Strategy Process
Strategic decision making- Analysis till formulation
Executing strategy- who is really involved in executing- executive committee- making and executing
of strategy
By management system, we’re referring to the integrated set of processes and tools that a company
uses to develop its strategy, translate it into operational actions, and monitor and improve the
effectiveness of both.
1. Developing strategy statement
2. Translating it into specific objective and initiative of a strategic plan.
3. Using strategic plan, company maps out the operational plans and resources need to achieve
its objectives
4. After managers execute the strategic and operational plan they continually monitor and
learn from the internal results and external data - competitors and the business environment to
understand if the strategy is successful
5. Reassess periodically
Closed loop
Stage 1: Develop Strategy
1. What business we are in and why: articulating the company’s strategy: improving an
existing one or makes a new one. Before formulating the strategy the managers have to
agree on
Company’s mission: The mission is a brief statement, typically one or two sentences, that
defines why the organization exists, especially what it offers to its customers and clients.
Its vision: This defines long to short term goals of the company. Jim Collins and
Jerry Porras noted in Built to Last, is to formulate a “big, hairy, audacious goal (BHAG) that
challenges even well-performing organizations to become much better.
Values (internal compass that will guide its actions): of a company prescribe the
attitude, behavior, and character of an organization
2. What key issues we face in our business: the company conducts strategic analyses of
the company’s internal and external situation.
External Analysis:
i. Industries economics using Michael porter's framework: 1. bargaining powers of buyers,
2.bargainig powers of suppliers, 3. rivalry, 4.new entrants, 5. substitues.
, ii. The team assesses the external macroeconomic environment of growth, interest rates,
currency movements, input prices, regulations, and general expectations of the corporation’s role in
society.
iii. PESTEL analysis:
1. political,
2. economic,
3. Social,
4. technological,
5. Environmental, and
6. Legal factors.
Internal Analysis:
i. Michael porter's value chain: capabilities used in the processes that create markets;
Develop, produce, and deliver products and services; and sell to customers.
ii. Resources and capabilities that give CA to the firm.
Analysis the results from internal and external analysis: SWOT analysis: aim here is to find if the
strategy leverages internal strengths to pursue external opportunities while countering weaknesses
and threats.
This analysis will reveal a few issues like
A. the best role for new products and services
B. whether new partners need to be acquired
C. what new market segments the company might enter
D. which customer segments are contracting
3. How can we best compete?
Strategy formulation itself – the statement describing the strategy and how the company proposes
to achieve it
• The strategy must respond, in some form, to the following questions:
Which customers or markets will we target?
What is the value proposition that distinguishes us?
What key processes give us competitive advantage?
What is the human capital capabilities required to excel at these key processes?
