4.
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"Three Strategic Business Options"
Today's SOHO Help Desk offers valuable advice on business
strategy.
If you have a informative tip, promotional idea or question
you
would like included in an upcoming issue of DEMC, all you have
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=== Business Strategy Tip ===
"You Have to Choose Between only Three Strategic Options"
By: Mark Munday
Ultimately, you have to settle for one of three business
strategy options. And it is important that you are clear on
what one you are going for.
Your business strategy choices are, at the end of the day,
very simple. The big question is, how do you want to
position yourself in relation to your competition.
Basically your options are :
1. To be the cheapest
2. To be the best
3. To dominate a market niche
Many small businesses go for the first option, in the
mistaken belief that it is only way to survive. The problem
is, there will always be someone who can do what you do,
more cheaply than you can.
A cost leadership strategy is only really suitable for big
businesses. Businesses that have substantial economies of
scale. They are able to spread their overheads thinly over
large volumes, and charge low unit prices. So if you are
running a small business, this strategy probably won't work
for you.
If, as a small business, you build your business reputation
on being the cheapest, you are operating from a position of
weakness. Even if you can survive with your low prices,
you will not be able to withstand a price war with a bigger
competitor. So why take the risk?
The second strategy, being the best, can be used to build a
powerful competitive advantage. It means, however, that
you have to have a unique product. Otherwise, you will
have to spend a lot of money on R&D to stay ahead of the
competition.
You need deep pockets to win with this strategy. Unless, of
course, your product is so specialized that no one else is
producing it. And big companies, for whatever reasons,
don't want to produce it either. That would give you
dominance over a niche of your own.
But generally speaking, a product leadership strategy is only
for the big boys. Like, Nokia, Sony and Mercedes Benz.
While being the best in a category, and staying that way, can
be a powerful strategy for highly specialized small
businesses, it is just not sustainable for most. Which brings
us to our third option.
Dominating a market niche in your industry. It is the most
suitable business strategy for most small businesses. By
adding value in a way that attracts a particular kind of
customer, you can steadily build your business success. You
are able to charge a premium. And you don't have to be the
"best".
The trick, of course is to clearly identify your niche market,
and convince your target market that you provide the best
solution to their problem. For nearly all businesses, finding
a niche and dominating it provides a solid foundation for
building a business on.
It is very important that you are absolutely clear on what
generic strategy you are relying on. Your business strategy,
by definition, is supported by a number of strategic tactics.
Whether you are aware of using them or not.
If you aren't clear about your overall strategic direction,
you may end up using conflicting strategies. For example,
focusing customers on your low prices at the same time as
you introduce best of class products. Doing this means that
your profitability suffers and you fail to attract the
customers you want : not good!
Deciding on the generic strategy that will create the business
success you are looking for, clarifies your thinking. And it
helps you see clearly what tactics you need to use.
###
As a Business Strategist and Coach, Mark works with
business owners to help them achieve their business goals.
His powerful strategic planning and implementation
techniques produce stunning results for clients.
Mark has just released a unique and revolutionary system
for building your business into what you really want it to
become. Be sure to review it at http://www.StratPlanWizard.com
===
If you have a valuable tip, promotional idea, question
or answer you would like included in an upcoming issue
of DEMC, all you have to do is submit it by email to -
mailto:helpdesk@demc2.com
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post as we'll be sharing any viable ideas/information
in an upcoming issue of DEMC E-Magazine.
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