Business Strategy

The most important decision facing the management of a firm is the business strategy of their firm. Not only they have to be original but they have to be creative and be innovativing their strategy to gain market share over time because that is the point of being is business. There are number of ways the firm can gain market share; lowest price, first player in the market, technology, uniqueness of the product or service. etc.

It is important for a firm to be different from its competitors. What Apple computers did earlier part of this decade transformed to digital music players industry. Although they were not the very first player into the digital music market, in the fall of 2001, they created a unique product and defined the market. If you have been living under a rock for a couple of years, this product is Ipod which is a digital music player that plays your downloaded digital files from computer. Now you might think why would a computer maker get into a different market in which they have no experience? The answer is simple to diversify their products and to take advantage of the new opportunities in the market place. Apple knew that this industry may be profitable and created a business strategy to create a product and a complementary service iTunes.com which allows one to buy all types of media to put into Ipod. In this way they are helping out the struggling music companies by selling their music and at the other end selling Ipod to enjoy that music to go. Now there were many other digital music players makers in the industry before Ipod was introduced, then how did Apple attract market share? through innovation of deigning. Music player were ugly back then with less functions while Ipod looked sleek (sexy) with multi function and could store hundreds of songs. The design attracted the buyers and the iTune service made them royal customers. Ipod's design have succeeded so much that it is regarded as a fashion statement more than a digital music player.

Cost is essential to most people. In other words, If you could buy the same product from a different retailor at a lower price, why won't you. In the world that I live in under normal circumstances, a person will always do to the cheaper retailer. This business strategy is executed perfectly by Walmart. Lets not confuse walmart as being the lowest price retailer but how they are focused on the costs of running the business through their regional warehouse channels that enables them to maintain the best prices. Since walmart buys items in largest quantity, they have regional warehouses where it stores and ships the inventory to its retail locations. Some of these warehouses are more than 50 foot ball fields. Because of this strategy walmart is major customer to individual companies and to thousands of their customers around the world. Another firm I could think of that used similar cost strategy by using just in time inventory was Dell. Their business strategy of selling directly to customers lead them to be dominant player in their industry while at the same time offering the most competitive prices in the industry. By using just in time inventory and directly selling to buyers of their products, they didn't have to worry about volatile computer component price, since they didn't have lots of inventory costs that lead them to offer the best prices. The company is struggling because they did not innovate through time and lost market share to rivals. However, since the founder Michael Dell took over the CEO position, they have been innovating their business model and now started to sell their products in retail stores.

As I have pointed out business strategy is essential in the success of a company. In addition, it had to been creative and innovative for one firm for it to maintain competitiveness and market share. Some companies have diversified their businesses at the same time innovated different business strategies and enjoined great profits while other like Dell have a great business plan but they have recently struggled because they did not innovate.