Alan Lakein once said, “Failing to plan is planning to fail.”
With the business environment in India becoming more dynamic, complex and unpredictable and with the growth of technology and globalization, it is now more important than ever for small and medium enterprises to have a business strategy in place that will help the business owner and all its stakeholders achieve the business objectives that they set for themselves. However, according to a research conducted in the UK, only half of the SMEs that undertook the survey had a business plan in place. A business strategy is crucial to long-term survival and growth.
Defining a Business Strategy
What then is a business strategy you ask? Is it just a fancy business term, or is there a principle behind it. Michael Porter, Harvard Business School says that a business strategy is a unique and distinctive position that a business should lend itself if they wish to stay relevant in the market and sustain themselves. He further explains that a smart business strategy is almost like a competitive advantage that a business can give itself; basis that it can also plan specific activities to execute and carry out the same. While leadership or business owners have a dominating role to play in forming and executing the business strategy, employees too have a considerable role to play.
Questions that Need Your Focus
As the owner of an SME in India, you have to make up for the lack of a core middle and senior management with the entrepreneurial passion that you possess. By backing that up with the resources you have in hand, you can devise a smart business strategy. Here are four kinds of business strategies that you can use to devise your own:
- Growth Strategy: A growth strategy is focused on expanding the business with the introduction of new products and services. A small business may even modify its product line and add more features to its existing line to help the business grow.
- Product Differentiation Strategy: A product differentiation strategy helps small businesses achieve a distinctive factor that sets them apart from the rest and adds to the credibility and usability of the products and services that the business offers.
- Price-Skimming Strategy: Often small businesses may charge a marked up price during the introduction phase of their business or even sell their innovative products at a lower price, and then gradually increase the price. This is done to acquire a stable customer base by SMEs in India.
- Acquisition Strategy: A small organization with a little extra capital may use this strategy to acquire a stake in another company or even take over it – this helps them the business increase its strength and resources.
The Way Forward
Like Winston Churchill said, “However beautiful a strategy, you should occasionally look at the results.”
To help your SME in India sustain its competitive advantage, you should revisit your business strategy time and again and further add new components to it. Moreover, despite the fact that you know your business the best – it helps if you get the perspective of someone else. Your team can be your biggest support system, so do not hesitate to reach out to them.