Strategy Tools to Assess the Macro Environment
Before we exami ne tool s that can be used for strategi c anal ysi s, we need to
understand what i s i nvol ved i n the process of bui l di ng strategy.
T he process of building strategy
Strategi c management compri ses a defi ned set of deci si ons and acti ons whi ch are
used to formul ate and impl ement strategi es. These are desi gned to improve any
exi sti ng competi ti ve rel ati onshi ps that exi st between an organi sati on and the
envi ronment i n whi ch i t operates. These wi l l support the efforts made to achi eve
organi sati onal goal s.
The key obj ecti ve of strategi c management i s to answers questi ons regardi ng
changes i n the fol l owi ng:
The competi ti ve envi ronment
Types of customers
Nature of product or servi ce offeri ngs (and how they can be provi ded most
effi ci entl y)
The answers to these questi ons wi l l enabl e managers to make appropri ate
deci si ons so that they may posi ti on an organi sati on wi thi n the envi ronment wi th
regard to any threats posed by other compani es. Superi or organi sati onal
performance ari ses from careful choi ces made by managers – i t i s not the resul t
of l uck.
Strategi c management i s used by seni or management to determi ne the overal l
di recti on for thei r organi sati on. Thi s i s sometimes known as the grand strategy
and general l y fol l ows one of three obj ecti ves:
Growth – i nvestment i s used to support expansi on or acqui si ti on to achi eve
greater profi tabi l i ty.
Stabi l i ty – adopted when an organi sati on deci des to remai n the same si ze (or
‘pause’ i n i ts growth), usual l y occurri ng at times of economi c uncertai nty.
Retrenchment – a peri od of forced decl i ne i s sel ected as a resul t of markets
shri nki ng.
Strategy, whether i t i s devel oped for a whol e organi sati on or for busi ness uni t, i t
fol l ows roughl y the same bui l di ng process. Its central concern i s to create a l ongterm
vi si on of where we want to be or what we woul d l i ke to become. Keepi ng that
cl earl y i n mi nd, we need to test whether thi s i s feasi bl e and practi cabl e, and to
fi nd ways of getti ng there. The pul l i ng power of the vi si on i s extremel y important
i n energi si ng a team and unl ocki ng the creati vi ty i ncreasi ngl y needed to survi ve
i n the tough competi ti ve cl imate i n whi ch we operate.
Thi s i s roughl y the sequence of the strategy bui l di ng process:
Developing strategic purpose – the reason we are here
Developing strategic intent – where we wi l l fi t i n a future envi ronment
Analysing where we are now
Planning what we have to do to get there – our strategi c pl an
Planning how we are going to do it – our tacti cal pl an
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