Define the role of Business Strategy and Explain how a Business strategy is developed?

Answer:

Defining the role of Business Strategy

Business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives. It states how business should be conducted to achieve the desired goals. Without a strategy management has no roadmap to guide them.

Having a clear and focused strategy is critically important to the success of your business, and without a well-defined strategy, yours may stall or even fail.

If you can take the emotion out of your decision making process, you'll have a business and a team that is more focused, more productive, and more profitable.

A Business Strategy plays the following roles:

1. Provides Direction: It Gives direction in which an organization strives to move. It establishes in a clear, concise and strategically sound way in which direction the organization should move so as to achieve what it wants to.

2. Prioritizes and Aligns Activities: Strategic planning is about making choices, establishing priorities, allocating resources to strategic initiatives and coordinating to achieve desired results.

3. Defines Accountabilities: It defines clear lines of accountability and timelines for achieving expected results on the agreed strategic initiatives of the organization.

4. Enhances Communication and Commitment: Communication is life blood of an organization, so, a strategy helps in clarifying the vision and accountabilities, the strategic plan increases the alignment of all organizational activities and fosters commitment at all levels.

5. Provides a Blue Print for Ongoing Decision Making:Since all decisions should support the strategy, the strategy and the strategic initiatives are the reference point for decision-making.

You have to have a plan for day to day business, but you also need to spend time looking and listening to the changes that are happening in your industry. It is a matter of having both a daily plan to get things done and an overarching strategy to guide those daily plans so you make progress towards your long-term goals.

How a Business Strategy Developed for an Organization:

According to Forbes, an organization can follow a five step process to develop a strategy. “Developing a strategic plan might seem like an overwhelming process, but if you break it down, it’s easy to tackle. Here’s our five-step approach:

1. Determine where you are. This is harder than is looks. Some people see themselves how they WANT to see themselves, not how they actually appear to others. Many small businesses get snared in this same trap.

For an accurate picture of where your business is, conduct external and internal audits to get a clear understanding of the marketplace, the competitive environment, and your organization’s competencies (your real—not perceived—competencies).

2. Identify what’s important. Focus on where you want to take your organization over time. This sets the direction of the enterprise over the long term and clearly defines the mission (markets, customers, products, etc.) and vision (conceptualization of what your organization’s future should or could be).

From this analysis, you can determine the priority issues—those issues so significant to the overall well-being of the enterprise that they require the full and immediate attention of the entire management team. The strategic plan should focus on these issues.

3. Define what you must achieve. Define the expected objectives that clearly state what your organization must achieve to address the priority issues.

4. Determine who is accountable. This is how you’re going to get to where you want to go. The strategies, action plans, and budgets are all steps in the process that effectively communicates how you will allocate time, human capital, and money to address the priority issues and achieve the defined objectives.

5. Review. Review. Review. It’s not over. It’s never over. To ensure the plan performs as designed, you must hold regularly scheduled formal reviews of the process and refine as necessary. We suggest at least once a quarter.”

Basically, an organization first set its goals that it wants to achieve, Prioritize them, create a framework to achieve them, bestowing the accountabilities on who has to achieve what in a given time frame, review and refine the plan time and again. The best thing is to do a thorough SWOT analysis of the organization in line with Set Goals and define the set the goals in clear terms and corresponding action points by keeping mind the principle of accountability and optimality vis-à-vis time, human capital, and money.