Business

Study Notes

An Introduction to Business Strategy

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB

What is a business strategy? In essence, business strategy is all about CHOICE. This includes the choices that businesses make about which markets they try to compete in and also how they choose to compete.

Johnson and Scholes define strategy like this:

"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".

In other words, strategy is about:

  • Where the business is trying to get to in the long-term
  • The markets a business should compete in and the kind of activities that are involved in such markets
  • How the business can perform better than the competition in those markets
  • The resources (skills, assets, finance, relationships, technical competence, facilities) that are required in order to be able to compete
  • The external, environmental factors that affect the businesses' ability to compete

Strategies exist at several levels in any business - ranging from the overall business (or group of businesses) through to individuals working in it.

Business strategies can be broadly grouped as follows:

Corporate strategy

This is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business.

Business unit strategy

This is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.

Operational Strategy

This is concerned with how each part of the business is organised to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.

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