News

The 5 Pillars of an excellent Business Strategy

25.01.2016

Excellent business strategies rest on 5 pillars. They can be used as a benchmark to review existing strategies or to develop a new strategic direction.

  • Focus on Core Competences
    Core competences are specific capabilities which are difficult to imitate for competitors. They enable a company to offer products (or solutions) with particular characteristics. Core competences include, e.g., the ability to develop strong brands or to build the tools required to manufacture high-quality products.

    Is there a common understanding in your management team as to what your company´s core competences are? How do you intend to leverage these competences in the future to reach your growth goals?
  • Select attractive Markets
    Companies are successful if they choose markets, branches or niches which are ´attractive´ for them. ´Attractive´ means that the company can leverage a specific competitive advantage (e.g. technological leadership) which allows it – at least temporarily - to set prices and generate above-average profits. Example: Pharmaceutical companies can set prices as long as their patents are running. Once generics manufacturers enter the market after the patents have expired, the competitive advantage is lost.

    Which markets do you currently focus on? How attractive are these markets? In which new markets can you leverage your competitive advantages in the future?
  • Quickly react to Changes
    A business strategy should be valid for the next 5 years at least, and it should define the company´s basic direction. This, however, does not mean that the strategy is ´cast in stone´: It should provide enough flexibility to react to unforeseen events (comp. the global financial crisis) and to changes in the general environment. That´s why a good strategy is a balancing act between commitment and adaptation. It defines the playing field, but changes in direction within the perimeters of that field are possible in order to reach the long-term goals.

    Which changes (e.g. new legislation, low price rivals from Asia) could have a negative effect on your business? Do you monitor your environment systematically to prepare for unforeseen events ? Have you developed scenarios to respond?
  • Achieve strategic Consistency
    Strategic consistency is achieved when everything a company does is in line with its strategy. Example: If a company has decided to position itself as a premium supplier of customer-specific solutions for a clearly-defined niche, it can hardly serve the mass market with low-price products under the same brand. Power tool manufacturer Metabo has refocused its business on the professional segment and abandoned the low-price volume business in do-it-yourself stores. The company´s management considered it strategically inconsistent to serve the two different markets simultaneously.

    How consistent is your strategy? Have you made clear decisions concerning price positioning, product portfolio and target markets? Are these strategic guidelines applied in everyday business?
  • Strict Execution
    Most strategies fail in the execution stage, not in the formulation phase. Successful execution critically depends on whether the strategy is clear and whether those who implement it (employees) are passionate about it. Also, appropriate structures and systems must be in place which support the strategy.

    Do your employees understand your company´s strategy? Do they know their personal contribution to the strategy´s implementation? Do your processes and structures support the strategy´s execution or, rather, hinder it?

back

Smart Strategy in B2B

Learn how to systematically create digital added value for your customers and boost your turnover and profit as a result. Contact us for additional information!

read more

Are you interested?