Importance of Business Strategy - Essay Example

Business Strategy al Affiliation Business Strategy Introduction The following essay will be answering various questions regarding the factors important in an organization. Among the factors include the importance of a business strategy. It is advisable for every organization to have a business strategy, mainly in order to ensure the achievement of the objectives of the organization. Among the other factors important in the essay will include the processes of making a business strategy, and implementing it within the environment of the business. The competitive strategy model provided by porter will have importance in evaluating the competitive capacity of the General Electric Company. There will also be the observation and analysis of the five generic strategies that the company can use for the purpose of ensuring its success. The leadership within the company should also adhere and match with the strategies employed by the business. Importance of Business Strategy Every organization, no matter the size, requires to have a strategy of the business. The strategy has the principle objective of ensuring that the company can meet the needs of the customers in the market. A business strategy, therefore, has the core objective of creating the foundation of the business. Once the business is founded on a common core, then there can be the establishment of systems to monitor the direction and operations of the business so that the business can have the capacity of succeeding in the market (White, 2012). As such, a business strategy ha the function of enabling the business understand its environment and the variety of factors that it requires in order to the business to attain success. Among the specific functions of the business strategies is to identify the strength and the weak areas of the business. Through this identification, the business can then have the capability of focusing on its strengths and attractiveness in order to sell itself to the consumers. Further, the business strategy has the capacity of enabling the business identify the risks that the business has to face when operating within a specific market through the use of the business strategy, the company will have the capability of mitigating these risks and having the capacity of achieving profits for the business. A business strategy has the purpose of ensuring the long-term growth of the business amidst a changing business environment. There are various trends and cultures coming up in the business world and every business should have the capacity of adapting to the change. An example is the quickly upcoming business trend of internationalization (Verbeke, 2013). For a business to survive in such a market, it needs to have a strategy that will direct the operations of the business towards adapting to the globalization effect and also manage to grow in the long haul. There also exist social, technological and political factors that dictate the direction of the environment of the business. Through focusing on these factors, the business strategy will help the business in identifying and effectively responding to the changes as they occur. Another important aspect about a business strategy is that it has the function of creating a vision and also dictating the overall direction of the business. The employees of the business need to understand their role within the business and the destination of the business. Without this strategy, the business will not have a purpose and an objective. This aspect will make it meaningless to work for the organization. The strategy, therefore, provides the business with a common goal and purpose that all the employees can focus towards. Phases of Crafting and executing a business strategy There exist five main phases of crafting and executing a business strategy. Phase One: Development of a strategic vision This is the vision of where the business desires to be and to have achieved within a given period of time. It also includes the figuring out of the key issues of the business including the products, technology levels, the market and also the customers in the market (White, 2012). The business needs to strategize on the future of the business in terms of having a clear outlook of the expectation of the level of product development and diversity that the business needs to have achieved within the set period of time of the strategy. It includes the decision on whether the company plans on operating within the same market and serving the same customers in a given period of time. This a managerial consideration within the business, where the management of the business needs to provide the direction of the company, both in the long term and in the short term period. It should also include the decision of the appropriate and specific actions that the management will take to ensure that the company achieves this aspiration within the set time frame. This aspect needs to communicate to the stakeholders of the company concerning the commitment of the company towards its success (Verbeke, 2013). Phase two: Setting Objectives The objectives of the company should communicate to the stakeholders the desires of the company in relation to the success of the company. The objectives of the strategy should provide clarity on the type of performance level that the business desires to achieve and also the timeframe of achieving those objectives (Armstrong et al, 2014). The financial aspects involved in this consideration can also have inclusion at this stage of making the business strategy. As such, setting the objectives of the business has the requirement of the making of both the strategic objectives that the business needs to achieve and also the financial objectives. This will forth a balanced type of business strategy, a factor that will ensure the success of the company. Phase Three: Crafting the Strategy This is an extensive stage of the making of the strategy of the business. The crafting phase of making the business strategy has the objective of ensuring that the business moves along the strategic path crafted by the management of the business. This phase involves the formation of responses to the changes that occur in the external environment of the business. It is also a phase that deals in the assassin of the competitive strategies and processes that the business can use in order to ensure that the business maintains a competitive advantage in the market. There is the building of valuable capabilities of the business and ensuring the unity of the strategic actions that have presence in various departments of the company. As such, crafting the strategy of the business increases in complexity depending on the products offered by the company and also the market that the company operates. A complex business will require the involvement of both the employees and management of the business in formulating a comprehensive business strategy that will cut across all markets and products produced by the business. Phase Four: Implementation and execution of the Strategy This is where the management of the business will select an effective methodology of effectively and efficiently executing the strategy of the business. This involves a results-based and goal-oriented activity in order to ensure that the strategy made has the capability of dictating and shaping the performance of the business. It should be in a strategy-supportive way so that the business can follow the strategy in performing its operations. The success of the implementation of the strategy can have measurement through the immediate performance of the company in fulfilling and meeting the set objectives in the business strategy. Phase Five: Evaluating Performance and Initiating Corrective adjustments The evaluation of the performance of the business due to the implementation of the business strategy can be in the form of the capability of the business to adapt and accommodate new ideas, a changing marketing environment, and the embracement of new opportunities. It also involves the analysis of the business in having a direction in its various operations and observing the objectives of the business. It is at this point that the management of the organization decides on where it will change the visions and strategies of the company as according to the performance of the business under the business strategy. Porter’s Five Forces The five forces of Porter analyses the industry in which the business is located. It aims at analyzing whether the products that the company deals in has the capability of achieving the objectives of the strategy of the business. The power yielded by the suppliers in the market influence the profitability of the business (Armstrong et al, 2014). This is because there is the possibility that the suppliers have the power of raising the prices in the market. This will make the company perform lower than its expectations since the business has to meet the demands of the business. The General Electric Company experiences considerable power of the suppliers within the business. This is because the company has a Limited number of suppliers who have the power of deciding the terms of providing the raw materials to the company. The power yielded by the buyers in the market also has a lot of influence to the success of the business. The power of the buyers measures the capability of the buyers in the market to drive the prices down (Baack et al., 2013). The buyers determine the sales of the company and the financial amounts that the company will use in order to attract and maintain the market. Further, the possibility of the buyers to switch from one company as their seller to another company also determines the power yielded by the buyers. For the case of a company such as the Generic Electric Company, the company has a large market share in the company. This is because the company has managed to diversify the products that they give to their buyers. Further, there exists a lot of buyers in the market in such a way that the buyers do no yield a lot of power in terms of dictating the prices of the company. The competitive power depends on the number of competitor companies that exist in the company. There are a high number of competing companies in the international market of the General Electric Company. This I because the variety of products that the company provides to the market are also availed in the same market by the competing companies (Armstrong et al, 2014). Among the strong competitors of the company include the Toshiba Corporation, the Siemens Company and also the Hitachi Limited Company. The power of substitutes in the market have a lot of power in the market operated by the General electric company. Among the various products provided by the General Electric Company include infrastructure products, financial services and also appliances. There are many substitutes in the market for this products, meaning that there is a high capacity of substitutes in the market. The threat of new entrants into the market involves the barriers to entry in the market. As for the case of the General Electric company has a low threat of the entry of new entrants mainly because the costs of operating in the market is too high. Further, the reputation and the goodwill that the company has in the market places a lot of demand on the new businesses, an aspect that they cannot meet. The Five Generic competitive Strategies. A business operating in any market has to be either offensive or defensive in order to have the capacity of successfully operating in the market. This is the competitive strategy advocated by porter. In order to gain a competitive advantage, the business should ensure cost leadership. In order to have the aspect of cost leadership, the company must strive to achieve economies of scale in order to produce goods at low costs (White, 2012). This will enable the company to avail products in the market at relatively low costs. The General electric company utilizes this approach in competing in the market. It sells a high volume of its products at cost effective prices due to the economies of scale that the company enjoys. Another strategy is having product differentiation, where the products of the General electric company have a strong brand. This is especially so for the appliances and electric equipment provided by the company. As such, competing companies have a hard time trying to emulate the products of the company. Market segmentation is another strategy applied by the company, where the company has to carefully choose the market that it decides to sell its products. This is the focus strategy. The company focuses its marketing to a specific group in the market for heeding to the unique needs of the customers in the chosen market (Tsyhankova et al., 2012). This strategy has the effect of enabling the customers to have a strong loyalty towards the brand of the General Electric Company. As such, other companies in the market tend to target less the market segment that has loyalty to the General electric company. The focus strategy applies to either the differentiation focus or the cost focus. The differentiation focus means that the company is applying extra efforts in providing something more unique to the market, more than the competing companies operating in the market. The cost focus, similarly, means that the company is applying extra efforts in ensuring that the customers receive a special lower price in the market. The General Electric Company has the capacity of enabling for this aspect through having special suppliers for the company, different from those that serve the competing companies. Leadership and strategy There is an increasing tradition of managers using strategies to ensure the success of their companies. This mean that the CEOs of the companies are increasingly applying business strategies in order to direct their employees in achieving the objectives of the business. Companies are currently in the increased tendency of battling for the customers that exist in the market. The traditional forms of differentiation in the products offered by the companies no longer ensures the competitiveness of the company (Verbeke, 2013). The companies must ensure that they effectively apply innovations in their companies for the purpose of, maintaining a competitive advantage in the market. There is, therefore, an increased tendency for leadership and strategy execution within the business. The CEOs of the company have to ensure that they apply the business strategies in all departments of the organization and also at all levels of the employees of the organization, the Generic Electric company, for example, has a strong leadership where the CEO of the company ensures that the individuals within the company have alignment, where the potentials and capabilities match up to the responsibilities assigned to the individual. Further, the employees of the company undergo a periodical coaching and training in order to make them more effective with dealing with the customers in the market. This ensures the constant thriving of the business. As such, the company has managed to build a specific leadership development program within the organization for the purpose of providing a unique type of training, support and ensures the critical selection of individuals who will enable the company achieve its business strategy. As such, these people have the special mandate of driving the strategy of the company (Baack et al., 2013). Tis builds a culture of success and strategy-orientation within the organization. It is through this methodology that the company can manage to effectively and efficiently execute its strategies. Conclusion Every business requires strong business strategies that will enable the business to achieve profitability and success. As such, the company will have the ability of setting its vision and objectives that the individuals within the company will follow. Companies increasingly use the five phases of the crafting and execution of the strategy of the company for the purpose of ensuring that the implementation of the strategies is consistent with the plans of the company. There is also the increased tendency of companies, with the example of the General Electric company, choosing to use the generic competitive strategies as laid out by Porter in ensuring that the achieve efficiency within the business. As such, there is the increased need for the focused differentiation of products in companies so that they can achieve competitive advantage in the market. The focused cost reduction strategy is also a commonly applied competitive strategy by companies such as the General Electric. It enables for the company to attract and retain customers who will have the brand loyalty of the company. Despite the use of the various business strategies, it is important for the leadership of the company to ensure the execution of the strategies of the company through an increased involvement of the employees of the company. The management of the General Electric Company ensures that they increasingly involve their employees in training so that they can have the capacity of constantly driving the company towards the execution of their strategies. References Armstrong, G., Kotler, P., Trifts, V., & Buchwitz, L. A. (2014). Marketing: An Introduction. Baack, D. W., Harris, E. G., & Baack, D. (2013). International marketing. Sage. effect. Place Branding and Public Diplomacy, 8(2), 110-118. Pearson Education Canada. Tsyhankova, T., Olena, Y., & Nataliia, Y. (2012). Strategies of International Companies in Turbulent Marketing Environment. International Economic Policy, (1-2), 5-32. Verbeke, A. (2013). International business strategy. Cambridge University Press. White, C. L. (2012). Brands and national image: An exploration of inverse country-of-origin Read More