A business is always the result of a significant investment—and not just in terms of capital; it also involves a great deal of time and effort dedicated to ensuring the project’s success. And yet, due to its complexity, neither the capital investment, nor the effort, nor the goodwill can guarantee the Strategic Success in a Company.
For that reason, it is very important minimize the degree of improvisation in decision-making as much as possible. It’s clear that there’s no way to predict the opportunities or threats that arise—volatility is an intrinsic part of the markets—but what we can do is have a strategy that’s as solid as possible. One that can withstand changes and, at the same time, adapt when necessary.
A company's strategy is the roadmap that encompasses all areas and organizes them around common goals. It represents the what and the how the actions necessary to achieve the ultimate goal of any organization: create value. Conceptually, a strategy is a work plan that outlines the steps necessary to achieve the company's vision, prioritize objectives, optimize the allocation of financial resources, and manage the company's time efficiently.
Key Aspects of a Business Strategy
A company's strategy may be management's best bet for efficiently achieving the milestones set by the organization. It must be designed as effectively as possible so that it serves as a framework to support all of the company's decisions—a framework that is sufficiently solid so as not to be thrown off balance by any unexpected event, but still flexible to adapt to changes.
It's a balance that's quite difficult to strike, which is why we must never lose sight of these two fundamental pillars:
- Internal communication: No matter how good the strategy is, it will be useless if everyone involved isn't aware of it, or if it isn't fully embraced by all parties. It is essential to communicate it to all levels, because if everyone isn't pulling in the same direction, the ship will have a hard time moving forward.
- Adapting to Change: For better or worse, a company or organization must deal with external factors that it cannot control and that may affect it to a greater or lesser extent. A good strategy must include contingency plans that enable it to respond to unexpected and uncontrollable changes.
Operational Levels of a Business Strategy
Within an organization, the various components have different types of responsibilities depending on the role they play within it. That is why it is necessary for the company’s strategy to align with the responsibilities and contributions that arise at each operational level. Conceptually speaking, there are 3 different operational levels at each company:
Corporate level
This is the highest level in the chain of command, so it requires a broad understanding of the environment in which the company operates, since its responsibility is to set common goals for everyone and establish guidelines for achieving them. Likewise, at this level, one must stay abreast of any external changes that could affect the original strategy and respond in the best possible way.
Business Units
A business unit may involve different products or entirely different markets within the same company, which gives it a more specialized and focused view of each of its areas, as well as of its direct and indirect competitors. Therefore, a strategy at this level must consider the specific objectives of each business unit and align them with the company’s overall strategy.
Functional Level
In turn, each business unit is made up of various departments with specific functions, such as the marketing, purchasing, sales, and operations departments, among others. Thus, at this level, strategy is linked to day-to-day actions and decisions, which must be as closely aligned as possible with the business unit to which they belong—and, consequently, with the overall vision at the corporate level.
Key Components of a Business Strategy
Unlike the business plan, which defines the objectives, the strategy must address all the unknowns: the how, when, why, where, and who for each of the objectives, through the following elements:
Mission and Vision:
With a constant focus on achieving the company's goals, the strategy must clearly articulate the organization's vision and mission, along with clear instructions on how to get there and who is responsible for each step.
Values:
They serve as a guide to what should and should not be done. Once again, clarity is key here, as these values will serve as a guide for how to act and make decisions at every operational level.
FODA / SWOT:
From the analysis of Strengths, Opportunities, Weaknesses, and Threats, this provides the conditions on which the strategy is based to be more efficient. Furthermore, it is an excellent tool for monitoring external changes that may require adjustments to the strategy.
Pragmatism
The business units that deal with a particular market on a daily basis are best positioned to provide insights into it, just as the departments that carry out the day-to-day work are best equipped to meet milestones. Listening to everyone’s input will help set more realistic goals and plan effectively based on them.
Resource Acquisition and Allocation Plan
The strategy must also consider where and how resources will be obtained and how to allocate them appropriately in line with the objectives. In addition, it must clearly identify the person responsible for managing those resources.
Indicators
The metrics used to quantify the results achieved along the way must be clearly defined. Without such metrics, the organization’s viability cannot be measured, and it will be impossible to know with certainty how much value is being generated through the strategy being implemented.
We can conclude that in order to make efficient use of a company’s resources—such as money and time—there is no room for improvisation; therefore, it is essential to have a very clear understanding of key aspects of the strategy in a company such as operational levels, vision, and mission, to ensure that it creates value for its customers, suppliers, and shareholders.
