1.3 Stages of business strategy forming

Environmental analysis looks at emerging economic, political, social, and technology scenarios, and seeks to identify the key driving forces that will affect a business. Typical forces that provide business opportunities and also pose potential threats include demographic, technological, and competitive developments. With this overall scenario in the background, an organization looks at its own strengths and weaknesses to identify the opportunities it should tap and the approach it should take. The findings are documented in a strategic plan.

Forming of a business strategy is a long, laborious and thought out process. And it is obvious that this process require a serious, premeditated and mature approach. Anyway, it is generally agreed today that there are two basic stages of this forming for every company. And T. Gopinathan thinks so and describes two phases of this process in his article “How to develop business strategy to success”. The first of them is the strategic planning process, and the second is writing a strategic plan.

• The strategic planning process

There is no one right way to do the strategic planning exercise. The way it is done can differ from an organization to an organization. The really important thing is that the process should result in identifying the broad directions and approach for an organization as a whole. Strategic planning need not always be for the whole organization. Instead, business units, and major departments and functions can also develop strategic plans.

What distinguishes a strategic plan is that it is broad in scope, intended to provide direction for the details to be worked out later. A good strategic plan will be comprehensive in scope, developed with considerable input of data and thinking and be an excellent fit for the organization’s competencies. Organizational competencies are typically identified through an analysis of business as it stands now. Any reasonably successful business would have acquired certain strengths, such as technical excellence, a strong marketing setup, and R&D team with strong innovation skills or some such factor of business relevance. Even a new small business can plan to focus upon the particular skills and experience of its founder. An objective analysis will also bring out the weaknesses of an organization. For example, a strong innovation record might not be supported by a strong enough marketing setup to tap the full potential of the innovations. Clearly identifying (and admitting) the weaknesses will allow an organization to see where it needs to seek external help (or hire people with required skills). External analysis of market trends, technological developments, and competitive situation will allow the business to identify opportunities suited to its strengths. The analysis can also be extended to identify the success factors for succeeding in the selected business opportunities. The findings of the analyses will help the business to develop a strategic plan that will indicate:

• The broad accomplishments it should aim for, and

• The broad strategies it should adopt to accomplish the aims. [4]