Significance of Business Strategy for Every Type of Business

What is a Business Strategy?

A business strategy is related to the long-term action plan of prioritizing and decision-making to achieve specific business objectives and overall performance. A business strategy indicates the steps or processes to help achieve the desired goals. Without any strategy, a business will lose its focus in a volatile environment and won't get a sustainable edge over its competitors. 

“With the level of uncertainty we see today, more people are asking, how can you develop a strategy in a world that keeps changing so fast? They are afraid that a set of rigid principles will hinder their ability to react quickly. I argue that it is precisely at such times that you need a strategy.” ―Orit Gadiesh, corporate strategist, and chairman of Bain & Company

A business strategy is becoming even more valuable since it reviews strengths, opportunities, threats, competitors, available resources, and the marketplace situation.

Significance of strategy:

Factors that should be taken into consideration:

• Designation of main objectives and how they can be achieved
• Target market and unique selling proposition
• Short-term and long-term plan
• Alternative pivot plans in case of failure
• Evaluate if the applied plans are effective and need to change
• Core principles should be reflected in all business dimensions

Every business has its requirements so factors can change accordingly.

Big Brand Failures; Lessons to Learn From

Netflix vs. Blockbuster

Netflix entered the market in 1999, competing with the well-known for then, Blockbuster. Blockbuster already had a market pie, so it looked easy to eliminate its new competitor. 

Netflix had a different pricing model, with a monthly subscription for unlimited movies or series instead of charging per movie and without late fees. 

How hard would Blockbuster fight this new player, and would a decision to cut late fees be effective?

Blockbuster was generating approximately $300 million per year in late fees in the early 2000s, bigger than the total operating profit. 

As a new player, Netflix only had a few hundred thousand subscribers compared to Blockbuster’s millions of customers. Ultimately, Blockbuster chose to accommodate and keep late fees in place by losing approximately 100.000 customers since they expected that Netflix would grow slowly. 

Here comes the significance of business strategy and how misguided a brand can be without any future evaluations. Even the smaller players can prove wrong the giant ones. 

The decision to cut late fees came years later after their financials began to turn. But the number of customers Netflix had built up and accumulated became so large that the accommodation strategy Blockbuster instituted cost them a great deal of money. 

At the time, Antioco considered Netflix to be small potatoes and would come to realize only too late that having an online platform would be the way of the future.

Learnings from this case study

• Never lose focus of what business you are in
• Adaptation and agility are the keys to every change
• Always think from the customer's perspective
• Never underestimate any of your competitors, especially the latest

Business strategies should be developed and constantly improved to adequately compete in the changing environment. 

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