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Ultimately, you have to settle for one of threebusiness strategyoptions. And it is important that you are clear on what one you aregoing for.Your business strategy choices are, at the endof the day, verysimple. The big question is, how do you want to position yourselfin relation to your competition. Basically your options are :
1. To be the cheapest 2. To be the best 3. To dominate a market nicheMany small businesses go for the first option,in the mistakenbelief that it is only way to survive. The problem is, there willalways be someone who can do what you do, more cheaply than you can.A cost leadership strategy is onlyreally suitable for bigbusinesses. Businesses that have substantial economies of scale.They are able to spread their overheads thinly over large volumes,and charge low unit prices. So if you are running a small business,this strategy probably won't work for you.If, as a small business, you build yourbusiness reputation onbeing the cheapest, you are operating from a position of weakness.Even if you can survive with your low prices, you will not be ableto withstand a price war with a bigger competitor. So why take therisk?The second strategy, being the best, canbe used to build apowerful competitive advantage. It means, however, that you have tohave a unique product. Otherwise, you will have to spend a lot ofmoney on R&D to stay ahead of the competition.You need deep pockets to win with thisstrategy. Unless, of course,your product is so specialised that no one else is producing it.And big companies, for whatever reasons, don't want to produce iteither. That would give you dominance over a niche of your own.Generally speaking, a product leadershipstrategy is only forthe big boys. Like, Nokia, Sony and Mercedes Benz. While being thebest in a category, and staying that way, can be a powerfulstrategy for highly specialised small businesses, it is just notsustainable for most. Which brings us to our third option.Dominating a market niche in yourindustry. It is the most suitablebusiness strategy for most small businesses. By adding value in away that attracts a particular kind of customer, you can steadilybuild your business success. You are able to charge a premium. Andyou don't have to be the "best".The trick, of course is to clearly identifyyour niche market, andconvince your target market that you provide the best solution totheir problem. For nearly all businesses, finding a niche anddominating it provides a solid foundation for building a business on.It is very important that you are absolutelyclear on what genericstrategy you are relying on. Your business strategy, by definition,is supported by a number of strategic tactics. Whether you areaware of using them or not.If you aren't clear about your overallstrategic direction, you mayend up using conflicting strategies. For example, focusingcustomers on your low prices at the same time as you introduce bestof class products. Doing this means that your profitability suffersand you fail to attract the customers you want : not good!Deciding on the generic strategy that willcreate the businesssuccess you are looking for, clarifies your thinking. And it helpsyou see clearly what tactics you need to use. Article Tags: Business Strategy, Small Businesses