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The_Business_Strategy_that_will_Work_Best_for_You
| The Business Strategy that will Work Best for You
Ultimately, you have to settle for
one of three business strategy
options. And it is important that you are clear on what one you
are
going for.
Your business strategy choices
are, at the end of the day, very
simple. The big question is, how do you want to position yourself
in relation to your competition. Basically your options are
:
1. To be the
cheapest
2. To be the
best
3. To dominate a market
niche
Many small businesses go for the
first option, in the mistaken
belief that it is only way to survive. The problem is, there will
always be someone who can do what you do, more cheaply than you
can.
A cost leadership strategy
is only really suitable for big
businesses. Businesses that have substantial economies of scale.
They are able to spread their overheads thinly over large
volumes,
and charge low unit prices. So if you are running a small
business,
this strategy probably won't work for you.
If, as a small business, you build
your business reputation on
being the cheapest, you are operating from a position of
weakness.
Even if you can survive with your low prices, you will not be
able
to withstand a price war with a bigger competitor. So why take
the
risk?
The second strategy, being the
best, can be used to build a
powerful competitive advantage. It means, however, that you have
to
have a unique product. Otherwise, you will have to spend a lot of
money on R&D to stay ahead of the competition.
You need deep pockets to win with
this strategy. Unless, of course,
your product is so specialised that no one else is producing it.
And big companies, for whatever reasons, don't want to produce it
either. That would give you dominance over a niche of your
own.
Generally speaking, a product
leadership strategy is only for
the big boys. Like, Nokia, Sony and Mercedes Benz. While being
the
best in a category, and staying that way, can be a powerful
strategy for highly specialised small businesses, it is just not
sustainable for most. Which brings us to our third
option.
Dominating a market niche
in your industry. It is the most suitable
business strategy for most small businesses. By adding value in a
way that attracts a particular kind of customer, you can steadily
build your business success. You are able to charge a premium.
And
you don't have to be the "best".
The trick, of course is to clearly
identify your niche market, and
convince your target market that you provide the best solution to
their problem. For nearly all businesses, finding a niche and
dominating it provides a solid foundation for building a
business on.
It is very important that you are
absolutely clear on what generic
strategy you are relying on. Your business strategy, by
definition,
is supported by a number of strategic tactics. Whether
you are
aware of using them or not.
If you aren't clear about your
overall strategic direction, you may
end up using conflicting strategies. For example, focusing
customers on your low prices at the same time as you introduce
best
of class products. Doing this means that your profitability
suffers
and you fail to attract the customers you want : not
good!
Deciding on the generic strategy
that will create the business
success you are looking for, clarifies your thinking. And it
helps
you see clearly what tactics you need to use.
About the author:
As a Business Strategy Coach, Mark helps business owners get
stunning business results. Mark has developed the revolutionary
StratPlan Wizard business building system. Learn more about it
at www.stratplanwizard.com
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