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
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