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 stages of 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 will help 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.

Develop a roadmap to follow progress and measure success. These parameters should mirror the goals set in Stage 1. Develop a strategic master project plan that specifies the activities. If those actions are not successful. Monitoring internal and external issues will also enable you to react to any substantial change in your business environment. The issues facing the company should be prioritized by their importance to your success. Identify any areas of which the business must seek external resources. Because business and economic situations are fluid. Determine your progress by measuring the actual results versus the plan. begin formulating the strategy. manage changes and address critical issues. Any successful evaluation of the strategy begins with defining the parameters to be measured. resources and time line required to implement your strategy. Evaluation and Control Strategy evaluation and control actions include performance measurements. This phase includes defining the roles that the leaders and others will play in leading the effort. it is critical in this stage to develop alternative approaches that target each step of the plan. Because internal and external issues are constantly evolving. a new structure should be installed at the beginning of this stage. then repeat the strategic management process. This is the action stage of the strategic management process. Once the funding is in place and the employees are ready. consistent review of internal and external issues and making corrective actions when necessary. and how that fits in with the overall goal. . Once prioritized. If the overall strategy does not work with the business' current structure. Everyone within the organization must be made clear of their responsibilities and duties. Determine what resources the business currently has that can help reach the defined goals. Phase three: Strategy Implementation Planning Change strategic intent into tangible action. execute the plan.Phase two : Strategy Formulation The first step in forming a strategy is to review the information gleaned from completing the analysis. It implies executing the plan. any data gained in this stage should be retained to help with any future strategies. Phase four: Strategy Implementation Successful strategy implementation is critical to the success of the business venture. objectives and priorities. If you determine that the strategy is not moving the company toward its goal. rationalize and prioritize. Additionally. any resources or funding for the venture must be secured at this point. take corrective actions.

Together. the organisation needs to determine what changes it needs to make and whether it is capable of effecting such changes.2 Analyzing the strategic position The strategic position is concerned with the impact on strategy of the external environment. customers. technological. and the expectations and influence of stakeholders. If not. To analyze the strategic position we must analyze the environment and our internal strategic capability 1.1. or PESTEL. . economic. In summary. Johnson and Scholes. suppliers and barriers to entry The STEEPLE framework This approach reviews current and future aspects of the external environment based on categories such as social. strategic capability. 2005 It is important to take account of the future and to assess whether the current strategy is a suitable fit with the strategic position. Some of these factors are used in variants of this framework and are known as STEP. political and environment (STEEPLE) issues. including competition. internal resources and competences. the strategic position forms an integral part of the strategic management process. 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. ethical. PEST. economic. It informs the strategic choices that need to be made and subsequently implemented. technological and social factors • micro influences – factors specific to the particular industry and related industries.2. a consideration of the environment.1 External analysis – the Environment Organisations need to understand the external environment in terms of: • macro influences – these include political.

governments have great influence on the health. exchange rates and the inflation rate. Furthermore. Technological factors include technological aspects such as R&D activity. interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. andinfrastructure of a nation.[1] inserting Environmental factors expanded it to PESTEL or PESTLE. tariffs. education. business position. It is a part of the external analysis when conducting a strategic analysis or doing market research. Furthermore. automation. They can determine barriers to . labour law. It is a useful strategic tool for understanding market growth or decline. Some analysts added Legal and rearranged the mnemonic to SLEPT. These factors have major impacts on how businesses operate and make decisions. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy Social factors include the cultural aspects and include health consciousness. environmental law. Economic factors include economic growth. technology incentives and the rate oftechnological change. political factors include areas such as tax policy. an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Economic.PEST analysis (Political. For example. For example. population growth rate. and political stability. potential and direction for operations. Social and Technological analysis) describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. age distribution. Trends in social factors affect the demand for a company's products and how that company operates. interest rates. Specifically. and gives an overview of the different macroenvironmental factors that the company has to take into consideration. Political factors may also include goods 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 merit bads). Political factors are basically to what degree the government intervenes in the economy. career attitudes and emphasis on safety. companies may change various management strategies to adapt to these social trends (such as recruiting older workers). trade restrictions.

and insurance. . farming. antitrust law. Environmental factors include ecological and environmental aspects such as weather. it is inadvisable to make the scenarios too complex. The trends are then mapped onto the scenarios. therefore effectively forming a pair. Building scenarios This takes the above frameworks a stage further by developing some possible coherent outcomes to some of the key environmental influences. In order to give a realistic dimension to the scenarios. quality. both creating new markets and diminishing or destroying existing ones. vizualisation and enactment techniques. Each driving force has an opposing force. and help the participants feel actively engaged. Furthermore. Immersion into the scenario by participants is the best way for the potential impact and consequences of it to be experienced. climate. Furthermore. and climate change. The scenarios are constructed by identifying the main driving forces behind the trends identified during the trend analysis stage. minimum efficient production level and influence outsourcing decisions. you can apply a mix of storytelling. consumer law. its costs. which may especially affect industries such as tourism. The two most important pairs become the axes that carve out the scenarios resulting in 4 scenarios. employment law. and health and safety law. These factors can affect how a company operates. and the demand for its products. growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer. technological shifts can affect costs.entry. Given the high degree of uncertainty related to predictions. Legal factors include discrimination law. and lead to innovation.

[3]Afterwards.The diamond model is an economical model developed by Michael Porter in his book The Competitive Advantage of Nations.[2] The Porter analysis was made in two steps. in customer-client relation. the history of competition in particular industries is examined to clarify the dynamic process by which competitive advantage was created. which has become a key tool for the analysis of competitiveness: .[2] The phenomena that are analysed are classified into six broad factors incorporated into the Porter diamond.[2] First. a number of small industries. where the competitiveness of one company is related to the performance of other companies and other factors tied together in the value-added chain. Porter’s diamond analysis The approach looks at clusters.[2] The second step in Porter's analysis deals with the dynamic process by which competitive advantage is created. clusters of successful industries have been mapped in 10 important trading nations.[2] where he published his theory of why particular industries become competitive in particular locations. or in a local or regional contexts.[2] The basic method in these studies is historical analysis.[2] In the second. this model has been expanded by other scholars.

set goals and are managed is important for success. national or supranational level.[2] But the presence of intense rivalry in the home base is also important. when sophisticated home market buyers pressure firms to innovate faster and to create more advanced products than those of competitors. capital resources and infrastructure. thus stimulating other companies in the chain to innovate.[2] The way in which companies are created. knowledge resources.[2] These industries provide cost-effective inputs. [2] Chance events are occurrences that are outside of control of a firm. regional. and competition between firms.[3] . Demand conditions in the home market can help companies create a competitive advantage. [2] They are important because they create discontinuities in which some gain competitive positions and some lose. [2] • • • • Clearly government can influence the supply conditions of key production factors. [2] Government can influence each of the above four determinants of competitiveness.• Factor • conditions are human resources.[2]Specialized resources are often specific for an industry and important for its competitiveness. [2] The Porter thesis is that these factors interact with each other to create conditions where innovation and improved competitiveness occurs.[2] Specific resources can be created to compensate for factor disadvantages. but they also participate in the upgrading process.[2] Firm strategy. [2] Related and supporting industries can produce inputs which are important for innovation and internationalization. structure and rivalry constitute the fourth determinant of competitiveness. physical resources. it creates pressure to innovate in order to upgrade competitiveness. [2] Government interventions can occur at local. demand conditions in the home market.

The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. p. Industries and sector analysis Porter five forces analysis is a framework for industry analysis and business strategy development. Porter (1990. This five forces analysis. It has been applied to a diverse range of problems. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. (1990) ^ a b Traill. 301. Eamonn Pitts (1998). the threat of established rivals. and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. The competitive advantage of nations. Springer. The remainder are internal threats.[2] . which he found unrigorous and ad hoc. is just one part of the complete Porter strategic models.E. ^ a b c d e f g h i j k l m n o p q r s t u v w x Porter. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. ISBN 0-7514-0431-4. in which available profits for all firms are driven to normal profit. Firms are able to apply their core competencies. from helping businesses become more profitable to helping governments stabilize industries. 2. ^ Traill. Bruce. 19. to contrast it with the more general term macro environment. New York: Free Press.three forces from 'horizontal' competition: the threat of substitute products or services. A change in any of the forces normally requires a business unit to re-assess the marketplace given the overall change in industry information. Attractiveness in this context refers to the overall industry profitability. The other elements are the value chain and the generic strategies. by applying unique business models. Springer.1. p. Competitiveness in the Food Industry.[citation needed] Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis. have been able to make a return in excess of the industry average. ISBN 0-7514-0431-4. Eamonn Pitts (1998). p. A very unattractive industry would be one approaching "pure competition".[1] Porter's five forces is based on the StructureConduct-Performance paradigm in industrial organizational economics. Porter's five forces include . It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. M. and the threat of new entrants. Porter referred to these forces as the micro environment. A clear example of this is the airline industry. business model or network to achieve a profit above the industry average. 127). profitability is low and yet individual companies. Competitiveness in the Food Industry. 3. Bruce. Three of Porter's five forces refer to competition from external sources. As an industry.

the more powerful your suppliers are. If it costs little in time or money to enter your market and compete effectively. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. then you can preserve a favorable position and take fair advantage of it. if there are few economies of scale in place.1. McGahan. Threat of New Entry: Power is also affected by the ability of people to enter your market. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do – for example. then this weakens your power. Again. and so on. the cost of switching from one to another. the importance of each individual buyer to your business. the uniqueness of their product or service. then they are often able to dictate terms to you. If substitution is easy and substitution is viable. "An Interview with Michael Porter". Competition and Crisis in Mortgage Securitization Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. then you can often have tremendous strength. If you have many competitors. their strength and control over you. and so on. On the other hand. The fewer the supplier choices you have. if noone else can do what you do. if you supply a unique software product that automates an important process. because suppliers and buyers will go elsewhere if they don't get a good deal from you. people may substitute by doing the process manually or by outsourcing it. Anita M. powerful buyers. or if you have little protection for your key technologies. Competitive Rivalry: What is important here is the number and capability of your competitors. and the more you need suppliers' help. and they offer equally attractive products and services. These are: Supplier Power: Here you assess how easy it is for suppliers to drive up prices. ^ Michael Porter. . the cost to them of switching from your products and services to those of someone else. This is driven by the number of suppliers of each key input. If you deal with few. The Academy of Management Executive 16:2:44at JSTOR 2. ^ Michael Simkovic. then you'll most likely have little power in the situation. this is driven by the number of buyers. then new competitors can quickly enter your market and weaken your position. Nicholas Argyres. If you have strong and durable barriers to entry.

at a minimum. the framework is only a starting point or "checklist. an analysis that uses it to the exclusion of specifics about a particular situation is considered naїve. However. industry-specific. more basic level: a market in which similar or closely related products and/or services are sold to buyers. one five forces analysis for its industry. . the first fundamental issue incorporate strategy is the selection of industries (lines of business) in which the company should compete.000 company competes in approximately 52 industries (lines of business). the five forces model should be used at the line-of-business industry level. and each line of business should develop its own. five forces analysis. it is not designed to be used at the industry group or industry sector level. According to Porter.Strategy consultants occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position." They might use "Value Chain" afterward. for most consultants. The average Global 1. Porter makes clear that for diversified companies.) A firm that competes in a single industry should develop. (See industry information. Like all general frameworks. An industry is defined at a lower.

TAM UK. Users of SWOT analysis need to ask and answer questions that generate meaningful information for each category (strengths.[3] 1.A Review". ^ Humphrey. and Threats involved in a project or in abusiness venture. weaknesses. opportunities. . Albert (December 2005). Journal of Computer Science 4 (9): 706–712. Jan 2008. the decision makers should consider whether the objective is attainable. This would allow achievable goals or objectives to be set for the organization. 3. SRI Alumni Newsletter (SRI International). First. Weaknesses. place. 2. The technique is credited to Albert Humphrey. Opportunities and Threats . • • • • 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. Retrieved 2012-06-03. A SWOT analysis can be carried out for a product. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. ^ "Object Oriented and Multi-Scale Image Analysis: Strengths. ^ "Albert Humphrey The "Father" of TAM". Weaknesses. Opportunities. given the SWOTs. "SWOT Analysis for Management Consulting". industry or person. Setting the objective should be done after the SWOT analysis has been performed.[1][2] The degree to which the internal environment of the firm matches with the external environment is expressed by the concept of strategic fit. and threats) to make the analysis useful and find their competitive advantage. who led a convention at the Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from Fortune 500 companies. If the objective is not attainable a different objective must be selected and the process repeated.Market Analysis SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths.

Assets such as cash. While strategic capability does take into account the strategies a business uses. As businesses change and acquire additional resources. Other elements of strategic capability include human resources and organizational structure. in part because of the number of factors it must address. Finally. . The process of evaluating a business' strategic capability is known as a strategic value analysis. They include investors. property and patents all contribute to a business' ability to formulate and employ strategies. 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.1. analysts must continually perform new strategic value analyses. Business leaders track strategic capability.2 Internal analysis – the strategic capability Scanning the external environment for opportunities and threats is not enough to provide an organisation a competitive advantage. Significance A business' strategic capability is a major component in remaining financially viable and growing despite the presence of competitors in a free market. with businesses 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. Pricing can also be a part of strategic capability. financial analysts and government regulatory agencies have interests in strategic capability since it plays a role in how they value and monitor businesses. it focuses on the organization's assets. public surveys and market trends to determine which businesses in a given industry have strategic capabilities that others lack. Strategic managers also need to identify internal strategic factors. There is no single method or universal metric for measuring or noting strategic capability. resources and market position. not only for their own companies but also for competitors to better understand the markets in which they operate. who want to put their money into businesses with reasonable chances of future success and growth. It relies on data from annual reports. Strategic capability refers to a business' ability to successfully employ competitive strategies that allow it to survive and increase its value over time. Many groups of interested parties attempt to measure and track strategic capability. Strategic Value Analysis Assessing strategic capability is a complex process. Elements Many elements can potentially contribute to a business' strategic capability. since employee skills and leadership mechanisms all contribute to a business' competitiveness.1. projecting how well it will be able to employ strategies in the future.

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