Goal setting is one of the first things that happen when a business is created. However, setting goals is only the first step in actually achieving them. In order to achieve the goals that you set out for your business, it is important to implement a strategy.
Not only will a business level strategy help you to reach and even surpass all of the goals that you have set out for your business, but it can also help you to secure investment and stakeholders which can help you achieve future goals.
In this article, we will look at what a business level strategy is in detail, including types of business level strategy.
What Is A Business Level Strategy?
In short, a business level strategy is a plan or roadmap that outlines what the business aims to achieve and helps provide customers with value from the business.
It also assists the business in gaining a competitive edge by ensuring that it is making the best use of its core competencies and resources.
There are multiple different types of business level strategies that you can implement. Depending on the type of business strategy that you use, your standing in the market of your niche will change.
In fact, the type of strategy that you choose has a direct impact on the foundation of your business and the goals that are set for the organization.
No matter which strategy you opt for with your business, there are three core elements that are integral to all of them.
Each strategy needs to consider customer satisfaction or happiness, maintaining a competitive advantage or avoiding a competitive disadvantage, and a strong ROI.
Types Of Business Level Strategy
The main focus of any business level strategy is to develop a competitive advantage within your chosen niche. However, there are different ways of doing that. Below are some of the most common types of business level strategies.
A focus strategy is a great option for businesses whose primary goal is to target a small and specific section of their target market.
A company that is looking to follow this strategy should consider three main factors when deciding upon a niche.
These factors are the size of the target market and whether it is considerable enough, the chances of potential growth and whether they are high enough, and whether or not the competitors have considerable effect on the business.
A focus strategy can be further divided into two subsections, focused differentiation and focused low-cost. A focused differentiation strategy involves a business working to an extremely specific niche of a market that has enough potential to be profitable.
The overall goal of such a strategy is to create a competitive advantage by offering a product that is difficult to substitute or replace. Such niches are often found in gaps in existing markets.
A focused low-cost strategy also targets a very specific niche, however, there is an added focus on achieving economies of scale. This is a good option for smaller businesses and enterprises that cannot afford to offer or produce multiple products at once.
The overall idea is to provide maximum value to the customer while minimizing costs at every level of operation.
Differentiation strategy, in short, is the opposite of cost-leadership strategy. It is mostly focused on using unique products and services to create a competitive advantage.
Products and services may be unique in regard to features, design, specifications, or any other facets that can differentiate the business’s product from others on the market. It is a strategy that is applicable in both mass and narrow markets.
Differentiation strategies essentially place quality over cost. However, it is possible for a business to offer a unique product at a lower cost.
In such a case, the strategy would be a combination of cost leadership and differentiation.
Differentiation strategy can help a business to be known as an industry leader, the strategy is only effective for as long as the business implementing it can offer something unique to customers.
Cost Leadership Strategy
Cost leadership strategy is one of the most common types of strategy implemented by businesses.
The main premise of cost leadership strategy is to manufacture products or services at a cost that is lower than competitors.
This is based on the concept that consumer’s purchase decisions are mostly influenced by price.
Cost leadership strategy is an option that is best suited for businesses that target mass markets rather than narrow ones and for markets with price-sensitive customers.
A business that implements such a strategy will endeavor to lower costs at all levels, including production, packaging, storage, and distribution.
Integrated Low-Cost/Differentiation Strategy
As mentioned above, it is possible for a business to implement two strategies at once, namely integrated low-cost/differentiation strategy.
This is usually only done when it will be of direct benefit to the businesses needs.
With this combined strategy, a business can focus on offering a product or service that is truly unique while keeping costs to a minimum across all levels and sectors in order to develop a competitive advantage.
This can be a difficult strategy to implement because reducing costs while maintaining a unique product can be a sensitive balance to maintain. However, by reducing unnecessary costs, especially from distribution and marketing stand points, it is possible to achieve.
A business level strategy will help your business to reach its broader goals by setting smaller, tangible goals that act as stepping stones to creating an overall vision.
There are many different types of business strategies that can help you to achieve those goals which are best suited to different types of businesses and niches.
Either a niche can dictate a business level strategy, or a business level strategy can inform a niche. Either way, there are certain strategies that work with certain niches.