Business Terms

In the e-commerce business environment, the elaboration of effective strategic management is vital for the overall success of business development and organizational performance. Many businesses fail to thrive just because they are not able to develop an effective business strategy. The review, therefore, focuses on how to develop an effective business strategy.

The first step is reviewing the mission and vision statement. The mission statement in the organization states the reasons why the business exists, along with how it satisfies the customers. The vision statement, on the other hand, defines future ambitions, it ranks the position where the company needs to be in the future. The two statements are, therefore, essential because they position the business strategy in a proper context.

The next step in creating an effective business strategy is measuring the current state operations. To ensure that the business is on the right track, ones needs to know what the current activities looks like. Is the industry meeting its objectives per the organizational values? Are the espoused values contributing to the development of reasonable standards of the organization now and in the future? These are some of the things to measure in the organization’s performance.

The other step is performing a SWOT analysis; In this case, the organization crafts the business strategy in such a way that they leave the strengths and address the weaknesses. Through doing this, the business gains a competitive advantage in the market. The SWOT analysis describes the strengths, weaknesses, opportunities and threats in an organization. When developing the SWOT analysis, it is critical to understand whether the organization matches the internal forces to external opportunities (Gao, 2011). Organizations should always carry out an internal analysis aimed at converting internal weaknesses intro strengths and external threats to opportunities. The internal environment of the business contains those components which affect its marketing operations such as staff, funds, machinery and materials. On the other hand, the external business environment consists of those factors and forces that the marketer has very little or no control. These include; economic environment; this constitutes of those factors influencing customers’ spending patterns and purchasing power. These factors include subsidies, income distribution, interest rates among many more. Technological environment; this consist of the innovation, research and development, and other technical barriers to appropriate business operations. Political environment; this includes the government policies prevailing within the business environment. The factors also involve the agencies and pressure groups in society. Social-cultural environment; this dwells on the emerging trends in the markets such as fashion, lifestyle among many more, and how they affect the market size. Legal industry environment; this consist of various laws that are put in place for the operations of the business, they may include environmental law, antitrust law and consumer protection laws among many more.

The other step in the business strategy is understanding competitive forces to maximize profitability. In this case, porters five forces are used to examine the strategy potential profitability and competitiveness of the business environment. The five effects that makes up a competitive advantage include; threat of new entry, in this case, the organization should take a foothold in the market to ensure that its position is not affected by other people ability to enter the market (E. Dobbs, 2014). Power of Suppliers; here, the organization determine the uniqueness of the product being produced by the suppliers, and the prices of the products are also evaluated. Power of buyers; the organization examines the number of buyers and the orders they place. Are these buyers strong enough to dictate terms? Threat of substitution; this is the likelihood of your customers finding another way of getting what you provide. It is essential to outsource so that to prevent this substitution. And lastly, competitive rivalry; here a proper analysis of competitor is done. How many competitors do the organization have? What do they provide? Checking about the competitors is vital in retaining the consumers.

The last step in strategic management is performance management; this is ensuring a continuous review of the actions plans and objectives to keep the organization on track to achieve desired goals. Creating, managing and reviewing the strategy requires capturing of the vital information and having clear strategic vision.




Gao, C. Y., & Peng, D. H. (2011). Consolidating SWOT analysis with nonhomogeneous uncertain preference information. Knowledge-Based Systems24(6), 796-808.

  1. Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review24(1), 32-45.