To create a robust corporate strategy, companies all must perform business strategy development beginning with a agreed upon understanding of its business positioning and identified strategic barriers to growth. The next steps include defining what the future state vision of the organization is and then delving into the details of planning how to get to that state. To properly gauge and analyze your strategic challenges, you must begin with a comprehensive current state understanding of your situation. Engaged strategy development is about value creation, strategy is about competitive selection, and strategy is about speed .
Strategy development process has evolved through 5 key stages since the early 1900s. Today, the strategic development theme is on integrating strategic planning and execution with a stress on the key concepts of core competencies, strategy planning and execution, and balance scorecard analysis. 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 emerged. 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 ultimately to a focus on strategic management in the present day. Changes to strategic mindset represent an ever evolving, new thought leaders, and emergence of disruptive technologies and trends.
There are numerous core components to strategy execution design. Strategy planning and budgeting projects can involve such as examples as growth scenario planning workshops, strategic planning design, and innovation management. You should design the organizational context that governs how the business operates. Strategic initiatives should be clearly controlled. Under strategy execution, an important element is shaping the strategy planning and budgeting process. organizational context includes such initiatives as governance, org structure, performance tracking, incentives, as well as managements capabilities and cognitive frames. Under the category of strategic initiatives, we should evaluate the companys project portfolio, ownership and management, and political tactics.
Business strategy includes the topics of corporate strategy, marketing strategy, sales strategy, as well other areas of strategic thinking. Marketing strategy and sales strategy are usually discussed in unity, but are distinct in nature. Business strategies are often done within a bi-annual strategic planning workshop, usually conducted in a week long day remote conference space with management and key stakeholders, both inside and outside the company. When we speak about growth strategy, we include normal business growth and acquisitory growth, namely mergers and acquisitions. Marketing strategy includes brand strategy, go-to-market strategy, and Internet strategy. Sales strategy includes channel strategy, direct sales strategy, and business development.
A common business scenario many organizations try to fully address is the challenge of creating sustainable growth through an effective strategic planning process. Over the last 50 years, Fortune 50 organizations typically see an average growth rate of in less than 6% in real terms and under 10% in nominal terms. Also, 90% of these companies are concentrated across the primary sectors of Financial Service Companies, Healthcare, Technology, and Retail. Companies achieving greater than 20% sales growth typically erode down to 8% within 5-10 years. Large businesses struggle to grow. The fact is that most companies have difficulty gaining noteworthy growth, YoY. For most of these companies that do achieve significant growth rates, these growth rates also erode rapidly. Only about a quarter of the Fortune 500 businesses are able to sustain top-line growth above the GDP and create returns above the Standard & Poors 500. Furthermore, real top line growth is much less stable than ROIC going from 1% to 11%.
There are 3 types of strategic challenges that can be derived from our discussion thus far. When we conduct strategy development, framing the type of strategic challenge is the most critical activities. Setting a strategic intent involves setting objectives, developing relevant battlefields, and defining the relevant core competencies. You should align execution content, so that strategy can be truly realized. One important strategy development challenge is designing top down intervention fueled by revised strategic intent. One noteworthy strategic challenge is the existence of ambiguity, as it relates to both the challenge and approach.
Business Strategy
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