Overview of Business Strategy Development

Definition: 

This page is intended to summarize the process of developing a strategy. It is not a tool that can be implemented, neither is it a step-by-step process of how to develop a strategy. It is intended to make you aware of the issues and help you learn what is necessary to develop a strategy.

Uses:

• How is it used: Strategy development is a process to answer the following questions:

• Where do we compete and who do we compete against?

• What unique value do we bring to win in those markets?

• What resources and capabilities do we utilize to deliver that value? 

• How do we sustain our ability to provide that unique value?

• Where: Strategy development has many levels and applications. It is the process of aligning resources and actions to meet an organizational goal. So strategy can be developed for a variety of departments and organizations:

• Corporate-wide portfolio (e.g., Apple)

• A large business unit within a corporation (e.g., Chevrolet as a part of General Motors)

• Product line within a company (e.g., breakfast cereal division of General Mills)

• A product (e.g., Tide Detergent within Proctor and Gamble)

• A standalone Business (e.g., Cafe Rio restaurants)

• An entrepreneur start-up

• Why: Without a cohesive strategy, a company or organization may find that its functions (marketing, R&D, manufacturing, etc.) can be working to achieve different outcomes, in different markets, for different customers. A marketing function focused on providing differentiated products with guaranteed inventory levels can find itself at odds with a manufacturing function focused on low-cost high volume products and a supply chain focused on large quantity shipments with minimal inventory to minimize freight and working capital. Strategy development creates an environment where functions and people in the company can work towards a winning strategy that has been designed to succeed.

Limitations:

• Where it shouldn't be used: Strategy development should not be used when the participants are simply looking for a set of tactics to implement a task. A company should not take the time and effort to complete a strategy process when business leaders have already decided what they are going to do and are unwilling to consider evidence or market insight in changing their desired strategy.

• Any restrictions: None

• Warnings: Strategies are difficult to develop properly when powerful leaders in the organization bring historical, irrelevant baggage to the process. These leaders must be willing to listen to new data and insights, or they will continue to follow the traditional path in a world that has changed.

Output Representation and Recommendations:

As this is only an overview of the development process, there are no representations or recommendations to present.

Examples:

•  As this is only an overview of the development, process there are no examples to present.

Additional Resources:

• How to Develop a Business Strategy: 6 Steps