Ultimately, superior business performance is attributed to:
Industry performance – the industry in which the business operates and the strength and direction of the forces (supplier power, buyer power, threat of substitution, barriers to entry, competitive rivalry, etc.) at play their impact on its performance and average profitability.
Individual business performance – the strength and execution of the individual business’ value proposition (product or service offering) and the quality of the resulting industry and market position achieved.
Business strategy is what makes it possible for a business to be more profitable at selling its products and services despite competition from rivals operating in the same market.
While it’s essential to develop and execute a sound business strategy, there is no one ideal or perfect business strategy. If there was, everyone would be doing the same thing, and no one would have any competitive advantage!
The key components of strategy development involve:
- Understanding where the game is played and the rules of the game – examining and assessing the macro business environment to understand the key trends, determine the key factors that drive competition and your industry’s profitability and establish the range of effective strategies
- Understanding how the game is played – understanding your competitors and developing an appreciation for their strategies, capabilities and the dynamics at play
- Playing to win – carefully assessing your market, competitors, resources and capabilities, then making key choices that will set you apart from the competition and create a competitive advantage for you.