No matter how big or small a business is, even if it is just to start, it has to have a strategy.
Business Knowledge Inc. understands strategy as the representation of how a business is going to compete and win in the market that it chooses, and it is a tool for building, implementing and maintaining the chosen course of a business.
The strategy can by an implicit one, that becomes obvious through owners actions and their decisions, or it can be an explicit one. When explicit, the strategy is captured in a formal document. That is usually called a Business Strategic Plan that allows the owner(s) to move forward for growth, create value in a competitive environment, and gain and retain customers. The business plan provides direction, coordination and control.
In any business we need to know who the owners (shareholders) are, what their strategic objective is (goals), and why they are in that business (value proposition), where and how they compete (target market and core competencies).
To arrive to a confirmed strategy, analysis is required to validate the strategic objective, determine the financial context, position the business on the market and decide on ways to compete. That means figuring out main components of strategy and their relationships, presented below.
Goals are about what the business wants to achieve, and what the business envisions in terms of growth, profitability and risks.
Market and product focus (where)
The business needs to learn about the market in which intends to compete, determine what the products that it will sell are, and to what specific markets is it going to go.
Value proposition (why our business)
Once the goals are established, the market is assessed and the product to be sold is decided upon, then the business has the task to determine how it is going to attract its customers. More to that it has to determine as well how to retain them. The value proposition is meant to show prospective buyers the value of the product or service compared with the ones that competition offers, and it has to be in dollars.
Core activities (how)
Without understanding itself, a business is heading for low performance or even failure. The core activities are about what value adding activities a business is going to conduct, and how is it going to conduct them (operating system) such that the business is achieving its goals.