Best Business Strategies Make Strong Business Fundamentals

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Jan 16, 2015

There are some companies that are highly successful, when it comes to performance, earnings, financial health, investor confidence, growth, innovation and all related fields. Why are they the best in their respective industries? What are they doing differently from their counterparts? What makes them the leader of the group? The simple answer to these questions is “smart business strategies.” These strategies might sound simple and fundamental for any business, but the truth is that, only few follow them on a daily basis. Once companies get these fundamentals right, they will be on the right track of growth and progress. Here are some of the strategies that made companies like Google (GOOG, Financial), Microsoft (MSFT, Financial), Apple (AAPL, Financial), Facebook (FB, Financial), etc., giants in the stock market today.

Growth opportunities

Most of the companies that figure in the “best companies in the world” list provide ample growth opportunities for their employees in the form of online training modules, on the job training, certification courses and the like. Internal job postings, foreign opportunities, transition programs, job rotation notification and mentorship programs help the employees to develop their skill sets to a great extent. They are also trained on the basics of corporate etiquette which helps them a ton in personality development.

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At big companies like Mercedes Benz, employees are introduced to job rotation programs, wherein, they can analyse the current job openings in the company, which they can apply for, after developing their skills. The immediate line managers spend ample time with the employees to understand their subordinates’ field of interest and place them in the right jobs. This is applicable for fresh and experienced employees. Due to this system, employees get the confidence that their skills are being used in the right way and hence they stay loyal to their employers.

Succession planning

Highly successful companies have a well-structured succession plan always handy with them. This is the right way to ensure that a company is well equipped to meet emergencies. Positions across various designation levels may fall vacant any time due to sudden death, resignation, retirement or long sick leaves of employees. The best companies in the market today evaluate all their employees, understand their strengths and weaknesses and use them at the right time for the right role. Once an employee is identified for a particular role, he is given ample trainings and on the job sessions so that he can familiarize himself with the new profile and gear up for the challenges ahead.

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For example, in the case of Apple, the current CEO, Tim Cook was made to present critical Wall Street analyses and handled other important conferences even when Steve Jobs was alive. This showed that Apple had its succession plan well sorted out. In the unfortunate event of Steve Jobs’ death, although the company lost a charismatic leader, it didn’t panic. Cook took charge and is at the helm of affairs now. He has come out of his shell he once used to be in and has become more assertive in arriving at excellent business strategies. In the absence of a succession plan, companies are in a mess when a role (especially top management role) becomes vacant. In a hurry to sort things out, they get external candidates to fill the job and this automatically is a huge dent to the morale of the internal employees.

Strict adherence to values

Any company, big or small, tastes success only when it believes in adhering to its values in every single activity it does. A good example for this is the oil and petroleum company, Royal Dutch Shell (RDS.A, Financial). Irrespective of the country of operation and irrespective of the designation of employees, Shell strictly follows its basic principles like honesty, integrity and respect for people. When employees join the company, they are made aware of these principles right during the induction session, so that new joiners know what is expected out of them and perform their daily tasks within the boundaries of the company’s culture and ethical values.

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Participative decision making and brainstorming sessions

Companies that are highly successful today follow the participative decision making style and not the authoritative decision making style. Junior employees are empowered to make their own decisions which give them the confidence to give their best at work. At Apple, junior engineers are given full freedom to implement their ideas and fix bugs wherever necessary, all by themselves. Similarly, leading consulting firm Boston Consulting Group treats its junior employees with the same respect as it treats its senior employees.

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Most of the times, the firm arranges for lunch or dinner sessions among the junior and senior colleagues, so that new ideas can be conceived and brainstormed during these informal get-together sessions. This is a win-win situation for the firm and its employees; juniors get to learn a lot from the experience of their seniors and the company in turn, gets the dual benefits of freshness and experience together.

Conclusion

The above strategies are taught as mandatory lessons during any management course. These are the basic steps that companies should follow if they want to attain success, irrespective of their scale of operation. Most of the much-admired companies of 2014 are the ones who have imbibed all these strategies in their day-to-day business operations. It is easy to decide on companies to invest on based on numbers for a short to medium term, but if we want to really look into long-term investment proposition then we have to take a call on the fundamental strength of the company and effective business strategy is one of the major yardstick in deciding the fundamental strength of a company.