A Business Strategy Model in simple terms is a graphical representation of the elements, processes, plans, tactics and all the features that make up the direction that a company follows in executing its activities. It comprises features that are identified after the assessment of several factors. These features are also some of the elements that would normally be found in a Business Plan of a start-up company. However, the factors are designed to be useful to both old and new companies. These factors include external environmental characteristics such as the consumer and competitive markets, the economic and political climate and the socio-cultural economy among several others.
Additional features shown in the business strategy model could be related to the microenvironment of the business. The microenvironment normally addresses issues that affect investors and shareholders, customers and employees as well as alliances, associations, suppliers and distributors. This level also comprises a competitor analysis and an evaluation of the overall sector trends.
An additional analysis required in developing business models is related to the internal environment. At this level, a company evaluates its in-house competences and capabilities. This evaluation also involves the assessment of the company's human resource capabilities, its internal business processes, its financial shape and its overall strengths and weaknesses. These factors determine the potential execution viability of the chosen strategies.
Other aspects that are considered in developing business strategy models are the tools and techniques used in the implementation and control of the strategies; and the indicators that will be used to measure the company's performance, post-implementation.
The analysis stage of the business strategy model development forms the first part of the exercise. This is followed by the identification of the strategic issues and challenges bordering on the operations of the business. These issues include problems that the company and/or sector currently face or are likely to face in the future. They could also include sector-wide influences or issues related specifically to the company in question.
Since every company is unique and every sector is different, it is not possible to find two identical business models. The levels of business environments analysed in business strategy modelling are shown in Figure 9.1.
Business models act as guides in the planning and development stages of
External environment Microenvironment Internal environment
Figure 9.1 The environmental analysis levels of business modelling any business venture, irrespective of sector. They are also useful for companies that intend to expand, restructure or re-align their business approaches to suit changing market needs. A business strategy model can be compared to a road map. When a driver embarks on a new journey, he needs a map to guide him. In some cases, the driver might have travelled down that road in the past but there might also have been several changes and even new routes since his previous trip. This calls for the road map. Without a map, the driver would be likely to get lost or arrive at his destination later than he would have done with the assistance of a map. This scenario is applicable to every business including luxury fashion brands. Without the map, which in this case is the business strategy model, luxury brands would find it tough to advance in the marketplace.
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