Strategy drives a successful business, a fact we can’t deny.
However, when it comes down to breaking it into smaller components, things become unclear. Is there a way for companies to build better conditions to thrive in their business? What are the best possible ways to leverage their strengths so that their customers pay for their products and services?
Here’s how Pierre Dussauge, Leading business expert and Professor of Strategic Management at HEC Paris and BMI explains it a question and answer format. If you’re a business strategist, you might want to take heed of what he has to say.
Why are some organizations successful than others?
Simple answer, they have a better business strategy.
Can you elaborate?
Basically, a strategy is like two sides of a coin. One is the business strategy and the other is the corporate strategy. And talking of business strategy, organizations need to balance their costs and keep it low as compared to their competitors. The ideal aim of a business strategy is to increase the gap between the cost and the willingness for your customers to pay. And companies can follow this by leveraging certain skills through different business models.
What is the difference between business strategy and corporate strategy?
For instance, the brand Toyota is not the world’s expensive brand, nor the cheapest and it’s not the best, and neither it is the worse. However, it is still the one brand that manages to gives you the right kind of price and yet maintains the cost. And they have been exploiting the economy by producing ten million cars every year. The cost of each car is still lower as compared to its competitors. This is what business strategy is all about. Being a business strategist, these are certain rules you’ll need to abide by to drive your business to success.
Whereas, corporate strategy is more about implementing steps and deciding how the organization or firm can compete in the business market.
Can the corporate strategy be counted as a milestone in helping your business strategy?
No. As mentioned, both have different facets of strategy. For instance, if a company faces problems in its business, it tends to get into other businesses. In this case, it has a business strategy problem which they are trying to solve by getting through the corporate strategy. However, almost 99 percent of this attempt fails.
In such situations, you need to first fix your business problems then start moving into another business.
How do companies compete?
Traditional structure companies tend to follow, they either compete on differentiation or cost. But Pierre does not believe this is true. He believes that all companies compete on differentiation and cost simultaneously.
For example, Rolls Royce went bankrupt because of the cost position. Despite charging a high price for their cars, it couldn’t survive.
While Tata Nano being the cheapest car company in the world was not a success either. The reason is the differentiation or the willingness to pay. They felt the price was too low to buy it.
People still preferred purchasing a motorcycle than what they perceive to say the cheapest or lower class of cars.
In short, every company needs to worry about the cost and the willingness to buy both at the same time. This is one major reason why certain companies outperform others.
However, at the corporate level: the reason may simply be because of the different combinations of markets and businesses that are performing much better than others.
If you’re looking to start a career in business strategy, you need to first get hold of the right skills. A business strategy certification can make your skills stand out amongst the crowd. However, you will need to dig deep and find the top business strategy certification program that fits your requirement.
It is tricky to nail down the perfect program but you can start by making a list of the skills you already know and the skills you need to acquire. Doing so will set you to the right career path and will make it easier for you to choose the right business strategy certification program.