The term ‘strategy’ is derived from the Greek word  ‘strategos’,  which means generalship. i.e. strategy is art
of war, the skill in managing any affair or the use of a trick in order to
succeed in a specific purpose. 

For example, Michael Porter, in his article titled ”What
Is Strategy?” (1996), states that ”strategy is the creation of a unique and
valued position, involving a different set of activities.”

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 Strategy is  ”a deliberate search for a plan of action
that will develop a business’ competitive advantage and compound it.”

The definition of business strategy is a long term plan
of action designed to achieve a particular goal or set of goals or objectives.  Strategy is management’s game plan for
strengthening the performance of the enterprise.  It states how business should be conducted to
achieve the desired goals. Without a strategy management has no roadmap to
guide them.  Creating a business strategy
is a core management function.  It must
be said that having a good strategy and executing the strategy well, does not
guarantee success.  Organisations can
face unforeseen circumstances and adverse conditions though no fault of their
own.

 

A Business  strategy needs to:

 • Show the lender
or the investor that they have a big chance of being repaid and that they will
be getting good returns on their investment.

• Build the necessary confidence for the firm and the
capabilities of the owner.

 • Show the
investors that there is a very good market for the service or product that you
offer.

• Show you a clear picture where you’re heading and how
to get there. A good business strategy is the base ingredient for a successful
business. However, there are many different kinds of business strategies.

 The best business
strategy should be able to guide your company into a direction wherein the
expected internal pressure due to business continuity meets the great demand of
the fast changing world for the revolutionary business plans.

In olden days 
there was not much need for evolving Business Strategy. In standard
approaches to competitive markets, the problem of capturing value is quite
simply assumed away: inventions are often assumed to create value naturally
and, enjoying protection of iron-clad patents, firms can capture value by
simply selling output in established markets, which are assumed to exist for
all products and inventions. Thus there are no puzzles about how to design a
business e it is simply assumed that if value is delivered, customers will
always pay for it.

 

But with the globalization of manufacturing activities,
trading activities, advent of internet, TV etc. 
consumers are  more educated and
their  demands are  more specific.  They knows the options available to  them 
are plenty  and  every company has to plan their business strategy
to  remain in business and increase
profitability.

A case study of 
Dell and Wall Mart   will  further 
enhance  our  knowledge 
of   Business Strategy.

Having a differentiated   (and
hard-to-imitate)  but at the same time
effective and efficient  e architecture  for an enterprise’s business model is
important to the establishment of competitive advantage.  The various elements need to be cospecialized
to each other, and work together well as a system.   For example, both Dell Inc. and Wal-Mart have
demonstrated the value associated with their business models (while Webvan and
many other dotcoms demonstrated just the opposite). Dell and WalMart’s business
models were different,  superior, and
required supporting processes that were hard for competitors to replicate  (at least in the U.S. e elsewhere, new
entrants could adopt key elements of the model and pre-empt Wal-Mart,  as Steven Tindall has demonstrated so ably in
New Zealand with ‘The Warehouse’).   Both
Dell and Wal-Mart have also constantly adjusted and improved their processes
over time.  Michael Dell, founder of
Dell, notes:  This belief  that by working directly with customers we
could get them technology faster, provide a better level of service, and
provide better value  was the basis of
the business e the fundamental business system was quite powerful and delivered
lots of value to our customers   we screwed up lots of things, but the one thing
we got right was this core business model, and it masked any other mistakes

 Dell’s competitors
were incumbents who had difficulty in replicating its strategy, as selling
direct to customers would upset their existing channel partners and resellers:
as a new entrant,  Dell had no such
constraints. Another critical element of Dell’s success, beyond the way it
organized its value chain, was the choice of products it sold through its
distribution system.  Over the  time, Dell developed (dynamic) capabilities
around deciding which products to build besside desktop and laptop computers,
and has since added printers, digital projectors and computer-related
electronics.  Of course, the whole
strategy depended on the availability of numerous non captive suppliers able to
produce at very competitive prices .

A striking early American example of 19th century
business  strategy model   was Swift and Company’s ‘re-engineering’ of
the meat packing industry. Prior to the 1870s, cattle were shipped live by rail
from the Midwestern stockyard centers like Omaha, Kansas City and Chicago to
East Coast markets where the animals were slaughtered and the meat sold by
local butchers.  Gustavus Swift sensed
that if the cattle could be slaughtered in the Midwest and shipped already
dressed to distant markets in refrigerated freight cars, great economies in
‘production’/centralization and transportation could be achieved, along with an
improvement in the quality of the final product.  Swift’s new business model quickly displaced business
models involving a network of shippers, East Coast butchers and the
railroads.    His biggest challenge was
the absence of refrigerated warehouses to store the beef near point of sale,
which were not part of the existing distribution system.   Swift set about creating a nationwide web of
refrigerated facilities, often in partnerships with local jobbers.   ‘Once Swift overcame the initial consumer
resistance to meat slaughtered days before in distant places, his products
found a booming market because they were as good as freshly butchered meats and
were substantially cheaper e Swift’s success quickly attracted imitators. 

 A more recent example
is containerization. Malcolm McLean, owner of a large U.S. trucking company,
was convinced that conventional shipping was highly inefficient because
shipping companies typically broke bulk at dockside, and cargo ships spent most
of their time in port being loaded or unloaded. In 1955 he hired an engineer to
design a road trailer body that could be detached from its chassis and stacked
on ships. McLean acquired a small steamship company, renamed it Sea-Land
Industries (it eventually became absorbed into the Maersk Line). He developed
steel frames to hold the containers, first on the top decks of tankers, and then
on the world’s first specialized cellular containership, the Gateway City,
launched in 1957. To promote the standardization necessary to develop the
industry, McLean made Sea-Land’s patents available royalty free to the
International Standards Organization (ISO). Sea-Land began service on North
Atlantic routes in 1966. When R. J. Reynolds bought Sea-Land for $530 million
in 1969, McLean received $160M for his share and retired.

 Another U. S. example
of successful business model innovation is Southwest Airlines, where the
founder surmised that most customers wanted direct flights, low costs,
reliability and good 176 Business Models, Business Strategy and Innovation
customer service, but didn’t need ‘frills’. To achieve these goals, Southwest
eschews the hub-and spoke model associated with alliances, nor does it allow
interlining of passengers and baggage, 
or  sell tickets through travel
agencies e all sales are direct. Aircraft are standardized on the Boeing 737,
allowing greater efficiency and operating flexibility. Southwest’s business
model e which was quite distinct from those of the major carriers e followed
elements of a discount airline model first pioneered in the U.K. by Freddie
Laker. Although Laker Airways eventually failed e as did other early followers
in the U.S. such as People’s Express e Easy Jet has implemented a similar model
in Europe, so far successfully.

The ‘razor-razor blade model’ is another classic (and quite
generic) case of a well known business revenue model (which is just one component
of a business model), which involves pricing razors inexpensively,  but aggressively marking-up the consumables
(razor blades). 

Jet engines for commercial aircraft are priced the same way
e manufacturers know that engines are long lived,  and maintenance and parts is where Rolls
Royce, GE, Pratt & Whitney and others make their money.  So engines are sold relatively inexpensively
e but parts (and service) involve considerable mark-ups and represent an income
stream that may continue for decades.

 

The  plan
successful  business strategy,   the 
team of managers should have  vast
and varied knowledge of their products, manufacturing locations,    anticipate difficulties that will be
encountered,  include all levels  of 
management,  customers,  selling agents,  logistic supports  etc. etc.   
In India also, Hindustan Lever  
implemented a successful  business
strategy  and  more recently   “PATANJALI”  
which  rose  from a ayuvedic  soap manufacturing company  to 
internationally  reputed  firms.  
Patanjali brand even 
competed  with  huge 
financially backed companies  like
Proctor and Gamble, Hindustan Lever etc. etc.  
Now  everyone  is  
harnesshing  its  model 
of   “Ayurvedic  products”.   
Shri Ramdev Baba achieved 
through  creating awareness and
health consciousness amoung  Indians
about ayurvedic  products.   He also created   a 
feeling in the minds of 
consumers  that  consumption of  ayurvedic products  are patriotic people.      Every 
multinational companies are  now   introducing various types of ayurvedic
products  to  compete with Patanjali.