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Business Strategy

Welcome to this Module on ?business strategy?- Digicanny. Strategy forms the core part of any business?s operations. It links a company?s long-term goals and objectives with short-term decisions. Having a sound strategy can help a business in staying ahead of the competitors and yet be realistic about the organisation?s expectations and performance. In this module, you will start with learning about business objectives and market sizing. Then, you will learn about the various internal and external competencies of a company.

Indexing:

  1. Business Strategy Formulation
    • Setting Business Objectives
    • Opportunity Sizing
      • Summary
  2. Opportunity Assessment: Industry and Competition
    • Analyzing External Factors Using PESTEL Analysis
      • Summary
  3. Assessing Internal Capabilities
    1. Product Portfolio Analysis
      1. Summary
  4. Business Strategy Execution
    1. Growth Strategies
    2. Ansoff Matrix I
    3. Ansoff Matrix II
  5. Executing a Business Strategy
    1. Steps to Implement the Strategy I
    2. Steps to Implement the Strategy II
    3. Managing Resistance and Risks

diversification strategy, on the other hand, achieves growth for a business by developing new products for completely new markets. This diversification can be:

  1. Related diversification, or
  2. Unrelated diversification

You learnt that the preferred cycle for products is to move from a question mark to a star to eventually a cash cow.  However, it is possible that some products get stuck as question marks and eventually become dogs.Business Strategy Execution

In this session

You will learn about the objective setting and opportunity sizing for a business. Here, you will first learn about setting accurate business objectives using the S.M.A.R.T. framework and then proceed to learn how to conduct market sizing or opportunity sizing for your business.

Setting Business Objectives

What is the most primary decision that needs to be taken while developing a business strategy? Well, it is to have a clear end-picture that the firm wants to achieve after implementing the strategy. This is done by setting the goals and objectives that the business wishes to achieve. The entire strategy would then be developed around these objectives, especially in terms of how to achieve them. This makes setting accurate objectives even more critical for a business

Business goals are basically the broad outcomes a company seeks to achieve, whereas business objectives are specific and can be measured. These objectives quantify the business goals and define the steps for the company to achieve these goals. We can use the S.M.A.R.T. framework for the purpose of setting business objectives. Here is a look at the components of this framework

  1. S ? Specific: The objective should clearly convey what a business is supposed to do according to the goals.
  2. M ? Measurable: There should be a metric within the set objective that helps the company measure the success or failure or the status of the objective.
  3. A ? Achievable: The objective should be in tune with the ground realities. It should not be a far-fetched dream that the employees struggle to achieve and, as a result, become dissatisfied.
  4. R ? Result-oriented: This means focusing on the outcomes of the business objective in terms of what the company will stand to gain by achieving this objective.
  5. T ? Timebound: There should be a well-defined timeline for the company to achieve the objective.

Here, you also learnt about the following business objectives:

  • Profit expansion
  • Brand image building
  • Survival
  • Growth expansion

Apart from these, some other types of business objectives could be as follows:

  • Gross market value
  • Volume of transactions
  • Revenue
  • Profitability

Opportunity Sizing

In the last segment, you learnt about business objectives and how to set them using the S.M.A.R.T. framework.

You saw that a business objective needs to be achievable in order for it to be effective. But what do you have to do to ensure that the volume of transactions you are aiming for, and/or the profitability levels you are trying to achieve are, in fact, achievable?

You would need to know the size of the opportunity or market you are looking at. For this purpose, you would need to conduct opportunity or market sizing for your business.

Let?s learn more about this concept.

Market Sizing

This purpose can be achieved through the following two approaches:

  1. Top-down approach
  2. Bottom-up approach
  • In the top-down approach, you start by determining the size of the bigger market and then moving down to the market of your interest.
    • For example, if you wish to determine the size of the formal shoe market in India, you will start by looking at the size of the overall shoe market and then determine the size of the market for formal shoes as a percentage of the total market.
  • Conversely, in the bottom-up approach, you start with the smaller units.
    • For example, if you were to determine the market size for formal shoes using this approach, you would start with determining the sales of formal shoes in a single store and then extrapolate the numbers to determine the total market size.

Bottom-up approach

Now, let?s discuss the bottom-up approach to identify the opportunity size in terms of rupees for the cab market in south India. 


Remember that data can vary, and we are using the data here for explanation purpose only. 

  • Average cost per urban trip is Rs 150. This data is generated from your existing consumer data. 
  • How many trips does an average household in urban India take ? Based on industry reports, there are three types of travels
  1. Work-related 
  2. Leisure and
  3. Miscellaneous 
  • From industry reports, you can see that: 
  1. An urban household takes 2 work-related trips2 leisure trips and 0.5 miscellaneous trip per day, based on survey data from various households
  2. An average  urban household has an average size of 4 members, according to census data. 
  • Coming to rural  population, the average cost per rural trip is Rs 75 
  1. A rural household takes 2 work-related trips1 leisure trip and 0.25 miscellaneous trip per day, based on survey data from various households
  2. An average rural household has an average size of 4.5 members, according to census data 

Now, not everyone takes these rides. 


First, let?s look at  the total population of all five south indian states. Based on the 2011 census, 

  1. Andhra Pradesh had 5 crore people 
  2. Karnataka had 6.5 crore people
  3. Kerala had 3.5 crore people 
  4. Tamil Nadu had 7 crore people and 
  5. Telangana had 3.5 crore people 

(These are approximate values, for calculation purposes only.)

So, the total population is 25.5 crore people. Let?s round it to 25 crore people. Now, the urban population in these 5 states is:

  1. Tamil Nadu has  3.5 crores 
  2. Kerala has 1.5 crores
  3. Andhra has 2 crores
  4. Telangana has 1.5 crores and
  5. Karnataka has 2.5 crores

This leaves us with 11-crore-strong urban population and a combined rural population of 14.5 crores in these five states. This information is taken from the 2011 census data.

 
Now everyone cannot afford cabs, and Mojo sees its opportunity among the upper middle to upper class people. Here, we are looking at people belonging to families with monthly household income of Rs 1,00,000 and above. This is less than 1 percent of the total urban population. In this case, we are using 1% for calculation purposes, which leaves us with 11 lakh people. In the case of rural population, this is a much smaller segment, about 0.1 percent, which leaves us with 1,45,000 people. This data is also available from census and other government reports on income distribution. 


As you saw earlier, we determined the average number of trips per household for urban and rural. Now, we need to convert this data of set of people into number of households. 
The Census states that the average household size in urban areas is 4 and in rural areas is 4.5.  
That leaves us with 2,75,000 households in urban areas and 32,000 households in rural areas. The number is lesser for rural areas due to income disparity, fewer jobs and leisure opportunities, purchasing power parity, etc.  


So, from industry reports you saw that 30% of the households in urban areas and 20% in rural areas do not use public transport or own their own means of transport. This leaves 
1,92,500 households in urban areas and 25,600 households in rural areas that you can target. 


Now people dont work all 365 days in a year. Subtracting the compulsory 104 days that are saturdays and sundays, and also public holidays and vacations, we cut a total of 132 days, which leaves us with 233 work days in a year. 


We mentioned earlier that in urban areas, average families take 2 work trips, 1 leisure trip and 0.5 miscellaneous trip per day, and each trip bears an average cost of Rs. 150. When you add the trips and multiply the number with the average trip price, you arrive at Rs. 525, i.e., the average spending per urban household per day on trips.


In rural areas, when you calculate the data, you arrive at a figure of Rs 245/day. 

Now, the total spending of urban households per year equals average spending per household multiplied by the number of households, multiplied by the number of days per year i.e 233. 
This takes the total to approximately ? 23 billion in urban areas and ? 1.28 billion in rural areas

So the total opportunity size for Mojo cabs in the South Indian market is Rs 24.3 billion. 

Top-down approach

Let?s understand the top-down approach to size the market for Mojo Cabs.

  • In the table, the first piece of information you have is the total market share of the taxi rental market for Ola and Uber in south India, which is 30% according to industry reports.
  • This is a bigger data point, much like the next two, which indicate that the total number of daily trips completed by Ola in south India is 70,000 while the same for Uber is 50,000.
  • This leaves us with a total of 1,20,000 daily trips completed by the top two companies accounting for 30% of the market share.
  • This means that if 1,20,000 is 30% of the total market, then the total number of daily cab rides in south India stands at approximately 4,00,000.
  • Excluding Ola and Uber?s share, about 2,80,000 cab rides are fulfilled by other market players, local- the regional players, and national players that are present in multiple regions.
  • So, much like how we calculated the number of holidays using the bottom-up approach, we will take into account that there were 233 days in a year that witnessed active rides.

This means the remaining opportunity, excluding Ola and Uber?s share, for a year can be 2,80,000 multiplied by 233 (number of days), giving us 6.52 crore rides in a year.

Based on the data provided in the Mojo cabs example, you know that the average trip fare is ?150.

When you multiply the number of trips per year with the average fare, you find out that Mojo cabs is targeting an opportunity of  ?1200 crore per year, or ?12 billion.

This is similar to the number we estimated using the bottom-up approach. So, using both the approaches, we have now corroborated the opportunity size to be about ?12 billion per year.

Summary

Let?s recap our learnings from this session!

In the session, you learnt that Strategy can be defined as,

?Determination of the basic long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for achieving these goals?.

In the first segment, you learnt how one can define accurate business objectives. This can be done using the SMART framework. SMART framework stands for: 

  • Specific: The what, why and how of the objective
  • Measurable:  A metric within the objective that helps you measure the success or failure
  • Achievable: The objective needs to be realistic
  • Result-oriented: Focusing on the outcomes of the objective or the end-product as to what the company will gain by achieving this objective
  • Timebound: There should be a time limit uptill which the objective is to be achieved

In the next segment, you learnt how to conduct opportunity sizing for a business using two approaches: 

  1. Top-down approach,and 
  2. Bottom-up approach 

In top-down approach, you start with a larger data set such as population, then you further mathematically size down by adding several factors that have a direct bearing on the opportunity of the business.

In the bottom-up approach, you use a very small data set such as average cost per trip and then added more factors to mathematically add up and size the opportunity.

In the next session, you will learn how to conduct an industry analysis for an organisation 

Opportunity Assessment: Industry and Competition

It is important for you to analyse the forces of the industry that you are operating in. 

What forces?

There are internal and external forces that act on industry and it is important to identify these forces to evaluate the threats and opportunities these forces may pose for your business. Michael Porter, an academician at the Harvard University published a five-forces perspective to visualise these forces.

Let?s hear about the 5 forces model.

Competitive Analysis Using Porter?s 5 Forces

Let?s quickly recap our learnings from the videos.

Porter?s model talks of five forces that act on an industry:

  1. The threat of new entrants
  2. Buyer?s bargaining power
  3. Supplier?s bargaining power
  4. Threat of substitutes
  5. Competitive rivalry

Porter?s five forces

You can use these forces to analyse and understand the industry you operate in- in a better manner.

Analyzing External Factors Using PESTEL Analysis

An organisation?s success is influenced by the market environment and an organisation can increase its chances of being successful by understanding and analysing this environment. 

Let?s try to analyse the business environment that can impact an organisation?s strategy with the help of PESTEL analysis.

the 6 factors that have the potential to impact an organisation:

  • P (Political) ? Stability of the Government, tax policies, trade regulations
  • E (Economic) ? Disposable incomes, access to credit, inflation, unemployment
  • S (Social) ? Demographics, distribution of wealth, education levels, lifestyles
  • T (Technological) ? Advances and innovations, obsolescence of legacy systems
  • E (Environmental) ? Environmental protection laws, waste disposal laws
  • L (Legal) ? Competitive regulations, health and safety regulations, patent laws

Summary

Let?s recap our learnings from this session!

In this session, you were taught how to conduct an industry analysis to understand the opportunities and threats surrounding your organisation.  Industry analysis is done using two frameworks:-

  • Porter?s 5 forces framework, and
  • PESTEL Analysis

In the first segment, you learnt how to use Porter?s 5 forces to study the attractiveness and profitability of an industry. The five forces used under this framework are :-

  1. Competitive rivalry within the industry 
  2. Threat of new entrants 
  3. Threats of substitute products 
  4. Bargaining power of customers, and 
  5. Bargaining power of suppliers

You learnt that the aspects that increase competitive rivalry include

  • Higher number of firms 
  • Poor market growth 
  • High fixed costs 
  • High storage costs 
  • Low switching costs 
  • Low product differentiation 
  • High strategic stakes
  • High exit barriers

The second factor is Threat of new entrants. Here you learnt there are five major barriers for entry including: 

  • Governments 
  • Patents and IPR
  • Asset specificity 
  • Internal economies of scale 
  • Barriers to exit 

The third factor is Threat of substitutes. Here you learnt that you have high threat from substitutes:

  • If the cost of a switch for a consumer is low 
  • If the substitute is cheaper
  • If the product is of higher or equal quality standard
  • If the performance is of higher or equal quality standard

The threat is low if the above mentioned conditions are in reverse. 

The fourth force is Bargaining power of suppliers.  Factors that raise the power of the supplier are:

  • There are few suppliers and more buyers. 
  • Cost of switching supplier is high
  • Reducing the quantity that is supplied, especially if the buyer has no or less substitutes and the component is  integral for the end product
  • Suppliers impose costs or penalties on consumers deciding to change to other suppliers
  • If supplier can start producing the end product themselves 
  • If buyer has little information regarding product

If these factors are in reverse, the bargaining power is low. 

The last factor is bargaining power of buyers.  Here the buyer refers to the organisations as opposed to the suppliers. Factors that increase bargaining power of buyers include:

  • If buyers  are well organised as opposed to suppliers
  • If switching between products is easy 
  • If the buyer is very well aware of the product, they will know how it is placed as opposed to the competitors within the suppliers
  • If there is no proper differentiation and multiple suppliers are available, buyers will choose price over brand
  • If the buyer decides or threatens to set up their own  production unit for the component provided by suppliers.

The supplier needs to lower this threat.

After you have identified the attractiveness of the industry, it is crucial to conduct an analysis of the broad factors pertaining to  the industry.  This can be done using PESTEL analysis.  PESTEL is the acronym for Political, Economic, Socio-cultural, Technological, Environmental and Legal factors.

  1. Political factors refer to the pressure as well as the opportunity provided by political institutions with regard to a business. This will help you understand the degree to which certain government policies will impact your business.
  2. Economic factors refer to how the performance of the economy has a direct bearing on how consumers, suppliers and other stakeholders behave in the market.
  3. Socio-cultural factors refer to societal forces such as family, friends , colleagues, media etc. and how they impact the attitudes, beliefs, opinions, interests etc. of individuals.
  4. Technological factors refer to the factors such as technological infrastructure, systems, hardware, innovation, etc. and how these factors affect your business
  5. Environmental factors refer to the natural environment and resources such as wildlife, minerals, waterways, timber, etc. and also issues such as waste disposal,  recycling procedures, etc.
  6. Legal factors refer to laws, regulations and legislation that affect your business. You should look into future changes in laws.

You also saw how Mojo Cabs used PESTEL analysis to conduct a detailed analysis of the broad factors within the industry.

In the next session, you will learn how to conduct internal analysis.

Assessing Internal Capabilities

In the previous session, you learnt how to assess the external environment and industry for your company. Now, it?s time to assess the internal capabilities of your firm. For this purpose, we are going to use a tool called the business model canvas.

Let?s learn more about it.

the different components of the business model canvas. Now, let?s try to gain a better understanding of the same by applying it to Mojo cabs.

Let?s create a business model canvas for Mojo cabs!

the business model canvas in detail. A Business model canvas plots the structure of your business. It allows an organisation to plan costs and revenue streams, map activities, profile customers and identify the key activities. This model has nine components that can be used to create an overall picture of your organisation. These 9 components are:

  1. Value propositions 
  2. Customer segments 
  3. Channels
  4. Customer relationships 
  5. Revenue streams 
  6. Key Resources
  7. Key Partners
  8. Key Activities
  9. Cost structure 

You can use this template to formulate the business model canvas for your organisation:

Product Portfolio Analysis

In the last segment, you learnt how to analyse the internal capabilities of an organisation using the business model canvas. Now, let?s learn how to analyse the product portfolio. This can help you in deciding which portfolios would demand a higher investment. 

In order to analyse the product portfolio of an organisation, we are going to use the BCG Matrix. Let?s learn more about it!

The BCG Matrix or the Growth-Market share matrix is used to perform portfolio analysis such that a business can make the right investment decisions. We can use this framework to analyze the products according to its growth and market share such that an  organisation can identify its strengths and weaknesses, while defining the competitive positioning. 

This matrix is represented in the form of a quadrant and each side of the quadrant has a name, and resources are allocated to these products based on their position: ​​​​​​BCG Matrix

  1. Bottom right are called Dogs 
  2. Top right is question marks
  3. Top left is called Stars  
  4. Bottom left is Cash cows 

Summary

Let?s recap our learnings from this session!

In this session you learnt how an organisation can conduct an internal analysis. For this, you learnt to use the following frameworks:

  1. Business model canvas
  2. BCG matrix

As you learnt, a Business model canvas plots the structure of your business. It allows an organisation to plan costs and revenue streams, map activities, profile customers and identify the key activities. This model has nine components that can be used to create an overall picture of your organisation. These 9 components are:

  1. Value propositions 
  2. Customer segments 
  3. Channels
  4. Customer relationships 
  5. Revenue streams 
  6. Key Resources
  7. Key Partners
  8. Key Activities
  9. Cost structure 

In the next segment you learnt how to conduct a product portfolio analysis using the BCG matrix. The BCG Matrix or the Growth-Market share matrix is used to perform portfolio analysis such that a business can make the right investment decisions. We used this framework to analyze the products according to its growth and market share such that an  organisation can identify its strengths and weaknesses, while defining the competitive positioning. 

This matrix is represented in the form of a quadrant and each side of the quadrant has a name, and resources are allocated to these products based on their position: 

  1. Bottom right are called Dogs 
  2. Top right is question marks
  3. Top left is called Stars  
  4. Bottom left is Cash cows 
  • Dogs are products that have a low relative market share in a low growing market. 
  • Question marks are products that fall in a growing market but have a low market share.
  • Cash cows are products that are in a low growing market but have a high market share. These are the products that typically bring in the cash for the organisation.
  • Stars are products in a high- growing market having a high market share.

You learnt that the preferred cycle for products is to move from a question mark to a star to eventually a cash cow.  However, it is possible that some products get stuck as question marks and eventually become dogs.

Business Strategy Execution

Welcome to the module on business strategy execution. In the previous module, you learnt about the different means through which you can analyse and conclude your competitive position in the market. Developing a strategy to achieve this growth objective is the next step. In this module, you will learn how to choose the right business strategy. Then, you will learn how to execute a business strategy.

Let?s quickly go through the scope of this module.

In this session, you will learn about how to go about choosing the right strategy suited to your business. One of the methods of this is using Ansoff matrix. Ansoff matrix offers the following strategies which can be chosen based on your business:

  • Market penetration strategy
  • Market development strategy
  • Product development
  • Diversification

You will also learn how you can inculcate strategic decision-making into your business.

Growth Strategies

You need to decide how to choose a business strategy for our business. Based on its competitive position in the market, there are four major strategies that a company can take to grow further, as suggested by Igor Ansoff, a Russian-American applied mathematician.

These four strategies together form the Ansoff matrix. Let?s learn more about it now.

In this section, you will go through to the Ansoff matrix. You wll see that there are effectively only two ways to grow a business ? either by varying what is being sold, or by varying to whom it is being sold. By putting these variables into a matrix format, we derive the Ansoff matrix:


Ansoff matrix

The four strategies, as you can see in the matrix image as well, are:

  1. Market penetration
  2. Market development
  3. Product development
  4. Diversification

We will learn more about each of these strategies in detail in the upcoming segments.

Ansoff Matrix I

In the last segment, you got an introduction to the Ansoff Matrix and the four alternatives a business could choose from. Let?s now dive deeper into these different strategies. In this segment, we will learn about:

  1. Market penetration strategy, and
  2. Market development strategy

Let?s learn about these two growth strategies.

when a firm?s interest lies in increasing the acceptance of its products or services in its home market, a market penetration strategy will be the most ideal approach. There are four approaches that can be adopted while implementing a market penetration strategy:

  1. Increase the market share of existing products
  2. Attain dominance in a growing market
  3. Restructure the market by driving out the smaller players
  4. Increase usage or purchase among existing customers

When market penetration is for a firm reaches saturation, it can go for other strategies to grow. Let?s now learn about the second growth strategy, i.e. market development strategy.

The market development strategy is the best option if a firm wishes to grow the business of a product or service in a new market. There are four approaches that can be adopted while implementing a market development strategy:

  1. Expand into new geographical markets
  2. Alter the product packaging or dimensions
  3. Offer different pricing policies
  4. Open new distribution channels

The need to protect the existing customer market while creating a new one for the same product is quite risky. One way around this problem is to sell a cheaper product under a different sub-brand. This is something that has been done successfully by the US musical instrument company Fender, which created the sub-brand ?Squier? in order to market budget instruments without alienating its core market of musicians who want to own a recognizably high-end instrument.

Ansoff Matrix II

The previous segment introduced you to different strategies that involve creating more market share or new markets for an existing product. In this segment, you will learn about another means of creating a higher market share through:

  1. Product innovation, and
  2. Product development

Let?s learn more about these two strategies. 

Now let?s look at the next higher version of new product development and innovation ? the diversification strategy.

a new product development strategy is usually taken by companies when they identify a product gap in the existing market, or an opportunity its competitors have not identified yet. There are five major approaches or tactics you could consider, while selecting a new product development strategy:

  1. Brand extension approach
  2. Offering a revamped product
  3. Acquiring the rights to manufacture and sell someone else?s product, and
  4. Entering a joint-venture to co-create and market a product

diversification strategy, on the other hand, achieves growth for a business by developing new products for completely new markets. This diversification can be:

  1. Related diversification, or
  2. Unrelated diversification

Executing a Business Strategy

So far you have learnt about how to choose the best growth strategy using the alternatives that are present under the Ansoff matrix. Having learnt how to choose the best growth strategy, let?s get to learn how to implement the strategy.

In this Session

This session will take you through the factors that need to be considered when a growth strategy is to be set in motion. The topics covered include the following:

  • Steps to implementing a growth strategy
  • Risk and resistance management

Steps to Implement the Strategy I

Strategy execution is where the real action takes place. All the approaches and tactics identified earlier as per an organisation?s objectives and its competitive position will now be transformed into actual performance. 

Needless to say, this is the most rigorous and challenging phase of the entire strategic management process. This also requires the maximum and best utilisation of the organisation?s resources. If done right, it will ensure successful achievement of the objectives the organisation had set.

Stories of multi-million dollar investments in start-ups keep popping up in our news-feeds every now and then, and you may wonder if you could achieve such success in life, too.

However, even the world at large, we often overlook the other side of reality ? that there is a great number of startups and established firms that fail every year.

Businesses fail for a lot of reasons. Some have to shut shop because the economic environment does not provide any room for a new business to operate profitably. Some others blame the actions of competitors, government policies, and other market challenges.

This might make you wonder that if the factors such as economy, competitors, the government, market are at fault, how come some firms are able to survive and even go on to become extremely successful?

Of course, there are many reasons why strategies fail. It could be that the plan itself was not thought through and aimed at unrealistic goals. Or it could be that the company did not adapt its strategy with the changing market conditions. Most of these failures crop up owing to gaps in business strategy implementation.

In this session, you will learn about the different factors that affect the implementation of a strategy, the various steps involved in effective implementation, and the ways in which a company can effectively handle issues arising from such a transition.

Let?s start learning.

Let?s have a look at some of the major mistakes managers make while implementing a strategy.

  • Inability to achieve stakeholder buy-in: Those responsible for executing a strategy will not want to do the work if they don?t believe in it.
    • The implementers will not take ownership of their tasks unless there is enough motivation for them to stand by the company?s decisions.
  • Poor alignment of resources: The leaders at times have a myopic view of the adequacy of the budget, the systems, the technology, tools and human resources required for the strategy execution.
    • Some fail to source the required new technology, or effectively utilise the already available technology.
    • Some fail to hire competent experts for the implementation, or do not provide the required training to their existing staff.
  • Lack of proper stakeholder communication: The strategy team at times is not able to provide clarity to the employees on the organisation?s vision, objectives, the strategy adopted, and the roles and tasks for the members of the workforce.
    • Sometimes, the expectations and opinions are not properly communicated to the employees, leaving them to find their way themselves.
    • On the other side, lack of proper channels for upward communication can also be an equally challenging reason for strategy implementations to fail.
    • If the leadership fails to receive real-time information about execution-related issues, it will have an incomplete picture of the direction the company is moving in.
  • Inability to adapt the strategy to the environment: There is an old military saying ?Your battle plan is great until you contact the enemy; then everything changes.? It?s likely that over time, several developments occur within your company, in your industry, at the government level, in the global economy, and so on.
    • You could be developing a new product, and all of a sudden, a competitor comes up with the exact same product in the market.
    • A change in the Government policy can make it more expensive for you to import raw materials from another country. Such situations are always bound to occur and can cause failure.

Keeping these popular pitfalls in mind while setting out a strategic implementation plan will definitely help an organisation achieve a higher success rate on the ground.

Business Strategy Steps to Implement the Strategy II

Wouldn?t it be great if there was a tried-and-tested system or framework for companies to refer to, to ensure a successful and effective implementation of a strategy?

This video will introduce you to the essential steps of implementing a strategy

the essential steps you need to take for executing a business strategy:

  1. Identify a core team
  2. Evaluate the plan and align the resources
  3. Communicate and clarify the objectives and the strategic plan to all stakeholders
  4.  Set up a proper implementation structure 
  5. Develop policies and programs that support the implementation
  6. Put everything into action

Managing Resistance and Risks

In the last segment, you learnt about the different steps an organisation should take towards achieving its strategic objectives. However, even with a well laid out execution plan, several issues might crop up at any time during the execution of the strategy. 

While some of these issues or risks could be predicted and avoided, a lot others can only be addressed as and when they occur. Risks of potential failure, or resistance to change from internal or external forces, are handled differently in different situations.

Many a time, once a project is launched, program managers are heard saying ?Oh, I knew this group was definitely going to resist the change?. If they indeed had guessed it earlier, the failure lies with the team for not having proactively taken steps to address it beforehand.

Let?s have a look at the likely sources of internal resistance.

  1. Employees who are devoted to the current way of doing a job, and have been successful in their roles and prefer the way things are
  2. Employees who created the existing way of doing things, now being subjected to change
  3. Employees who think the change is going to bring additional work to their plates
  4. The people who had proposed an alternative plan, which was not selected by the top management

 So, identifying the key sources of resistance in your organisation, and then acting upon this knowledge to reduce the impact, is crucial before you launch an implementation process.

The strategic risk management is all about setting up an effective process in place, to be able to face uncertainties, and effectively manage the unmanageable. The risk management process includes:

  1. Risk identification
  2. Analysis and prioritisation of risks
  3. Assignment of owners to the risks
  4. Risk response planning
  5. Tracking and monitoring the risks

These five steps would help managers mitigate the expected risks to a great extent. The totally unexpected incidents that occur will, however, need to be handled carefully, using expert knowledge in the affected areas.

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Comments

Santosh2020-09-28

The best article on the business strategy concept. Can you send me the copy to the above-mentioned email id? Thank You in advance

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