Business Level Strategy And Basics
For those who have already written, read, leafed through, or simply watched books on business level strategy, you quickly noticed their volumes are rarely less than 800 pages. Therefore, it seems essential to us to specify that this article is in no way intended to provide all the elements making up the subject. Indeed, this paper wants to be simple, pragmatic, and synthetic. It aims to provide some aspects of understanding of the strategy realistically and is intended for the uninitiated.
What Is Business Strategy? History And Origins
How can we simply define the business level strategy? By browsing the literature on the subject, we find many definitions. Here is one that seems relevant:
“All maneuvers that allow the company to successfully lead the competitive conquest of its markets. It is a process of decisions and actions, deliberate and anticipatory. It is through him that the company defines its priorities, directs its forces, allocates and reallocates its scarce resources.
But first of all, we must point out that business level strategy has its origins in the military domain.
Indeed, the most significant military strategists (such as Sun Zu or Jomini) used this concept to carry out their fights by studying, in particular, the distribution of the opposing means and the movement of their armies before the war then the different movements performed during combat.
But it is only from the 19th century that this notion began to take an economic orientation, particularly the struggle between the bourgeois class and the working class, exposed by Karl Marx. It highlights the strategy of the working class’s economic and political seizure of power.
Nevertheless, in 1908, with the work of Joseph Schumpeter, corporate strategy took on its whole meaning. According to him, the entrepreneur is at the heart of the capitalist system. He must set out to conquer the market, both nationally and internationally. For this, he must build a solid strategy.
However, it was simply from the 1950s that business level strategy experienced a tremendous boom, with the highlighting by Harvard in the United States of the strengths and weaknesses of the company as well as the threats and opportunities that exist. In its environment.
Following this, we can identify 4 significant eras in the evolution of corporate strategy:
The 1960s: Creation of strategic analysis models with the help of returning military officers
The 1970s: operational method, implementation of activity portfolio optimization matrices, the introduction of the notions of strategic planning (Igor Ansoff)
The 80s: competitive analysis, the discovery of Porter’s work to get ahead of its competitors by predicting their behavior
The 90s/2000s: general model abandoned, the emphasis placed on strategies that constantly adapt to their environment, an essential strategy aimed at optimal positioning vis-a-vis its competitors
Why Is It Essential To Have A Strategy/S Within An Organization?
To begin with, it is essential to have a strategy to define a course or, in other words, to set an orientation, a guideline. Then, this strategy is essential to concentrate its efforts on its success objectives and, consequently, to avoid dispersing itself. In addition, it is essential to define the company’s framework and give meaning to it. Finally, a strategy aims to facilitate action and reduce ambiguities.
Ultimately, the best way to convince yourself of the importance of a strategy is to ask yourself the question the other way around: what do you do if you don’t have a strategy? Here is a possible answer: let’s wait to see what happens and react accordingly… This may seem surprising, but this is often how a good part of SMEs and startups work without being really aware of it.
Strategic Decisions
As soon as we talk about strategy, the notion of choice is essential. Indeed, it is impossible to achieve everything when developing a strategy, and we must make confident choices. These choices are called “strategic decisions.”
Strategic decisions are characterized by a long-term orientation, the definition of the scope of activity to create a competitive advantage, which is difficult to imitate, and an optimal allocation of resources. Moreover, they are highly influenced by competition.
Strategy In Practice: Strategic Management
Strategy in its usable form is generally called Strategic Management.
By nature, in organizations, we tend to focus on somewhat operational aspects such as increasing the quality of service, visual presence, sales management, or even financial performance. All these elements are essential for the proper functioning of the company. However, we must not forget that we are in the operational, or in other words, in the “effective deployment of the strategy” and not in Strategic Management. This is made up of the following elements:
Strategic diagnosis: determining the strategic position of the organization
Strategic choices: list the different options available and select one
Strategic deployment: implementing the strategy
How To Develop A Strategy?
From the point of view that can be described as simplistic or reductive, the strategy is limited to three fundamental questions:
- Where are we?
- Where are we going?
- How do we get there?
However, the approach is clearly pragmatic.
In a more detailed and concrete way, they can be reformulated as follows:
- What for? vocations + missions
- What to do? goals and objectives + activities + positioning
- How to do it? organization + planning + implementation of actions
Even if these questions are on three lines and seem to be common sense, they are crucial for establishing a strategy. Moreover, it is clearly more complicated than it seems to answer them in a precise and structured way.
Understand The Different Strategic Levels
The strategies intervene at different company levels, but at three mainly. The main thing, at first, is to know at which level we are. The different levels are as follows:
The corporate strategy concerns the organization as a whole (adding value – choice of geographic coverage, product and service offering, distribution between activities).
Competitive strategies (SBU) are mainly used to identify the critical success factors of different markets.
Operational strategies define how resources, know-how, and processes are deployed efficiently and in line with other strategic levels.
The Strategic Approach
At a certain point, the approach must be formalized to become methodological. Below is the well-known LCAG model, which basically applies to Domain Competitive Strategies (SBU):
- Formulation of objectives
- Identification of the strategic problem
- Proposal of a catalog of solutions
- Evaluation of these solutions
- Choosing a solution
- Implementation of the chosen solution
Environmental Scan And Resource Assessment
In any diagnosis before the strategy, a large number of factors and forces present must be studied to have the necessary knowledge. The two main ones are presented below:
Environments
- Economic
- Competitive
- Demand
- Social and societal
- Scientific and technical
- Policies and regulations
The resources
- human
- physical
- Financial
- Reputation
- Technological
- Organizational
- Informational
Conclusion
Business level Strategy is a complicated science but not necessarily complex. Suppose we want to maximize the possibilities of success of an organization. It is essential to work on the different strategies or at least on the business strategy. Otherwise, too much weight is given to the “luck” factor. Strategies aren’t just for big companies. An SME or a startup needs it just as much, if not more.
In practice, we meet many business leaders for whom the term “Strategy” is frightening. This is often due to the difficulty of understanding the subject and understanding what it can bring to their business. These fears are entirely legitimate. But how to have control over the evolution of the company, consistency between the different activities and actions, and at the same time have the possibility of anticipating opportunities and threats?
