Strategy-The Game of Business

22 Jan

Business competition is very similar to sports. In business,teams of individuals face each other in competition for employees,customers, product innovations, and profits—among other goals. The major difference between sports and business is the relevant time frame. Imagine if teams in the National Football League had to play each other every day, from nine to five, with the lunch hour replacing halftime!

As in sports, business organizations that win consistently excel at preparation, planning, and execution. They know their situation, know where they want to go, and determine how best to go there. Maybe more importantly, these organizations have their finger on the pulse of the markets, customers, technologies,and other innovations that may change the rules of the game and the factors that lead to success. And these dominant companies are willing to adjust their game plans accordingly.

Strategy is the business word for game plan.All businesses have strategies, either planned or unplanned.

A Simple Business model– Let’s say we decide to use our grandmother’s recipes to open a restaurant. We figure that since we all loved Grandma’s cooking, others would too.

In order to realize and deliver the promise of the business idea, we must use a package of assets: People, Property, and Relationships. We’ll need a location,tables, chairs, china, silverware, and a lot of restaurant equipment and supplies. We’ll need cooks, waiters and waitresses,dishwashers, and other employees. We’ll need a liquor license, public health certificates, and accounts with food suppliers of meat, produce, and so forth. These assets must then generate income, which is used to refuel the assets (buy more food and pay the staff) and invest in new ideas to keep the business going.

Let’s examine each component of the model. It all begins with a business idea. Now, a business idea is more than just an idea.

A business idea has two defining characteristics—–

First, a good business idea meets an unmet need in the market. The product or service that we offer must satisfy a customer’s unmet need. This may mean a brand-new product or service or service or it may mean finding a way to provide a product or a service at a lower price than is currently available.

Second, a good business idea drives transactions. Whatever product we offer to customers, they must be willing to exchange their money for our product or service. The test of a good business idea is whether people will give up their cash to get our products or services in enough numbers to keep operations going.

Our Grandmother’s restaurant idea, when communicated to the public (by advertising and/or word of mouth), must create a demand for hungry people to select our establishment for lunch or dinner. The ultimate test is whether our business idea will meet the unmet needs of the market in a way that customers will return,again and again—and satisfy our business need to generate income. Once we have a business idea, we must assemble the assets to construct our business. Usually we need money, financial capital.Also we need employees,human capital.

Finally, we need relationships: with suppliers,the government, customers, distributors, and others to make the business work. Linking the business idea with the right asset mix is what creates the power of a business and it’s that link that’s our business strategy. So, while we start with Grandma’s recipes, in putting together our plan, we must make many decisions and undertake many activities. That is, we must construct our strategy. The location, the market we target (families, upscale diners,college students, and so forth), the décor we select, the pricing of our entrées, our wine list, the training and performance of the wait staff, the quality of the foodstuffs, and the preparation of the food—all will play a role in our success.

These strategic decisions we make in building our organization and business model are endless.

#The link between our business idea and the assets we select is our business strategy.

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