Your knowledge of the strategy areas enables you to focus on essential issues that affect the success or failure of your company. It also prevents you from diverting your focus to other less important and influential topics.
Strategy areas are the aspects and topics that influence the presence and growth of your company in the market. Given the importance of these spaces, you must focus on them and build a particular strategy for each. The most important areas are the company’s environment, target customers, service/product, customer access channels, and market competition.
Strategy areas are significant for any business. So, This article provides a sufficient and straightforward explanation of this topic. Let’s start
💡 Helpful Statistics About Strategy: ● 67% of well-formulated strategies failed due to poor execution. (HBR) ● 48% of leaders spend less than a day on strategy each month. (HBS) ● 61% of executives feel they are not prepared for the strategic challenges. (HBR) ● 77% of successful companies translate their strategy into operational terms and evaluate it on a day-to- day basis. (Palladium) ● 98% of leaders think strategy implementation takes more time than strategy formulation. ● 42% of managers and 27% of employees get access to the strategic plan ● 95% of employees do not understand their organization's strategy ● 84% of all staff members are clear on their organization’s top priorities
Table of Contents
List of strategy areas
The term “Strategy areas” means that it is a vital aspect of what you should study to develop an effective strategic plan for this aspect.
This strategic plan will overcome the risks and exploit the opportunities.
The following is a list of the most critical areas that the strategy must study and prepare clear plans for:
- The external environment of the company
- The company’s internal environment
- Target customers
- What is your Service or product ( And how to produce it)
- Communication Channels
- Competing Products
- Alternative Products
Why are strategy areas important?
Every job has priorities, essential tasks, and other less important ones. The company should Prioritize the most important job, which has a direct and significant impact on the company’s success.
The strategy areas are the company’s essential aspects for which the company should develop appropriate strategies plans.
The benefits of strategy areas
- It helps you to know the important fields and topics that influence the success of the company.
- It enables you to focus on the important areas and give them priority in planning and implementation. So, not wasting effort and resources in the less important area.
- Help you analyze your company’s work and identify areas where there are deficiencies so you can address them.
These are the most important benefits of studying and knowing the strategy areas.
In the following paragraphs, this article will explain each area of the strategy, an adequate explanation.
1- The company’s external environment
Companies do not work in a vacuum but operate in a work environment that affects it.
The environment in which your company operates has a significant impact on the success and failure of your company. Therefore, you should pay attention to studying your company environment before starting work with it.
The company’s external environment refers to the vessel or surroundings in which the company operates. This environment consists of different factors, such as economic, political, social, and geographical factors. These factors surround the company and impose specific working conditions that the company cannot easily overcome. It also provides opportunities that can be exploited and benefit the company.
The external environment is one in which there are risks to be avoided and opportunities that can exploit. Given the importance of the company’s external environment, it is considered an important strategic area.
So, many companies change their work environment if there are difficult conditions for carrying out their activities. And that by migrating to more suitable environments in other countries and geographic areas.
Therefore, you can divide the environment into two main types: an investment-friendly environment and an investment-repelling environment. This division is according to the opportunities and facilities offered by these environments to investors and companies operating in them.
The most important factors that shape the company’s external environment
- Economic factor
- Political factor
- Social factor
- Geographical factor
- Technical factor
There are also many analyze models of knowledge that help you study the external environment of the company. The most important of them is the PEST model.
The economy is the backbone of any country. It determines the work and the possibility of growth of any commercial activity within it.
You can analyze the economy into several different elements. These elements in their entirety constitute the economic factor of the state.
These elements include demand and supply, tax laws, export, import laws, labor force, unemployment, interest rate, purchasing power, bank procedures, labor laws, etc.
Politicians are the ones who lead countries. They determine the way governments deal with investors and companies operating within them.
Therefore, political stability is one of the most important factors that attract investment, encouraging companies to work and grow.
For example, suppose the political relations with the countries that supply raw materials to your company are intertwined. In that case, they may directly impact the stability and sustainability of your business.
Likewise, dictatorial governments threaten the investments in them in many ways, the tendency of these governments to wage wars and take random decisions.
The population is the primary source from which your company obtains customers and workforce.
So the social factor focuses on studying the population and its different characteristics, such as the population geographical distribution, the distribution of ages in the country, gender, etc.
Also, by studying the social factor, it is possible to know the preferences and desires of the population.
Lies in the geographical location of the state many opportunities and threats.
Therefore, the geographical factor must be given sufficient attention and studied thoroughly.
Studying the country’s geographical location makes it possible to know how close your company is to the target markets or the raw materials your company needs. This information directly affects your investment decisions.
This factor also studies the fluctuations of weather and temperatures and their impact on economic activities within this environment.
2- The company’s internal environment
The internal environment of the company is an essential aspect of the strategy’s area. By studying it, you can know the company’s internal capabilities, strengths, and weaknesses.
The company’s internal environment refers to the capabilities and resources that the company possesses or can obtain. It includes material resources such as money, production equipment, and facilities. And intangible resources such as experience, knowledge, patents, and commercial relations with other companies.
The SWAT model is one of the most famous models specialized in studying the internal corporate environment.
The SWAT analysis module enables you to know your company’s strengths to rely on and understand the weaknesses in your company to strengthen them.
The information available from the study of the internal work environment of your company contributes significantly to building an effective strategy.
3- Target Customers
Customer service is the only way companies can make money, to continue to operate and grow. Without customers, there is no point in having any business at all.
Given the importance of customers, this area is considered one of the most critical strategy areas.
The following are the most important questions that you can ask to study and evaluate this strategy area:
- Who is the customer segment that the company is targeting?
- Are the company’s customers able to pay the costs of the product or service provided to them?
- What is the financial value that the company can gain from each customer’s lifetime?
- How can I get a new customer for my company?
- How to maintain the company’s existing customers?
- What are the ways to increase the benefit for the company’s existing customers?
- What are the costs of getting a new customer?
- Is the number of customers enough to generate income for your company’s work and growth?
By asking these questions and Similar to them, you can find out whether this segment of customers is suitable for your company’s work or not.
4- The Service/Product provided to the customer
This area of the strategy is no less important than the other spaces, given its importance in the success or failure of the company.
This area is usually called value proposition instead of the product or service. Because the customer does not look at the company’s product alone, it looks at the set of services provided with the product, such as maintenance services, or warranty, training, etc.
Therefore, the value term is more indicative of this area than the product or service.
The customer pays you for the value you give them. If you don’t give him a proper value, he won’t buy from you. Therefore, you should give this strategy area the effort it deserves.
The following paragraph presents you with some guiding questions that help you to study and analyze the value provided to your customer:
- What is the value provided to the customer? What is its specification?
- What is the problem or desire that this value solves or saturates?
- Is your product providing solutions to a sensitive and urgent problem or a secondary problem?
- Is this problem bothering the customer, and is he looking for a solution?
- What are the alternative solutions or products in the market?
- Do other solutions or products in the market provide a sufficient or appropriate solution to this problem your product works?
- Is the value proposition price appropriate for the customer’s purchasing power?
- Is the customer satisfied and happy to pay the value price to solve his problem?
- What are the materials needed to create this value? And how to get it?
- What activities are required to produce this value? And how to get it?
- What type of workforce is required to produce this value?
It often makes obtaining new information to re-study the other areas again.
You can refer to the article “How Startup Works and How to Run Startup?” to develop a successful strategy for these critical strategy areas.
5- Communication Channels
Despite the importance of these strategy areas, the company often neglects or does not sufficiently study this area.
Communication channels refer to how to reach the customers. To provide him with the service or product, enable him to pay the cost or present promotional offers. There are two main communication channels: online channels (via the Internet) and traditional channels. In most cases, the companies use a mixture of these two types of channels.
The type of communication channels the company uses affects the product’s cost and the service delivery speed to the customer. Therefore, you must choose the appropriate channels to communicate with the customer and deal with him.
The type of customer may dictate the type of channels that the company will use. For example, if the company’s target customers sit for a long time on televisions, it is appropriate to use television for advertising campaigns more intensively than other means.
But suppose the customers are young people and use social media pages a lot. In that case, it is more appropriate to focus on social media channels for advertising campaigns rather than other means.
Also, the type of product may dictate a specific type of communication channel. For example, if the product is software, you can use the Internet to deliver it to the customer. In physical products, the company cannot use this channel (the Internet) in this task.
Communication channels with the customer are essential areas for your company. And the poor choice of these means increases the costs of services, reduces the quality of service, and may lead to the company failure.
6- Competitive Products
Competing products are considered one of the most critical challenges facing companies in the market. If the company does not beat the competitors and has a specific competitive advantage, it cannot survive long.
Therefore, this area is considered one of the most important areas where you should focus.
The strategy in this area must answer several questions; an example of these are the following:
- What distinguishes your product from other products in the market?
- What drives customers to buy your product instead of competing products in the market?
- What is the degree of importance of the competitive advantage that your product has for the customer?
- Can your competitive advantage be protected from imitators and competitors in the market?
These are some of the questions that your company must answer in this critical area. To be able to develop an effective strategy.
7- Alternative Products
Substitute products differ significantly from competing products. Competing products are the same as your product produced by competing companies. Alternative products are products of another kind that can solve the same problem or satisfy the same desire that your product satisfies or solves.
Alternative products are other products that the customer can use instead of your product to solve his problem or satisfy his desire.
For example, gas is one of the alternatives to gasoline, which the customer can use to operate cars.
Suppose there are many alternative products to your product in the market; customers can move to them at no cost. This case poses a significant risk to the stability of your company, and you must develop an effective strategy to overcome this challenge.
Knowing the strategy areas is one of the most important tools that help you succeed in the market and overcome various challenges.
Strategy areas are the aspects and topics that influence the presence and growth of your company in the market. Given the importance of these spaces, we must focus on them and build a particular strategy for each. The most important areas are the company’s environment, target customers, service/product, customer access channels, and market competition.
Benefits of studying and knowing the strategy areas:
- Determine priority topics and areas that you should give them more important than others.
- Focusing on the critical topics and not wasting efforts on side topics that have a limited impact on your company’s success.
- Strategy areas provide you with a summary of past experiences and efforts in business so that you can benefit from them quickly.
- Your omission to study the strategy area will undoubtedly lead to wasting efforts and money and ultimately the failure of any business.
The most important strategic workspaces
- Company’s external environment
- The company’s internal environment
- Target customers
- What is the Service/product you provide to your customers (how to produce it)
- Customers channels
- Competitive Products
- Alternative Products
These are the most important strategic areas that you can focus on to ensure your company’s success in the market.