SAP 2: IDENTIFY THE FIRM’S STRATEGY
I will refer to the chosen firm as X and its industry as Y.
This section requires each group to conduct a Strategy Statement Analysis. Think of it as an exercise in describing the content of your chosen firm’s “STRATEGIC MANAGEMENT AUDIT REPORT.”
The cornerstone of a successful firm is its ability to articulate a simple strategy statement. Many executives find it very challenging to explain their firm’s strategy in a clear and compelling way. In fact, few executives can do it well. A large number of executives often mistake planning for strategy.
“Inability to articulate a strategy in a single, incisive, natural sounding sentence is a sure sign that there is something wrong in the strategy itself.” Kenichi Ohmae, “Foresight in Strategic Planning”
Strategy doesn’t have to be mysterious or left to consultants just because it might not be easy to define. To define a firm’s strategy one should begin by asking specific questions that will help the firm make better choices and clarify its focus. Typically, these questions can be subsumed under the two broad ‘Strategic Positioning’ questions:
- Where does the firm compete?
The answer to this question explains the Product market scope, geographic scope, and/or the vertical scope of the firm.
- How does the firm compete?
The answer to this question explains the advantage that the firm seeks in the market.
The answers to the above questions may throw light on a firm’s Strategic Position, which articulates a firm’s approach to competing and winning in the current context. However, they do not explain the firm’s approach to competing and winning in the future! An ideal strategy statement should also focus on the future.
- Identify the chosen firm’s mission statement and long-term goals. What are the aspirations and goals of the company?
Some firms use the term mission and vision interchangeably, so you may need to adapt a vision statement as the mission if it is appropriate. The long-term goals of most public firms are typically found in their Annual Reports which they are required to file with the SEC (http://www.sec.gov/edgar.shtml). You can compare the firm’s latest annual report to those from previous years. This will give you an idea of the major changes, if any, in the firm’s outlook or organization.
2 (a). Segregate the chosen firm into its respective lines of business.
The primary objective of this sub-section is to identify whether the firm is single-business or multi-business corporation.
2 (b). List the product- and geographical-markets within the industry in which the firm competes.
The market scope should be taken relative to the competitors in the industry of focus. For example, in the furniture industry IKEA is primarily appealing to college-aged consumers and young families just starting out, and has a more narrow approach than other retailers such as Ashley Furniture or La-Z-Boy.
3 (a). Examine the chosen firm’s business strategy in relation to the four characteristics of successful strategies:
- clear, consistent, long-term objectives;
- profound understanding of the environment;
iii. objective appraisal of resources; and
- effective implementation.
Please refer to figure 1.1 on page 10 of the textbook for the template.
3 (b). Explain how the firm’s Strategy links with its environment.
Please refer to Figure 1.5 on page 36 of the textbook for the template.
YOU CAN focus on ONE business unit TO ADDRESS SOME OF THE ABOVE ISSUES if THE CHOSEN firm operates in several businesses.