This Chapter considers the challenges presented by strategic planning in a business context, offering a range of tools and analytical models to support the development of competitive strategies. The basic principles of strategy are articulated, noting the importance of developing a clear business goal that delivers both economic value and which reflects the broader value expectations of customers. The use of strategy to set the long-term direction of a business is also discussed, highlighting the need to create some point of competitive differentiation. Ultimately, corporate agility is required to stay ahead of the competition and the Chapter therefore focusses on the need to maintain and review an accurate understanding of the corporate operating environment if the strategy being followed is to be effective.
The importance of developing a suitable mission and vision is shown, noting how these should be supported by realistic and achievable goals. These need to reflect the fact that no business operates in a vacuum and that it is therefore important to understand the marketplace and continually monitor the operating environment for any for changes. To support these deliberations, the Chapter proposes a number of analytical frameworks to guide strategy development. To review external factors, the PESTLE model is suggested (considering political, economic, social, technological, legal and environmental drivers), along with Michael Porter’s (2008) five forces approach (considering the bargaining power of supplier and customers, as well as the challenges posed by new market entrants and product/service substitution). These findings can then be further developed through a competitor analysis to identify sources of unique value, key attribute or features which can provide sustainable differentiation.
In considering how an organisation can best deploy its resources deliver any strategic plan, the Chapter also outlines a number of internal analytical approaches. These include SWOT (examining strengths, weaknesses, opportunities and threats), undertaking a review of unique resources (such as people, intellectual property, brand, and infrastructure) and Porter’s (2004) value chain analysis.
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Having considered the tools and models that can be used to support strategic planning, the Chapter then examines the approaches that can be considered to achieve and maintain a competitive advantage. Cost leadership, cost focus, differentiation and differentiation focus strategies are outlined as being core/fundamental approaches to pursue, although this is further refined by examining how companies generate value. This supports a more detailed consideration of the strategy options relevant to businesses operating in the services sector, using Bowman’s strategy clock (1996) to frame the discussion.
The challenge of ensuring that strategy reflects any growth/expansion aspirations is also noted in this Chapter, along with the need to continually review the approach taken to ensure that it reflects emerging/changing market conditions. This introduces the danger of strategic drift, where the constant adaption of plans and corporate activities (driven by market changes) can lead to a company losing sight of how it delivers value to customers. This reinforces the importance of maintaining a long-term view when adapting corporate objectives, ensuring that any revisions reflect the company’s mission, vision and values.
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