Business Strategy Formulation


Business strategy must be clear and focused. The main goal is to develop a strategy that leads to competitive advantage in an industry or market segment.

Strategy formulation at this level depends on a company’s ability to understand its industry and competitors and to develop resources and capabilities that lead to a favorable competitive position.

The following table shows the internal and external analyses needed to develop a clear and focused business strategy:

Competitive Advantage

Business Strategy

These analyses will tell management what is possible in terms of strategy development. A company must match its capabilities with external opportunities and position itself to maximize its chances for competitive advantage.

Sound business planning dictates that all relevant data must be analysed in the strategy formulation process.

Strategy execution is more difficult if:

  • Business strategy is unclear, unfocused, pursuing the wrong things or reading the competitive environment incorrectly

Strategy execution will work only if:

  • It’s sharply defined, clearly communicated and well understood by employees, customers, partners and investors

The Business Strategy must be in line with the Corporate Strategy.

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