Business strategy is the core of any company. It determines its future and how it will operate. It’s a tool guiding the organization towards its goals and objectives. The framework gives a clear picture of what is expected from the company in terms of revenue, profits, market share, etc., to achieve success.
Defining Business Strategy Framework
The business strategy framework outlines steps that an organization needs to follow to move toward its strategic objectives. This framework is a type of process map which maps out the steps an organization must take to achieve its strategic objective.
Furthermore, it is a structured set of principles that govern how you treat customers and manage your resources. By applying a business strategy framework, you can reduce the time needed to make important decisions by making them based on facts.
How to Implement a Business Strategy Framework
Step 1: Choose the Right Strategic Framework
Self-reflection is an important part of choosing the right framework.
- What is the status of your organization?
- What is your goal?
- How would you describe your main strengths and weaknesses?
It is important to consider these factors when selecting a strategy framework.
Step 2: Apply the Strategic Framework to Your Strategy.
Consider each element of your strategic plan carefully as you develop it.
- What are the strategic objectives of your organization?
- What is the role of each goal within your chosen framework?
- What are the key performance indicators you need to measure and establish?
Utilize your strategic framework to evaluate your strategy and the information you have gathered. Through this process, you will be forced to consider the alignment between your goals, strategic framework, and overarching vision.
Step 3: Review Your Plan Against Your Chosen Strategic Framework.
Implementing a strategy framework has other benefits. For instance, it helps your employees understand how their goals relate to the larger picture. Every decision is made with an understanding of the context and direction of the organization.
It is possible to analyze your strategic plan’s alignment with your strategic framework with strategy execution tools. It includes automatically calculated metrics such as the percentage of your overall strategy’s goals that fall under each element of your framework. Using this method, you can determine the level of attention you give each element of your strategic plan.
Business Strategy Frameworks and Their Relevance
Business strategy frameworks are the backbones of any business. They help companies to understand their future business and provide them with a road map to achieve their goals.
In this section, we will discuss the top business strategy framework:
1. Porter’s Five Forces
Porter’s Five Forces provide an understanding of the intensity of competition within an industry, as well as the level of profitability and attractiveness of the industry.
Porter’s 5 forces are
- Competitive rivalry
- The threat of substitute products
- Bargaining power of buyers
- The threat of new entrants
- Bargaining power of suppliers.
When to use it
- Identifying and understanding the forces that can affect the profitability of your business
- Understanding your industry’s competitiveness
- Assessing the viability of your product in the marketplace as well as the strengths and weaknesses of your position
2. BCG Matrix
BCG is a portfolio management framework that helps businesses determine which products and services to invest in, not based on market growth or market share.
- Market growth – how well is the product growing compared to other products?
- Market share – what is the size of the market the product has captured compared to the competition?
This matrix also known as the growth-share matrix contains four quadrants representing different categories of the company’s products. Market growth is represented by the y-axis, whereas the x-axis represents market share.
When to use it
- Determine where to invest and withdraw from based on the portfolio of products to identify growth opportunities x-axis.
- Ascertaining which products should be kept, sold, or invested in more heavily by a business
- To determine how the current products are performing in the marketplace
3. GE-McKinsey Nine-Box Matrix,
The purpose of this strategy tool is to assist businesses in planning their portfolios. A multi-business corporation uses this tool to evaluate its various business units’ performance and systematically prioritize investments in them.
The y-axis represents the attractiveness of the market/industry, and the x-axis represents the strength of the business unit.
There are three levels of scale: high, medium, and low. The model generates nine industry attractiveness measures and twelve business strength measures.
When to use it
- The purpose of this task is to plan and evaluate the business portfolio
- to prioritize and strategize business investments
- Identify the key areas that require improvement within the business portfolio
4. Ansoff Matrix
Ansoff matrix is used by businesses to analyze and plan growth strategies and understand their associated risks. Following the matrix, two approaches can be taken to develop a growth strategy;
- Variation in product sales (product growth)
- Changing the target market (market expansion)
When to use it
- Identifying profitable growth strategies
- Identifying the risks associated with growth strategies
- Communicate company strategies to stakeholders
The business strategy framework specifies how you will approach your strategic plan conceptually. It is typically defined through a framework, which usually provides a visual representation of the activities carried out in the plan. Think of the framework as a blueprint or the foundation for your messaging and brand narrative.
What is a 4p framework?
The 4 Ps framework is a set of processes that can be used to develop and deliver an effective sales message.
What is the customer’s business strategy?
The customer’s business strategy is the fundamental reason a company should do business with them. In order to understand the customer’s business strategy, you need to have a good understanding of their core competencies and unique selling points.
What is the best customer strategy?
Customer strategy is the most important part of any company’s marketing strategy. It determines how much effort and resources a company should put into customer acquisition and retention. The best way to achieve this is to create a strong customer base that will stick with your brand and buy from you again.