Every business leader wants their organization to succeed. Turning a profit and satisfying stakeholders are worthy objectives but aren’t feasible without an effective business strategy.
To attain success, leaders must hone their skills and set clear business goals by crafting a strategy that creates value for the firm, customers, suppliers, and employees. Here's an overview of business strategy and why it's essential to your company’s success.
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Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.
According to Harvard Business School Online's Business Strategy course, an effective strategy is built around three key questions:
Many promising business initiatives don’t come to fruition because the company failed to build its strategy around value creation. Creativity is important in business, but a company won't last without prioritizing value.
A business strategy is foundational to a company's success. It helps leaders set organizational goals and gives companies a competitive edge. It determines various business factors, including:
Without a clear business strategy, a company can't create value and is unlikely to succeed.
To craft a successful business strategy, it's necessary to obtain a thorough understanding of value creation. In the online course Business Strategy, Harvard Business School Professor Felix Oberholzer-Gee explains that, at its core, value represents a difference. For example, the difference between a customer's willingness to pay for a good or service and its price represents the value the business has created for the customer. This difference can be visualized with a tool known as the value stick.
The value stick has four components, representing the value a strategy can bring different stakeholders.
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Crafting a business strategy is just the first step in the process. Implementation takes a strategy from formulation to execution. Successful implementation includes the following steps:
Throughout the process, it's important to remember to adjust your plan throughout its execution but to avoid second-guessing your decisions. Striking this balance is challenging, but crucial to a business strategy's success.
Business strategy constantly evolves with changing consumer expectations and market conditions. For this reason, business leaders should continuously educate themselves on creating and executing an effective strategy.
One of the best ways to stay up-to-date on best practices is to take an online course, such as HBS Online's Business Strategy program. The course will provide guidance on creating a value-driven strategy for your business.
Do you want to learn how to craft an effective business strategy and create value for your company's stakeholders? Explore our online course Business Strategy, or other strategy courses, to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart.
Michael Boyles is a content marketing specialist and contributing writer for Harvard Business School Online.
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