Corporate Strategy Phases of Implementation

7/28/2019 Corporate Strategy Phases of Implementation

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1.1 Corporate strategy phases of implementation

The strategic management process is more than just a set of rules to follow. It is a

philosophical approach to business. Upper management must think strategically first,

then apply that thought to a process. The strategic management process is best

implemented when everyone within the business understands the strategy. The five stagesof the process are goal-setting, analysis, strategy formation, strategy implementation and

strategy monitoring.

Phase one : Strategic intelligence gathering analysis

Goal-Setting

The purpose of goal-setting is to clarify the vision for your business. This stage consists

of identifying three key facets: First, define both short- and long-term objectives. Second,

identify the process of how to accomplish your objective. Finally, customize the process

for your staff, give each person a task with which he can succeed. Keep in mind during

this process your goals to be detailed, realistic and match the values of your vision.

Typically, the final step in this stage is to write a mission statement that succinctly

communicates your goals to both your shareholders and your staff.

Analysis

Analysis is a key stage because the information gained in this stage will shape the next

two stages. In this stage, gather as much information and data relevant to accomplishing

your vision. The focus of the analysis should be on understanding the needs of the

business as a sustainable entity, its strategic direction and identifying initiatives that willhelp your business grow. Examine any external or internal issues that can affect your

goals and objectives. Make sure to identify both the strengths and weaknesses of your

organization as well as any threats and opportunities that may arise along the path.


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Phase two : Strategy Formulation

The first step in forming a strategy is to review the information gleaned from completing

the analysis. Determine what resources the business currently has that can help reach the

defined goals, objectives and priorities. Identify any areas of which the business must

seek external resources. The issues facing the company should be prioritized by theirimportance to your success. Once prioritized, begin formulating the strategy. Because

business and economic situations are fluid, it is critical in this stage to develop alternative

approaches that target each step of the plan.

Phase three: Strategy Implementation Planning

Change strategic intent into tangible action. Develop a strategic master project plan that

specifies the activities, resources and time line required to implement your strategy.

This phase includes defining the roles that the leaders and others will play in

leading the effort. Develop a roadmap to follow progress and measure success,rationalize and prioritize.

Everyone within the organization must be made clear of their responsibilities and duties,

and how that fits in with the overall goal. Additionally, any resources or funding for the

venture must be secured at this point. Once the funding is in place and the employees are

ready, execute the plan.

Phase four: Strategy Implementation

Successful strategy implementation is critical to the success of the business venture. This

is the action stage of the strategic management process. If the overall strategy does notwork with the business' current structure, a new structure should be installed at the

beginning of this stage. It implies executing the plan, manage changes and address

critical issues.

Evaluation and Control

Strategy evaluation and control actions include performance measurements, consistent

review of internal and external issues and making corrective actions when necessary. Any

successful evaluation of the strategy begins with defining the parameters to be measured.

These parameters should mirror the goals set in Stage 1.

Determine your progress by measuring the actual results versus the plan. Monitoring

internal and external issues will also enable you to react to any substantial change in your

business environment. If you determine that the strategy is not moving the company

toward its goal, take corrective actions. If those actions are not successful, then repeat the

strategic management process. Because internal and external issues are constantly

evolving, any data gained in this stage should be retained to help with any future

strategies.


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1.2 Analyzing the strategic position

The strategic position is concerned with the impact on strategy of the external environment,

internal resources and competences, and the expectations and influence of stakeholders.Together, a consideration of the environment, strategic capability, the expectations and the

purposes within the cultural and political framework of the organisation provides a basis

for understanding the strategic position of an organisation.

Johnson and Scholes, 2005

It is important to take account of the future and to assess whether the current strategy is asuitable fit with the strategic position. If not, the organisation needs to determine what

changes it needs to make and whether it is capable of effecting such changes.

In summary, the strategic position forms an integral part of the strategic managementprocess. It informs the strategic choices that need to be made and subsequently

implemented.

To analyze the strategic position we must analyze the environment and our internal

strategic capability

1.2.1 External analysis the Environment

Organisations need to understand the external environment in terms of:

macro influences these include political, economic, technological and socialfactors

micro influences factors specific to the particular industry and related

industries, including competition, customers, suppliers and barriers to entry

The STEEPLE framework

This approach reviews current and future aspects of the external environmentbased on categories such as social, technological, economic, ethical, political

and environment (STEEPLE) issues. Some of these factors are used in variants

of this framework and are known as STEP, PEST, or PESTEL.


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PEST analysis (Political, Economic, Social and Technological analysis) describes a

framework of macro-environmental factors used in the environmental

scanning component ofstrategic management. Some analysts added Legal and rearranged

the mnemonic to SLEPT;[1] inserting Environmental factors expanded itto PESTEL or PESTLE. It is a part of the external analysis when conducting a strategic

analysis or doing market research, and gives an overview of the different macro-environmental factors that the company has to take into consideration. It is a useful

strategic tool for understanding market growth or decline, business position, potential and

direction for operations.

Political factors are basically to what degree the government intervenes in the economy.Specifically, political factors include areas such as tax policy, labour law, environmental

law, trade restrictions, tariffs, and political stability. Political factors may also includegoods and services which the government wants to provide or be provided (merit goods)

and those that the government does not want to be provided (demerit goods or meritbads). Furthermore, governments have great influence on the health,education,andinfrastructure of a nation.

Economic factors include economic growth,interest rates,exchange rates andthe inflation rate. These factors have major impacts on how businesses operate and make

decisions. For example, interest rates affect a firm's cost of capital and therefore to what

extent a business grows and expands. Exchange rates affect the costs of exporting goodsand the supply and price of imported goods in an economy

Social factors include the cultural aspects and include health consciousness, population

growth rate, age distribution, career attitudes and emphasis on safety. Trends in socialfactors affect the demand for a company's products and how that company operates. For

example, an aging population may imply a smaller and less-willing workforce (thus

increasing the cost of labor). Furthermore, companies may change various managementstrategies to adapt to these social trends (such as recruiting older workers).

Technological factors include technological aspects such as R&D activity, automation,technology incentives and the rate oftechnological change. They can determinebarriers to
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entry, minimum efficient production level and influence outsourcing decisions.

Furthermore, technological shifts can affect costs, quality, and lead to innovation.

Environmental factors include ecological and environmental aspects such as weather,climate, and climate change, which may especially affect industries such as tourism,

farming, and insurance. Furthermore, growing awareness of the potential impacts ofclimate change is affecting how companies operate and the products they offer, both

creating new markets and diminishing or destroying existing ones.

Legal factors include discrimination law, consumer law, antitrust law, employment law,and health and safety law. These factors can affect how a company operates, its costs, and

the demand for its products.

Building scenarios

This takes the above frameworks a stage further by developing some possible

coherent outcomes to some of the key environmental influences. Given the highdegree of uncertainty related to predictions, it is inadvisable to make the

scenarios too complex.

The scenarios are constructed by identifying the main driving forces behind the trends

identified during the trend analysis stage. Each driving force has an opposing force,

therefore effectively forming a pair. The two most important pairs become the axes that

carve out the scenarios resulting in 4 scenarios.The trends are then mapped onto the scenarios. In order to give a realistic dimension to

the scenarios, and help the participants feel actively engaged, you can apply a mix of

storytelling, vizualisation and enactment techniques. Immersion into the scenario byparticipants is the best way for the potential impact and consequences of it to be

experienced.
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The diamond model is an economical model developed by Michael Porterin his

book The Competitive Advantage of Nations,[2] where he published his theory of whyparticular industries become competitive in particular locations.[3]Afterwards, this model

has been expanded by other scholars.

Porters diamond analysis

The approach looks at clusters, a number of small industries, where the competitiveness

of one company is related to the performance of other companies and other factors tiedtogether in the value-added chain, in customer-client relation, or in a local or regional

contexts.[2] The Porter analysis was made in two steps.[2] First, clusters of successful

industries have been mapped in 10 important trading nations.[2] In the second, the historyof competition in particular industries is examined to clarify the dynamic process by

which competitive advantage was created.[2] The second step in Porter's analysis deals

with the dynamic process by which competitive advantage is created.[2] The basicmethod in these studies is historical analysis.[2] The phenomena that are analysed are

classified into six broad factors incorporated into the Porter diamond, which has become

a key tool for the analysis of competitiveness:
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Factor

conditions are human resources, physical resources, knowledge resources, capital

resources and infrastructure.[2]Specialized resources are often specific for an industry and

important for its competitiveness.[2] Specific resources can be created to compensate for

factor disadvantages.

Demand conditions in the home market can help companies create a competitive

advantage, when sophisticated home market buyers pressure firms to innovate faster and to

create more advanced products than those of competitors.[2]

Related and supporting industries can produce inputs which are important for

innovation and internationalization.[2]

These industries provide cost-effective inputs, but theyalso participate in the upgrading process, thus stimulating other companies in the chain to

innovate.[2]

Firm strategy, structure and rivalry constitute the fourth determinant of

competitiveness.[2] The way in which companies are created, set goals and are managed is

important for success.[2]But the presence of intense rivalry in the home base is also

important; it creates pressure to innovate in order to upgrade competitiveness.[2]

Government can influence each of the above four determinants of competitiveness.[2] Clearly government can influence the supply conditions of key production factors, demand

conditions in the home market, and competition between firms.[2] Government interventions

can occur at local, regional, national or supranational level.[2]

Chance events are occurrences that are outside of control of a firm.[2]They are important

because they create discontinuities in which some gain competitive positions and some lose.[2]

The Porter thesis is that these factors interact with each other to create conditions where

innovation and improved competitiveness occurs.[3]
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1. ^Traill, Bruce; Eamonn Pitts (1998). Competitiveness in the Food Industry.Porter(1990, p. 127).

Springer. p. 19.ISBN0-7514-0431-4.

2. ^ abcdefghijklmnopqrstuvwx Porter, M.E. The competitive advantage of nations. New York:

Free Press. (1990)

3. ^ abTraill, Bruce; Eamonn Pitts (1998). Competitiveness in the Food Industry. Springer.

p. 301.ISBN0-7514-0431-4.

Industries and sector analysis

Porter five forces analysis is a framework for industry analysis and business

strategy development. It draws upon industrial organization (IO) economics to derive fiveforces that determine the competitive intensity and therefore attractiveness of a market.

Attractiveness in this context refers to the overall industry profitability. An"unattractive" industry is one in which the combination of these five forces acts to drivedown overall profitability. A very unattractive industry would be one approaching "pure

competition", in which available profits for all firms are driven to normal profit.

Three of Porter's five forces refer to competition from external sources. The remainder

are internal threats.Porter referred to these forces as the micro environment, to contrast it with the

more general term macro environment. They consist of those forces close to

a company that affect its ability to serve its customers and make aprofit. A change in anyof the forces normally requires a business unit to re-assess the marketplace given the

overall change in industry information. The overall industry attractiveness does not imply

that every firm in the industry will return the same profitability. Firms are able to applytheircore competencies,business model or network to achieve a profit above the industry

average. A clear example of this is the airline industry. As an industry, profitability is low

and yet individual companies, by applying unique business models, have been able tomake a return in excess of the industry average.

Porter's five forces include - three forces from 'horizontal' competition: the threat

of substitute products or services, the threat of established rivals, and the threat of new

entrants; and two forces from 'vertical' competition: thebargaining powerof suppliersand the bargaining power of customers.

This five forces analysis, is just one part of the complete Porter strategic models.

The other elements are the value chain and the generic strategies.[citation needed]Porter developed his Five Forces analysis in reaction to the then-popularSWOT analysis,

which he found unrigorous and ad hoc.[1] Porter's five forces is based on the Structure-

Conduct-Performance paradigm in industrial organizational economics. It has beenapplied to a diverse range of problems, from helping businesses become more profitable

to helping governments stabilize industries.[2]
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dia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_note-1http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_note-2http://en.wikipedia.org/wiki/Diamond_model#cite_ref-traill01_1-0http://books.google.com/books?id=-g_iw4ocyAgC&printsec=frontcover#PPA19,M1http://en.wikipedia.org/wiki/Michael_Porterhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/0-7514-0431-4http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-0http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-1http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-2http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-3http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-4http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-5http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-6http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-7http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-8http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-9http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-10http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-11http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-12http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-13http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-14http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-15http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-16http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-17http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-18http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-19http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-20http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-21http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-22http://en.wikipedia.org/wiki/Diamond_model#cite_ref-Porter_2-23http://en.wikipedia.org/wiki/Diamond_model#cite_ref-traill_3-0http://en.wikipedia.org/wiki/Diamond_model#cite_ref-traill_3-1http://books.google.com/books?id=-g_iw4ocyAgC&printsec=frontcover#PPA17,M1http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/0-7514-0431-4http://en.wikipedia.org/wiki/Industrial_organizationhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Profit_(economics)#Normal_profithttp://en.wikipedia.org/wiki/Marketing#Marketing_environmenthttp://en.wikipedia.org/wiki/Environmental_scanninghttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Marketplacehttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Core_competencieshttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Bargaining_powerhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Porter_generic_strategieshttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_note-1http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_note-2


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1. ^Michael Porter, Nicholas Argyres, Anita M. McGahan, "An Interview with Michael Porter", The

Academy of Management Executive16:2:44at JSTOR

2. ^Michael Simkovic,Competition and Crisis in Mortgage Securitization

Five Forces Analysis assumes that there are five important forces that determine

competitive power in a business situation. These are:

Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is

driven by the number of suppliers of each key input, the uniqueness of their product or

service, their strength and control over you, the cost of switching from one to another,and so on. The fewer the supplier choices you have, and the more you need suppliers'

help, the more powerful your suppliers are.

Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down.

Again, this is driven by the number of buyers, the importance of each individual buyer to

your business, the cost to them of switching from your products and services to those of

someone else, and so on. If you deal with few, powerful buyers, then they are often ableto dictate terms to you.

Competitive Rivalry: What is important here is the number and capability of yourcompetitors. If you have many competitors, and they offer equally attractive products and

services, then you'll most likely have little power in the situation, because suppliers and

buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-

one else can do what you do, then you can often have tremendous strength.Threat of Substitution: This is affected by the ability of your customers to find a different

way of doing what you do for example, if you supply a unique software product that

automates an important process, people may substitute by doing the process manually orby outsourcing it. If substitution is easy and substitution is viable, then this weakens your

power.

Threat of New Entry: Power is also affected by the ability of people to enter your

market. If it costs little in time or money to enter your market and compete effectively, if

there are few economies of scale in place, or if you have little protection for your keytechnologies, then new competitors can quickly enter your market and weaken your

position. If you have strong and durable barriers to entry, then you can preserve a

favorable position and take fair advantage of it.
http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-1http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-1http://www.jstor.org/stable/4165839http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-2http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-2http://ssrn.com/abstract=1924831http://ssrn.com/abstract=1924831http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-1http://www.jstor.org/stable/4165839http://en.wikipedia.org/wiki/Porter_five_forces_analysis#cite_ref-2http://ssrn.com/abstract=1924831


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Strategy consultants occasionally use Porter's five forces frameworkwhen making aqualitative evaluation of a firm's strategic position. However, for most consultants, the

framework is only a starting point or "checklist." They might use "Value Chain"afterward. Like all general frameworks, an analysis that uses it to the exclusion of

specifics about a particular situation is considered nave.

According to Porter, the five forces model should be used at the line-of-business industrylevel; it is not designed to be used at the industry group or industry sector level. An

industry is defined at a lower, more basic level: a market in which similar or closely

related products and/or services are sold to buyers. (See industry information.)A firm that competes in a single industry should develop, at a minimum, one five forces

analysis for its industry. Porter makes clear that for diversified companies, the first

fundamental issue incorporate strategy is the selection of industries (lines of business) inwhich the company should compete; and each line of business should develop its own,industry-specific, five forces analysis. The average Global 1,000 company competes in

approximately 52 industries (lines of business).
http://en.wikipedia.org/wiki/Conceptual_frameworkhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Corporate_strategyhttp://en.wikipedia.org/wiki/Line_of_businesshttp://en.wikipedia.org/wiki/Conceptual_frameworkhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Corporate_strategyhttp://en.wikipedia.org/wiki/Line_of_business


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Market Analysis

SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to

evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or

in abusiness venture. A SWOT analysis can be carried out for a product, place, industry

or person. It involves specifying the objective of the business venture or project andidentifying the internal and external factors that are favorable and unfavorable to

achieving that objective. The technique is credited to Albert Humphrey, who led a

convention at the Stanford Research Institute (now SRI International) in the 1960s and1970s using data from Fortune 500 companies.[1][2] The degree to which the internal

environment of the firm matches with the external environment is expressed by the

concept ofstrategic fit.Setting the objective should be done after the SWOT analysis has been performed. This

would allow achievable goals or objectives to be set for the organization.

Strengths: characteristics of the business or project that give it an advantage over

others Weaknesses: are characteristics that place the team at a disadvantage relative to

others

Opportunities: elements that the project could exploit to its advantage

Threats: elements in the environment that could cause trouble for the business or

project

Identification of SWOTs is important because they can

inform later steps in planning to achieve the objective.

First, the decision makers should consider whether the

objective is attainable, given the SWOTs. If the

objective is notattainable a different objective must be

selected and the process repeated.

Users of SWOT analysis need to ask and answer

questions that generate meaningful information for

each category (strengths, weaknesses, opportunities,

and threats) to make the analysis useful and find their

competitive advantage.[3]

1. ^Humphrey, Albert (December 2005)."SWOT Analysis

for Management Consulting".SRI Alumni

Newsletter(SRI International).

2. ^"Albert Humphrey The "Father" of TAM". TAM UK.

Retrieved 2012-06-03.

3. ^"Object Oriented and Multi-Scale Image Analysis: Strengths, Weaknesses, Opportunities and

Threats - A Review". Journal of Computer Science4 (9): 706712. Jan 2008.
http://en.wikipedia.org/wiki/Planhttp://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Albert_S._Humphreyhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/Fortune_500http://en.wikipedia.org/wiki/SWOT_analysis#cite_note-1http://en.wikipedia.org/wiki/SWOT_analysis#cite_note-2http://en.wikipedia.org/wiki/Strategic_fithttp://en.wikipedia.org/wiki/SWOT_analysis#cite_note-3http://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-1http://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-1http://en.wikipedia.org/wiki/Albert_S._Humphreyhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-2http://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-2http://www.tamplc.com/Humphsprofile.htmhttp://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-3http://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-3http://trove.nla.gov.au/work/27715159http://trove.nla.gov.au/work/27715159http://en.wikipedia.org/wiki/Planhttp://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Albert_S._Humphreyhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/Fortune_500http://en.wikipedia.org/wiki/SWOT_analysis#cite_note-1http://en.wikipedia.org/wiki/SWOT_analysis#cite_note-2http://en.wikipedia.org/wiki/Strategic_fithttp://en.wikipedia.org/wiki/SWOT_analysis#cite_note-3http://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-1http://en.wikipedia.org/wiki/Albert_S._Humphreyhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-2http://www.tamplc.com/Humphsprofile.htmhttp://en.wikipedia.org/wiki/SWOT_analysis#cite_ref-3http://trove.nla.gov.au/work/27715159http://trove.nla.gov.au/work/27715159http://trove.nla.gov.au/work/27715159


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1.1.2 Internal analysis the strategic capability

Scanning the external environment for opportunities and threats is not enough to provide an

organisation a competitive advantage. Strategic managers also need to identify internal

strategic factors.

Strategic capability refers to a business' ability to successfully employ competitive

strategies that allow it to survive and increase its value over time. While strategic

capability does take into account the strategies a business uses, it focuses on the

organization's assets, resources and market position, projecting how well it will be able toemploy strategies in the future. There is no single method or universal metric for

measuring or noting strategic capability.

Significance

A business' strategic capability is a major component in remaining financially viable and

growing despite the presence of competitors in a free market. Many groups of interestedparties attempt to measure and track strategic capability. They include investors, who

want to put their money into businesses with reasonable chances of future success andgrowth. Employees also care about strategic capability since it identifies businesses that

are stable and unlikely to go under or those that need to cut costs through layoffs.

Business leaders track strategic capability, not only for their own companies but also for

competitors to better understand the markets in which they operate. Finally, financialanalysts and government regulatory agencies have interests in strategic capability since it

plays a role in how they value and monitor businesses.

Elements

Many elements can potentially contribute to a business' strategic capability. Assets suchas cash, property and patents all contribute to a business' ability to formulate and employ

strategies. Other elements of strategic capability include human resources and

organizational structure, since employee skills and leadership mechanisms all contribute

to a business' competitiveness. Pricing can also be a part of strategic capability, withbusinesses that understand how to manipulate prices to maximize profits likely to enjoy

strategic advantages over competitors that have trouble arriving at profitable price points

for their products.Strategic Value Analysis

Assessing strategic capability is a complex process, in part because of the number of

factors it must address. The process of evaluating a business' strategic capability isknown as a strategic value analysis. It relies on data from annual reports, public surveys

and market trends to determine which businesses in a given industry have strategic

capabilities that others lack. As businesses change and acquire additional resources,analysts must continually perform new strategic value analyses.


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Corporate Strategy Phases of Implementation

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