Analysis on the business strategy of small and medium-sized enterprises Abstract: Small and medium-sized enterprises have become an important carrier for the simultaneous development of various ownership economies in China, and business strategy is the most effective method and foundation to realize the vision and goals of small and medium-sized enterprises. Based on the analysis of the current business strategy of small and medium-sized enterprises, combined with the characteristics and reality of small and medium-sized enterprises in China, this paper introduces and analyzes three business strategies that can be adopted by small and medium-sized enterprises, such as virtual operation, strategic alliance and transnational operation, in an attempt to provide thinking and reference for the development of small and medium-sized enterprises in China through the analysis and discussion on the formulation and implementation of business strategies. Keywords: small and medium-sized enterprises; Business strategy; Virtual management; Strategic alliance; Transnational Operation I. Role of Small and Medium-sized Enterprises in National Economy and Economic Analysis I. Role of Small and Medium-sized Enterprises in National Economy In China, supporting and developing small and medium-sized enterprises is a long-term and stable basic policy. As a part of the market economy in the primary stage of socialism, small and medium-sized enterprises are an important part of the national economy, a powerful and flexible supplement to the market under China's public ownership economic system, and play an indispensable role in promoting market competition, diversification of enterprises and commodities. If large enterprises are "bricks and stones" representing a country's economic strength, then the development of small and medium-sized enterprises is "cement mortar" representing the vitality of a country's system. The competitiveness of a country is not only reflected in large enterprises, but also in small and medium-sized enterprises. The two functions complement each other and are indispensable. The development of small and medium-sized enterprises supporting large enterprises is an important guarantee to enhance the strength and competitiveness of large enterprises, and the development of large enterprises cannot be separated from the help of small and medium-sized enterprises. Large and medium-sized backbone enterprises reflect the national strength, while thousands of small and medium-sized enterprises inject vitality into the economy. The CPC Central Committee and the State Council put forward the policy of "grasping the big and releasing the small", and both of them are indispensable. (2) Economic analysis of the importance of small and medium-sized enterprises in economic development Under the market economy system, why do small and medium-sized enterprises play such an important role in economic development? Basic economic analysis tells us that enterprises have boundaries, not the bigger the better; Comparative advantage and the principle of social division of labor based on comparative advantage. It is driven by the economic laws revealed by these basic economic principles that enterprises must be a group of large, medium and small enterprises with reasonable distribution and maintain their own economic and ecological balance. Therefore, the existence of small and medium-sized enterprises plays an irreplaceable role in maintaining economic and ecological balance. Ii. the importance and present situation of business strategy in the development of small and medium-sized enterprises (I) the importance of making business strategy for small and medium-sized enterprises As the market changes from seller's market to buyer's market, with the advent of the information age and knowledge economy era, small and medium-sized enterprises in China are facing different business environments. Especially with the opening of China's entry into WTO, China's small and medium-sized enterprises will face the strong impact of imported goods, and the market situation will be more severe. In order to gain a firm foothold in the fierce market competition, small and medium-sized enterprises must formulate and implement short-,medium-and long-term business strategies that are suitable for their own conditions, respect the laws of market economy and take into account all social factors in each period, so as to form their unique competitiveness. Business strategy analyzes the internal and external environment and capabilities of the enterprise, and establishes an ideal business plan, because business strategy is the most effective method and foundation to realize the prospects and goals of the enterprise. Only a business strategy with a long-term development vision can correctly guide enterprises to use limited funds, manpower and material resources in the market competition, adapt to the needs of the market at any time, and not be eliminated by the market. (II) Status quo of business strategy of small and medium-sized enterprises At present, the status quo of business strategy positioning of small and medium-sized enterprises in China is worrying. First of all, in a strict sense, most small and medium-sized enterprises in China still have no real business strategy. The present situation of the establishment and operation of these small and medium-sized enterprises stems from the timely utilization of local resources and short-term market demand. Some of their plans are not from an objective point of view or from the development trend, so they are quite limited, short-term and blind. Secondly, even though some enterprises have started or begun to study the strategic positioning of business, they have not completely broken away from the pattern of the government-led system in the planned economy period in terms of guiding ideology, specific content and implementation, and are deeply branded with the planned economy. The business strategy based on this position can't adapt to the fierce and even cruel market competition at all, and some will inevitably become deformed children of the bubble economy. In addition, China's market economy system has just developed and improved, and its supporting laws and policies need to be further improved. In this specific social, political and economic environment, our small and medium-sized enterprises do their best to solve the problems of enterprise survival and staff feeding, so they have no time to take into account the systematic research and implementation of enterprise management strategy. Third, the business strategy that small and medium-sized enterprises can adopt in their development. The strategic management of large enterprises is usually a clear and formal process. Enterprise managers organize enterprise operations through the strategic management process and make positive responses to complex and dynamic environments. Due to the different scale of enterprises, the strategic management techniques used by many large enterprises are not necessarily suitable for small and medium-sized enterprises. The strategy of small and medium-sized enterprises is rarely formal, and sometimes it may even be hidden and unclear. Therefore, small and medium-sized enterprises should first strive to make the best choice in direction and type when formulating business strategies. When choosing a strategy, we should generally follow the following principles: the principle that the future product management direction of an enterprise is consistent with the survival and development strategy; The principle of consistency between enterprise's specific environment and business strategy; The principle of consistency between enterprise's potential core competence and business strategy; The principle of multi-type optimal selection. On the basis of this principle, according to the present situation and characteristics of small and medium-sized enterprises in China, the following business strategies can be considered in the development of small and medium-sized enterprises: (1) Virtual management Virtual management is essentially a resource allocation model that borrows and integrates external resources to improve the competitiveness of enterprises. In this mode, enterprises can obtain functions such as production, design, marketing, etc., but they don't necessarily have entity organizations corresponding to the above functions. Virtual management pays attention to the utilization of resources, not the control of resources. It pursues the goal of weakening the organizational structure of entities as much as possible, maximizing the use of external resources, and achieving the goal of "leveraging the momentum" in all directions. One of its remarkable features is that related enterprises still maintain the status of independent legal persons. Therefore, virtual management has a leverage effect on the development of small and medium-sized enterprises, and as a result, the organizational structure and operation mode of modern enterprises have undergone fundamental changes, and their inward-deployed core businesses are closely linked with outward-deployed businesses, forming a relationship network, that is, virtual economic organizations. The operation and management of enterprises will also change from "control-oriented" to "utilization-oriented". Virtual management is undoubtedly of far-reaching significance to small and medium-sized enterprises in China. Because for small and medium-sized enterprises, specialized division of labor is the main link of virtual operation organization of small and medium-sized enterprises, and it is also the realistic basis for implementing virtual operation; The development of information technology makes it possible for small and medium-sized enterprises to successfully implement virtual business strategy, and information technology has cast a brand-new platform for small and medium-sized enterprises to interface with virtual business strategy; Institutional innovation is actually the embryonic form of virtual management, a technologically advanced organizational form created by small and medium-sized enterprises, and a typical virtual management mode; Compared with the complex hierarchical structure and inefficient investment of large enterprises, the advantages of technological innovation are more effective in driving mechanism, more urgent in innovation requirements and lower in innovation cost. Therefore, with these advantages, small and medium-sized enterprises can make full use of these favorable conditions of virtual operation and actively carry out virtual operation. (II) Strategic Alliance The so-called strategic alliance refers to a loose network organization formed by two or more enterprises to seize and take advantage of rapidly changing market opportunities for a certain purpose or to achieve strategic goals, with complementary advantages, risk bearing and two-way or multi-directional flow of elements. Strategic alliance is spontaneous, and all parties in the alliance maintain the operational independence of the original enterprise, which has the characteristics of fuzzy boundary, efficient operation and flexibility. For each member enterprise, it is essentially a strategy of taking advantage of the situation. With the help of external forces, it integrates external forces and external resource advantages of the enterprise to achieve fusion and create extraordinary competitive advantages. Therefore, strategic alliance enables enterprises to deal with "individual strength" with "systematic strength" and easily occupy an advantageous position in the competition. In the fierce market competition, in the face of the strong competition of large enterprises that have formed advantages in capital, technology and scale, small and medium-sized enterprises must stand at a strategic height, not be limited to immediate short-term interests on the premise of ensuring their survival, adopt flexible forms and means, combine horizontal and vertical, give full play to each enterprise's own advantages, and face the competition of large enterprises in the market with overall competitiveness. (3) Transnational Operation Since the reform and opening up, a considerable number of enterprises in China have embarked on the road of transnational operation to varying degrees. However, most of the enterprises engaged in transnational operations are large domestic enterprises or groups, and although small and medium-sized enterprises have set foot in this field, they are few. Transnational operation involves the extension of the enterprise's business network abroad, and the different business environment may lead to great risks. Small and medium-sized enterprises' small scale, single product structure, weak talent attraction, weak brand image and lack of funds make it more difficult for them to implement transnational business strategy. Generally speaking, the success rate and profit rate of transnational operation of small and medium-sized enterprises in China are lower than those of large enterprises and enterprise groups. However, as far as the experience of transnational operation in developed countries is concerned, it is an inevitable stage for a country to enhance its international competitiveness to shift from large-scale enterprises to small and medium-sized enterprises. The entry of small and medium-sized enterprises into the international market not only conforms to the trend of market internationalization, but also greatly resolves its unfavorable factors in the domestic market, which is of great strategic significance to China, where small and medium-sized enterprises account for about 99% of the total number of enterprises. IV. Issues that SMEs should pay attention to when implementing their business strategies (1) Analyze and master the trends of government macro policies and regulations. We should not only understand today's policies, but also understand the government's policy orientation towards this industry in three or five years. (2) Respect the market and take the market as the yardstick to test the business strategy of enterprises. As a constantly changing objective entity, the market has its own objective laws and is influenced by factors such as policies in various periods, the contradiction between supply and demand in the market, consumers' customs and habits, and consumption levels. Therefore, for enterprises and operators, there are certain risks. We should grasp the pulse of the market at any time, respond in time according to the new changes in the market in each period, constantly adjust the strategic policies of enterprises in each period, and minimize the operational risks caused by market instability as much as possible, so as to survive in the fierce competition. (3) Establish corporate image with the help of brand effect, and improve business efficiency. An enterprise should gradually establish its own brand in the market competition. Brand, in a narrow sense, refers to the logo that distinguishes enterprise products from similar products in market competition, that is, trademarks; Broadly speaking, a brand is an image that an enterprise establishes for itself in the market. With the help of a brand, an enterprise can improve its awareness among consumers, and gradually improve its trust in the minds of consumers through continuous self-improvement, so as to gradually occupy the market share in the process of consumers' consumption and improve its market share. (4) Strengthening management innovation is the eternal theme of enterprise development. Small and medium-sized enterprises generally start late, and most of them implement family management. There are family culture, paternalistic style and corresponding ethical concepts in enterprises. Although it can play a positive role in the initial stage of entrepreneurship, with the development and scale expansion of enterprises, negative factors are becoming increasingly obvious, such as irregular management mode, strong randomness, inability to guarantee product quality and weakening market competitiveness of enterprises. The serious lag of enterprise management has become a bottleneck restricting inland small and medium-sized enterprises from entering the international market. To strengthen management innovation, we must first carry out the reform of enterprise organizational structure, and on this basis, realize internal integration as soon as possible and strengthen internal management. (5) Pay attention to and cultivate talents. In the final analysis, the competition among enterprises under the market economy is the competition of talents. On the one hand, enterprises should take active and effective measures to stabilize the existing talents, strengthen the training of employees, and constantly improve the professional and comprehensive quality of employees. On the other hand, we should take favorable conditions to actively introduce urgently needed top-notch high-tech talents and give full play to their unique advantages. We should not stick to one pattern in employing people, boldly employ people of insight and innovative talents, and at the same time actively reserve talents. V. Conclusion As an important growth point of the national economy, small and medium-sized enterprises have become an important carrier for the simultaneous development of various ownership economies in China, and business strategy is the most effective method and foundation for realizing the prospects and goals of small and medium-sized enterprises. On the basis of normative theoretical analysis, this paper first points out and analyzes the importance of small and medium-sized enterprises in the national economy. By analyzing the current situation of small and medium-sized enterprises in business strategy and combining the characteristics and reality of small and medium-sized enterprises in China, this paper specifically introduces and analyzes three kinds of business strategies that can be adopted in the development of small and medium-sized enterprises, such as virtual operation, strategic alliance and transnational operation. Finally, it gives six problems that small and medium-sized enterprises should pay attention to when implementing business strategies to ensure the smooth implementation of business strategies. 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