This paper examines four foundational concepts in business strategy. It begins by explaining the purpose and value of a business plan, emphasizing the process of research and analysis behind it. The paper then explores how supply and demand dynamics affect organizational performance, including short-run market disruptions. Next, it addresses the role of ethics in long-term business success, arguing that a well-defined ethical code helps prevent organizational misconduct. Finally, the paper discusses sustainable competitive advantage, focusing on how marketing strategy, brand equity, and organizational structure — particularly value chain efficiency — allow firms to establish durable market positions.
A business plan is critical for any organization. At its core, the business plan outlines the opportunities in the marketplace that the company intends to seize and the resources that will be marshaled in order for this to happen. For new and young companies, the business plan is essential in helping to obtain financing, but even for established firms it can help management understand their business and its characteristics more precisely (Concord Business Development, 2001).
The business plan allows for the efficient and effective communication of the company's mission and how it intends to achieve that mission. It helps to align priorities and resources, including the onboarding of new employees (Ibid). Ultimately, the business plan is less a document than the process by which that document is created. The value of the business plan derives largely from the research and analysis that contributes to its creation.
The process involves the development of a framework by which the business objectives will be achieved. This includes budgets, timelines, and resource allocations. Because the business plan is often used to help obtain bank or venture capital financing, it should also help management frame the medium-to-long-range development of the business (Cox, 2007). It is not imperative that every detail of the plan be met — indeed, they probably will not be — but it is important that management demonstrate that they have considered all aspects of the business and developed a plan that works for the immediate future and that can guide the development of the company over time.
Supply and demand have a significant impact on organizational performance. A company needs to consider how much demand already exists in the marketplace for its product, and from there determine the impact that its operations will have on that demand. Is its product and/or marketing sufficiently differentiated to drive higher demand, or will the company simply take market share away from existing industry players?
Once demand is estimated, the firm must determine how it will supply that demand. Organizational performance is driven significantly by the means and costs of procurement, production, and logistics. In most industries, a firm faces positive elasticity of demand, meaning that as the price rises, potential demand falls. Therefore, in order to maximize organizational performance, the firm must find a way to provide enough supply to meet demand at a price point that will enable it to capture a share of the market while also turning a profit.
Supply and demand considerations can also have a significant short-run impact. While over the long run supply, demand, and price will trend toward equilibrium, this is not necessarily the case in the short run. As a consequence, a firm can adopt a strategy of disrupting the equilibrium in the market in order to build its market share. This could mean overproducing so as to flood the market with lower-priced goods. Conversely, it could mean reducing production to create scarcity, which for many products — such as fashion or automobiles — can drive demand higher. Short-term disruptions in the supply-demand equilibrium can help a firm improve its market position. It is therefore important for management to understand these dynamics in order to build the business and improve organizational performance in the long run, even if the organization's performance is weaker in the short run.
"Role of ethics in organizational outcomes"
"Brand equity and structure as competitive tools"
You’re 40% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.