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Recent developments that have taken place in global economy worldwide have changed the ways in which relationships between customers, manufacturers and suppliers are created. With the advancements in technology and communication infrastructures, global trade regimes have been opened so that customers are given wide variety of choices. The businesses of recent times have to focus on their customers and select strategy in accordance with their needs and requirements. In order to meet the demands of customers of these days, it has become important for organizations to revalue their propositions; it means organizations need to do re-evaluation of their value propositions so that they can survive in today's tough competitive environment (Zoti & Amit, 2008).
According to Dafikapu (2011), new business environment has augmented the need of addressing the customer needs along with capturing value from the products and services that are offered to the customers. It is important that every organization has a well-designed business model so that innovators working within business are able to give superior quality products and services. Business model is most important for Internet companies because revenue streams are heavily dependent on customer perception about offerings made by them (Teece, 2010).
In order to be successful, every organization needs to ensure that it has a well designed business strategy. When top ranked organizations business structures are studied, it can be judged that their success is dependent on the business model used by its owners along with their vision and business strategy. Strategy is basically the direction that the organization should move into to ensure that it is able to meet its objectives and goals which will allow fulfillment of organization's mission and vision (Meyer, 2011; Shaughnessy, 2011).
Business strategy can be best described as the way the business intends to follow to be successful in its target market in comparison to its competitors. In other words, it represents most appropriate attempt that can be done by management to define and secure its business future (). According to Daniels, Radebaugh, & Sullivan (2012), a business strategy should have incorporation of following aspects:
Business scope - Offering on which the strategy is to be applied.
Needs assessment of customers - All current and potential needs of both existing and future customers of the business.
Competence / Competitive advantage - Unique competency or distinctive capabilities which will give competitive edge that will help in meeting needs of customers for long run.
Securing business competitiveness - Ensuring right competencies are developed so that future of business is feasible.
An effective and well-designed business strategy which has six elements as identified by Shediac, Moujaes & Najjar (2011), the scope of business is correctly defined, documentation is done appropriately, real customer needs should be addressed, do exploitation of competencies that are genuine, develop sustainable competitive advantage and it should provide perfect ground for implementation of strategic plan.
Factors important for business Strategy
When business strategy is being designed, it is important that various factors that are important for business should be taken into account such as its scope, purpose of existence, target market, competitors of the company, availability of suppliers, distribution network, external environment of business, political stability, climatic and economic conditions and many more (Casadesus-Masanell & Ricart, 2009). When an organization has multiple businesses, it needs to ensure that it has separate business strategy for each of the business. For instance, Apple has separate strategies for its computers, iPhones, Tablets and iPads (Meyer, 2011). The business scope needs to be defined in mediocre way so that it is neither too broad nor too narrow.
One of the crucial aspects of every business strategy is the right identification of customer needs as it is the main driving force. The customers' needs to be rightly identified along with analysis and evaluation of options to meet those needs fully and beat the competitors. Hence, right methods need to be used for identification of customer needs and alternative solutions that can be used to fulfill the demands of the customers so that company is able to gain competitive edge in the market and survive for long period.
Practical Implications for Business Strategy
In order to understand how business strategy can help an organization to get competitive edge in the market case studies of Dell and Wal-Mart are discussed. Dell's strategy of directly selling to the customers via Internet has been difficult for its competitors as they are unable to replicate it. When Dell decided to sell directly to its customers, it had to upset its existing distribution channel partners and also resellers. The success of Dell lies in the way it did its value chain organization; the products were sold via its system of distribution. With the passage of time, it developed competitive capabilities by allowing its customers to get their products designed in customized manner and they were offered wide choice among products such as laptops and desktop computers, digital projectors, printers and various other computer related electronics. The complete strategy was dependent on suppliers' availability to produce products at competitive prices (Shaughnessy, 2011).
Similarly, strategy implied by Wal-Mart revolves around providing best range of products at discounted prices with superb quality. Initially, founder of Wal-Mart started its operations in small towns to support similar sized small stores; the first mover advantage enjoyed by the store has not been replicated by anyone so far. Wal-Mart made sure that is supported national brands at discounted prices which were supported by highly innovative along with efficient IT systems and lean purchasing and logistics system. All the factors combined helped Wal-Mart to create sustainable competitive advantage across the world (Shediac, Moujaes, & Najjar, 2011).
The primary purpose of each business strategy is to do exploitation of various capabilities of the organization so that competitive advantage can be achieved and sustained for long time. An effective strategy is to serve customers with perfection so that needs of the specific market can be successfully achieved. Only those strategies are able to work well in today's competitive environment that incorporates all current and future needs along with existing and potential customer demands assessment. Every business strategy should focus on four key elements to survive in ever changing business environment i.e. scope of business, needs and demands of customers, the way in which enterprise will do exploitation of advantages and mechanism by which competitive advantage will be attained by the organization. Hence, the strategy will describe necessary actions that are mandatory for implementation of the strategy along with the reasons for changing the strategy.