Strategy is a comprehensive action plan providing long-term direction and guiding resource utilization to accomplish organizational goals and to sustain competitive advantage. Competitive advantage means operating in a successful way that is difficult for competitors to imitate.
Step 1 - Analyise current organisation
- Assess the mission statement and what it means
- Core values
- Company objectives
Step 2 - Analyse environment and industry
Analysis of environment
Swot analysis:
- Strengths
- Weaknesses
- Opportunities
- Threads
Analysis of the industry
Porter's 5 forces model lists 5 forces that determine the level of competition in an industry:
- New entrants - Thread of new entrants
- Customers - Bargaining power
- Substitute products - How easy is it to substitute what you do
- Suppliers - Bargaining power
Step 3 - Choose a level of strategy
Corporate level - Long term strategy of whole enterprise
Business level - Sets strategic direction of business unit
Corporate level
Growth strategies
- Concentration
- Diversification
- Vertical integration (going further up the supply chain)
Retrenchment strategies
- Liquidation
- Restructuring
- Divestiture
Cooperative strategies
- Strategic alliances
o Outsourcing
o Suppliers
o Distribution
e-Business strategies
- Business to business applications
- Business to customer applications
Business level strategy
- Cost leadership strategies
- Differentiation strategies
- Focused cost leadership
- Focused differentiation
Step 4 - Implementation
Challenges in implementing strategy:
- Failure of substance - Inadequate attention to planning elements
- Failure of process - Poor implementation