BUSINESS STRATEGIES TO ADOPT- YOUR CHOICE OF THREE
you have to settle for one of the three business strategy options, and it is
important that you are clear on what one you are going for.
business strategies choices are, at the end of the day, very simple.
The big question is, how do you want to position yourself in relation to
Basically your options are:
be the cheapest|
be the best|
|To dominate a market niche|
small businesses go for the first option, in the mistaken belief that it is the
only way to survive.
The problem is, there will always be someone who can do what you do more
cheaply than you can.
cost leadership strategy is only really suitable for big businesses that have
substantial economies of scale.
They are able to spread their overheads thinly over large volumes, and
charge low unit prices.
So, if you are running a small business, this strategy probably won’t
work for you.
as a small business, you build your business reputation on being the cheapest,
you are operating from a position of weakness.
Even if you can survive with your low prices, you will not be able to
withstand a price war with a bigger competitor.
second strategy, being the best, can be used to build a powerful competitive
means, however, that you have to have a unique product.
Otherwise you will have to spend a lot of money on research and
development to stay ahead of the competition.
need deep pockets to win with this strategy.
Unless, of course , your product is so specialised that no one else is
producing it. And
big companies, for whatever reasons, don’t want to produce it either.
That would give you dominance over a niche of your own.
Generally speaking, a product leadership strategy is only for the big
being the best in the category and staying that way can be a powerful strategy
for highly specialised small businesses, it is just not sustainable for most.
a market niche in your industry is the most suitable business strategy for most
By adding value in a way that attracts a particular kind of customer, you
can steadily build your business success. You are able to charge a premium.
And you don’t have to be the “best”.
trick, of course, is to clearly identify your niche market, and convince your
target market that you provide the best solution to their problem.
For nearly all businesses, finding a niche and dominating it provides a
solid foundation for building a business on.
is very important that you are absolutely clear on what generic strategy you are
Your business direction, by definition, is supported by a number of
strategic tactics, whether you are aware of using them or not.
If you aren’t clear about your overall strategic direction, you may end
up using conflicting strategies. For example, focusing customers on your low
prices at the same time as you introduce best of class products.
Doing this means your profitability suffers and you fail to attract the
customers you want…. not good!
Deciding on the generic strategy that will create the business success
you are looking for, clarifies your thinking.
And it helps you see clearly what tactics you need to use.
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