What does the business strategy define for a firm?

The business strategy of a firm primarily defines how it will compete in the marketplace. This encompasses the company's approach to positioning itself against competitors, identifying target markets, and establishing a unique value proposition. It involves strategic decisions regarding pricing, product development, distribution methods, and customer engagement, all of which are essential for gaining and maintaining a competitive advantage.

While managing internal HR functions, establishing organizational culture, and developing financial budgets are important aspects of a company's operations, they are typically influenced by the overarching business strategy rather than being definitions of it. The business strategy provides the framework within which those components operate. Therefore, the emphasis on competing in the marketplace captures the essence of what a business strategy entails, integrating various operational facets to achieve strategic goals.