Strategic management is not just for big businesses
All businesses big or small need strategies to achieve business goals. A strategy is defined as the actions needed to move from the current condition to the desired future condition. The desired future condition is a vision of the organization, and it is put in clear focus by goals and objectives. The gap between the current condition and the desired future condition comprises challenges which the organization will need to overcome and opportunities which the organization will have to harness to achieve its goals and objectives. What the organization does to overcome challenges and harness the opportunities constitutes the strategies.
In this highly competitive business landscape, businesses big and small need to competitively position themselves in the market. This competitive positioning demands business organizations to be cognisant of their internal strengths, weaknesses and the threats and opportunities facing the organization in the external business environment. The extent to which the organization uses its strengths to exploit opportunities and mitigate threats and weaknesses determines its competitive position in the market.
The strategy formulation process doesn’t need to be a daunting task. The starting point is to paint a clear picture of where the organization needs to be in three or five years and then understand the organizations current position or situation. The next step will be to identify the obstacles preventing the organization from achieving its future state in three or five years and the opportunities which it can exploit. However, it is worth pointing out that to be effective, strategies should not be developed and implemented in isolation. While it is true that management has the responsibility to lead organizations, employees are the ones who mostly interact with customers, implement various activities and fully understand the challenges they face as they do so. Therefore, to be effective, the strategy formulation process should involve everyone in the organization. This creates the needed momentum, motivation, and sense of ownership needed to effectively implement strategies and refine them as the business and market conditions change.
Throughout the process of strategy formulation, the organization needs to understand its position in the industry and how external forces are likely to affect its position. The organizations competitiveness in the industry is analysed by looking at the existing competition in the industry, the bargaining power of suppliers, the bargaining power of customers, the threat of new entrants and the threat of substitute products. The organizations ability to withstand external forces can be evaluated by assessing the influence of the political, economic, social, technological, environmental and legal factors on the organization.
Once the strategies have been formulated, it is important to disseminate this organization-wide and develop monitoring metrics to monitor and evaluate the performance their performance.
References
Havard Business School Online. (n.d). How to formulate a successful business strategy. Havard Business School Online.
Johnson, G., Whittington, R., & Scholes, K. (2011). Exploring Strategy texts and cases. Harlow: Pearson Education Limited.
Ritson, N. (2019). Business Strategy and Strategic Planning a definition and definitive guide. Bookboon Learning.