6 Key Components of a Business Strategy and How Knowing Them can Help you to Succeed at Work

For any company to survive and thrive, its leaders need to follow a clear and effective business strategy. That’s why successful companies are always looking for job candidates who understand the importance of executing their employers’ strategic vision and plan. Developing a keen understanding of the key components of a business strategy can give you an advantage over rival job seekers.

In this article, we’ll explore the six key components of a successful business strategy and explain why they’re important for your company’s strategic success. We’ll also provide some tips you can use to create and implement an effective business strategy.

What is a business strategy?

Every business has goals – big goals and small goals. Those goals can include things like expanding into international markets, creating a new product, or challenging the status quo to disrupt existing industries. Regardless of the objective, a great business strategy is essential for defining and reaching those goals – a master plan for achieving success.

What are the 6 key components of any business strategy?

Business strategies, sometimes called company strategies, contain these six components:

• Vision and objectives

• Core Values

• SWOT (Strengths, Weaknesses, Opportunities, and Threats)

• Tactics and operational delivery

• Resources and resource allocation

• Measurement and analysis

It's critical to understand that there is a monumental difference between tactics and strategy. 

• Tactics are actions you use to achieve your goals

• Strategies are the plans you create to guide you toward those objectives

It can be easy to get bogged down in tactics, but those actions only support short-term goals. To ensure that you're leading your team toward long-term goals, you need to build a business strategy.

1.      Vision and objectives

The only way to effectively start any business strategy is by defining your goals and short-term objectives. This will help you establish a clear vision that gives your strategic plan a purpose. As you think about the overall purpose of your business strategy, consider what steps you'll have to take to achieve the end result. Each objective that is fulfilled should take your organization one step closer to the goal or vision.

2.      Core Values

Your organization’s core values must be defined as well, so they can guide how the people within the company work together to achieve shared goals. Aligning core values with business strategy is imperative, if for no other reason than to demonstrate how employees should engage in the activities and objectives that have been established.

Moreover, core values help company leaders to identify potential staff members (or job seekers) that will work best for a given assignment. Identifying top talent and putting the right people in the right job will make it easier to achieve and measure success.

3.      SWOT analysis

All business strategies must include an assessment of strengths, weaknesses, opportunities, and threats (SWOT). Not only does this analysis show what factors exist that will guide success, but it also shows potential issues that could pop up. Knowing these things in advance will help you and your team to successfully navigate problems and could even pave the way for solving challenges before they arise.

• Strengths include all the things your company excels at and how these qualities affect business operations. Strengths can be internal or external and include everything from your team having an innovative mindset to the company being on a solid financial footing.

• Weaknesses include any area that can benefit from improvement. Some examples of company weaknesses can include things like low customer satisfaction, outdated equipment, and high debt levels.

• Opportunities define what changes need to take place to positively impact the company and the plan. Perhaps your business is in an area of expanding industry, or there have been recent government support programs put into place. All of these present potential opportunities that your company can take advantage of to boost its overall success.

• Threats include all of the potential risks that could cause harm to your business enterprise. They are often external and can include things like supply chain issues or new regulations that negatively impact on the company’s efficiency, competitiveness, or profitability.

4.      Tactics and operational delivery

Most executives like to focus on tactics because those actions bring clear and obvious results. They want to know where things are, who is doing the things that need to be done, and how much it will cost. This section of the business strategy is important for showing how resources will be allocated.

5.      Resource allocation

Once you know how the resources need to be allocated, it's time to assign, issue, or administer them. Resources encompass everything from people and equipment to budgets and time. As time progresses, you may need to adapt this section to increase or decrease those resources.

When resources are properly allocated, you can improve efficiency and employee productivity, save labor hours, increase workplace harmony, and achieve higher employee retention rates.

Resource allocation happens in stages:

• There's early-stage allocation, which happens when the strategy is being put into place.

• As the business plan progresses, you reach the growth stage. At this point, you start setting new goals and start working on new business strategies, which means that you have to allocate more resources (or the same resources differently).

• Finally, there's end-stage resource allocation. At the end of the execution of a business strategy, the company’s resource needs will likely change and need to be re-evaluated.

6.      Measurement and analysis

A great business strategy is useless if there's no way to measure success. Performance measurement, performance metrics, and performance indicators are prominent resume keywords in most job descriptions for positions that involve business strategy creation or management.

Evaluating how the company is performing – whether goals are being achieved or not – will allow you to make needed course corrections to keep things on track.

How to develop a business strategy

It's one thing to know the components of a business strategy and be able to talk about them during an interview; it's something else entirely to actually put a company strategy together. The following steps can help you to develop a business strategy that can benefit any company that hires you.

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1.      Identify the problem you’re trying to solve

Every business strategy has a purpose: to solve some problem that’s presenting an obstacle to your company. For example, your company may need to boost revenues, reduce costs, or strengthen customer brand loyalty. You need to identify the target problem before you can create a strategy to overcome it.

2.      Conduct a SWOT assessment

You’ll then need to assess all the various factors that influence your company’s success. Analyze your company strengths, weaknesses, market opportunities, and potential threats. This assessment will provide vital information about your company that can help you identify key challenges and areas for potential improvement.

3.      Set clear goals

The next step in the process will require you to set firm goals that will help you solve that problem that you identified in step one. Make sure that you’re establishing SMART goals that are specific, measurable, achievable, relevant, and time bound. You should also review your SMART goals from time to time to ensure that your team remains focused on those objectives.

4.      Create an action plan

Once you’ve outlined your goals, it’s time to create an action plan that defines the steps you’ll take to achieve the company objectives. This plan should include specific actions that the company will take to reach its goals, information about the resources that will be used to complete those actions, and the target timelines for completion.

5.      Monitor and measure your progress

Finally, you’ll need to have a plan to monitor company activities and measure progress. Set some target milestones so that your team has short-term objectives to reach during the implementation phase of your strategy. You should also plan to adjust your strategy if your team’s progress falls short of expectations.

Business strategy examples

To better understand the important components of business strategy, consider the following examples.

Example 1:

• Build a loyal client base: The goal is to not only acquire new customers, but also to increase client retention to at least 80%. It's necessary to shift to a customer-first approach and fine-tune associates' client-facing relationship-building skills. Product and service delivery needs to improve, and the market needs to be continually monitored to guarantee that we're offering the best prices.

This strategy will work because it sets a goal (an objective) and addresses a core value of the business (customer-first approach). Then, it talks about SWOT by identifying that staff skills, product delivery, and pricing need to be improved.

The tactics required for making this business strategy successful will involve improving relationship-building skills and giving the customer the best product at the right price. It’s also a strategy that can be measured by using tools like Net Promoter Scores and client surveys.

Example 2:

• Improve revenue by 50%: The goal is to increase sales by getting new products to market and pivoting operations from an in-person shop to include online shopping. Expanding technological capabilities and hiring a tech team will be imperative to the success of this plan. By expanding our product range to clients who don't have physical access to the store, we will experience a rapid increase in profitability.

This strategy's goal is clear and extremely easy to measure. The strategist who built this plan also realizes that one of the company's weaknesses is a lack of technical personnel and it is immediately addressed. This example could technically be broken into two.

One could define what the company will do to get new products to market, and the second could detail how they will address expansion into e-commerce capabilities.

Stay adaptable and flexible

These business strategy examples identify a course of action to improve business results surrounding a particular objective. In the end, you do have to remember that a business strategy isn't carved into stone. It's a roadmap with curves and turns that your company and team will have navigate along the way.

At times, any given business strategy will need to be adjusted or adapted to fit new circumstances or events. If there's one thing that's true, it's that everything changes. Often those changes are outside of your control – you can, however, control how you respond to the changes.

Are you ready to employ your understanding of business strategy in your next job?

Today’s employers are always eager to hire candidates who possess a high level of business acumen. By learning as much as you can about business strategy, you can further demonstrate your potential value to prospective employers. Ultimately, that knowledge could be the thing that sets you apart from rival job seekers, helping to increase your odds of landing an interview and job offer!

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This article was originally written by Marsha Hebert. It has been updated by Ken Chase.