1.1 Corporate strategy phases of implementation The strategic management process is more than just a set of rules to follow.

It is a philosophical approach to business. Upper management must think strategically first, then apply that thought to a process. The strategic management process is best implemented when everyone within the business understands the strategy. The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation and strategy monitoring.

Phase one : Strategic intelligence gathering analysis Goal-Setting The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying three key facets: First, define both short- and long-term objectives. Second, identify the process of how to accomplish your objective. Finally, customize the process for your staff, give each person a task with which he can succeed. Keep in mind during this process your goals to be detailed, realistic and match the values of your vision. Typically, the final step in this stage is to write a mission statement that succinctly communicates your goals to both your shareholders and your staff. Analysis Analysis is a key stage because the information gained in this stage will shape the next two stages. In this stage, gather as much information and data relevant to accomplishing your vision. The focus of the analysis should be on understanding the needs of the business as a sustainable entity, its strategic direction and identifying initiatives that will help your business grow. Examine any external or internal issues that can affect your goals and objectives. Make sure to identify both the strengths and weaknesses of your organization as well as any threats and opportunities that may arise along the path.

Phase two : Strategy Formulation The first step in forming a strategy is to review the information gleaned from completing the analysis. Determine what resources the business currently has that can help reach the defined goals, objectives and priorities. Identify any areas of which the business must seek external resources. The issues facing the company should be prioritized by their importance to your success. Once prioritized, begin formulating the strategy. Because business and economic situations are fluid, it is critical in this stage to develop alternative approaches that target each step of the plan. Phase three: Strategy Implementation Planning Change strategic intent into tangible action. Develop a strategic master project plan that specifies the activities, resources and time line required to implement your strategy. This phase includes defining the roles that the leaders and others will play in leading the effort. Develop a roadmap to follow progress and measure success, rationalize and prioritize. Everyone within the organization must be made clear of their responsibilities and duties, and how that fits in with the overall goal. Additionally, any resources or funding for the venture must be secured at this point. Once the funding is in place and the employees are ready, execute the plan.

Phase four: Strategy Implementation Successful strategy implementation is critical to the success of the business venture. This is the action stage of the strategic management process. If the overall strategy does not work with the business' current structure, a new structure should be installed at the beginning of this stage. It implies executing the plan, manage changes and address critical issues. Evaluation and Control Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues and making corrective actions when necessary. Any successful evaluation of the strategy begins with defining the parameters to be measured. These parameters should mirror the goals set in Stage 1. Determine your progress by measuring the actual results versus the plan. Monitoring internal and external issues will also enable you to react to any substantial change in your business environment. If you determine that the strategy is not moving the company toward its goal, take corrective actions. If those actions are not successful, then repeat the strategic management process. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.

1.2 Analyzing the strategic position The strategic position is concerned with the impact on strategy of the external environment, internal resources and competences, and the expectations and influence of stakeholders. Together, a consideration of the environment, strategic capability, the expectations and the purposes within the cultural and political framework of the organisation provides a basis for understanding the strategic position of an organisation. Johnson and Scholes, 2005 It is important to take account of the future and to assess whether the current strategy is a suitable fit with the strategic position. If not, the organisation needs to determine what changes it needs to make and whether it is capable of effecting such changes. In summary, the strategic position forms an integral part of the strategic management process. It informs the strategic choices that need to be made and subsequently implemented. To analyze the strategic position we must analyze the environment and our internal strategic capability 1.2.1 External analysis the Environment

Organisations need to understand the external environment in terms of: macro influences these include political, economic, technological and social factors micro influences factors specific to the particular industry and related industries, including competition, customers, suppliers and barriers to entry The STEEPLE framework This approach reviews current and future aspects of the external environment based on categories such as social, technological, economic, ethical, political and environment (STEEPLE) issues. Some of these factors are used in variants of this framework and are known as STEP, PEST, or PESTEL.

PEST analysis (Political, Economic, Social and Technological analysis) describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added Legal and rearranged the mnemonic to SLEPT;[1] inserting Environmental factors expanded it to PESTEL or PESTLE. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

Political factors are basically to what degree the government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on the health, education, andinfrastructure of a nation.

Economic factors include economic growth, interest rates, exchange rates and
the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).

Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate oftechnological change. They can determine barriers to

entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.

Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

Legal factors include discrimination law, consumer law, antitrust law, employment law,
and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.

Building scenarios This takes the above frameworks a stage further by developing some possible coherent outcomes to some of the key environmental influences. Given the high degree of uncertainty related to predictions, it is inadvisable to make the scenarios too complex. The scenarios are constructed by identifying the main driving forces behind the trends identified during the trend analysis stage. Each driving force has an opposing force, therefore effectively forming a pair. The two most important pairs become the axes that carve out the scenarios resulting in 4 scenarios. The trends are then mapped onto the scenarios. In order to give a realistic dimension to the scenarios, and help the participants feel actively engaged, you can apply a mix of storytelling, vizualisation and enactment techniques. Immersion into the scenario by participants is the best way for the potential impact and consequences of it to be experienced.

The diamond model is an economical model developed by Michael Porter in his book The Competitive Advantage of Nations,[2] where he published his theory of why particular industries become competitive in particular locations.[3]Afterwards, this model has been expanded by other scholars.

Porters diamond analysis

The approach looks at clusters, a number of small industries, where the competitiveness of one company is related to the performance of other companies and other factors tied together in the value-added chain, in customer-client relation, or in a local or regional contexts.[2] The Porter analysis was made in two steps.[2] First, clusters of successful industries have been mapped in 10 important trading nations.[2] In the second, the history of competition in particular industries is examined to clarify the dynamic process by which competitive advantage was created.[2] The second step in Porter's analysis deals with the dynamic process by which competitive advantage is created.[2] The basic method in these studies is historical analysis.[2] The phenomena that are analysed are classified into six broad factors incorporated into the Porter diamond, which has become a key tool for the analysis of competitiveness:

Factor

conditions are human resources, physical resources, knowledge resources, capital resources and infrastructure.[2]Specialized resources are often specific for an industry and important for its competitiveness.[2] Specific resources can be created to compensate for factor disadvantages. Demand conditions in the home market can help companies create a competitive advantage, when sophisticated home market buyers pressure firms to innovate faster and to create more advanced products than those of competitors. [2] Related and supporting industries can produce inputs which are important for innovation and internationalization.[2] These industries provide cost-effective inputs, but they also participate in the upgrading process, thus stimulating other companies in the chain to innovate.[2] Firm strategy, structure and rivalry constitute the fourth determinant of competitiveness.[2] The way in which companies are created, set goals and are managed is important for success.[2] But the presence of intense rivalry in the home base is also important; it creates pressure to innovate in order to upgrade competitiveness. [2] Government can influence each of the above four determinants of competitiveness.
[2]

Clearly government can influence the supply conditions of key production factors, demand conditions in the home market, and competition between firms. [2] Government interventions can occur at local, regional, national or supranational level. [2] Chance events are occurrences that are outside of control of a firm. [2] They are important because they create discontinuities in which some gain competitive positions and some lose.
[2]

The Porter thesis is that these factors interact with each other to create conditions where innovation and improved competitiveness occurs.[3]

1. ^ Traill, Bruce; Eamonn Pitts (1998). Competitiveness in the Food Industry. Porter (1990, p. 127). Springer. p. 19. ISBN 0-7514-0431-4.

2. 3.

^ a b c d e f g h i j k l m n o p q r s t u v w x Porter, M.E. The competitive advantage of nations. New York: Free Press. (1990) ^ a b Traill, Bruce; Eamonn Pitts (1998). Competitiveness in the Food Industry. Springer. p. 301. ISBN 0-7514-0431-4.

Industries and sector analysis

Porter five forces analysis is a framework for industry analysis and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. Three of Porter's five forces refer to competition from external sources. The remainder are internal threats. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average. Porter's five forces include - three forces from 'horizontal' competition: the threat of substitute products or services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. This five forces analysis, is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.[citation needed] Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found unrigorous and ad hoc.[1] Porter's five forces is based on the StructureConduct-Performance paradigm in industrial organizational economics. It has been applied to a diverse range of problems, from helping businesses become more profitable to helping governments stabilize industries.[2]

1. ^ Michael Porter, Nicholas Argyres, Anita M. McGahan, "An Interview with Michael Porter", The Academy of Management Executive 16:2:44at JSTOR 2. ^ Michael Simkovic, Competition and Crisis in Mortgage Securitization

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are: Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you. Competitive Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if noone else can do what you do, then you can often have tremendous strength. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power. Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

Strategy consultants occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. However, for most consultants, the framework is only a starting point or "checklist." They might use "Value Chain" afterward. Like all general frameworks, an analysis that uses it to the exclusion of specifics about a particular situation is considered nave. According to Porter, the five forces model should be used at the line-of-business industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. (See industry information.) A firm that competes in a single industry should develop, at a minimum, one five forces analysis for its industry. Porter makes clear that for diversified companies, the first fundamental issue incorporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces analysis. The average Global 1,000 company competes in approximately 52 industries (lines of business).

Market Analysis
SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in abusiness venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from Fortune 500 companies.[1][2] The degree to which the internal environment of the firm matches with the external environment is expressed by the concept of strategic fit. Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization. Strengths: characteristics of the business or project that give it an advantage over others Weaknesses: are characteristics that place the team at a disadvantage relative to others Opportunities: elements that the project could exploit to its advantage Threats: elements in the environment that could cause trouble for the business or project

Identification of SWOTs is important because they can inform later steps in planning to achieve the objective. First, the decision makers should consider whether the objective is attainable, given the SWOTs. If the objective is not attainable a different objective must be selected and the process repeated. Users of SWOT analysis need to ask and answer questions that generate meaningful information for each category (strengths, weaknesses, opportunities, and threats) to make the analysis useful and find their competitive advantage.[3]
1. ^ Humphrey, Albert (December 2005). "SWOT Analysis for Management Consulting". SRI Alumni Newsletter (SRI International). 2. ^ "Albert Humphrey The "Father" of TAM". TAM UK. Retrieved 2012-06-03. 3. ^ "Object Oriented and Multi-Scale Image Analysis: Strengths, Weaknesses, Opportunities and Threats - A Review". Journal of Computer Science 4 (9): 706712. Jan 2008.

1.1.2 Internal analysis the strategic capability

Scanning the external environment for opportunities and threats is not enough to provide an organisation a competitive advantage. Strategic managers also need to identify internal strategic factors.

Strategic capability refers to a business' ability to successfully employ competitive strategies that allow it to survive and increase its value over time. While strategic capability does take into account the strategies a business uses, it focuses on the organization's assets, resources and market position, projecting how well it will be able to employ strategies in the future. There is no single method or universal metric for measuring or noting strategic capability. Significance A business' strategic capability is a major component in remaining financially viable and growing despite the presence of competitors in a free market. Many groups of interested parties attempt to measure and track strategic capability. They include investors, who want to put their money into businesses with reasonable chances of future success and growth. Employees also care about strategic capability since it identifies businesses that are stable and unlikely to go under or those that need to cut costs through layoffs. Business leaders track strategic capability, not only for their own companies but also for competitors to better understand the markets in which they operate. Finally, financial analysts and government regulatory agencies have interests in strategic capability since it plays a role in how they value and monitor businesses. Elements Many elements can potentially contribute to a business' strategic capability. Assets such as cash, property and patents all contribute to a business' ability to formulate and employ strategies. Other elements of strategic capability include human resources and organizational structure, since employee skills and leadership mechanisms all contribute to a business' competitiveness. Pricing can also be a part of strategic capability, with businesses that understand how to manipulate prices to maximize profits likely to enjoy strategic advantages over competitors that have trouble arriving at profitable price points for their products. Strategic Value Analysis Assessing strategic capability is a complex process, in part because of the number of factors it must address. The process of evaluating a business' strategic capability is known as a strategic value analysis. It relies on data from annual reports, public surveys and market trends to determine which businesses in a given industry have strategic capabilities that others lack. As businesses change and acquire additional resources, analysts must continually perform new strategic value analyses.