Bain Fundamentals: Business Strategy Development in against 5 ...

To build a rigorous corporate strategy, businesses all must conduct strategy development beginning with a collective set of beliefs around its current situation and existing strategic challenges. The next steps, on a high level, include defining what the future state vision of the company is and then going into the details of planning how to get to that state. In order to understand your strategic challenges, you must begin with a complete, end-to-end understanding of your situation. It is also important to realize that there is more to strategy than just winning. Strategy is about value innovation, strategy is about competitive selection, and strategy is about flexibility.

Strategy development is an expansive but integral component of any business, enterprise or small, and as a result, there are various methodologies geared towards this focus area. To begin with corporate strategy development, you must determine your strategic barriers by defining where you want your company to be, how you can get your business to the desired end state, and where you currently are. ABC allows for logical profitability to be understood around critical areas of product lines, customer segments, distribution channels, and other markets. Even though the end desire of any business strategy is to maximize profitability, it involves a number of non-trivial pieces, including defining your companys value proposition, competitive strengths, and business transformation. The evolution from your current state to your desired end state is a matter of strategy development and execution of that strategy. Activity Based Costing ABC is a strategy development framework created to improve upon the accuracy of conventional forms of business costing, so that strategic business decisions can be performed in a way that is well informed.

Today, there are two primary schools of thought around strategic management. In organizational configuration, the organization takes on behaviors based on adaptation to business surroundings. Mintzberg also advocates a transformation of business practices, where management recognizes the need and has the ability to manage organizational business operations transformation. Mintzberg opts for an organization, bottom-ups approach to drive the strategy development process that adheres to organizational configuration.

Strategy development process has evolved through 5 key phases over the years. Much of growth strategy is also hinged on ideas in the 1970s, where the focus was around thinking strategically to beat competition and the business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were actively used for the first time. Strategy development started with a focus on financial planning in the 1950s, moving to long-term planning in the 1960s, to strategic planning in the 1970s and eventually to a focus on strategic management in the present day. Shifts in strategic mindset represent a changing landscape, new business leaders, and emergence of disruptive technologies and changes. Today, the strategic development theme is on integrating strategic planning and implementation with a stress on the primary notions of core competencies, strategy planning and execution, and balance scorecard analysis.

Within the strategy development process, it is always critical to conduct rigorous market analysis. Understanding what is a market analysis involves both supply analysis and demand analysis, which includes segmentation and segment analysis, understanding consumer buying behavior, and trend analysis. There are several market environment evaluation variables, including ones that are socio-demographic, economic, political, technological, and current trends. Proper market analysis example involves defining the market scope and the study scope, understanding the core business issues, and planning for the future. There are also several market place analysis characteristics, including market size development, pricing changes, product development, market place characteristics, market force structure, and current trends. Remember that you should evaluate what makes a market unique, such as a high degree of government regulations, high competitive fragmentation, and importance of CapEx.

Strategic thinking of contemporary businesses has been built upon a platform of military strategists since the beginning of organized warfare. Sun Tzu spoke about indirect corporate strategies when he said winning without fighting is the pinnacle of skill on the battlefield. Sun Tzus thoughts about the factor of terrain, if we were to take that into the context of companies competing today, translates to markets, industry structures, market positions, and Porters Five Forces. Sun Tzu preached to know and attack the enemys strategy. In Sun Tzus Art of War, he spoke about several fundamental factors in military strategy and each of these factors can be directly translated to terms of business strategy.

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