Business Unit Strategy
A business strategy is related to a Strategic Business Unit (SBU). An SBU can be a subsidiary or department within a big corporation, a country branch in geographically expanded companies and more generally any distinct domain of activity in a company.
Defining a strategy by business unit offers the opportunity for the adoption of several strategies at the same time which fosters flexibility, retaliation to competition and resilience in case of downturns.
It becomes therefore clear that a business that smartly sets the boundaries between its SBUs and defines the appropriate strategy for each will have found its way on the path of success.
IT is not an easy task though. In fact, very often there is no clear-cut separation of activities, especially in small companies; the same resources are used to serve the same customers and this entails a considerable risk of dependence between the activities therefore vulnerability.
Another important challenge is to decide whether to go for a strategy that builds on the uniqueness of your offer or a strategy of cost reduction and to do this a very good knowledge of the customer and the competition is needed: who is exactly your customer? What do they value? Who is your competition? What are their prices and cost structure?...
Third, uncertainty has never been greater and the bases of success change at a pace that hardly can be followed by companies. That is why today’s companies need to learn how to influence the rules of the competitive game instead of simply being reactive.
- Gain a full understanding of the peculiarities of your product, its related cost structure, and possible market prices
- Learn to define the right production volumes that make you benefit from economies of scale without incurring extra maintenance and overtime costs
- Design a product with unique and superior features that customers will be delighted to buy.
- Pinpoint the underserved customer segments and craft an offer adapted to their needs
- Counteract the new incumbent’s actions and strengthen your competitive advantage
- Differentiation mapping: This tool consists of identifying two attributes that differentiation can be built around (e.g. product features, level of service…). Then, a list of the relevant competitors is established and a matrix plotting the two attributes is used to position the company and its competitors.
- Price quality interactive strategy: The couple price-quality is what defines your product on the market. Learn how to set the combination that enables you to face the competition and win the customer!
- Interactive strategy tree: Building scenarios on how to retaliate to competitor’s customers is paramount. The interactive strategy tree is a step-by-step analysis that identifies all the options available to you and presents in a clear visual chart what needs to be done.
- Value chain reconfiguration: Value can be embedded in every single activity your organization performs. Likewise, among your everyday tasks, there may be several which draws from your resources without adding value. Value chain reconfiguration consists in analyzing the processes of the companies to find out how much each one consumes and what value it creates. The next step is the redefinition of the activities to be performed/outsourced/given up maximizing the profitability of the business.