Why is Business Strategy Important?
The purpose of business strategy is to find the right mix to succeed in business. A company must decide where in the market to be and what it wants to be good or known for. If a final goal is to be the best at a service, have the best product, or sell the most widgets then every step that the company makes must match the end goal. To help achieve this goal a company will make a vision statement to explain this plan, a mission statement on how to achieve the vision, a purpose, philosophy and the goals of the Business
Mission Statement and Vision Statement
A company starts it is smart to decide what the goals are. A mission statement helps others understand why and what the company wants to achieve. A mission statement focuses on the market, who it serves, helps inspire, and often memorable (Olsen, 2008). A vision statement is much more involved as it covers 5 year or more into the future. The vision and mission statement is often combined and includes the purpose, philosophy, and the goals for the business.
Management strategy hierarchy leads to competitive advantage
Management Strategy for decision making contains three levels. The corporate level, business level, and the functional level. The corporate level focuses on direction of the company, profits, image, and social standing. The business level translates the direction the corporate level would like to pursue and how the company will compete in that market. The final is functional level who develops a plan of strategy to complete the firm’s goals (Pearce II, 2014).
The pro’s and con’s of cost and differentiation types of competitive advantage
There are several ways to grab the market and a company must decide which to offer a cost or differentiation. The cost is when you can cut costs of making or producing the product and offer it at a lower price than all the other competitors. This strategy could easily be taken over by another competitor offering a lower price. The differentiation competitive advantage is when the company tries to offer a special product or service that no one else can duplicate. This type of strategy needs to keep up with the competition to ensure that they can continue to have the best product or serve (Porter’s Generic Strategies, nd).
Examples to relate theories, principles, and concepts to real world application of strategy in business and industry
Maytag uses the differentiation competitive advantage strategy by claiming their products never or rarely breakdown. Their commercials often show a very bored repairman.
Olsen, E. (2008, July 1). How to write a Mission Statement. Retrieved from YouTube: https://www.youtube.com/watch?v=XtyCt83JLNY&feature=relmfu
Pearce II, J. &. (2014). Strategic Management Planning for domestic & global competition 13th edition. New York: McGraw-Hill Irwin.
Porter’s Generic Strategies. (nd). Retrieved from Mind Tools: https://www.mindtools.com/pages/article/newSTR_82.htm