When Mark Zuckerberg launched Facebook in 2004, he was not a pioneer. At that time, there were dozens of social networks with huge investments and thousands of registered users. But still, he managed to create the most popular social network on the planet. How did Facebook manage to get ahead of large and much better-funded rivals? The answer is simple. This is one of the business strategy examples, in which a thoughtful planning has become an obvious advantage over the years.
Business strategy definition includes a management plan for one particular area of the enterprise. It includes the directions and approaches developed by the enterprise’s planning to attain the greatest success in the work. Each firm chooses a business strategy for itself depending on the situation. There are reference types of strategies that contain general provisions and definitions. Basic types of business strategies disclose four different approaches that lead to the growth of the enterprise, by varying the elements. These elements include the following. There are rialto, industry, manufactured product, applied technology, enterprise’s place within the industry. These elements can be considered either in the present state or in the future.
Business strategy case studies show that there are four types of strategies.
- The first one is strategies of concentrated growth which provide for a change in the product and/or rialto. In this case, the enterprise improves the quality of the product or expects to launch a new one without changing the industry. The rest of the elements do not change. In this case, there is a search for opportunities that can improve the situation in the existing rialto or help the transition to a new rialto. With such a business planning, the main growth tool will be commodity policy and rialto segmentation analysis.
- The second one is integrated growth strategies. They provide for the expansion of the enterprise by creating new structures through the purchase of new property or through internal changes. This means intra-industry changes of the enterprise. It is very advantageous in this case to create new enterprises or buy ready-made ones that supply component parts. In this case, dependence on supplier requests and price fluctuations on components disappears. This is a kind of protection of strategically important sources of supply. Sometimes structures that are between the buyer and the enterprise are bought or taken under control, and this makes it possible to have intermediaries with a high-quality level of service delivery and to expand intermediary services.
- The third one is strategies for diversified growth. They are used when the enterprise is forced to change the product that it produces, the developed rialto and the industry. This can be achieved by using existing equipment, but for the release of new products. It is possible to produce new products on the already existing rialto. Another way is when the enterprise is expanding at the expense of a completely new product, manufactured using new technology and requiring new rialtos. This new product is completely unconnected in terms of technology with previously produced products. This is the most difficult approach for implementation; it requires the competence of the staff, the availability of additional funds and much more. Strategies for diversification are complex and risky, because, applying them, the enterprise needs to attract additional financial and human resources.
- The last one includes strategies for targeted reduction. They find application if the enterprise needs to improve efficiency or regroup forces. There is a purposeful and planned reduction in production and, as a result, in staff. Implementing business strategies for targeted reduction is very painful, but they can not be avoided under certain circumstances. It often happens that these are the only possible strategies that allow updating the business.
In reality, an organization can simultaneously implement several business strategies, that is, implement a combined approach. There are the following reasons for changing a strategy. They may include decreased efficiency of work; unforeseen actions of close rivals; noticeable discontent of staff and customers; and the human factor, which means the appearance of a person who requires strategic reforms in the leadership.
When developing a business planning, it is necessary to take into account many factors. They have different meanings for different industries, a heterogeneous composition and vary in time. Internal factors include the following. There are strengths and weaknesses of the enterprise; competitive capabilities of the enterprise and its advantages over rivals; correspondence of corporate culture to the tasks; personal qualities of the leader such as personal aspirations, ethical principles. External factors are also important. They include an attractiveness of the industry; the existing level of competition for the product; perspective capabilities of the firm and risks; political, social and civil regulations.
There are some approaches to business strategy development. The main strategic approach means that the document is developed by the leader. There is also an approach of the delegation of authority. The leader passes on the development of the planning to other workers. The undoubted advantage is that managers of different levels participate in the work, but the lack of strategic guidance and control from the side of the first leader is a drawback.