An effective business strategy is the foundation that helps businesses shape their development path and achieve long-term goals. In this article, 1C Vietnam will explore specific criteria and examples of successful business strategies, helping businesses have a comprehensive view as well as apply effectively in practice.

1. Overview of business strategy

Below are concepts as well as knowledge related to building business strategies in practice.

1.1 What is business strategy?

A business strategy is an overall plan to achieve a business's goals. The main goal is to promote maximum profits and sustainable development of the business system. A business plan is comprehensive, including the main measures and methods implemented by the business over a long period of time.

1.2 Components of business strategy

Understanding and coordinating the components of business strategy helps businesses optimize resources, develop sustainably and gain competitive advantage in the market. These components include:

• Strategic goals: Goals need to be specific, measurable, time-bound and oriented to business activities.
• Strategic scope: Businesses need to determine the strategic scope of customers, products, and regions to focus resources, avoid dispersion, and optimize operational efficiency.
• Customer value: Businesses need to clearly understand the expectations of target customers and build a customer value chart, emphasizing the factors that make them willing to pay.
• System of strategic activities: Activities need to be compatible with common goals and aim at creating outstanding value for the business.
• Core competency: This is the ability to perform activities that are superior in quality and performance compared to competitors, allowing effective diversification of products and services.

1.3 The role of business strategy in an enterprise

Business strategic planning helps businesses determine directions and ways to achieve business goals in a competitive environment. Here are some of the important roles of business strategy:

• Orientation and focus: Determine strategic goals and direct all staff activities, ensuring resources are focused on important activities.
• Brand positioning: Identifying core values and distinguishing the business from competitors.
• Resource optimization: Effective use of human, financial, material and technological resources to maximize profits.
• Development and expansion: Orientation for development and market expansion, increasing market share of the business.
• Risk management: Assess and minimize risks from the environment, competitors and other factors.
• Create competition: Analyze the market, customers and competitors to gain a competitive advantage.
• Strategic decisions: Provides a basis for decisions in accordance with market fluctuations.

1.4 Characteristics of business strategy

A business strategy is a detailed plan aimed at achieving an enterprise's business goals in a competitive environment. Business strategies often have the following characteristics:

• Clearly define the basic goals and direction of the business to ensure the continuous and steady development of the business in a fluctuating environment.
• Outline the long-term operating framework of the business: In reality, it is necessary to coordinate with economic goals, adjust flexibly to meet the business environment and ensure efficiency.
• Take advantage of your business's competitive advantage by optimizing resources (human resources, physical and intangible assets) now and in the future to increase the ability to capture opportunities.
• Reflection in a continuous process: Business strategy will be used throughout the construction and implementation stages and extends to the adjustment and improvement stage.
• Decided by senior management: To ensure the accuracy of long-term strategy and protect information confidentiality in competition, business strategies are made by senior management teams throughout progress.
• Not an immutable operating model: Business strategy is not fixed. When the market fluctuates, the strategy will change to adapt accordingly.

2. Popular types of business strategies

Depending on each business field and scale of operations, businesses will choose an appropriate business strategy. Common types of business strategies include:

1 - Focused growth strategy

A focused growth strategy aims to expand and deepen within an existing market. This strategy can be deployed in three directions as follows:

2 - Integration development strategy

Business integration development strategy includes establishing and expanding relationships with intermediaries as well as competitors in certain fields. This strategy is often deployed in three directions as follows:

3 - Diversified development strategy

Diversified development strategy based on innovation in technology, products and business fields. Enterprises can deploy diversification activities in the following directions:

3. Principles for building effective business strategies

The core principle of building a business strategy is to focus on customer benefits, add value and optimize resources. Here are some common principles:

• Understanding the market: Businesses need to form important strategic thinking to understand the market and competitors, thereby enhancing competitive strength.
• Identify target customers: It is impossible to sell a product/service to everyone, so businesses should aim to target customers with the most needs.
• Competing to differentiate: Business strategy does not necessarily mean leading the market. The important thing is to create a difference, limit the repetition of competitors' steps to attract customers and achieve success.
• Learn to say "no": Saying "no" and stopping providing products/services with unnecessary customer files is an important step in business strategy.
• Not afraid of change: To develop, businesses need to be sensitive to trends and improve business strategies by accepting product/service changes for the sustainable development of the brand.
• Systems thinking: Judgments are often not highly accurate. Therefore, businesses need to rely on actual data to evaluate market trends and customer needs.

4. Process of building an effective business strategy

Business strategy theory is easy to understand, but implementing it effectively is a challenge for businesses. Below are suggested steps for establishing a business strategy:

4.1 Step 1: Determine business goals

To establish an effective business strategy , the first step is to identify specific business goals. Some goals include revenue, profit and market share that businesses are interested in.

4.2 Step 2: Determine the current position of the business

To effectively implement business strategies, businesses need to determine their position in the market, identify main competitors and evaluate business performance factors as well as the future direction of the business.

4.3 Step 3: Research the market and competitors

Business strategy needs to be suitable for customers and different from competitors. Grasping market needs and researching competitors helps businesses make more accurate decisions.

4.4 Step 4: Plan and execute

Planning will create a detailed strategy to achieve goals and utilize resources effectively. Businesses need to regularly monitor and adjust when necessary to ensure that business strategies are implemented as planned.

4.5 Step 5: Measure and optimize

Evaluation, measurement and moderation to optimize and complement business strategy are necessary steps before official implementation. This ensures maximum efficiency for business operations in the long term.

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Built to be compatible with most popular database management software, operating systems, and browsers, 1C:ERP ensures connectivity and ease of integration into a business's existing technology infrastructure. Karma. From there, the solution supports businesses to quickly plan and control operational goals to achieve business goals.

5. Criteria for choosing appropriate business strategies

Criteria for choosing an appropriate business strategy are an important basis to help businesses determine and apply the most optimal strategy in their operating context. Important criteria include:

5.1 Factors affecting strategic planning

The chosen strategy must be optimal or at least most suitable for the conditions and circumstances of the business. Grounds commonly considered include:

• The strength of the business compared to its competitors: Strong businesses often choose a growth strategy and expand opportunities, while weak businesses often choose an innovation strategy to strengthen their competitiveness and adaptability. quickly when necessary.

• Mission and goals: The goal system from the board of directors and the board of directors deeply affects the strategic choices of the business. Detailed tasks need to fit into the overall goal, not just profit or growth.

• Financial capacity of the business: Businesses with large capital resources can easily pursue breakthrough business strategies compared to businesses with thin capital.

• Timing factor: Determining the right time for implementation greatly affects the success of the strategy.

• Results of evaluating the business's current strategy: Accurately identifying the current strategy is the basis for finding a new strategy and reaffirming the current strategy, including assessment of external and internal factors. of business.

5.2 Strategy selection method

Businesses can use the following strategic options:

• Step 1: Evaluate business criteria and indicators such as total profit, risk level, competitive advantage...
• Step 2: Determine the score of each criterion. Scores represent the level of application and influence from low to high.
• Step 3: Evaluate each criterion for strategic options. Determine the total score for each option.
• Step 4: Compare and choose business strategies. The principle is to choose the option with the highest total score.

5.3 Requirements when choosing a strategy

When choosing a strategy, businesses need to ensure:

• Suitable for environmental conditions.
• In accordance with the policies and management of the board of directors.
• Suitable for the financial capacity, resources and personnel of the business.

6. Examples of effective business strategies

Examples of effective business strategies can be found in:

• Cross-sell more products: Focus on cross-selling products to the same customers, especially effective for office companies, banks and online retailers, which can increase profits without revenue costs. attract new customers.
• Most innovative product or service: Many companies, especially in technology and automotive, create cutting-edge products to highlight their innovation strategy.
• Increase sales from new products: Some companies invest in research and development to continuously innovate to match market trends.
• Improve customer service: Focusing on improving customer service is an optimal business strategy, especially when businesses face difficulties in providing quality service.
• Creating a young market: Large companies often acquire or merge with competitors to dominate new or developing markets.
• Product differentiation: Product differentiation is a popular strategy, by highlighting superior technology, features, price or design. This option is especially effective in consumer-to-consumer (B2C) business.
• Pricing strategies: The company can keep prices low to attract more customers, or set prices higher to maintain exclusivity and profits.
• Technological advantage: Invest in research, development, small company acquisitions or hire talented and skilled employees that can bring a technological advantage to the company.
• Improve customer retention: A customer retention strategy is a more effective way than spending to attract new customers.
• Sustainability: Businesses can implement a strategy to increase their sustainability with goals such as reducing energy costs or promoting recycling programs.

7. Frequently asked questions about business strategy

Business strategy is a topic that many administrators and businesses are interested in. Here are some frequently asked questions on this topic:

7.1 What is the ultimate goal of a business strategy?

The ultimate purpose of a business strategy is to develop a business through a specific roadmap.

7.2 How to measure the results of business strategies

In the goal setting phase of a business strategy, businesses need to set and measure specific goals such as attracting and retaining customers, increasing sales, enhancing brand, and tracking indicators such as satisfaction, conversion rate or website traffic.

Choosing a business strategy is not only an important decisive step in the process of building a business but also affects the future of the organization. Effective strategy implementation is an important factor to turn plans into reality and bring success in the market. Businesses can refer to 1C Vietnam's comprehensive resource management solution 1C:ERP to support the process of building business strategies more effectively.