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Strategy - Coggle Diagram
Strategy
Not all businesses get it right straight away. There are natural weaknesses within all organisations for various reasons. What a business strategy does is try to remedy these weaknesses so that companies don’t trip up and suffer their impact too greatly. Strategies look at these future risks and help develop ways in which they can overcome these obstacles.
Guide: A well defined business strategy will offer a guide on how your business is performing internally. Also, how you are performing against your competition and what you need to stay relevant into the future.
Trends: A strategy can identify trends and opportunities in the future. It can examine the broader changes in market such as political, social or technological changes, as well as consumer changes, and can develop tactics so your business can modify and develop to suit these future changes.
Vision: A business strategy creates a vision and direction for the whole organisation. It is important that all people within a company have clear goals and are following the direction, or mission of the organisation. A strategy can provide this vision and prevent individuals from losing sight of their company’s aims.
Competitive Advantage: Finally, by creating a business strategy a company can create a competitive advantage and ultimately understand more about themselves and where they are going.
- Resource allocation – One thing is clear about any company, large and small—resources are finite. We wish they were infinite, but that will never be the case. Strategy is about making choices. What products, services and markets will be a part of the future and what we should not do? These types of decisions are critical to ensuring that limited resources are being deployed to the most promising opportunities that will provide the greatest return.
- Strengths and Weaknesses – At first glance this seems too obvious and you are saying to yourself, “Of course we know what our strengths and weaknesses are!” We cannot disagree. No one knows your business better than you. On the other hand, are you leveraging strengths (competitive advantages) and do you have plans to close capability gaps in your organization (weaknesses)? Strategy creates a higher level of awareness and provides greater focus on activities that will make the organization more successful.
- Skills & Knowledge – If you know where you want to take your business over the long term, you will have a much better idea of the kinds of capabilities you will need to achieve your goals. Strategy defines and drives decisions in organizational design. Therefore by proactively pursuing new skills and knowledge, you prepare the organization for the intended future state and your odds of success increase.
- Environmental Scan – Too many CEOs don’t take the time to truly know the external environment that can have a positive or negative impact on performance. This is not to say that leaders are not in tune with their customers, or not aware of their competition. The question is, how thorough an analysis are they doing? Jack Welch had it right when he asked his division leaders to dig deep to understand how things might change before they really happened. Being aware and prepared for potential shifts in your market or industry provides the opportunity to take action before it happens.
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Important steps in understanding past performance and formulating and monitoring strategy may include:
Historical analysis to determine key drivers of business and set key performance indicators (KPI’s);
Implementation of management information systems to facilitate the extraction of KPI’s and other important information; and
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Change Management
Sometimes taking the leap of faith to move away from doing things the way they have always been done and implementing change is a difficult hurdle for management or business owners to overcome.
An independent review, undertaken in conjunction with management that summarises the relevant factors impacting performance can be the catalyst for driving strategy going forward.
In order to best determine the future direction of your business, it helps to understand where you are positioned in the market.
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A critical assessment of the current and historical performance of your business and factors impacting it may assist with gaining a better understanding and help shape direction.
Gaining an analytical understanding of where your business is positioned in the market, aids you in determining the direction in which your business should head in order to achieve desired objectives
A business strategy outlines the tactics, methods and pathways employed by a business to achieve future goals.
A business strategy, in simple terms, is a documented plan on how an organisation is setting out to achieve their goals. A business strategy contains a number of key principles that outlines how a company will go about attaining these goals. For example it will explain, how to deal with your competitors, look at the needs and expectations of customers, and will examine the long term growth and sustainability of their organisation.