Unit 2: Management Strategies Analysis
This unit focuses on the first step to strategy development, which is to analyze the business's current situation. Companies need to look at their core capabilities and competitiveness to succeed with their business strategy. These are the first steps to analyzing the current business situation. Without knowing where a company is currently at, it is difficult to determine the strategy. Therefore, by determining a business's external and internal factors and creating a mission and vision, the company can map where it wants to go from here.
Completing this unit should take you approximately 15 hours.
Upon successful completion of this unit, you should be able to:
- explain the internal and external factors that affect a business and drive its strategies, such as available resources and organizational capabilities; and
- identify the components of well-written mission and vision statements.
- explain the internal and external factors that affect a business and drive its strategies, such as available resources and organizational capabilities; and
2.1: Overview of External Factors
Strategy analysis is the first step to determining a strategy. There are external and internal factors to consider, and you should reflect on the types of competitive advantages you can use. Competitive advantages can come from pricing strategies, operational strategies, and many others. Ponder the kinds of companies you do business with as you read. Can you identify their competitive strategy?
Understanding how companies can create competitive advantages is necessary when analyzing external factors during the strategy analysis phase. As you read through this resource, consider the role of customers in helping your company develop a competitive advantage.
2.2: Competition
As you read this section, consider ways you might be able to research your competition. Your competition is an important external force as you develop your business strategy. Knowing your competition can help you set yourself apart from them and allow you to create a winning strategy.
After you read this resource, you should be able to explain the importance of analyzing a competitive environment before developing a company strategy.
Earlier in this course, we addressed the markets companies compete within. At that time, we discussed the importance of understanding the type of market competition to create a better strategy. This resource will focus on the different strategies that can be used depending on market competition.
This video explains the steps you'll take to analyze your competition. Can you identify why this analysis is so important before developing your own company's strategy?
When looking at competitive strategies, a theory called Blue Ocean strategy addresses how to create value beyond looking only at your competition. Can you identify how innovation relates to a blue ocean strategy?
It can be difficult to find the best way to compete in hypercompetitive markets. In the framework discussed in this article, we address the initiatives a company can participate in to give temporary advantages to a firm.
2.3: Driving Forces in Industry
When you formulate your strategy, understanding what is driving the current industry you're in is key to a successful strategy. The market changes rapidly, so understanding the industry and trends affecting the industry is imperative. In addition to understanding marketing trends, it can be helpful to have an overview of how the government classifies businesses. You will be able to use this information to make solid strategic decisions.
The North American Industry Classification System (NAICS) is a system that classifies businesses by type of economic activity. As you review this page, consider how your organization can use NAICS data to gain a competitive advantage.
There are other forces besides competition you should be concerned with before developing a strategy and implementing it. After you read, you will be able to name the other external considerations when creating your business strategy.
There are several trends influencing businesses today that could also affect your strategy. As you read this text, consider the trends that might influence your business' strategy.
Once you watch this video, you should be able to name the four main trends that could impact your strategic plan. Knowing these potential impacts will better prepare you to create your strategy.
2.4: Life-Cycle Considerations
Do you know what a product life cycle is? Perhaps from a marketing class? This same model can be applied to the business' current situation when analyzing external factors. Identifying what stage an organization is at in its lifecycle can help them make strategic decisions. Another important thing to understand is the different types of planning and how our current state of planning might impact our strategy.
The product life cycle and knowing where your products or services stand in each phase of the product lifecycle is useful information. Read this resource to understand how it can allow you to better align your strategic plan with your current offerings.
Once you develop your strategic plan, you will implement four planning elements to implement it. As you read this text, look for the four elements, and pay special attention to the time frame.
2.5: Overview of Internal Factors
You learned about the external factors that should be considered in the last section. The next step to planning your strategy is identifying internal factors that could impact your strategy. These internal factors will help drive the direction of your strategies, such as your human resource capabilities and value chain development. As you read, think about other internal factors that could impact strategy.
Although stakeholders can refer to anyone who cares about the success of a business, this resource will address internal stakeholders. Read this text on stakeholder management, which is an important concept, as you need to determine your internal stakeholders before taking the first step to strategy creation.
Before developing a strategy and creating an organizational design, do you know the internal elements you should be aware of? This text will address some of the employee-related factors to consider.
After you read, you will be able to name the internal conditions to consider and the value chain supporting activities necessary for strategy decisions.
2.6: Resources and Capabilities
In this section, we will specifically discuss how companies perform an internal analysis so they can better create appropriate strategies. Much of strategy development depends on the organizations' specific capabilities and the resources (financial and otherwise) available to them. Do you think a small business owner could find resources and capabilities as useful as a large business? Consider this question as you read through the section.
After completing This text, you will know the types of tools available, such as VRIO, to determine your company's resources and capabilities.
2.7: Resource Allocation and Planning
After an organization has done a thorough analysis, it is necessary to check its current methods of allocating and planning for resources. If organizations miss this step, they could formulate a strategy for which they cannot gather the proper resources or at the right cost. As you work through this, ponder the role technology can take in assisting organizations in allocating resources and planning for allocating resources.
Planning for resource usage is a key factor in understanding your company's capabilities and resources, and planning for how it will use them. As you read this text, look for reoccurring themes for companies who plan their resources effectively.
This page explains the terminology related to resource planning. Do resources always have to be tangible, or can they be intangible?
2.8: Merger and Acquisition Opportunities
Can you think of companies that have merged lately? Or a company that acquired another company? Often, this can be part of an overall strategy. As you read, consider which companies in an industry are merging or acquiring companies to better understand the business environment.
When developing a strategic plan, some companies may decide to focus on mergers and acquisitions. This chapter will explain the meaning of both terms and discuss factors to consider when choosing this type of strategy.
This video further addresses mergers and acquisition strategies. At the end of the video, you will be able to explain how mergers and acquisitions can be part of an overall strategic plan and the reasons for engaging in these types of business activities.
2.9: Globalization
Production, development, customer service, and marketing strategies are all internal factors of globalization. When companies consider developing their strategy, they may decide that using an international approach is viable and profitable. This section will address some of the considerations of an international strategy, such as the types of entry modes. Do you buy products from international companies? As you read through, consider their international strategies.
Some organizations may choose a global strategy. However, before doing so, it is important to know why a company chooses this option and the considerations they must make when going global. After you read, you should be able to pinpoint some of the reasons that make expanding globally an attractive option for some companies.
When a company decides to expand globally, it must choose an entry strategy. After watching this video, you will be able to explain the types of entry modes and their advantages and disadvantages.
As you read this case study, consider how international considerations are important for ethics and social responsibility. Review the critical thinking questions at the end and consider other companies that may have similar social responsibility strategies internationally.
As you read this case study, consider the response of Johnson & Johnson in this situation. Do you think it was appropriate? Could they have done more ethically to resolve the situation? Also, review the critical thinking questions at the end of the case and determine what your answers might be.
As you read this case study on Petrobras, consider the individual unethical actions and the organization's unethical actions. Consider how corruption and bribery can have negative effects on all stakeholders. Also, read the critical thinking questions and brainstorm answers.
2.10: Establishing a Mission and Vision
Now that an organization has considered internal, external, and other factors, it is time to write the mission and vision! The mission is vision is what the strategy will be based upon. During your study of this unit, consider this: if you had a personal mission statement and vision statement, what would it be? What characteristics are important in a vision and mission statement?
Before creating the strategy, a company must have a clear picture of its vision and mission. As you read this resource, consider the purpose of mission and vision statements, and think about how that can tie into the overall business strategy.
This text will show you examples of company vision and mission statements. Can you identify the similarities and differences between each?
Read this resource to learn how mind-mapping a vision statement can be an effective tool for vision statement creation.
As you have learned, the main difference between a vision and a mission is that the vision focuses on broad aspects of why the company exists. In contrast, mission statements focus on how the company will accomplish the vision. As you read this section, look for overarching themes for making a good vision statement.
At this point in the unit, you should have a pretty good idea of how to write a vision statement and mission statement. As you read this article, be reminded why companies need strong and well-written mission and vision statements.
Study Guide: Unit 2
We recommend reviewing this Study Guide before taking the Unit 2 Assessment.
Unit 2 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.