STRATEGIC MANAGEMENT IMPORTANT QUESTIONS TO ANSWER

IN DEVELOPING A STRATEGIC PLAN

 Defined as the art and science of
formulating, implementing and 1. Where are we now?
evaluating cross functional decisions
that enable an organization to 2. Where do we want to be?
achieve its objectives. 3. How will we get there?
 Strategic management is the
management of an organization’s FIVE STAGES OF STRATEGIC
resources to achieve its goals MANAGEMENT PROCESS
and objectives.
1. Assessing the organization's current
 The term strategic management is
strategic direction;
sometimes used synonymously with
2. Identifying and analyzing internal
the term strategic planning.
and external strengths and
 Involves setting objectives,
weaknesses
analyzing the competitive
3. Formulating action plans;
environment, analyzing the
4. Executing action plans; and
internal organization, evaluating
5. Evaluating to what degree action
strategies, and ensuring that
plans have been successful and
management rolls out the strategies
making changes when
across the organization.
desired results are not being
 The purpose of strategic
produced.
management is to exploit and create
new and different opportunities for
tomorrow's long-range planning. 1. Assessing the organization's
current strategic direction;
STRATEGIC PLANNING
CLARIFY YOUR VISION (GOAL SETTING)
 Originated in 1950s and
This stage consists of identifying three key
 It was very popular between the mid-
facets:
1960s and mid-1970s. During these
years, strategic planning was widely 1. Define both short- and long-term
believed to be the answer for all objectives.
problems. 2. Identify the process of how to
accomplish your objective.
 Is an organization's process of
3. Customize the process for your staff,
defining its strategy, or direction, and
give each person a task with which
making decisions on allocating its
he can succeed.
resources to pursue this strategy.
Note: Keep in mind during this process your
goals to be detailed, realistic and match the
values of your vision.
2. Identifying and analyzing internal and 4. Executing action plans;
external strengths and weaknesses
STRATEGY IMPLEMENTATION
GATHER AND ANALYZE INFORMATION
 This is the action stage of the
 In this stage, gather as much strategic management process.
information and data relevant to Everyone within the
accomplishing your vision. organization must be made clear of
their responsibilities and duties, and
 The focus of the analysis should be how that fits in with the overall goal
on understanding the needs of the
business as a sustainable entity, its  Requires a firm to establish annual
strategic direction and identifying objectives, revise policies, motivate
initiatives that will help your business employees, and allocate resources
grow. so that formulated strategies can be
executed.
 Make sure to identify both the
strengths and weaknesses of your  The challenge of implementation is
organization as well as any threats to stimulate managers and
and opportunities that may arise employees throughout an
along the path. organization to work with pride and
enthusiasm toward achieving stated
3. Formulating action plans; objectives.
STRATEGY FORMULATION 5. Evaluating to what degree action
plans have been successful and
 Determine what resources the
making changes when desired
business currently has that can help
results are not being produced.
reach the defined goals
and objectives. STRATEGY EVALUATION AND
CONTROL
 The issues facing the company
should be prioritized by their  Include performance measurements,
importance to your success. consistent review of internal and
 Include deciding what new external issues and making
corrective actions when necessary.
businesses to enter, what
businesses to abandon, how to  Managers desperately need to know
allocate resources, whether to when particular strategies are not
expand operations or diversify, working well; strategy evaluation is
whether to enter international the primary means for obtaining
markets, whether to merge or form a information.
joint venture.
 THREE FUNDAMENTAL STRATEGY
EVALUATION ACTIVITIES:

1. Reviewing external and internal  Most organizations can benefit from

factors that are the bases for current strategic management, which is
strategies. based upon integrating intuition and
2. Measuring performance. analysis in decision making.
3. Taking corrective actions. Analytical thinking and intuitive
thinking complement each other.
INTEGRATING INTUITION AND
ANALYSIS PEOPLE USED INTUITION AND
ANALYSIS
 Integrating intuition and analysis is
important in strategic management.  William Duran, who organized GM,
was described by Alfred Sloan as a
ANALYSIS man who would proceed on a course
 Provides an objective and ground of action guided solely, by some
intuitive flash or brilliance. He never
perspective.
felt obliged to make an engineering
 Analysis of the strategic plan helps hunt for the facts.
to identify the loopholes in the
 Albert Einstein acknowledged the
management.
importance of intuition when he said,
INTUITION I believe in intuition and inspiration.
At times I feel certain that I am right
 Brings in a more creative and while not knowing the reason.
intuitive approach. Imagination is more important than
knowledge, because knowledge is
 Is a psychological function
limited whereas imagination
supported to individuals for using
embraces the entire world.
her/his experiences and
knowledge to isolate and integrate  Operating from what I’ve already
the data for taking appropriate made up to my mind, don't bother
decisions for the business. me with the facts mode is
not management by intuition; it is
 It is developed to reduce the
management by ignorance. Drucker
chances of uncertainties and risks in
says, I believe in intuition only if you
the future, and sometimes it is
discipline it.
necessary to move according to
intuitions.  Artists, who make a diagnosis but
don’t check it out with the facts, are
 Based on past experiences,
the ones in medicine who kill people,
judgment, and feelings, most people
and in management kill businesses.
recognize that intuition is essential to
making good strategic decisions.
 competitive trends and events that
could significantly benefit or harm an
NINE KEY TERMS IN STRATEGIC organization in the future.
MANAGEMENT
Opportunities and Threats that Face
COMPETITIVE ADVANTAGE - Anything many Firms
that a firm does especially well compared to
rival firms. When a firm can do something  Availability of Capital
that rival firms cannot do, or owns
something that rival firms desire, that can  Marketing is moving rapidly to the
represent a competitive advantage internet.

Ways in Sustaining Competitive  Global markets offer the highest

Advantage growth in revenues.

 Too much debt can crush even the

 Continually adapting to change.
best firms.
 Effectively formulating, implementing and
evaluating strategies.  Layoffs are rampant.
STRATEGISTS – Are the individuals who INTERNAL STRENGTHS AND
are most responsible for the success or WEAKNESSES – Are an organization’s
failure of an organization.- Help an controllable activities that are performed
organization gather, analyze, and organize especially well or poorly.
information.
LONG-TERM OBJECTIVES
VISION AND MISSION STATEMENT
 Objectives defined as specific
 Vision statement answers the results that an organization seeks
question “what do we want to achieve in pursuing its basic
to become?” Developing a vision mission. Long term means more
statement is often considered the than one year.
first step in strategic
planning, preceding even  Objectives are essential for
development of a mission statement. organizational success because they
state direction; aid in
 Mission statements are enduring evaluation; create synergy; reveal
statements of purpose that priorities; focus coordination; and
distinguish one business from other provide a basis for effective
similar firms. planning, organizing, motivating and
controlling activities.
EXTERNAL OPPORTUNITIES AND
EXTERNAL THREATS STRATEGIES – Are the means by which
long-term objectives will be achieved.
 Refers to economic, social,
Potential actions that require top
cultural, demographic,
management decisions and large amounts
environmental, political, legal,
of the firm’s resources.
governmental, technological, and
ANNUAL OBJECTIVES – Are short-term roadmap, guiding the organization through
milestones that organizations must achieve the execution of its strategy by outlining
to reach long term objectives. Like long- specific actions, timelines, resource
term objectives, annual objectives should be allocations, and responsibilities.
measurable, quantitative, challenging,
realistic, consistent and prioritized. 3. Alignment of Resources and
Structures Plan - ensures that the
POLICIES – Are the means by which organization’s resources and structural
annual objectives will be achieved. Include elements align with the strategic objectives,
guidelines, rules, and procedures facilitating efficient and effective
established to support effectively to achieve strategy implementation. This alignment is
stated objectives. Are guides to crucial because it can significantly impact
decision making and address repetitive or the organization’s ability to execute its
recurring situations. strategy successfully.

MODULE 2: The process of Crafting and 4. Communication and Engagement -

Executing Strategy This serves as the glue that binds all other
steps together. Effective communication
STRATEGY EXECUTION ensures that everyone in the organization
understands the strategy and their role in
 Process of implementing an
organization’s strategy. It implementing it. In contrast, engagement
involves determining what actions to ensures that employees are committed and
take to achieve the desired motivated to contribute to the strategy’s
success.
outcomes and organizing them into
a plan. 5. Execution of Strategic Initiatives – This
 Is a critical phase in strategic is where planning transitions into action,
management, focusing on turning and the organization’s strategic objectives
begin to materialize through concrete
strategic plans into actions
to achieve strategic objectives. actions. This phase is the heart of strategy
execution, involving deploying resources,
KEY STEPS IN STRATEGY EXECUTION initiating projects, and implementing actions
carefully planned in previous steps.
1. Clarification of Strategy - It involves
ensuring that the strategy is understood 6. Monitoring and Control – this ensures
clearly and uniformly across the entire that strategic initiatives progress as planned
organization. This clarity is crucial because and achieve the desired outcomes. This
it influences how well the strategy will be step involves setting up systems to track
implemented and whether the intended progress, assess performance, and make
strategic objectives will be achieved. necessary adjustments to keep the strategy
on track. Effective monitoring and control
2. Development of an Implementation are crucial for identifying issues early,
Plan - a critical phase in the strategy enabling timely interventions, and ensuring
execution process, where the overarching that the strategy execution remains aligned
strategy is translated into a detailed with the organization’s strategic objectives.
blueprint for action. This plan serves as a
7. Adaptation and Continuous FORMATION OF VISION, MISSION, AND
Improvement - About embedding agility STRATEGIC GOALS
and a culture of ongoing enhancement
within the organization to ensure its VISION STATEMENT - is a company's
strategic initiatives remain relevant and future aspirations defined clearly by an
effective over time. This step acknowledges executive or team of executives.
that the business environment is dynamic, IMPORTANCE OF VISION STATEMENT
and successful execution of strategy
requires adherence to a plan and the ability It directs a company's focus on how its
to adapt and evolve based on new insights present actions can influence future
and changing circumstances. business prospects. It can also act as a
reminder to company employees about why
8. Review and Evaluation - the final phase
they perform certain job duties and how
in the strategy execution process, where their work contributes to the organization's
the organization takes a comprehensive success.
look at the outcomes of its strategic
initiatives and the overall effectiveness of its 1. It helps the brand make informed
strategy. This phase is critical for assessing decisions. The brand can refer to its
whether the strategic objectives have been vision statement when making
achieved, understanding the impact of the substantial decisions for the company.
strategy on the organization’s performance, This helps to ensure the company and
and identifying lessons learned for future its employees remember what the
strategic planning cycles. company is working towards and select
the right choices to move the business
Process of crafting and executing
forward in its statement, even if it delays
strategy involves the following steps:
immediate benefits.
2. It provides motivation and
 Developing a strategic vision of
where the company needs to head inspiration to employees. Employees
and what its future product, market, may feel motivated and inspired to work
customer, technology focus should on their tasks when the company
be. provides a vision statement for
guidance. It provides a reason why a
 Setting objectives to spell out for the
professional may want to do the job and
company how much or what kind of
help maintain their job satisfaction
performance is expected and by
because they understand their purpose
when.
at work.
 Crafting a strategy to achieve the
3. It creates a brand legacy. An effective
objectives and move the company
vision statement for a brand can help
along the strategic course that
establish a legacy. This means the goal
management has crafted.
of a business' vision statement can
 Identifying employees’ capabilities to
include ensuring the legacy outlasts
fulfill and execute the strategies.
the founders.
4. It develops company culture.
Professionals can understand how to
 act in their organization when there's a STEPS IN CONDUCTING A
clearly defined statement. It can also COMPETITIVE POSITIONING ANALYSIS
guide professionals on how to
represent the brand outside the office 1. IDENTIFY YOUR COMPETITORS
when attending company events. The first step is to identify who is your direct
5. It can prioritize resources. The
and indirect competitors are. Direct
company can use its statement to
competitors are those who offer similar
determine how to prioritize resources products or services to the same target
effectively to achieve its goals. For market as you. Indirect competitors are
example, it may help you decide how to those who offer different products or
utilize the technology and equipment the
services but solve the same customer
brand already owns. problem or satisfy the same customer need
MISSION STATEMENT – is a single as you. You can use various sources to find
sentence that describes a company’s your competitors, such as online search,
fundamental purpose by explaining why the industry reports, customer feedback, social
business exists. media, or word of mouth. You should aim
to select at least three to five competitors for
PURSUING THE VISION AND MISSION your analysis.
THROUGH SMART GOALS
2. ANALYZE YOUR COMPETITORS
The most effective goals are those that are
SMART (specific, measurable, attainable, The next step is to analyze your
realistic, and time bound). SMART goals competitors' strengths, weaknesses,
help provide clarity, transparency, and opportunities, and threats (SWOT). This will
accountability. help you understand their value proposition,
target market, differentiation,
MODULE 3: EVALUATING A COMPANY’S and messaging. To collect and organize
COMPETITIVE POSITION data, you can use various tools and
methods such as competitor websites,
COMPETITIVE POSITIONING ANALYSIS - reviews, social media, surveys, interviews,
Is a process of identifying and evaluating or benchmarking. When analyzing your
how your brand compares to your competitors, focus on their value proposition
competitors in terms of value. to see what benefits and solutions they offer
their customers. Also look at their target
- The process of categorizing and
market to identify their ideal
evaluating your competitors to understand
customers' demographics, psychographics,
their strengths and weaknesses in
behaviors, and needs. Additionally, consider
comparison to your own.
their differentiation to determine what
makes them unique in the market. Lastly,
pay attention to their messaging to see how
they convey their brand personality and
voice.
 3. COMPARE YOUR BRAND Surveys, interviews, focus groups, or
experiments are some of the methods you
The third step is to compare your brand to can use to test and refine your positioning
your competitors based on the same statement. It is important to answer
aspects that you analyzed in the previous questions such as: Is the positioning
step. This will help you to identify your statement clear and relevant to the target
strengths, weaknesses, opportunities, and market? Is it distinctive and defensible from
threats (SWOT) as well as your points of competitors? Is it consistent with the brand
parity and points of difference. You can use identity and values? Based on the results
a SWOT matrix or a positioning map to and insights obtained from the testing and
visualize and compare your brand to refinement process, you should revise
your competitors. When doing so, consider and refine your positioning statement.
questions such as: does your value
proposition differ from competitors? How do PORTER’S FIVE FORCES
you communicate it? How does your target
market differ from others? How do you - This framework offers organizations a
differentiate yourself from others? What is systematic approach to assessing their
the tone and voice of your messaging? competitive environment and making
strategic decisions that can influence their
4. DEFINE YOUR POSITIONING long-term success.

The fourth step is to define your positioning 1. COMPETITIVE RIVALRY - evaluates the
statement based on your points of number of existing players and how
difference and points of parity. A positioning established they are in the industry. How
statement is a concise and clear statement many competitors do you have? Are their
that summarizes how you want your target products better than your own? This force
market to perceive your brand, and should is the major determinant on how competitive
include the target market, category, benefit, and profitable an industry is. In
and reason to believe. This statement a competitive industry, firms have to
should follow the format: [Brand name] is compete aggressively for market share,
the [category] for [target market] that which results in low profits.
[benefit] because [reason to believe]. As an
example, Zappos is the online shoe store 2. SUPPLIER POWER- When only a few
for busy professionals that deliver suppliers can provide a product, they can
exceptional customer service because they dictate terms and pressure businesses to
offer free shipping, free returns, and a accept higher prices. Even if terms are
365-day return policy. unfavorable, some get pressured to take
them because of the costs of moving to
5. TEST AND REFINE YOUR another supplier. This means supplier
POSITIONING power refers to the pressure suppliers can
exert on businesses by raising prices,
The final step is to test and refine your lowering quality, or reducing availability of
positioning statement with your target their products.
market and stakeholders. This will help you
validate your assumptions, gain feedback, 3. BUYER POWER - refers to the influence
and enhance your positioning strategy. customers wield over a business. If an
industry has strong buyer power, 3. RISK MITIGATION - By identifying
consumers can demand lower prices, higher potential threats, companies can address
quality or improved service, affecting a challenges ahead of time. For example, it
company’s profitability. A market with fewer offers a unique value proposition to remain
customers and more sellers. In this relevant for consumers.
scenario, businesses can differentiate
themselves by formulating unique value 4. OPPORTUNITY IDENTIFICATION -
propositions to justify their higher prices. Recognizing industry gaps and unmet
needs can help businesses differentiate
4. THREAT OF SUBSTITUTION - refers to themselves or develop innovative solutions.
the likelihood that customers might switch to
a different product or service. When 5. LONG-TERM SUSTAINABILITY - When
substitution threats are high, businesses are strategies consider Porter’s Five Forces,
vulnerable to sudden shifts in consumer they are more likely to withstand market
preferences. This is the availability of a fluctuations.
product that the consumer can purchase STRATEGIC GROUP – is a concept used
instead of the industry’s product. in strategic management that groups
5. THREAT OF NEW ENTRANTS - companies within an industry that have
involves evaluating the barriers to entry in similar business models or similar
an industry. High barriers such as high combinations of strategies. Example the
starting capital costs and a small pool of restaurant industry can be divided into
suppliers can deter new rivals from several strategic groups including fast-food
early success. It is a threat that new and fine-dining based on variables such as
competitors pose to current players within preparation time, pricing, and presentation.
an industry. STRATEGIC GROUP ANALYSIS (SGA) –
ADVANTAGES OF PORTER’S FIVE Aims to identify organizations with similar
FORCES strategic characteristics, following similar
strategies or competing on similar bases.
1. HOLISTIC ANALYSIS – Porters five
forces provides a comprehensive overview USE OF STRATEGIC GROUP ANALYSIS
of the competitive landscape. As a result,
1. Helps identify who the most direct
organizations can allocate their resources competitors are and on what basis they
and make decisions based on multiple compete.
factors existing in the environment. Holistic 2. Raises the question of how likely or
analysis means looking at the entire
possible it is for another organization to
business and all of its moving parts rather move from one strategic group to another.
than narrowing in on just a few key pieces 3. Strategic Group mapping might also be
of the puzzle. used to identify opportunities.
2. STRATEGIC INSIGHT - The model lets 4. Can also help identify strategic
businesses think critically about their problems.
position in their industry and their existing
competitors. That way, they can make
informed decisions
INTERNAL ANALYSIS - The process of an MARKET POSITIONING - refers to the
organization examining its internal ability to influence consumer perception
components to assess its resources, assets, regarding a brand or product relative to
characteristics, competencies, capabilities competitors. The objective of market
and competitive advantage. This positioning is to establish the image or
helps management during the decision- identity of a brand or product so that
making, strategy formulation, and execution consumers perceive it in a certain way.
processes by identifying the organization's
strengths and weaknesses. TYPES OF POSITIONING STRATEGIES

5 STEPS IN CONDUCTING INTERNAL 1. Product attributes and benefits: Using

ANALYSIS product characteristics or benefits as a
positioning strategy associates your brand
1. Set the goal with a certain characteristic that is beneficial
to customers. For example, in the
The first step is to set the goal, this is automobile industry, Toyota’s position in the
essentially the answer as to why you're market is reliability, Porsche’s position is
conducting an Internal Analysis. performance and Volvo’s position is safety.
2. Pick a template framework Brands consistently communicate the most
unique benefit or characteristic of the
The second step is to download an Internal product with consumers.
Analysis Toolkit and choose the Internal
Analysis Framework Template that most 2. Product price: This is associating your
aligned with the problem you're trying to brand with competitive pricing. Usually, with
pricing positioning strategy, a brand aims to
solve and your goal.
be the cheapest or one of the cheapest in
3. Data collation the market, and value becomes their
position. For example, Supermarket chains
Use all internal sources to collate often have a house brand with very low-
information to assist in achieving your price products in many product categories.
goal. Their lower logistical and distribution
costs allow them to price their products
4. Framework time
lower than the competitors, so price-
Now you take into account all of the data sensitive buyers will often purchase them
you collected from your research and without knowing the price because they
execute it in the chosen framework. Once know it is often the cheapest option.
you have completed the framework,
3. Product quality: Associating your
leverage the insights to best answer the
brand/product with high quality.
question of why you conducted an Internal
Analysis. 4. Product use and application:
Associating your brand/product with a
5. Create your plan
specific use. For example,
Once you have answered that question, meal replacement supplements can be of
take the insights and create a strategic plan use to anyone lacking time or wanting a
that enables you to reach that initial goal. quick convenient meal. There are also meal
replacements designed specifically for your product or service, you should still be
people who want performance in the gym, targeting specific buyers to
so high in calories and added vitamins and maintain integrity and differentiation within
minerals. Other meal replacements are for your brand.
people on a diet, so they are low in calories
and would not provide much energy b. MARKET CATEGORY – Usually start
for somebody’s workout. out broad and get more niche as the
businesses occupying that market expand
5. Competitors: Making consumers think their product and service offerings to the
that your brand/product is better than that of consumers in the market. When your
your competitors. Competitor based market category is developed or you’re part
positioning focuses on using the competition of an emerging market, you’ll need to
as a reference point for differentiation. define who the buyers are in the space,
Brands highlight a key difference their where they’re searching for goods and
product/service offers in their marketing to services, and who has their attention.
make it seem favorable and unique
compared to other options in the c. CUSTOMER PAINS – Are the problems
marketplace. or issues your target audience is
experiencing that could be solved with
MARKET REPOSITIONING - is when a products or service available in your market
company changes its existing brand or category. Your product or service should
product status in the marketplace. aim to address customer pains and offer a
Repositioning is usually done due to solution.
declining performance or major shifts in
the environment. Many companies, instead d. BRAND PROMISE – Is ultimately what
of repositioning, choose to launch a new the target audience or buyer stands to gain
product or brand because of the high cost from using your product or service. It’s what
and effort required to successfully reposition success looks like to them if their pain or
a brand or product. problem is resolved.

POSITIONING STATEMENT – is a brief e. BRAND IDENTITY – Is the personality of

description of a product or service and an your business and includes both visible
explanation on how it fulfills a particular factors (such as logo design) and invisible
need of the target market. The goal of a ones (such as values or voice). Brand
positioning statement is to align identity is one aspect of strategic market
marketing efforts with a company’s brand positioning that will set you apart from
and value proposition. competitors and help you gain recognition
from your target audience.
CORE ELEMENTS OF STRATEGIC
MARKET POSITIONING f. VALUES – Guide how your business
makes decision within the context of your
a. TARGET AUDIENCE – Defined as the brand. They create the culture of your
group of consumers you’re targeting with organization and leave a favorable
your product or services. They say that “the impression on your target audience. They
riches are in the niches.” This comes down are the intangible methods with which you
to the idea that, even if anyone can use execute your mission and vision.
SWOT ANALYSIS - Is a technique for
assessing the performance, competition
risk, and potential of a business or part of a
business. It is a framework used in strategic
planning to evaluate the
business’s competitive positioning in the
marketplace.

Strengths may be any number of areas or

characteristics where a company excels and
has a competitive advantage over its peers.
Advantages may be more qualitative in
nature and therefore difficult to measure
(like a great corporate culture, strong brand
recognition, proprietary technology, etc.), or
they may be more quantitative (like best-in-
class margins, above-average inventory
turnover, category-leading return on equity,
etc.).

Weaknesses are areas or characteristics

where a business is at a competitive
disadvantage relative to its peers. Examples
include inexperienced management, high
employee turnover, low (or declining)
margins, and high (or excessive) use of
debt as a funding source.

Opportunities highlight external factors that

represent potential growth or improvement
areas for a business. Example technological
advancements that might help improve
efficiency, or changes in social norms that
are creating new markets or new sub-
segments of existing markets.

Threats are external forces that represent

risks to a business and its ability to operate.
Technological innovation could also be a
threats that could disrupt the existing
business and its operations, or
evolving social norms that make existing
product offerings less attractive to a growing
number of consumers.