An organization’s assets include both physical and financial capital. The stakeholders include shareholders, lenders, employees, suppliers, customers, and communities under the influence of the organization’s activities. Moreover, businesses depend on human and natural resources for their sustenance.
At this juncture, a business strategist must develop a sustainable business strategy while integrating economic, environmental, and social objectives as the company’s goals, activities, and planning. Further, the main aim is to create long-term value for the company, its stakeholders, and society.
Baumgartner and Ebner say that sustainability business strategy comprises three dimensions like economic dimension, ecological dimension, and social dimension.
Economic dimension: It includes all the critical business activities like innovation, knowledge management, and collaboration to develop valuable products and services. This helps the businesses to finance themselves and prevent bankruptcy.
Ecological dimension: It includes concerned activities that prevent a negative impact on the environment. It includes recycling, biodiversity, and, waste management. The integration of sustainable strategies ensures sustainable economic growth while preventing exploitation.
Social dimension: It includes corporate governance, employee health, and safety through stringent and ethical internal policies and practices. Also, it includes ethical external policies focusing on the business relationship with the stakeholders and community.
To gain a competitive advantage, businesses should strategize differentiation and innovation to its customers and stakeholders. Let us see how.
Differentiation as a business strategy
Differentiation means to stay different from every other company. It could be the development of new products, branding, and customer service. Then only, differentiation can lead to profitability and may gain a high market share.
Let us deep delve into each of them here.
Development of new products
Innovative or new products are the best and practical way for the differentiation strategy. Because you become the market leader as the product will be the first entrant in the market. However, innovations require regular research and development costs that the company has to invest in. Yet, it is a proven strategy.
The promotion of your product and marketing communication efforts enables you to target the right segment of the customers. The main factors include promoting strategies, packaging, pricing, designing, and differentiating product quality.
Pre and post-sale services lead to word of mouth marketing. The services should be beyond customer expectations and address the pain points to gain traction in the market. Variety of products and user convenience while buying the products wins the show.
Moving forward, let us touch upon the other important strategy i.e., innovation.
Innovation as a business strategy
An innovative strategy guides the business decisions on how to use the resources, deliver value, and gain competitive advantage. The type of innovation and budget vary on the intention. Multiple intentions need multiple strategies. It could be the development of a new product, protection of market share, expansion of the market, sell or license the innovation, improvement of operational efficiency, or increase your market profile.
The innovation may be proactive, reactive, active or passive as the business demands. If your company has a research orientation, you can take the first-mover advantage and become the market leader. Your company is focused on operations, wait-and-see approach and look for low-risk opportunities, then you may go for a reactive approach by depending on tested and proven methodologies. Likewise, you can actively participate by adopting new technologies as soon as possible to defend the existing market, or respond to changes passively once you get demand from the customers.
Any business must adopt a solid business strategy to meet the demands of the enterprise, human resources, and its stakeholders (as mentioned above) while protecting the natural resources for the future. Traditionally businesses seek precision and practicality for its planning efforts, but sustainable development is fluid that changes over time, increased data, and evolving practices.
Accordingly, it is crucial to pen down and implement the right strategy with the right approach at the right time to reign the business.