Strategic Business Elements
A business strategy specification includes a determination of:
- The product market in which the business is to compete.
- Level of investment.
- The functional area strategies needed to compete in the selected product market.
- The strategic assets or skills which underlay the strategy providing the sustainable competitive advantages.
- The allocation of resources over the business units.
- The development of synergistic effects across the businesses - the creation of value by having business units that support and complement each other.
The various elements of business strategy are shown in Figure A. All six elements of the strategy concept can be capsuled into two core-elements:
- the product-market investment decision which encompasses the product-market scope of the business strategy, it investment intensity, and the resource allocation over multiply business.
- the development of a sustainable competitive advantage to compete in those markets. This core concept encompasses appropriate functional area strategies matched with underlying assets, skills, and/or synergy.
The central thrust of business strategy is how to build and strengthen the company's long-term competitive position in the marketplace. Therefore, business strategy is concerned principally with:
- forming responses to changes underway in the industry, the economy at large, the regulatory and political arena, and other relevant areas;
- crafting competitive moves and market approaches that can lead to sustainable competitive advantage;
- uniting the strategic initiatives of functional departments;
- addressing specific strategic issues the business faces.