A business strategy is a formal action plan for achieving a sustainable competitive advantage and delivering an attractive return for stockholders. Strategy focuses on the big decisions, those that have critical consequences, require significant resources, pose the toughest implementation challenges and are the hardest to reverse if wrong.
A firm’s business strategy always weighs heaviest on the owner or CEO, for the questions it must answer are too consequential to be delegated:
- To what mission will the firm dedicate itself, and with what values will it operate?
- In what markets and what countries will the firm compete?
- What business model will it define and pursue?
- What resources and competencies must it develop to succeed in its competitive strategy?
- How will it differentiate its products and services from those of its competitors?
- What scope of activities will it reserve for itself versus outsourcing to other firms?
- What kind of corporate culture will it foster to energize its employees, enhance their skills and ensure their dedication to the firm’s goals?
Company management teams must not only answer these questions one time, but must re-fashion those answers repeatedly in response to the lightning fast changes in markets and technologies that inevitably confront businesses in today’s world.