How do you pick the right business strategy for your industry?

1 Factor 1: Industry structure

The first factor to consider is the structure of your industry, or how competitive and attractive it is. You can use tools like Porter's five forces model to analyze the level of rivalry, threat of new entrants, bargaining power of suppliers and buyers, and threat of substitutes in your industry. Depending on the results, you can choose a strategy that matches your position and resources in the industry. For example, if your industry is highly competitive and fragmented, you might opt for a cost leadership strategy, where you offer the lowest prices and operate efficiently. If your industry is more differentiated and niche, you might choose a differentiation strategy, where you offer unique value and quality to your customers.

3 Factor 3: Industry trends

The third factor to consider is the trends and changes that are affecting your industry, or how innovative and disruptive it is. You can use tools like PESTEL analysis or SWOT analysis to scan the external and internal factors that influence your industry, such as political, economic, social, technological, environmental, and legal factors, as well as your strengths, weaknesses, opportunities, and threats. Depending on the trends, you can choose a strategy that matches your vision and adaptability. For example, if your industry is facing technological disruption or environmental challenges, you might embrace a transformational or sustainability strategy, where you change your business model or practices to create new value or reduce negative impacts. If your industry is stable and predictable, you might stick to a conservative or maintenance strategy, where you preserve your market position and profitability.

5 Factor 5: Industry performance

The fifth factor to consider is the performance and results of your industry, or how profitable and successful it is. You can use tools like the balanced scorecard or the key performance indicators to measure and evaluate the financial and non-financial outcomes of your industry, such as revenue, profit, market share, customer satisfaction, employee engagement, social responsibility, and innovation. Depending on the performance, you can choose a strategy that matches your expectations and feedback. For example, if your industry is performing well and exceeding your targets, you might continue with a growth or expansion strategy, where you invest and scale up your business. If your industry is performing poorly and falling behind your targets, you might switch to a turnaround or recovery strategy, where you cut costs and improve efficiency.

6 Factor 6: Industry vision

The sixth factor to consider is the vision and direction of your industry, or how aspirational and inspiring it is. You can use tools like the vision statement or the mission statement to articulate and communicate the purpose and values of your industry, such as why it exists, what it does, how it does it, who it serves, and what it aims to achieve. Depending on the vision, you can choose a strategy that matches your passion and motivation. For example, if your industry has a clear and compelling vision that resonates with your customers and employees, you might implement a customer-centric or employee-centric strategy, where you focus on delivering value and satisfaction to your key stakeholders. If your industry has a vague or generic vision that lacks differentiation and appeal, you might develop a niche or distinctive strategy, where you create a unique and memorable position in the market.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?