In the article Strategy: An Executive’s Definition, the authors seek to define a business strategy. The authors are quick to point out that strategy differs from mission, vision, priorities, goals and plans. According to Favaro et al (18), a business strategy is “the product of choices that executives formulate on where to play, how to win and maximizing long-term value”. This article therefore examines these three critical aspects of business strategy. The first aspect discussed is “where to play”. This aspect defines the target market on the needs to be met and the customers. The several characteristics of a target market are: the location of the target customers; their buying or spending patterns; their demographics; the time they buy or spend and; their preferences. The authors observe that a differentiated approach is advantageous when defining a target market. Two examples are given; Southwest Airlines Company and Lloyds TSB. A significant point that emerges from these two cases is that defining a target market is extremely important, such that an executive needs to be sharper than the competition when choosing a target market.
According to the authors, “how to win” outlines value proposition that distinguishes a company in the eyes of the target or potential customers. This has to be accompanied by the capabilities that give a business an edge in the delivery of the value proposition. It is with good choices that a business can create a niche in its target market. Also, good strategies require the right amount of capabilities stretch, in that there should be neither a too little nor a too much change from the capabilities that a business already has. The third aspect of business strategy is maximizing long-term value. What this means is that executives need to choose options that provide the greatest sustained increase in the business’s economic value. However, when it comes to the maximization of long-term value, there is no limit because executives should constantly seek higher-value options. Maximizing long-term value differs from short-term goals such as improving the share price, but it should take into account profitability and growth, risk and reward, and the long-term andshort-term. Therefore, Favaro et al (19) identify three aspects that define the fundamentals of any business strategy as the target customer or market, value proposition to that customer or market and the essential capabilities necessary for the delivery of that particular value proposition.
I agree with the opinions presented in this article because they are very specific in defining business strategy. For example, the authors clarify that strategy differs from aspects such as mission, vision and goals. The authors’ approach to the definition is rather detailed because they use the aspects provided in the definition to outline the key issues that define a business strategy. This is compounded by the use of two examples or cases; the Southwest Airlines Company and Lloyds TSB. However, the authors could have provided examples for the other two aspects of the definition. Something that is worth noting is the manner in which the authors describe how choices affect business strategy. Favaro et al (19) observe that “there exist at least one way to win in any market, but not every business is capable of winning in any given market”. This choice of words basically means that good choices are critical for business strategy. Overall, the article provides important aspects on the fundamentals of business strategy.
Works Cited
Hirsch, Evan, Rangan, Kasturi, and Favaro Ken. Strategy: An Executive’s Definition. Strategy + Business, Summer 2012, Issue 67, pp. 17-20.
