challenging. Most business strategist, professionals, and stakeholders often get confused in deciding which approach to go about. Questions such as, how will companies build a strategy that can help their business grow or how can they leverage their business strengths to increase customers’willingness to pay for the services and products.
To answer some of the most challenging questions, Pierre Dussauge, leading business expert and Professor of Strategic Management at HEC Paris and BMI is here to respond to all your queries.
What is the difference between a corporate strategy and a business strategy?
According to Pierre, business strategy is about having the ability to create a competitive advantage, and this can only come to you if there’s a gap between the cost and the willingness to pay.
Let us take Toyota as an example, this brand is not the most expensive and neither the cheapest and nor the worst. Well, this is the only factor that has been keeping their cost at bay. Precisely, Toyota has been able to exploit economies of scale because they can produce ten million cars every year. So to speak, the prices of their car are much cheaper than their competitors in the market.
On the other hand, corporate strategy is a strategy that defines the scope of the company, making decisions about what strategy to build next and which are the market areas for one to compete.
Why are some companies more successful than others?
In simple words, because they have the best strategy at hand.
Precisely, a strategy is like two sides of a coin. First the business strategy and second the corporate strategy. Talking of business strategy, the companies need to maintain and lower the cost as compared to their competitors. Else, this can be done by creating the thrive for people to pay. The sole purpose of a business strategy is to raise the gap between the costs and the willingness for the customer to pay.
The job of a business strategy professional is to make this happen by leveraging the skillset using different business strategy models.
Is strategy all about comparing yourself with the competitors in the market?
Strategies are said to be relative to the competition. The reason being, during critical situations taking place in the market, customers will then be able to compare it with different brands in the market. Thus, if the customer can pay for brands such as Mercedes or BMW than they will likely be able to pay for Volkswagen.
Now you might ask the question why?
A simple answer to this, brands such as BMW and Mercedes have either or by chance have deliberately cultivated multiple aspects within their business aspects. If you talk about the quality, it is much better as compared to other brands in the industry. And if you talk about the brand, it is prestigious, thus people pay attention to these.
Therefore, in a business strategy, the business strategy professional needs to ensure they can manage these strategically.