Introduction

Digital transformation (DT) has completely changed the face of the global economy, making it necessary to adapt to rapidly changing technologies and new customer requirements. Conventional strategies related to products and processes are slowly being replaced by a customer-oriented and technologically integrated one.

This study is particularly relevant because the use of digital tools in business is on the rise, and there is also an emergent and urgent need for an understanding of how companies can harness these technologies to enhance their competitiveness and resilience in the market. On one hand, new technologies provide enormous opportunities for enhancement in customer experiences, internal process optimization, and increased profitability. In contrast, the implementation of innovations needs significant investments and changes in organization, which is not free from risks and problems.

The purpose of this article is to examine the evolution of business strategies in the context of DT and explore how modern companies adapt to rapid technological changes by employing a personalized approach to meet customer needs.

Main part. Definition and key directions of DT

The process of comprehensively integrating DT into the strategic, operational, and organizational aspects of a business is known as DT. It aims to reshape business approaches and create new opportunities for growth and competitive advantage. Unlike the simple adoption of information technologies, ВЕ involves a shift in the entire company ecosystem, its processes, and strategies. Table 1 presents the key directions of DT that play a crucial role in business modernization.

Table 1

Key directions of DT [1]

The process of DT has a significant impact on consumer behavior, as it changes their expectations regarding the quality and availability of goods and services. A modern user, who is accustomed to fast and comfortable digital solutions, expects an individual approach and immediate response on the part of business. For instance, bank clients assume that transfers will be processed instantly. This drives companies to implement mobile applications and online services.

The importance of cybersecurity is growing, as clients expect not only convenience but also the security of their data. Companies are compelled to invest in data protection to maintain consumer trust. Thus, DT not only reshapes business strategies but also profoundly influences customer culture and perception, setting new standards for convenience, security, and service quality.

Evolution of business strategies

Perhistorical evidence, every major innovation – from steam engines to electricity and the internet – automatically meant radical changes in corporate strategies. In times of DT, when this pace of technological developments is so fast, it creates a situation that obliges organizations to revise their strategies more quickly and deeply than ever before. Whereas companies initially focused on digitalization of internally located processes and gains in productivity, the strategic aims of DT today encompass more aspects, like customer engagement, the development of new products and services, or the rethinking of business models.

Historically, business strategies adapted to technological changes through the gradual adoption of various tools and approaches that enhanced efficiency. For example, with the advent of personal computers and databases in the 1980s, companies began shifting toward a more structured organization of data, which enabled them to improve resource management and planning. In the 1990s and 2000s, the internet became a crucial factor that transformed strategies. Companies began actively developing e-commerce and integrating online platforms into their models. This shift led to the emergence of the first online stores, digital services, and customer interaction platforms. After that, business strategies changed again with the development of mobile technologies and social media-to accommodate a new generation of consumers who feel they need information at any time and who want immediate responses from brands.

According to a 2021 study by Statista and McKinsey & Company, 90% of companies believed they needed to change their business model to remain competitive in the coming years, and 64% of respondents highlighted the necessity of creating a new digital business (fig. 1).

Figure 1. Changes companies need to make to their business model to remain economically viable [2]

An example of successful business strategies is the use of big data to build forecasts and create personalized interactions with customers. Companies employ ML algorithms to analyze user preferences and offer products or content tailored to the individual needs of each customer. This approach not only enhances customer satisfaction but also significantly increases profits. According to surveys, in 2023, nearly 61% of companies worldwide implemented big data analytics (fig. 2).

Figure 2. Adoption rate of emerging technologies in organizations worldwide in 2023 [3]

The use of IoT in the manufacturing and logistic processes is another example of new business strategies. This allows for real-time equipment monitoring and predictive maintenance, which minimizes any type of downtime and reduces repair costs.

A further strategy that has become successful in the digital age is the shift to a subscription-based model. Companies are moving away from one-time sales of their software products in favor of subscriptions [4]. This approach allows customers to access the latest software versions without needing to purchase each new release. This model not only provides a steady revenue stream for companies but also increases customer loyalty by offering regular updates and new features.

The digital environment influences significantly the competitive advantages of companies. In the context of globalization and high information availability, it is already not enough for any company to differentiate in a competitive market only by offering a quality product or service; they also have to offer a unique customer experience. Companies that can organize modern technologies to better analyze and forecast market needs can react in shorter terms in case of changes in customer behavior and offer higher service standards.

Personalized approach in business strategies

With the growth of digitalization, companies have gained unique opportunities for in-depth analysis of customer data. This enables a better understanding of consumer behavior, needs, and preferences. By leveraging big data and advanced analytical tools, businesses can tailor their offerings to each customer, which becomes especially important amid increasing competition and diverse market options. In 2023, a global survey revealed that 70% of business leaders increased their investments in personalization, while 80% acknowledged that personalized experiences led to higher costs. Meanwhile, 62% emphasized a positive impact on customer retention, and 50% identified obtaining accurate data for personalization as a continuous challenge [5].

Analyzing data on customer behavior and preferences allows companies to create detailed user profiles, which form the foundation for personalized marketing. Using ML algorithms, companies can not only analyze purchase histories and interactions with products and services but also predict future audience needs. This supports the development of strategies that more precisely align with consumer interests and needs, as well as the timely offering of relevant products and services.

Customer segmentation based on data also plays a crucial role in building personalized strategies. Modern analytical tools enable companies to segment their audience by various parameters such as age, geographic location, purchasing behavior, and even interests [6]. This allows the development of marketing campaigns targeted at specific consumer groups, making them as effective as possible. This is particularly relevant in retail, where personalized offers, such as individual discounts and recommendations, attract attention and enhance customer satisfaction.

Another important aspect of a personalized approach is the use of data to improve the customer experience. In the service industry, for instance, companies can use data to enhance support quality by anticipating potential issues and offering solutions before the customer seeks help. In banks and financial institutions, customer data helps tailor services to individual financial needs, creating offerings that match customer preferences.

Thus, data analysis and consideration of customer preferences play a central role in building personalized business strategies, enabling companies to adapt to market dynamics and establish long-term relationships with customers [7]. A data-driven personalized approach becomes a powerful tool for enhancing customer experience, fostering loyalty, and maintaining competitive advantages in the digital economy.

Practical aspects of business strategy transformation

According to the IMD 2023 Global Digital Competitiveness Index, the USA ranks first among 64 economies, confirming its leading position in the use and development of digital technologies. Key success factors include investments in science and education, developed capital markets, and an advanced technological base. High business adaptability and a well-developed entrepreneurial culture enable the USA to effectively integrate digital solutions across all sectors of the economy, creating strong competitive advantages.

A notable example of an American company that has successfully adapted and developed its strategy amid DT is Amazon. What started as an online bookstore has expanded greatly over time into cloud computing services, such as AWS, logistics, streaming, and AI developments. The use of diversification has been a very strong tool for Amazon, mainly because it can reduce risks while developing its customer base. Active use of big data analytics and AI for personalization of customer experience and optimization of operational processes is widely performed by Amazon. In 2023, the revenue was $574,8 billion, which is up 12% from last year, while $90,8 billion came from AWS cloud services, underlining the success of the company [8].

In addition to cloud technologies, Amazon is actively expanding in other areas. For instance, the company’s advertising business grew by 24%, generating $47 billion through solutions like Sponsored TV, which allows brands to run campaigns on more than 30 streaming TV services, including Twitch.

Microsoft, the largest software company, demonstrates successful DT through the diversification of its activities. Initially focused on operating systems and office software, Microsoft expanded its services by adopting cloud technologies and becoming a leader in the cloud platform market. In 2023, Microsoft’s cloud computing revenue increased by 22%, reaching $111,6 billion (fig. 3).

Figure 3. Microsoft сloud computing revenue, billion dollars [9]

Moreover, Microsoft is actively developing areas related to AI and cybersecurity. For example, Azure AI services enable companies to integrate large language models, supporting application development and data analysis processes. As a result, Azure AI has become a competitive advantage for Microsoft, offering powerful tools for business process optimization. Additionally, Microsoft’s cybersecurity segment generated over $20 billion in 2023, confirming its successful positioning in the market.

Unlike the USA, where DT is already deeply integrated into the economy, Azerbaijan has been actively building infrastructure for digital development and economic diversification in recent years. The government attaches strategic importance to digital technologies, as evidenced by the opening of the Center for Analysis and Coordination of the Fourth Industrial Revolution and several other institutions under the Ministry of Economy that support IT startups and digital skills development. The country has established incubation centers and technoparks, and is developing projects for creating powerful data centers and a G-cloud system. According to a report presented at the World Economic Forum (WEF) in 2024, from 2016 to 2023, a significant portion of foreign investments has been focused on the IT and financial services sectors, highlighting the country’s strategic priority in attracting capital to promote digital growth. Azerbaijan is also expanding digital government programs and developing the «Azerbaijan Digital Economy Development Strategy», which includes key technologies such as IoT, big data, and AI. The strategy also envisions the implementation of public-private partnership mechanisms.

Conclusion

The evolution of business strategies in the context of DT shows that successful companies adapt to changes by implementing advanced technologies such as AI, big data, cloud computing, and the IoT. It also allows companies to improve customer experience, optimize operational processes, expand their activity by creating new revenue streams, and make it more resistant to changes in the market. Highly digitized countries, such as the USA, leverage innovation to strengthen their competitiveness. As demonstrated by companies like Amazon and Microsoft, the adoption and integration of digital tools provide access to new business models, such as subscription services and personalized offerings.