Goals are important for organizations to determine the future direction of a company. A good strategy always stems from a thorough analysis of the company’s position in the market. This is where a company’s strengths and weaknesses, as well as opportunities and threats, are incorporated in the strategy. A great example of a tool that assists in determining a strategy in this aspect is the SWOT analysis.
The usefulness of an effective strategy (importance) does not stop with providing direction for management and employees. In addition to its function as a North Star, strategy also plays an important role in the decision-making process. For organizations that have an adequate understanding of their strengths and weaknesses, the strategy helps managers decide where best to spend efforts and resources.
Tools to improve strategy
Today’s modern business and markets act on a planning from dynamic strategies. Companies and organizations need to have strategy to survive, save their market position and expand with new products and customers. Various tools exist to support this process. For example, the CAGE Distance Framework is used to identify important differences between countries that companies should take into account when developing the strategy. The McKinsey Three Horizons of Growth model helps companies avoid a gap between what a company wants to achieve in the future and where it is now in relation to its strategy.
A strategy charts the course of a business. There are many theories and methods that orient themselves towards the best one. It’s always about the best fit and the commitment that’s required to make it successful. An example of this are the 5 Ps of Strategy by Henry Mintzberg. Kenichi Ohmae’s 3C model focuses on the three key factors for success that must be balanced in the form of a strategic triangle.
All strategy tools are aimed at improvement of business performance. A strategy can be modeled after a tool, but the resulting strategic plan should still suit the business. Every business or organization has a unique identity, set of values and work process. A strategy is effective if these aspects are considered as well.In order for companies to be unique in business, competitive strategy is also applied. Competitive strategy can be a part of strategic management to develop a unique aspect in a business. Competitive strategy aims to create a competitive advantage. If a company follows such a strategy, it is possible for the strategy to lead to a unique place in the market. In order for a business to develop in the way that the strategy plan estimates, a strategy will consist of business approaches and initiatives.
