This was the first car they ever produced – knowing that they couldn’t achieve the necessary scale or efficiency to turn a profit (even at such a high price). However, such a car was in-line with Tesla’s vision statement where they aim “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.”
What is a business strategy?
A business strategy is an outline of the actions and decisions a company plans to take to reach its goals and objectives. A business strategy defines what the company needs to do to reach its goals, which can help guide the decision-making process for hiring as well as resource allocation. A business strategy helps different departments work together, ensuring departmental decisions support the overall direction of the company.
Strengths and weaknesses: The process of creating a business strategy allows you to identify and evaluate your company’s strengths and weaknesses so you can create a strategy that optimizes your strengths and compensates for or eliminates your weaknesses.
Efficiency: A business strategy allows you to effectively allocate resources for your business activities, which automatically makes you more efficient. It also helps you plan ahead for deadlines, allocate job roles and stay on track for your project goals.
Control: Creating a business strategy gives you more control over choosing the kinds of activities that will directly help you reach your goals, as well as allows you to easily assess whether your activities are getting you closer to your goals.
Competitive advantage: By identifying a clear plan for how you will reach your goals, you can focus on capitalizing on your strengths, using them as a competitive advantage that makes your company unique in the marketplace.
Components of a business strategy
1. Vision and business objectives
A business strategy is intended to help you reach your business objectives. With a vision for the direction of the business, you can create clear instructions in the business strategy for what needs to be done and who is responsible for completing each step.
2. Core values
A business strategy guides top-level executives, as well as departments, about what should and should not be done, according to the organization’s core values. It helps everyone stay on the same page and with the same goals.
3. SWOT analysis
SWOT stands for strengths, weaknesses, opportunities and threats. This analysis is included in every business strategy, as it allows the company to rely upon its strengths and use them as an advantage. It also makes the company aware of any weaknesses or threats.
Many business strategies articulate the operational details for how the work should be done in order to maximize efficiency. People who are responsible for tactics understand what needs to be done, saving time and effort.
5. Resource allocation plan
A business strategy includes where you will find the required resources to complete the plan, how the resources will be allocated and who is responsible for doing so. In this regard, you will be able to see where you need to add more resources in order to complete your projects.
The business strategy also includes a way to track the company’s output, evaluating how it is performing in relation to the targets that were set prior to launching the strategy. This helps you to stay on track with deadlines and goals, as well as budgetary concerns.
10 business strategy examples
1. Cross-sell more products
Some organizations focus on selling additional products to the same customer. Cross-selling works well for office supply companies and banks, as well as online retailers. By increasing the amount of product sold per customer, you can increase the average cart size. Even a small increase in cart size can have a significant impact on profitability, without having to spend money to acquire more new customers.
2. Most innovative product or service
Many companies, particularly in the technology or automotive space, are distinguishing themselves by creating the most cutting-edge products. In order to use this as your business strategy, you will need to define what "innovative" will mean for your organization or how you’re innovative.
3. Grow sales from new products
Some companies like to invest in research and development in order to constantly innovate, even with their most successful products. This type of strategy involves introducing new products into the market and updated products that are able to keep up with trends.
4. Improve customer service
This can be a good business strategy if your business has had a problem delivering quality customer service. Some companies have even built a strong reputation for having exceptional customer service. Usually, companies have a problem in one specific area, so a business strategy that’s focused on improving customer service will usually have objectives that center around things like online support or a more effective call center.
5. Cornering a young market
Some large companies are buying out or merging competitors to corner a young market. This is a common strategy used by Fortune 500 companies to gain an advantage in a new or rapidly growing market. Acquiring a new company allows a larger company to compete in a market where it didn’t previously have a strong presence while retaining the users of the product or service.
6. Product differentiation
Product differentiation is a common business strategy, especially for business-to-consumer (B2C) businesses. They can differentiate their products by highlighting the fact that they have superior technology, features, pricing or styling.
7. Pricing strategies
When it comes to pricing, businesses can either keep their prices low to attract more customers or give their products aspirational value by pricing them beyond what most ordinary customers could afford. If companies plan to keep their prices low, they will need to sell a much higher volume of products, as the profit margins are usually very low. For companies who choose to price their products beyond the reach of ordinary customers, they are able to maintain the exclusivity of their product while retaining a large profit margin per product.
8. Technological advantage
Obtaining a technological advantage, you can often achieve better sales, improved productivity or even market domination. This can mean investing in research and development, acquiring a smaller company to gain access to their technology or even acquiring employees with unique skills that will give the company a technological advantage.
9. Improve customer retention
It’s generally far easier to retain a customer than spend money to attract a new one, which is why this is a great strategy if you see opportunities for improvement in customer retention. This strategy requires you to identify key tactics and projects to retain your customers.
You could launch an entire business strategy aimed at increasing the sustainability of your business. For example, the objective could be to reduce energy costs or decrease the company’s footprint by implementing a recycling program.
Best business strategies #5: Apple iPhone launch shows tremendous restraint
Ok, I hear you – this is such an obvious inclusion for the ‘best business strategies’. But as one of the first people to adopt smartphones when they came out in the 1990s, this is something else that’s close to my heart.
Thankfully, a few years later, BlackBerry came along and started to release phones that were not only smart but much more usable. Sony Ericsson, Nokia, HTC, and a whole host of other manufacturers came out with reasonably solid smartphones well before 2007 when Apple finally released the iPhone.
I remember arriving at the office one day, and my boss had somehow gotten his hands on one of the first iPhones to be sold in the UK. I was shocked. Normally I was the early adopter. I was the one showing people what the future looked like.
But it didn’t. Instead, it waited until the technology was mature enough to sell it to my boss – someone who is far less tech-savvy than me. But also far more financially equipped to spend plenty of money on new tech products.
What can we learn from Apple?
One of the most common misconceptions in the startup world is that it’s the ‘idea’ that matters the most. The truth is, the world’s most successful companies were rarely the original innovators. I’m looking at you, Nokia. At you, Kodak. And at you as well, Yahoo.
People, and especially tech companies, get carried away with being first and forget that it’s a competitive position with pros and cons. Deciding to be a ‘first mover’ or ‘smart follower’ is crucial for strategic planning.
Best business strategies #6: PayPal Daring to challenge the status quo
There are certain industries that you just don’t mess with. Industries like aerospace, big supermarkets, semiconductors, and banking. Actually, banking is probably the toughest industry to try to disrupt because the barrier to entry is huge.
Banks are old. Their business models have been essentially unchanged for hundreds of years. They’re insanely powerful and almost impossible to displace. But for some crazy reason – PayPal didn’t seem to care.
In a very short time, PayPal has emerged as a new payment method – giving a very real alternative to your trusty debit or credit card. PayPal has also become one of the best payment platforms for digital nomads, tapping into one of the fastest-growing business trends in the world.
What can we learn from PayPal?
eBay was smart enough to mostly leave Paypal alone, and their newfound sense of boldness saw them strike a series of deals with other online retailers to try and replicate the success they’d had with eBay.
This is where the second reason comes in. Partnerships. Banks had always been wary about forming partnerships with retailers directly. Instead, they relied on their scheme partners (Visa / MasterCard) to do it for them.
They didn’t want the hassle of managing so many different relationships and were extremely confident that credit and debit cards would always be at the heart of the payment system. But the problem was that MasterCard was already working on a partnership with PayPal.