What Are the Best Tips for Creating A Business Strategy?

Corporate business strategy refers to the effective operation of all assets owned by the company through divestiture, sale, transfer, merger, acquisition, etc., in order to achieve maximum capital appreciation.

Business strategy

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Enterprise business strategy refers to the effective operation of all assets owned by the company through divestiture, sale, transfer, merger, acquisition, etc. to achieve the maximum

The business strategy emphasizes the way each unit survives, competes, and develops in its own industry. How to integrate resources and create value to satisfy customers is the focus of business strategy. When formulating a business strategy, you can think of the business strategy of the company from the following six aspects: product line breadth and characteristics,

1. Product line breadth and characteristics

Product line breadth and distinctive products (or services) are the most direct interface between the company and the customer. It is the most basic basis for the company to survive. It is the easiest to grasp and describe the characteristics of the company. It is also the strategy that the company can specifically pursue to improve and Where the change is. Therefore, the breadth and characteristics of the product line are the first items to describe the business strategy of the enterprise.

When describing the breadth and characteristics of the product line, pay attention to the following questions: Among all the possible products or services offered by the industry, what does this company provide? Is there an industry, but is it all owned by the company? Or just a single product? If there is more than one product line, why would you choose this product combination? Can product lines or service items be roughly divided into categories? How do they fit together? What are the characteristics of products or services in the same industry? What are the characteristics of the providers provided by this enterprise? How are these characteristics formed? Why can we create these features?

For example: A Information Company mainly provides information security control system integration services. Its product line includes information security products (providing enterprise security control product series, including overseas brands and operating own-brands) and IC smart card products (including card reading devices, card issuing systems, drivers, applications, intermediary software, etc.) . The company's products feature a system integration service for bank operators. Product features are derived from previous product development experience and a stable technical team, which makes it strong in R & D and system integration, and has a considerable degree of understanding of international card specifications and card issuance processes.

2. Segmentation and selection of target market

The target market is the object that the company wants to serve and satisfy, and it is also the main source of external resources. Therefore, it is an important component of describing business strategy. But in practice, many business leaders or business leaders are not clear about the concept of the target market, often resulting in a lack of focus in practice, or because they want to serve different target markets in the same way, reducing customer satisfaction.

Whether consumer or industrial, customers can be divided into many segments or types based on various criteria. Different industries in the same industry may not segment the target market in the same way. And its subdivision method also represents its strategic thinking and strategic choice. For example, some companies divide the market according to the size of the customer; some divide it by region; some divide it by consumer income, age, or lifestyle. Different division methods, strategically and even organizationally, all represent different meanings.

The business strategy maker should think about and decide what business he is responsible for. How can he now define and select his target market? How to define and select its target market? What is the strategic significance of this segmentation method? Do the customers in the target market match the breadth and characteristics of the product line of this business in terms of purchase behavior and demand characteristics? How stable is the future growth potential and demand characteristics of the selected target market? If it is an industrial product, you can also consider how different the target market is or how much the customer type depends on the company? How dependent is the company on them? After segmenting the target market, companies may not necessarily choose only one of them.

For example: A Information Company only targets the institutional market. Based on "business type". Target markets include governments, banks, peers, and general enterprises. According to different target markets, their products, marketing, system integration, and applications are different, so they are distinguished. At present, the government is actively promoting the use of IC smart cards, of which the "electronic signature law" has been passed. It is expected that the demand for IC smart cards will increase in the future for banks and general enterprises.

3. The degree of vertical integration depends on

In any industry, from the raw material to the satisfaction of the final customer, it must go through a series of processing operations or "value activities". For example, in the semiconductor industry, there are IC design, photomask, chip processing, passive component manufacturing, packaging and so on. Manufacturers can choose one of these many stages to engage in; they can also start from the beginning and become a consistent operation. Semiconductor industry. The decision of how many stages or stages to engage in is the decision of the degree of vertical integration. These "activities" can be done by enterprises themselves or by others, each with its own advantages and disadvantages.

When deciding on the degree of vertical integration, we must first understand what processes and stages are common in the upstream and downstream industries before we can make in-depth analysis and make some choices. The formation of competitive advantages for some businesses ("activities") is extremely critical and should be held in their own hands as much as possible. Some businesses have little to do with competitive advantages or the core capabilities of the enterprise, and there are many organizations outside the organization that can do the work for them. To streamline the organization.

For example: A information company's business value unit includes card reading device design; security control and IC smart card technology research and development; agency; procurement; international card specifications; card issuing process; system integration; application development; brand; direct sales; customer service. Knowledge of research and development, system integration, and international card specifications and card issuance processes are at the core of the business, and the company must master and strengthen it on its own.

4. Relative scale and economies of scale

Economies of scale are the benefits brought by the expansion of business scale, which may be manifested in the full utilization of production capacity, negotiation power in procurement, the use of national advertising, and personnel training and research and development. And the magnitude of these benefits varies with the characteristics of the industry. Even in the same industry, there will be changes due to the advancement of technology and the evolution of industrial structure.

In terms of scale, strategy makers need to know: compared to their peers, is the company competing on a large-scale or small-to-medium scale? As far as the characteristics of the industry are concerned, what scale economies can the scale of the business already play? On the benefits? What economies of scale can't we play?

To describe "relative scale and economies of scale", we must first think carefully and answer these questions, rather than simply asking the company's turnover or capital. To answer these questions requires in-depth research and some subjective judgment.

In many high-tech or e-commerce industries, the characteristics of the sub-industry are large and ever-growing, and those who do not reach a certain threshold scale will be eliminated soon, so the rapid pursuit of scale growth is a key issue. Before investing in new business, you need to think clearly about the scale requirements or thresholds of this industry, and whether your own resources and strategic ambitions can meet the industry scale requirements. And even the veterans of the industry, when faced with drastic changes in the industrial environment (such as technological breakthroughs or market openings), they should also thoroughly review their status and decisions in terms of scale.

5. Geographic coverage

An enterprise can be a local enterprise, a national enterprise, or a global enterprise. It can transport products produced in the same place to many different markets; it can also transport products produced by factories in various places to the same regional market. Many companies have dispersed its various value activities around the world. For example, a bicycle production and sales company conducts research and development and most of its manufacturing in Taiwan, China, and does some assembly in mainland China and imports it from Japan. Components, and the final product is sold to the United States and Europe. This geographical coverage has a close relationship with its product positioning, choice of target markets, and the use of economies of scale.

Dispersing various value activities to different regions may be to approach the market, or to approach the origin of raw materials, or to pursue the comparative benefits of international production and sales, such as lower labor costs. However, extending the front will also increase the cost of storage and storage, as well as difficulties in communication and coordination.

6.Competitive advantage

Strategy makers hope that the above strategic decisions can create a competitive advantage unique to the business. These competitive advantages may be advantages in marketing, such as brand awareness and mastery of channels, or in production and finance, such as production efficiency and low-cost funding sources; they may also be original and leading technologies. But sometimes these strategic competitive advantages are not independent of each other, but support each other, echo each other, and cooperate with each other.

Some competitive advantages are formed from the strategic form of this business, or are extended from the above five strategic form facets. For example, "the product quality is particularly good", "the product variety is more than others", "quick delivery" and other advantages are related to "product line breadth and characteristics". "Mastering the most loyal customers" and "Finding the best distributors" are advantages related to "Target market segmentation methods and choices". "Consistent production and sales" and "use of outsourcing to streamline the organization" are advantages related to "depending on the degree of vertical integration". "Big scale and low cost" and "large procurement volume, so valued by suppliers" are related to "relative scale and economies of scale". The advantages of procuring from the place of origin, moving factories to countries with low wages and creating cost advantages, and mastering foreign orders are related to geographic coverage.

But some competitive advantages are caused by so-called "non-strategic factors". For example, the competitive advantage of some companies comes from synergies or relationships provided by other business units or related companies. Some are due to the timing factors or "first-mover advantage" created by the original investment (such as those who have a higher customer loyalty or better channel relationships). Some competitive advantages are based on the enjoyment of special exclusivity in certain key resources or markets (such as patents or licenses), and the degree of exclusivity is also a matter of degree. Some competitive advantages are purely due to strong financial resources. Financial resources can be used to attract various resources and talents. Financial resources can also be used for investment or long-term competition in competition.

Synergies, relationships, timing, exclusivity, financial resources, capabilities, and the use of information technology are all sources of competitive advantage. For example: A information company's competitive advantage is strong research and development, system integration capabilities, agency of well-known brand products, understanding of international card specifications and bank card issuance process, and good relations with China Telecom.