Business Strategy Theories and Frameworks

Does a low-cost provider strategy make sense? Selling cheaper than competitors can be a good way to gain market share. But is it smart? You may gain market share but only at the expense of profitability.

Want to impress your friends at cocktail parties by talking about business strategies? Explain Michael Porter's strategy model and you'll be the star of the party. Even better, use the strategies to grow your business.

Cash cows, dogs, question marks, and stars? Oddly enough, these are a valuable classification system that can help you create winning business strategies for your products.

According to Wikipedia, Porter's 5 forces analysis is a framework for the industry analysis and business strategy development developed by Michael Porter of Harvard Business School in 1979 . It is helpful in particular to small businesses and startups, because it determines how competitive the market already is and how it would respond to a new brand or product entering it.

How do companies create and maintain a sustainable competitive advantage? Through a combination of unique resources and stakeholder relations, organizations strive to outperform their competitors.

All businesses have goals that involve creating a sustainable competitive advantage over their competitors. This requires companies to develop effective business strategies that exploit their operational advantages over competitors, while minimizing their disadvantages. An effective strategic development procedure that links internal organizational strengths and weaknesses, with external opportunities and threats, is SWOT (strengths, weaknesses, opportunities, and threats) analysis.

Past and current theories in the strategic management field are as varied as the industries they try to guide. These business climates may explain the lack of a universally accepted set of theories. Although numerous methods for companies to approach their strategic development exist, some are more widely used and accepted than others.

How does a firm decide to pursue one course of action over another? Along with SWOT analysis, TOWS analysis is a process that requires management to think critically of its operations. By identifying several action plans that could improve the company's position, TOWS analysis allows management to choose those strategies that most effectively capitalize on the available opportunities.

The Porter's Five Forces model is a business model that was developed to help entrepreneurs understand the different forces that have an influencing role in their respective industries. With this model the entrepreneurs can not only gauge the viability of their business ideas but they can also design strategies to help them compete effectively in their environments.

Feedback is an essential means for companies to evaluate the effectiveness of their strategic decisions. Through the use of budgets, ratio analysis, audits, and objectives, companies are able to measure the performance of management, departments, and/or individual business units.

Strategy in business can be understood to be split into three different levels - Corporate Unit level, Business Unit level and the Operational level, the main difference between them being due to their sphere of influence. A brief introduction to these levels is necessary for estimating the scope of strategy and the power it wields on various business and operational activities.

Many businesses are natural networks that benefit greatly from network effects. Even if your business is not a natural network, understanding network effects can help you analyze strategies for creating more durable competitive advantages.

Network effects have been a successfully utilized strategy for building durable competitive advantages, but are often the most difficult strategy to successfully implement. Understanding the critical components of building your network will help you achieve stronger network effects in the long run.

When starting a new business, there are two distinct ways to innovate that provide your company the ability to create a sustainable business. Understanding the difference between business and technological innovation and how those innovations are developed and sustained will provide you a clearer roadmap for your start-up.

According to the Churchill and Lewis growth model a business goes through six stages of growth/development. These six stages involve conception/existence, survival, profitability/stabilization, profitability/growth, take-off, and maturity.

The Greiner's growth model illustrates the well defined periods of crisis that small firms encounter as they progress from one phase of growth to the next.

The interplay between experience curves and business strategy was first investigated by Bruce Henderson of the Boston Consulting Group (BCG) in the 1960s. Half a century later, the experience curve remains an important element of business strategy planning.

In a period of inflation, what business strategies make sense? We take a look at how companies should modify their business strategies if they are operating in an inflationary economic environment.

Deflation can be debilitating to even the most robust economies. From a business strategy perspective, here are a few elements of business strategy definition that you'd do well to consider if deflation is on the horizon.

Vertical integration strategies involve owning upstream suppliers and downstream buyers. The popularity of this business strategy has ebbed and flowed over time. Here are a few pros and cons for vertical integration business strategies.

It's an odd concept but business strategy guru Henry Mintzberg has made a name for himself by distinguishing between a deliberate strategy, implemented by design, and an emergent strategy that develops over time, almost by accident.