Standard strategy

Tags: KC ST

Strategy

A strategy is meant to provide guidance for the decisions to be made in a company (at all levels is best). It should provide an overall goal to achieve and some orientations to achieve them. A good strategy is a strategy that exploits opportunities, neutralises threats, leverages strengths and dismisses weaknesses.

Elaborating a strategy thus generally requires at least the following elements :

  • Analysis of the environment (external analysis)
  • Analysis of the resources (internal analysis)
  • Strategy formulation

Environment

Michael PORTER provided a simple model to help analyse an organisation's environment. This is called the 5 porter forces. These forces are: clients, suppliers, competitors, substitutes and potential new competitors.

With these forces in mind one can analyse the company's environment in order to identify potential opportunities or threats.

Resources

Resources are everything and anything a company has available for use. This ranges from human resources to financial resources going through production facilities, knowledge basis, research and development results, ...

By studying its resources (or lack of resources) a company can identify its strengths and weaknesses.

Formulation

To formulate a strategy the external and internal analysis results will be combined in order to find proficient matches.

A formal method which exists for this is called the TOWS analysis, which suggests creating a 3*3 matrix with the external analysis in the first column and the internal analysis in the first line. The upper left cell stays blank. In the four remaining cells you right down the intersection strategy.

The strategies found can then be extracted from the matrix and be reworked (blended, merged, filtered) to contribute to the strategy formulation.