- The activity of making, buying, selling or supplying goods/ services for profit maximisation.
- It comprises with Idea, Asset and Income.
- Every idea is not business idea.
- Business idea is an Idea which meets the unmet need of a market at profit.
- Business Model => Idea+ Asset+ Income
- Low price always for a galaxy of products that most people need or want (Wall Mart)
- A plan and its movement that is intended to achieve a particular purpose.
- The process of planning something or carrying out a plan in a skilful way.
- This word comes from Military.
· Describes how a particular business intends to succeed in its chosen market place against its competitors.
· A course of action or sequence of action towards achieving the objectives.
· Shows how a Firm compete within an industry.
· It is a selection of ideas and assets to meet our Long term goal.
· It is a designed frame work within which all plans execute.
· We can say it is an array of decisions which designed to execute at particular time
· It is like full proof war strategy( Defensive warfare, Offensive warfare, Flanking warfare and Guerrilla warfare )
· Making cartel is one of the advance Business Strategy.
Constituents of Business Strategy:-
- Scope refers to Functional, Geographical, Product/ Service and Relational limits.
- Functional limits- marketing, Production etc.
- Geographical limits- market covered.
- Products limit- Product line and range.
- Relational limit- business dealings are internal or external
- So, Scope refers to span of activities of the Organisation.
- Domestic or Foreign capital
- Fresh equity
- Raw materials
- Senior or Middle level of employee
- In house R&D or outsourced R&D
- Shows distinctive competence over competitors.
- Shows the advantage over competitors.
- Uniqueness comes due to different Vision and Missions of the Firm.
- Alternative Plans
- Close through customers through Retail chains, Speed of action, Internet and Technology
- Refers to combinations of sub systems within an organisation, which are sufficient to achieve the objective.
- Means instead of single, working together.
- Company to company relationship is also an example (making Cartel).
Strategic Mix and Strategy Formulation:-
- Strategic Mix having 3 levels; Corporate, SBU and Functional level
- Corporate level- Charted for whole organisation, Deals with “What to do”, It is a Grand Strategy, Retrenchment of Strategy, Curtailment of Goal
- SBU(Strategic Business Unit) level- Concerned with “ What to do for particular Unit”; Defender, Reactor, Analyser and Prospector Strategies
- Defender Strategy- Satisfied with present situation; Market leader; perhaps in niche market; don’t want to take risk; they are market leaders.
- Reactor Strategy-No opportunities perhaps threats are faced
- Analyser Strategy- Firm is not silent; modifying course of action; want to take risk; new companies
- Prospector strategy – looks for new opportunities; imbibe with old and modern working culture.
- Functional level- Concerned with “ How”; Functional areas like Marketing, production, Finance, Personnel, and R&D
- Board of Directors and CEO formulates corporate level strategy, The CEO and Functional heads formulates Business unit level Strategy and Functional heads and his subordinates formulate Functional level strategy.