7 Principles of Building Modern Business Strategy

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Leaders, or startups, are very interested in talking about topics related to “Business Strategy” or “Strategic Management” because it shows their own knowledge and understanding. Building an effective business strategy certainly exists not only on paper, plans, or reports, but it must be built through hands-on experience, direct contact with customers.

Here are 7 Principles of Business Strategy that ThiCao believes that every leader should know to help their business grow and not deviate from the original goal.

Basic Business Strategies You Need to Know

For any business model, it is necessary to build a really correct business strategy. Here are 7 important strategies that you can refer to:

Business Strategy: Compete to be different

Many people assume that the business strategy of an enterprise is to become the best and most outstanding unit of the industry, but however, that task sometimes cannot come true.

In sports, there is only one winner, but it is very common for two or three leading businesses to benefit from the opposite.

The worst business strategy is to try to knock out the strongest competitor in the industry by imitating their every move. Approach distinct values for success.

Business strategy: Competition for profit

Doing business isn’t just about you having the largest share of the market, or the business that is growing at breakneck speed, it’s also about the profits you generate.

After all, if all the strategies you come up with don’t have a clear goal of how much money you can make, it’s best not to waste time and effort on them.

Understand the market before building a business strategy.

Every business is part of the market-economic ecosystem. Each market will have its own characteristics and personalities. And these characteristics will be related to the profits that you can achieve in the future.

Understanding the market, your competitors will form a strategic mindset for the business, about how to help you survive and compete.

Identify customers

Of course, you need to determine exactly the target audience you are targeting, and how you serve this customer file. You cannot sell your products or services to everyone, because you only have a limited number of potential customers who share the same need.

Therefore, it is important to identify steps to make customers feel satisfied with their needs with the products and the value you bring.

Learn to say no

Once you have understood the market, understood the customer, and built up the value of the commitment of the business, you will gradually realize that there are many things that we must say no.

There will be a lot of customer files that you won’t serve, activities that you don’t need to perform, and products and services you shouldn’t provide.

In business strategy, determining what to do and what not to do is equally important.

Don’t be afraid to change

Competitors evolve, customers’ needs and behaviors change, technology improves, so the essential element of defining a company’s business strategy is acumen in detecting new trends. can be applied to business models.

When you don’t change, you are standing still and standing still. Nokia exemplifies the fear of change.

Changing their own products is also a way for brands to extend their product lifecycle.

System thinking

The last but not least important business strategy is the formation of systems thinking, building accurate data, and data to make assumptions for the growth of the business.

Your judgments cannot always be 100% accurate, so you need facts to make judgments about customers, about market trends, everything, etc.

9 Steps to building a business strategy

Here are 10 steps to building a business strategy for your business. Hope the following suggestions will help you figure out the right direction for your organization.

Step 1: Build the right vision

“Vision” can be something of a blur to any of us. In a nutshell, “vision” is a brief statement of the future direction of the business.

However, “vision” does not include specific values, which will be expressed in the “mission” (which includes aspects related to market goals, customers, market share, sales…).

Step 2: Shaping competitive advantage

In order to formulate core business strategies, businesses need to understand their strengths in competing with outside competitors.

A good business strategy needs to be clear: What factors can make you stand out and become more successful than your competitors.

Step 3: Set your goals

Choosing the wrong audience to reach, giving development goals that are too low or higher than the capacity, choosing inappropriate media, no separation between sales and marketing … yes This can lead to disorientation of the business, leading to cost losses that are hard to compensate for in a day or two.

A clear and right goal helps your business to harmonize marketing and sales activities, reach the right customers, convey the right communication messages, optimize sales and marketing. part.

Step 4: Make informed decisions

Without quality data sources, businesses cannot make the right decisions. Making decisions should be based on carefully calculated data and information.

Emotional decisions lead the business to a game of chance, where success and failure are separated by a thin thread.

Step 5: Focus on sustainable development

Only a solid foundation can help businesses overcome the storms and crises.

Investing in sustainable developments such as technology, people, and facilities is something businesses should think about when making long-term decisions.

Step 6: Always update new information

It is true that businesses should focus on long-term development, built from solid foundations, but the marketplace is always changing day by day.

Standing still is like walking back to the development of the opponent.

Flexibility to change the environment is essential and should be taken into account in the proposal of the business strategy of the business.

Step 7: Consult from many different parties

A good business strategy requires consultation from many different actors in the business.

Many times, the expertise coming from experts in a specific field can help businesses make reasonable and right decisions.

Step 8: Have a thorough preparation

Thorough preparation is a very important thing in any strategy building activity.

To have good preparation, you need to carefully perform tasks such as market research, search for information related to internal and external factors of the business …

Step 9: Things to keep in mind when implementing the strategy

Any longer strategy needs to be realistic and applicable in the current context. Therefore, you need to consider the following issues when planning your business:

The strategies you develop can effectively track and measure monthly problems.
The results of the strategy need to be measured through quantitative indicators (such as KPIs).
Regularly share the vision and goals of the business so that employees in the company know and understand their destiny and role in the development of the business.
There are periodic reviews of the effectiveness of the strategy. Make changes if needed to the strategy.

3 Type of business strategy building

There are 3 basic types of strategies that any leader must really understand: (1) common strategy, (2) corporate strategy, and (3) competitive strategy. This section will clearly define the differences between the three types of business strategy building and ask some useful questions.

Common strategy

Common strategy – Relates to how a particular goal is achieved. Therefore, this type of strategy pays much attention to the relationship between the purpose and the means of implementation, between the outcome and the resources used.

Strategy or Tactics both involve taking out the necessary actions to achieve specific objectives. Mostly, strategy relates to how you deploy and allocate your resources at will. While tactics relate to how you use them.

Together, strategy and tactics bridge the gap between purpose and means.

Strategy and tactics are terms formed in the military. However, in business, that is the basic foundation of any success.

Corporate strategy and competitive strategy

Business strategy will determine which market segment that business operates in, and how the business model is. The competitive strategy will determine the core values that are used to compete.

Business strategy will often decide issues related to the company’s vision and strategy, telling customers what they do, why to exist, and what will become in the future.

A competitive strategy is a combination of the capabilities, strengths, and weaknesses of an enterprise when compared with direct competitors in the same industry.

According to Michael Porter – professor at Harvard University, competitive strategy is influenced by 5 main factors:

Threats from new deceivers enter the market.
Threats of alternative products or services.
The strength of the supplier.
Power of buyers.
Competition between businesses exists.

He also emphasized that to address the above 5 factors, a competitive strategy needs to possess: (1) concentration, (2) differentiation, and (3) leadership team.

Factors affecting business strategy

Here are some of the basic factors that directly affect the building of the business strategy of an enterprise:

Products/services offered.
Natural resources.
Marketing and sales method.
Production capacity.
Ability to satisfy customers.
Growth target.
Distribution mode.
Technology background.
Type and market demand.
Profit target.

Michael Treacy and Fred Wiersema suggest that there are 3 absolute principles of absolute compliance in a business strategy, including:

Operational Excellence – Perfect performance

This strategy depends on the ability to produce and deliver the product/service. The goal is to lead the market with price and convenience.

Customer Intimacy – Customer loyalty

This strategy focuses on providing products and services that are tailored to the selected customer segment. The goal is to build strong relationships and build customer loyalty with corporate brands.

Product Leadership Generation – Providing leading products

The strategy focuses on developing innovative, innovative products and services. The goal is to quickly commercialize product ideas within the business.

Frequently asked questions about the strategy

If the above definitions seem a bit confusing, the FAQs below will be more suggestive to you:

Related to the brand’s vision and mission

Who are we?
What do we do?
Why are we here? (this market)
What fields do companies and businesses operate in?
What do we want our business to be in the future?
What do we want the business to be in the future?

Relate to the common strategy

What are the goals of the business?
The strategy of the current business?
What actions can help us to achieve our goals?
What means and resources need to use?
The business is limited by no means or resources?
What serious risks do we need to prepare for in advance?

Relate to business strategy

The strategy of the current business?
What are the assumptions about the feasibility of the new strategy?
What will happen in different environments (social, political, technological, and financial)?
Growth goals and business profitability?
Where is the target market?
In what specific industry or field?

Relate to competitive strategy