6.2 Business Strategy

A business strategy is a medium- to long-term plan that shows how a company will reach its main goals. Think of it as a roadmap — it tells the business which direction to go, which markets or products to focus on, and how to use its people, money, and technology to get there.

Strategic management is the ongoing process of choosing long-term goals, planning how to reach them, putting those plans into action, and regularly reviewing results to keep the business on course. It is a continuous cycle of three stages.

Before making any decisions, managers study the business's situation carefully by looking at:

• External factors such as markets, competitors, laws, and the economy
• Internal factors such as employees' skills, production costs, and company culture
• Tools such as SWOT or PEST analysis are used to organise findings

Example: A sports shoe company checks fashion trends in trainers, compares its costs with those of rivals, and identifies its strengths (a strong brand) and weaknesses (slow delivery times).

Once the analysis is complete, senior managers:

• Turn the business's mission into clear, measurable targets
• Choose the best strategy to reach those targets — for example, cost leadership (being the cheapest), differentiation (being unique), or entering new markets

Example: The sports shoe company sets a goal to raise online sales by 30% in three years. It chooses a differentiation strategy — launching eco-friendly trainers made from recycled plastic.

The chosen strategy is put into action:

• Resources are allocated and each department sets its own objectives
• Staff are trained and new systems are put in place
• Progress is regularly measured against targets, and the strategy is adjusted if needed

Example: Operations buys recycling equipment, marketing schedules a social-media campaign, and HR recruits designers with sustainability skills. After one year, if sales are only 15% up instead of 30%, the firm boosts advertising to close the gap.