The business perspective of a strategy looks at what value needs to be added to the business. It should encompass marketing and sales objectives, and other operations that improve business value. It should not have much detail, because a business strategy should be a guide to decision-making at lower levels. This means that it does not need to explain exactly what has to be done. When considering the business perspective of a strategy, the business should consider competitive advantage, core competencies, and resources. Based on the market, businesses may have more areas to be considered.
The competitive advantage is comprised of how the business is different from its competitors and how much market share the business has. Differentiation is important because it helps customers to make a choice between two different options, reducing random decision-making. Differentiation can involve product changes, quality changes, and price changes. It is also important in branding a product, because it ensures the customer knows what the product is and what it does. The company may want to differentiate their product more as part of a marketing strategy, giving their product a position in the customer's mind. Positioning the product correctly can create sales and increase value. Strategies should consider differentiation because becoming more different from competitors, or changing the product, may change the target audience.
The amount of market share that the business has demonstrates how well the business is doing in that particular market. If the business is gaining market share, it is growing in the market; if it is losing market share, it is shrinking. Market share also considers the size of the market. If the market is growing, the business should consider putting more resources into the product to gain the majority of the market share. If the market is shrinking, the business may want to withdraw resources, because the market may cease to exist. Strategies should consider the market share because it will affect the current and future value of operations in that market.
The business's core competencies are the things that it excells at. These should be things that differentiate them from its competitors. The business should consider how much value the competency adds, how many businesses have it, how easy it would be for a competitor to imitate, and how it helps the organization. The business should consider its core competencies because they frequently improve the business. Strategies should be built around using and improving the business's core competencies, because the business is already good at these things.
The resources that the business has available are an important consideration for the business perspective. The business should keep in mind that it may not be able to fund all products to the desired level. The business should determine which products will create most business value, and what the consequences would be if the product's resources were reduced. Then they can give the most valuable products the most resources, making them more likely to succeed. Strategies should consider available resources so that the business does not try to do too many things at once.
The business perspective of a strategy should examine how the business will gain value. The business should consider the above options when deciding on a strategy, as well as any business-specific options. Once the business has decided where it will add value, it should record the changes, why they were decided on, and the expected benefits. Lower-level managers will be able to refer to the strategy when making their decisions, allowing the strategy to be put into action.