A strategy is a plan to achieve a goal that will provide the organisation with a competitive advantage. Generating a strategic plan begins with identifying the organisation’s purpose through a mission statement, a vision of the future, and a set of objectives as performance targets.
Once the direction is decided, the internal and external environments are analysed to assess the current strengths, weaknesses, and competitive environment. Tools like Porter’s five forces model, PEST analysis, and Resource-based view (RBV) support the generation of this internal and external map.
A clear picture of the environment allows the organisation to make choices about creating value and achieving a competitive advantage. Areas in which a company can choose to find an advantage include:
- Undercutting competitors on price through economies of scale or reducing costs.
- Differentiating products to make them more attractive to specific market segments.
The final strategic stage in how the organisation can achieve the identified competitive advantage is an implementation plan. The tactics of how the strategy will be carried out are created and documented. The means to carry out the tactics will be listed, and milestones draw up to measure progress.
If you don’t know where you’re going, you might not get there.Yogi Berra
Many companies do not take the time to think through these stages. Simply documenting where they want to go, where they are now, and a plan to move from point a to point b can dramatically improve performance.
Strategic management process
- Mission & Objectives
- Strategic Choice
- Strategic Implementation
- Competitive Advantage