Corporate strategy - How to achieve your goals
With a business strategy, you have a plan in place to increase sales and achieve your business goals. How to develop such a plan, we tell you here.
What is meant by a corporate strategy?
The term corporate strategy refers to a business strategy that provides a long-term structure for the economic success of the company. The purpose here is to define the business goals and set certain milestones that you want to achieve.
The starting point for this is a market and customer analysis, through which the market growth and the potential of the market are determined. There are several models for this.
Goals of a corporate strategy
A strategic goal fixes a state in the distant future that is perceived as so attractive that one wants to achieve it. The strategic goals concretize your vision and mission, which are important for the company’s success. For your goal setting, the SMART model can be helpful. It defines the objectives according to the following points:
- Specific: Your goals should be as specific and precise as possible. The target should therefore be described as precisely as possible and pictorially.
- Measurable: Orient yourself to measurable numbers, data and facts. These are in fact verifiable. Turnover can be measured in terms of an amount. Working hours can also be measured.
- Attractive: Plan in a way that makes sense to you to achieve your goals. What is positive when you reach the goal?
- Realistic: What you set out to do must be feasible and achievable. Otherwise, you and your employees will quickly lose interest, motivation, and even belief in the product. Since you may not be able to achieve all of your goals right away next year, make a plan. For the next two, three and five years.
On schedule: This means including deadlines and scheduling tasks in a time-binding manner. More or less: We want to increase sales by ten percent by the end of the year.
How do you develop a corporate strategy?
The company strategy goals are already defined in the business plan and already play a central role in the foundation. Therefore, ask yourself:
- Why exactly were these measures chosen?
- What customer benefits can be achieved?
- What advantage does the strategy offer over competitors?
- Where exactly can the company position itself in the market with the chosen strategy?
- What is the advantageous relationship between the business strategy and the size and type of the company?
What are the business strategies?
There are some strategies. Probably the best-known model for building a corporate strategy is Michael Porter’s five forces model. This defines the corporate strategy as a competitive position.
This means you need to know both the market you are in and your competitors. This is the only way you can react to the market and its changes. These questions are the focus here:
1. our competitors & rivals
- What budget do we need to raise to enter the market.
- How long does it take to develop the market.
- What are the hurdles to market entry? This may include, for example, patents and rights.
- What does it take to scale our business?
- Are our key technologies protected?
- Is our market strictly regulated?
If the hurdles are low, a strategy is needed to keep the competition at bay.
2. danger from substitute products
How quickly can your customers replace your products or services with an alternative?
- How is your product & service different from the replacement product?
- What substitutes are available on the market and how many?
- How much do the substitutes cost?
- What do you offer that can replace a market leader?
One example: When the iPod was developed, the CD and thus the CD player soon became passé. Because the iPod used a new technology, but fulfilled the same needs. In addition, many more music tracks fit on the stick. At first, the iPod was significantly more expensive, but then quickly dropped in price, finding a large consumer base.
3. your suppliers
In point three, you analyze your suppliers. How quickly they can raise their prices and thus affect your bottom line. To find out, ask yourself these questions:
- How many suppliers do you work with?
- Is the product or service unique?
- Can you find alternative suppliers and if so, how many?
- How do their prices compare to current suppliers?
- How expensive would it be to switch from one supplier to another?
Attention: Your suppliers also think strategically. If your supplier knows that only a few other companies meet the same demand, they will charge you more for their service or product.
4. the negotiating power of your customers
Have you ever considered whether your buyers could depress your prices and have such power? To do so, briefly answer these questions:
- Your sales are driven by how many buyers?
- How large and extensive are the orders that customers request?
- How important is your product or service to your customers?
- Could your customers switch to another provider?
- How much would such a switch cost your customers?
- What is the ROI, or return on investment, of your product and service?
5. rivals on the market
All four of the previous points in Porter’s model affect this last point. Now here you need to look at the number and strengths of your competitors:
- How many competitors are there?
- Who are your biggest competitors?
- How is the quality of the products contrast to yours?
- What sets your company apart from the competition?
What to consider for a successful business strategy
Experience shows that a well-functioning corporate strategy depends on these factors:
- Customer analysis: What do our customers want?
- Communication focus on solutions rather than products to optimize sales.
- Creating competitive advantages: What is our USP (Unique Selling Proposition)?
- Use of technological innovation to increase efficiency.
- Anchor goals in the corporate culture and live them in practice.
Conclusion - your corporate strategy
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