developing-business-strategy

The meaning and purpose of business strategy

• A business strategy is a medium- to long-term plan that shows how a company will reach its main goals

  • It sets clear priorities, chooses the markets or products to focus on and guides the use of people, money and technology

The meaning and purpose of strategic management

• Strategic management is the ongoing process of choosing long-term goals, planning how to reach them, putting plans into action and regularly reviewing results to keep the business on course

The strategic management process

• Analysis

  • External factors, such as markets, competitors, laws and the economy

  • Internal factors, such as employees’ skills, costs and culture

    • Tools such as SWOT or PESTLE can help organise the findings

  • E.g. A sports shoe business checks trainer fashion trends, compares its costs with Nike’s and lists its strengths (a strong brand) and weaknesses (slow delivery)

• Choice

  • Senior managers turn the mission into clear targets

    • They pick the best way to reach them, such as cost leadership, differentiation or targeting new markets

  • E.g. The sports shoe business sets a goal to raise online sales by 30 % in three years. It chooses a differentiation strategy which will involve launching eco-friendly trainers made from recycled plastic

• Implementation

  • Resources are allocated and departments set their own objectives

    • Staff are trained, and new systems or contracts are put in place

    • E.g. Operations buys recycling equipment, marketing schedules a social-media campaign and HR recruits designers with sustainability skills

  • Progress is measured against targets

    • Managers investigating gaps and tweaking the strategy when needed.

    • E.g. After a year, online sales of eco-trainers increase by only 15 %, so the firm boosts advertising to close the gap