The Executive Guide to Strategy

Topics: Management, Strategic management, Motivation Pages: 18 (2971 words) Published: August 25, 2013
What is strategy?
Strategy is 'a linking process between environment and organisation variables'. It contains a number of interrelated elements composed of analysis of internal and external environments. It is a game plan of goals, actions, monitoring and evaluation to achieve the company's ultimate vision and mission. Vision

* where we want to be

Mission statement
* how to get there and why

* Approaches to Strategy

1. Rational approach
a. strategy formulation is portrayed as a scientific and rational process, assisted by analysis tools. eg. SWOT, Porter's 5 Forces b. assumes that information is readily available and accurate assessment can be made c. decision-making might be difficult due to imperfect information d. same information are often collected by rival companies, resulting in similar strategies

2. Flexible approach
e. recognises the need to adapt to the constantly changing environment f. scenario planning due to complexity and volatility of the environment g. maximise chances of survival and efficiency

3. Creative approach
h. stresses on the importance of imagination in the strategic process i. offers more chance of achieving competitive advantage j. the more complex and changing the business environment, the more creativity needed

4. Behavioural approach
k. outcome of negotiations within the business
l. negotiations take place between competing faction within management m. likely to be satisfactory rather than seeking to maximize results

5. Incremental approach
n. emergent based on organisational environment
o. strategies continually being changed in accordance to the changing environment p. no carefully planned strategy

Internal, External & Internal + External Strategic Analysis Tools

* Customer value proposition
* 'all benefits customers can receive from a market offering' (Ander, Narus and von Rosum 2006, p.4)

* Core competencies
* activities of a firm that make a difference and give the firm a competitive edge (Needle 2010, p. 275) * integration of knowledge, skills and technology to give customers added value in terms of cost, customer value, differentiation and innovation

* Resource Based View

* How resources are used and controlled eg. staff, land, $$$ * Physical restraints on technology and available space could make resources more variable

* Value Chain
* A chain of activities a firm performs to deliver something valuable to consumers * Gives the product more added value than sum of the independent activities' values

* Supply Chain
* A system of organisations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. * Transformation of natural resources, raw materials into a finished product delivered to the end customer

* Optimising supply chain creates new opportunities
* In the fast paced word, supply chain management is vital to strategy to meet the demand of customers.

* Porter's 5 Forces

1. Threats of new entrants - how easy it is for a new business to establish itself in the same product market. It is reduced by the barriers of entry such as equipment and capital requirements, accessibility to raw materials, customer loyalty to existing brands, patents and experience. 2. Threats of substitutes - the ability to replace one's product with a different type of product performing the same service or satisfying similar needs. 3. Bargaining power of buyers - the ability for customers to buy a similar product from another company with little to no cost of switching. MORE FIRMS = MORE POWER. Strategies to avoid this include differentiation and quality, market segmentation, price and promotion. 4. Bargaining power of suppliers - the ability for suppliers to...
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