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How To Write a Strategic Plan for Your Business

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Strategic planning forms the foundation of effective strategy management. It's the crucial first step that sets the direction for your entire business, regardless of its size or industry. A well-crafted strategic plan does more than outline goals—it provides a roadmap for achieving them, aligning your team's efforts, and adapting to change. Whether you're steering a multinational corporation or managing a neighborhood café, mastering the art of strategic planning can significantly impact your business's trajectory. Let's explore how strategic planning initiates the strategic management process and lays the groundwork for long-term success.

What are the seven elements of a strategic plan?

A comprehensive strategic plan typically consists of seven key elements that work together to create a cohesive roadmap for your business. Let's explore each of these elements:

Vision 

Your vision statement articulates what your organization aspires to achieve in the future. It's your long-term goal to provide a clear picture of where you want your business to be. A strong vision statement is inspirational and guides your strategic decision-making.  

The mission statement is the driving force behind why your company exists. It defines who you serve, how you create value, and what sets you apart. A well-crafted mission statement should be concise, memorable, and aligned with your vision.

Values 

Your core values are the fundamental beliefs that guide your company's behavior and decision-making process. They shape your organizational culture and influence how you interact with customers, employees, and stakeholders.

Goals 

Goals are the measurable objectives that align with your business mission, vision, and values. These are typically your long-term ambitions, often set for a 3-5 year timeframe. They provide direction and focus for your entire organization.

Your strategy is the long-term plan for achieving your objectives. It's based on both internal and external factors, often informed by a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). Your strategy maps out how you'll leverage your strengths, address weaknesses, capitalize on opportunities, and mitigate threats.

The approach outlines how you'll execute your strategy and achieve your objectives. It involves defining specific actions and initiatives. These are often your short-term objectives, breaking down long-term goals into smaller, measurable milestones to track progress and maintain momentum.

Tactics are the granular, short-term actions, programs, and activities that support your approach. They are the detailed steps and specific tasks that, when executed, help you achieve your objectives and, ultimately, your long-term goals.

By incorporating these seven elements into your strategic plan, you create a comprehensive framework that bridges the gap between your current state and your desired future. This strategic roadmap not only defines where you want to go but also outlines how you'll get there, ensuring that every aspect of your business is aligned towards achieving your vision.

What is an example of a strategic plan?

A strategic plan is your business's GPS, guiding you from where you are to where you want to be. It's a comprehensive document that outlines your goals, strategies, and the steps needed to achieve them. 

Let's look at a real-world example to see what a strategic plan could look like in practice:

Imagine a mid-sized tech company aiming to become a market leader in cloud computing solutions. 

Their strategic plan might include:

• Mission : To revolutionize business efficiency through innovative cloud solutions
• Vision: To be the go-to cloud service provider for small and medium enterprises by 2026
• Core values: Innovation, customer-centricity, collaboration
• SWOT analysis: Identifying strengths (cutting-edge technology), weaknesses (limited market presence), opportunities (growing demand for cloud services), and threats (intense competition)
• Long-term goals : Achieve 25% market share within five years
• Short-term objectives: Increase customer base by 50% in the next 12 months
• Action plans: Launch a targeted marketing campaign, develop new product features, and expand the sales team

This example demonstrates how a strategic plan provides a clear roadmap for achieving business objectives.

Specific examples of strategic plans for various sectors

Different sectors may emphasize different aspects of strategic planning . For instance:

• Healthcare: Focus on patient outcomes, technology integration, and regulatory compliance
• Education: Prioritize student achievement, faculty development, and funding strategies
• Non-profit: Emphasize mission alignment, donor engagement, and program effectiveness

Remember, the key is to adapt your strategic plan to your unique context and needs.

How do you make a strategic plan for a small business?

Strategic planning is essential for all business sizes, not just corporate giants. Small businesses, with their limited resources, can greatly benefit from a well-structured strategic plan. By prioritizing initiatives and allocating resources wisely, a strategic plan helps avoid costly mistakes and maximizes return on investment. It allows business owners to focus on impactful activities, adapt quickly to market changes, and ensure every effort contributes to long-term goals. 

Even a simplified version of the seven strategic planning elements can provide a solid foundation for growth. The key is creating a plan that's both comprehensive and flexible. In the resource-constrained world of small business, a well-crafted strategic plan ensures that every resource is channeled effectively, promoting smart, strategic growth rather than just hard work.

Here's how a small business can create a strategic plan: 

• Clarify your vision, mission, and values
• Conduct an environmental scan
• Define strategic priorities
• Develop goals and metrics
• Derive a strategic plan
• Write and communicate your strategic plan
• Implement, monitor, and revise

These steps provide a comprehensive framework for organizations to create, execute, and maintain an effective strategic plan.

For a more in-depth guide, check out this article on the  strategic planning process .

Simplify the process using strategic frameworks and templates

Strategic frameworks and templates can be invaluable tools, especially for those new to the process or looking to streamline their approach. They provide structure and ensure you don't overlook critical components. Here are some examples of strategic frameworks and templates and their specific use cases:

• Use case: Ideal for small businesses or startups needing a concise overview.
• Example : A tech startup might use this to outline its product development roadmap, key market targets, and growth milestones for the next 12 months.
• Use case: Perfect for teams setting specific, measurable objectives.
• Example: A sales team could use this to set targets like “Increase quarterly revenue by 15% through expanding into two new market segments by Q3.”
• Use case: Valuable for businesses conducting a comprehensive situational analysis.
• Example: A retail company might use this to assess its e-commerce capabilities (strength), limited physical presence (weakness), emerging markets (opportunity), and increasing online competition (threat).
• Use case: Suited for larger organizations needing to align various departments.
• Example: A healthcare provider could use this to track patient satisfaction (customer), operational efficiency (internal processes), staff training (learning and growth), and cost management (financial) metrics.
• Use case: Useful for project managers or team leaders implementing specific strategies.
• Example: A marketing team might use this to outline steps for a product launch, including timelines for content creation, media outreach, and performance tracking.

By choosing the right framework for your specific needs, you can significantly simplify the strategic planning process and ensure all crucial elements are addressed. Remember, these templates are starting points - customize them to fit your unique business context and goals.

Want to streamline strategic planning?

Strategic planning is more than a business exercise — it's a commitment to your future success. Whether you're learning how to write a strategic plan for a department or figuring out how to write a strategy for a project, the principles remain the same: clarity, focus, and actionable steps.

Writing a strategic plan from scratch may seem daunting, but it doesn't have to be. Our strategic intelligence platform, Quantive StrategyAI , can help you create a strategic plan based on your current business circumstances, ways of working, and goals. Here's how:

• AI-Powered Insights: StrategyAI analyzes your business data, both structured and unstructured, to provide contextually relevant insights and guidance at every step.
• End-to-end Management: From strategy development to execution and evaluation, StrategyAI offers a comprehensive solution to manage your entire strategic process.
• Adaptive Approach: The platform adapts to your business context, inputs, and way of working, eliminating the need for you to adjust to a new system.
• Data-Driven Decision Making: With over 170 integrations, StrategyAI connects with your business data sources, ensuring your insights are always fresh and relevant.
• Always-On Strategy: StrategyAI enables a continuous, responsive, and connected approach to strategy, which is crucial for success in today's fast-paced business environment.

At Quantive, we specialize in turning complex business challenges into clear, effective strategies. Our AI-powered platform, combined with our team of experts, can guide you through the process, helping you create and execute a strategic plan that drives real results.

Quantive empowers modern organizations to turn their ambitions into reality through strategic agility. It's where strategy, teams, and data come together to drive effective decision-making, streamline execution, and maximize performance.     

As your company navigates today’s competitive landscape, you need an Always-On Strategy to continuously bridge the gap between current and desired business outcomes. Quantive brings together the technology, expertise, and passion for transforming your strategy and playbooks from a static formulation to a feedback-driven engine for growth.    

Whether you’re a fast-growing scale-up, a mid-market business looking to conquer, or a large enterprise looking for innovation, Quantive keeps you ahead – every step of the way. For more information, visit  www.quantive.com .

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Strategic Planning: How To Create a Strategic Business Plan

Explore the role of a strategic business plan in fostering innovation and driving growth at your company.

From handling customer concerns to managing supplier relations, companies often find themselves lost in the weeds of everyday business operations. These daily tasks can distract from the bigger picture and slow a business’s growth. This is why a strategic business plan is important.

A strategic business plan steers the company amid the bustle of regular operations and guides the leadership team to realize their strategic objectives and overarching vision. This article will discuss how a strategic business plan is a powerful tool for directing your company toward success and growth

What is a strategic business plan?

A strategic business plan is a comprehensive document that outlines a company’s vision, mission statement , and goals, coupled with a detailed roadmap to achieve those objectives. The plan takes account of the current business environment, provides insights into a company’s competitive advantages, and helps identify key performance indicators (KPIs). It guides the entire company’s decision-making processes by bridging the gap between the present and desired future. 

How does a strategic business plan differ from a traditional business plan?

Both strategic and traditional business plans help you map out your company’s goals, understand the competitive environment, and engage key stakeholders in achieving those goals. However, their purpose, time horizon, focus, and execution set them apart. A strategic business plan focuses on:

A strategic business plan focuses on the growth and direction of an established business. A traditional business plan is typically used to start a business or secure initial funding. 

Time horizon

A strategic business plan focuses on the next 12 months. A traditional business plan often covers a longer time frame, typically three to five years.

A strategic business plan concentrates on specific initiatives to develop the business. It emphasizes tactical, immediate actions to navigate the competitive landscape, increase market share, and work toward sustainable competitive advantages and business growth.

A traditional business plan is a high-level document that provides a long-term view of the business’s direction. This includes detailed financial projections, a marketing plan , and an overview of day-to-day operations, including project management and direct operations. 

A strategic business plan focuses on turning high-level goals and objectives into actionable strategies and execution plans. A traditional business plan focuses more on the overall business concept and financial viability.

What are the benefits of a strategic business plan?

Aligned company objectives, improved decision making, prudent risk management, clear communication among stakeholders, funding options.

A strategic plan is your guide to achieving business success, and the process of creating and implementing it has five key advantages:

The strategic planning process should involve the entire company—from the C-suite to operations staff. This ensures all departments align with the overarching business strategy on a day-to-day basis. This collaborative effort unifies the leadership team, key stakeholders, and employees around strategic objectives.

Strategic business planning allows staff to make more informed decisions. Decisions that align with the company’s strategic objectives have a clear purpose, whether that’s investing in new opportunities, responding to competitive threats, or adjusting operations.

A strategic business plan helps companies anticipate potential challenges in the business environment. By understanding your company’s exposure to risk, you can make informed decisions that mitigate potential harm and help the business adapt to shifts in the market.

A well-documented strategic plan communicates your company’s mission, vision, and objectives to all stakeholders. This ensures everyone—from the leadership team to the employees— understands your company’s goals and their role in achieving them.

A strategic business plan includes financial projections and a marketing plan , demonstrating the company’s viability and potential for return on investment. If you pursue additional rounds of funding, you can use it to showcase the business opportunity to potential investors.

What should a strategic business plan include?

• Executive summary
• Mission statement
• Vision statement
• Company values
• Products and services
• Market research and analysis
• SWOT analysis
• Business objectives
• Key performance indicators
• Marketing and sales strategy
• Financial plan

A well-crafted strategic business plan includes 12 key elements, each contributing to a comprehensive, actionable blueprint. Here are the essential components :

1. Executive summary

The executive summary opens your strategic business plan, documenting your mission statement, vision statement, company values, and strategic objectives. It provides key stakeholders with a preview of what’s to come.

2. Mission statement

The mission statement articulates your company’s purpose. It’s the guiding principle that steers your company in a strategic direction.

3. Vision statement

The vision statement paints a picture of your company’s future. It inspires stakeholders to contribute to your business growth plans.

4. Company values

This section lists the principles and ethical outlook that shape your company’s identity and influence its operations. They form the bedrock of your business strategy.

5. Products and services

This section outlines what your company offers, showing how your products or services are poised to capture market share by addressing customer needs.

6. Market research and analysis

The market research section demonstrates your understanding of the business environment. That includes an in-depth study of customer profiles, competitors, and market trends.

7. SWOT analysis

A SWOT analysis is the part of your strategic planning process that analyzes your company’s strengths, weaknesses, opportunities, and threats. It offers insights to inform your strategic business planning and enhance your strengths while acknowledging your weaknesses.

8. Business objectives

Business objectives, which are broader than specific goals, provide clear aims for your company. They support your company’s mission and vision by translating them into achievable initiatives.

The goals segment provides specific and measurable targets your company will use to achieve its business objectives. This component encourages accountability throughout the organization.

10. Key performance indicators

Your KPIs are the metrics that benchmark your company’s performance, determining whether you are reaching or falling short of goals. They provide measurable insights to track progress and influence decisions, ensuring your strategic plans are on course.

11. Marketing and sales strategy

This section outlines how you plan to attract and retain customers. It details your marketing plan, the sales process, and your engagement strategies.

12. Financial plan

The financial plan outlines your financial projections , including revenue, expenses, and profitability. It includes a comprehensive view of the company’s financial statements , highlighting the viability of your strategic business plan. It can also be an essential part of seeking funding. 

How to develop a successful strategic business plan (5 steps)

• Assess the current state of your business
• Perform a SWOT analysis
• Define strategic objectives and set goals
• Develop your marketing and financial strategies
• Create an execution plan

Creating an effective strategic business plan involves key members of your team. Here’s how to streamline the process: 

1. Assess the current state of your business

Crafting a strategic business starts with examining all aspects of your company—from financial statements to your Net Promoter Score , an important measure of customer satisfaction. Consider your business strengths and any potential growth opportunities. Understanding where your company stands is fundamental to formulating an effective business strategy.

2. Perform a SWOT analysis

Conduct a comprehensive SWOT analysis. This process helps you identify your business strengths, weaknesses, opportunities, and threats, providing a detailed overview of the competitive environment and where your business fits.

3. Define strategic objectives and set goals

Define your strategic objectives and, based on your company’s mission and vision statement, establish measurable goals that align. These goals should encompass the entire company and help you achieve specific initiatives promoting business growth.

4. Develop your marketing and financial strategies

With strategic objectives in place, develop your marketing and financial strategies. The marketing plan should be geared toward reaching your target market and increasing your market share. Your financial strategy should include detailed financial projections.

5. Create an execution plan

Create a plan for implementing your strategic business plan. This execution plan should include specific projects to be executed over the next year and key performance indicators to monitor their progress. Involve key stakeholders and the leadership team in the execution process to ensure the plan is implemented effectively across the entire company.

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Strategic business plan FAQ

What is the main purpose of strategic planning.

The main purpose of strategic planning is to establish a company’s objectives and lay out the steps necessary to achieve those goals.

How often should a strategic business plan be updated?

Update your strategic business plan at least once a year—or whenever you make major changes at your company or market conditions shift significantly.

What role does market analysis play in a strategic business plan?

Market analysis is pivotal in a strategic business plan. It helps businesses understand their competitive environment, identify growth opportunities, and inform strategic decision making.

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How To Write A Business Strategy: Your Four-Step Guide

Tricia Jessee

Tricia manages our implementation and onboarding team to ensure the success of ClearPoint customers.

Here’s a simple guide on how to write a business strategy that works.

Table of Contents

Creating a solid business strategy happens in three parts: 1) understanding where you stand strategically as an organization right now; 2) deciding where you want to be in the future; and 3) determining how you’ll get there. The steps below cover each of these areas, with steps three and four both being part of the final phase.

Jumpstart the strategic planning process with our free, downloadable templates., how to write a business strategy: four steps, step 1: conduct a swot analysis..

The best way to understand your organization’s current state is to conduct a SWOT (strengths, weaknesses, opportunities, threats) analysis. A SWOT analysis provides wide-ranging insights about your company from multiple perspectives. Not only does it reveal where things are going well and where you can improve internally, but it also requires you to evaluate the environment outside your company to understand potential threats and opportunities you can minimize or leverage (respectively) going forward.

To glean these insights, you’ll need to do some information-gathering from your employees, external stakeholders, and even your customers (where relevant). You can read more about how to do a SWOT analysis in this article, but in brief, here are the questions you should ask:

Once you’ve gathered all this information, study it. Identify seemingly significant points, things to follow up on, and trends. Also, look for connections between the areas. For example, some of your strengths may naturally support the identified opportunities, and eliminating certain weaknesses might present additional opportunities.

Step 2: Clarify your mission, vision, and values.

Next, with your SWOT insights in mind, you can begin thinking about where you want your company to go. This direction should be reflected in your organization’s mission and vision statements. A mission statement articulates your purpose—why the organization exists and the value of the product or service it provides. A vision statement clarifies the direction in which your organization is headed by stating the outcomes you expect to achieve in the near future.

Another element to consider is your core values; these define your organization’s fundamental beliefs and practices.

All of these elements are a foundational part of your organizational structure, and form the linchpin of your strategy.

The SWOT analysis you completed in Step 1 is helpful because it serves as an objective assessment of your company—what you’re good at and your weaknesses. Knowing this information will help you formulate realistic goals, and create a plan that the organization is reasonably prepared to execute. Without those insights, it’s possible you could be busy developing a business strategy that’s categorically beyond your reach.

Another way of articulating your strategy is with an OAS statement:

• Clarify your organization’s objective, or the reason you exist.
• Clarify your advantage, or how you do things differently, better, or more efficiently than competitors.
• Clarify the scope —what you’re doing (and not doing) to achieve your objective.

Step 3: Select a strategy management framework.

Before you begin to write a business strategy, choose a strategy management framework to hold it all together.

A strategy framework brings structure to your plan, connecting your projects and initiatives with the outcomes you hope to achieve. It serves as support for your organization’s daily activities, and makes your priorities clear to everyone involved. Think of it as the master plan for your strategy, unifying all activities organization-wide.

There’s no shortage of frameworks to choose from, including (our favorite) the Balanced Scorecard (BSC), Theory of Change (TOC), and Objectives and Key Results (OKRs) .

Step 4: Develop your five-year plan with SMART measures and objectives.

Now that you know where you’d like to go, it’s down to the details of creating a business strategy—what can you do that will get you there? Note that the framework you’ve chosen may use specific terminology, but you’re still essentially going through the same exercise: clearly identifying high-level goals and performance measures .

Using the Balanced Scorecard as an example:

• You’ll create objectives, which are high-level organizational goals. To do this, focus on what your organization is trying to accomplish strategically. A very general example of an objective would be “Become an internationally-recognized brand.” Organizations using the BSC typically create 10 to 15 strategic objectives .
• You’ll create measures, which help you understand if you’re accomplishing your objectives. Using the above example, a measure would force you to answer the question, “How do I know that I’m becoming an internationally recognized brand?” Create one to two measures per objective. Also known as KPIs, measures use the process of measurement to help you understand what you can influence and which actions you can take. (Note that these might change if you discover over time that a particular measure is not accurate.)
• You’ll set targets for your measures. By setting targets, you’ll be able to see whether or not you’re on track to meet your specific goals.

In ClearPoint, you can structure your plan with common elements, creating linkages (as many as needed) to show alignment. You can also customize the terminology you use to match the framework you’re using.

Tip: Use the SMART framework to create objectives.

SMART is an acronym for specific, measurable, attainable, realistic, and timely. This methodology will guide you in creating goals that are clear and achievable. Each objective you create should be:

• Specific: Goals should be well-defined and explicitly state who, what, when (see “Timely,” below), where, and why.
• Measurable: Goals should be quantitative and number-oriented.
• Attainable: Goals should be feasible given your organization’s capabilities and resources.
• Realistic: Goals should be realistic given the external environment and your company’s current stage of growth.
• Timely: Goals should have an end date, and, if applicable, dates for completion of various phases.

What happens after you write a business strategy? How To Complete The Strategic Planning Process

Learning how to write the business strategy itself is only part of the strategic planning process. Once you’ve created your plan, there are a few more steps to complete in order to set yourself up to execute it successfully.

Execution is the most difficult part of strategy. It’s easy to generate excitement around the initial writing of a plan; the hard part is sustaining momentum over the space of three to five years. Doing the following as part of the planning phase will put you in the best possible position as you begin strategy implementation:

Communicate your plan organization-wide.

No matter how good your business plan is, it won’t work if your co-workers at the executive, management, and employee levels don’t know how to contribute to it, or if they simply don’t know about it. That’s why you need to create a strategy communication plan that builds awareness.

A strategy map is a visual representation of the things your organization must do well in order to execute its plan successfully. It is easy to understand and share. For more ideas on how to communicate strategy effectively, read this article.

Set up a way to measure your results.

To know if you’re making progress, develop a plan to report on your strategy regularly. The best way to do that is with strategy reporting software like ClearPoint. ClearPoint bridges the gap between strategy creation and execution, helping you to maintain focus on the big picture (your objectives) while managing all the operational pieces that will bring it to fruition.

In ClearPoint, you can work within the framework of your choice (Balanced Scorecard, OKRs, etc.) and focus on the data that drives results.

ClearPoint users are more likely to achieve their goals because they can:

• Clearly see how measures and projects align with objectives
• Spot trends and learn the key influencers of outcomes
• Understand how all departments contribute to the organization’s goal

In addition, they are more likely to stick with strategy execution for the long haul because they can:

• Automate data collection and report generation , removing the burdens traditionally associated with manual reporting
• Keep conversations continuously centered around strategy, using ClearPoint as a guide
• Provide open access (if desired) to progress data to keep employees informed and motivated

Developing a business strategy is only a prelude to the hard work entailed in putting it to work. But with preparation and the right tools, you have a very good chance of being the kind of organization that actually accomplishes what it sets out to do. If you want to talk more about how ClearPoint can help, please reach out.

What are the different types of business strategies?

Different types of business strategies include:

- Growth Strategy: Focuses on expanding the company’s market share, product line, or geographic reach. - Cost Leadership Strategy: Aims to become the lowest-cost producer in the industry to attract price-sensitive customers. - Differentiation Strategy: Involves offering unique products or services that stand out from competitors. - Focus Strategy: Concentrates on serving a specific market niche, either through cost focus or differentiation focus. - Innovation Strategy: Emphasizes creating new products, services, or processes to gain a competitive edge. - Sustainability Strategy: Integrates environmental and social considerations into the business model to meet the needs of present and future generations.

How can I conduct a SWOT analysis for my business?

To conduct a SWOT analysis for your business:

- Identify Strengths: List internal strengths such as strong brand reputation, skilled workforce, proprietary technology, and robust financial health. - Identify Weaknesses: List internal weaknesses such as limited resources, outdated technology, or gaps in capabilities. - Identify Opportunities: List external opportunities such as market growth, emerging trends, technological advancements, and regulatory changes. - Identify Threats: List external threats such as competition, market volatility, economic downturns, and changing customer preferences. - Analyze and Prioritize: Analyze the items in each category and prioritize them based on their impact on your business.

How can I clarify my mission, vision, and values?

To clarify your mission, vision, and values:

- Define Mission: Articulate the purpose of your business, what it does, who it serves, and how it serves them. It should be clear and concise. - Define Vision: Outline your long-term aspirations and what you aim to achieve in the future. It should be inspiring and forward-looking. - Define Values: Identify the core principles and beliefs that guide your business’s behavior and decision-making. They should reflect your company culture and ethics. - Engage Stakeholders: Involve employees, customers, and other stakeholders in the process to ensure alignment and buy-in. - Communicate Clearly: Ensure the mission, vision, and values are communicated clearly across the organization and incorporated into all strategic planning.

What are some different strategy management frameworks?

Different strategy management frameworks include:

- Balanced Scorecard: A framework that balances financial and non-financial performance measures across four perspectives: financial, customer, internal processes, and learning and growth. - SWOT Analysis: A tool for identifying strengths, weaknesses, opportunities, and threats to inform strategic planning. - Porter’s Five Forces: Analyzes the competitive forces within an industry to understand its attractiveness and potential profitability. - PEST Analysis: Examines the external macro-environmental factors (Political, Economic, Social, Technological) that could impact the organization. - OKR (Objectives and Key Results): A goal-setting framework that defines clear objectives and tracks the outcomes to measure progress. - Growth-Share Matrix: Helps businesses prioritize their product portfolio based on market growth and market share.

How can I develop a five-year plan for my business?

To develop a five-year plan for your business:

-Set Clear Objectives: Define long-term goals that align with your mission and vision. - Conduct a SWOT Analysis: Assess your business’s strengths, weaknesses, opportunities, and threats to inform strategic decisions. - Define Key Initiatives: Identify the key initiatives and projects needed to achieve your objectives. - Create Action Plans: Develop detailed action plans with timelines, resources, and responsibilities for each initiative. - Allocate Resources: Ensure you have the necessary resources (financial, human, technological) to support your plans. - Establish KPIs: Set key performance indicators to measure progress and success over the five-year period. - Review and Adjust: Regularly review the plan and make adjustments based on performance and changing external conditions.

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Strategic Analysis

The process of conducting research on a company and its operating environment to formulate a strategy

What is Strategic Analysis?

Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate a strategy. The definition of strategic analysis may differ from an academic or business perspective, but the process involves several common factors:

• Identifying and evaluating data relevant to the company’s strategy
• Defining the internal and external environments to be analyzed
• Using several analytic methods such as Porter’s five forces analysis, SWOT analysis , and value chain analysis

What is Strategy?

A strategy is a plan of actions taken by managers to achieve the company’s overall goal and other subsidiary goals. It often determines the success of a company. In strategy, a company is essentially asking itself, “Where do you want to play and how are you going to win?” The following guide gives a high-level overview of business strategy, its implementation, and the processes that lead to business success.

Vision, Mission, and Values

To develop a business strategy, a company needs a very well-defined understanding of what it is and what it represents. Strategists need to look at the following:

• Vision – What it wants to achieve in the future (5-10 years)
• Mission Statement – What business a company is in and how it rallies people
• Values – The fundamental beliefs of an organization reflecting its commitments and ethics

After gaining a deep understanding of the company’s vision, mission, and values, strategists can help the business undergo a strategic analysis. The purpose of a strategic analysis is to analyze an organization’s external and internal environment, assess current strategies, and generate and evaluate the most successful strategic alternatives.

Strategic Analysis Process

The following infographic demonstrates the strategic analysis process:

1. Perform an environmental analysis of current strategies

Starting from the beginning, a company needs to complete an environmental analysis of its current strategies. Internal environment considerations include issues such as operational inefficiencies, employee morale, and constraints from financial issues. External environment considerations include political trends, economic shifts, and changes in consumer tastes.

2. Determine the effectiveness of existing strategies

A key purpose of a strategic analysis is to determine the effectiveness of the current strategy amid the prevailing business environment. Strategists must ask themselves questions such as: Is our strategy failing or succeeding? Will we meet our stated goals? Does our strategy align with our vision, mission, and values?

3. Formulate plans

If the answer to the questions posed in the assessment stage is “No” or “Unsure,” we undergo a planning stage where the company proposes strategic alternatives. Strategists may propose ways to keep costs low and operations leaner. Potential strategic alternatives include changes in capital structure, changes in supply chain management, or any other alternative to a business process.

4. Recommend and implement the most viable strategy

Lastly, after assessing strategies and proposing alternatives, we reach a recommendation. After assessing all possible strategic alternatives, we choose to implement the most viable and quantitatively profitable strategy. After producing a recommendation, we iteratively repeat the entire process. Strategies must be implemented, assessed, and re-assessed. They must change because business environments are not static.

Levels of Strategy

Strategic plans involve three levels in terms of scope:

1. Corporate-level (Portfolio)

At the highest level, corporate strategy involves high-level strategic decisions that will help a company sustain a competitive advantage and remain profitable in the foreseeable future. Corporate-level decisions are all-encompassing of a company.

2. Business-level

At the median level of strategy are business-level decisions. The business-level strategy focuses on market position to help the company gain a competitive advantage in its own industry or other industries.

3. Functional-level

At the lowest level are functional-level decisions. They focus on activities within and between different functions, aimed at improving the efficiency of the overall business. These strategies are focused on particular functions and groups.

Related Readings

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• Competitive Advantage
• Industry Analysis
• Types of Financial Analysis
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How to Develop a Business Strategy: 6 Steps

• 25 Oct 2022

Business strategy can seem daunting, and for good reason: It can make or break an organization. Yet, developing a strong strategy doesn’t need to be overwhelming.

In the online course Business Strategy , Harvard Business School Professor Felix Oberholzer-Gee posits that strategy is simple. His secret? Focus on your organization’s value creation.

“Strategy often sounds like a lofty concept that only the most senior executives can develop,” Oberholzer-Gee says. “But actually, anyone can think and act strategically. It doesn’t need to be difficult; all you need is a proven framework.”

Here’s a breakdown of why business strategy is important, the basics of value-based strategy, and six steps for developing your own.

Why Do You Need a Business Strategy?

Business strategy is the development, alignment, and integration of an organization’s strategic initiatives to give it a competitive edge in the market. Devising a business strategy can ensure you have a clear plan for reaching organizational goals and continue to survive and thrive.

According to a study by Bridges Business Consultancy , 48 percent of organizations fail to meet half of their strategic targets and 85 percent fail to meet two-thirds, highlighting why dedication to the business strategy process is crucial.

One type of business strategy is called value-based strategy, which simplifies the process by leveraging the value stick framework to focus on the advantage your business creates.

Access your free e-book today.

What Is Value-Based Strategy?

Value-based strategy , also called value-based pricing, is a pricing method in which an organization relies on the perceived value of its goods and services to determine its pricing structure and resource allocation.

The value stick framework can be used to visualize how various factors impact each other and determine which initiatives to pursue to increase value for all parties.

The value stick has four factors:

• Willingness to pay (WTP) : The highest price a customer is willing to pay for your product or service
• Price : The amount customers have to pay for goods or services
• Cost : The amount a company spends on producing goods or services
• Willingness to sell (WTS) : The lowest amount suppliers are willing to accept for the materials required to produce goods or services

To determine how to best create value, you can toggle each factor on the value stick to see how the others are affected. For instance, lowering price increases customer delight.

"As strategists, we really ask three questions,” Oberholzer-Gee says in Business Strategy. “How can my business best create value for customers? How can my business create value for employees? And how can my business create value by collaborating with suppliers? Think of a company's strategy as an answer to these three questions."

Related: 4 Business Strategy Skills Every Business Leader Needs

6 Steps to Develop a Value-Based Business Strategy

1. define your purpose.

When approaching business strategy, defining your organization’s purpose can be a useful starting point.

This is vital in creating customer and employee value, especially if your organization’s purpose is linked to a cause such as environmental protection or alleviating specific social issues.

A recent survey conducted by clean energy company Swytch found that nearly 75 percent of millennials would take a decrease in salary if it meant working for an environmentally responsible company. Nearly 40 percent selected one job over another because of an organization’s sustainability practices.

Additionally, research in the Harvard Business Review shows that consumers’ motivation to buy from sustainable brands is on the rise. Sales of products marked as sustainable grew more than five times faster than those that weren’t.

By starting with purpose, your organization can create more value down the line.

2. Assess Market Opportunity

Next, understand your market’s competitive landscape. Which companies own shares of the market? What differentiates your competitors’ products from yours? Are there any unmet needs your organization could take advantage of?

Conducting this research before planning a strategy is critical in identifying how your organization provides unique customer value and opportunities to create even more.

3. Create Value for Customers

With an understanding of the market and your company’s purpose, you can determine how your organization provides unique or greater value and strategize ways to improve.

On the value stick, the value captured by customers is called “customer delight.” It can be increased by raising their willingness to pay and decreasing the product’s price. If lowering the price isn’t an option, brainstorm how you could make the product more valuable to customers, thus increasing their willingness to pay.

Some ways to create customer value include:

• Lowering the product’s price
• Increasing the product’s physical quality and longevity
• Providing quick, high-quality customer service and a smooth shopping experience
• Leveraging network effects , if applicable, to create a community of users
• Incorporating an environmental or social cause into processes, packaging, and branding

4. Create Value for Suppliers

In addition to creating value for customers, you also need to provide value for suppliers. Suppliers can include any company that provides raw materials, labor, and transportation to help your organization produce goods or deliver services.

Supplier surplus, also called supplier delight, is created when the cost of materials increases or their willingness to sell decreases. The relationship between a firm and its suppliers can be contentious, given that both want to increase their margins. Yet, there are ways to create value for both parties.

Some ways to create value for suppliers include:

• Agreeing to pay more for higher quality materials : While this increases the supplier surplus, it may also increase customer delight by raising willingness to pay, or increase the firm’s margin by allowing you to raise prices.
• Working with the supplier to increase efficiency : This strategy can increase supplier surplus by lowering the overall cost of the supplier’s labor and their willingness to sell.

5. Create Value for Employees

Creating value for employees is a critical part of an effective business strategy and can be assessed using the value stick. Think of your employees as the “supplier” of labor and the supplier margin as employee satisfaction.

Employee satisfaction can be increased by raising wages or lowering the minimum salary they’re willing to receive by delivering value in other ways. Satisfied employees may provide a better customer experience, resulting in increased customer delight.

The value you provide employees ensures they’re motivated to do their best work, develop their skills, and stay with your company long-term.

Some examples of ways to create value for your employees include:

• Offering competitive salaries and bonuses
• Offering benefits like ample paid vacation and sick days, generous parental leave, and wellness budgets
• Providing flexibility of work location, whether your team is fully remote or hybrid
• Aiding in professional development
• Creating a workplace rich with a diversity of experiences, identities, and ideas
• Fostering a supportive organizational culture

One example from Business Strategy is that of a call center for a diagnostics company. The employees were being paid minimum wage and expressed that the analytical nature of their phone calls with customers warranted higher pay. They also expressed pain points about cumbersome tasks and work conditions.

When a pay increase was implemented for all employees, along with operational changes to make processes smoother, employee productivity increased to the point that it balanced out the higher cost of salaries.

Because the employees’ satisfaction increased, they also began providing better experiences on the phone with customers. This increased the customers’ willingness to pay, directly impacting customer delight.

6. Map Strategy to Actionable Tasks and KPIs

Amidst creating value for each of the three groups, don’t forget the fourth party that needs value: your company. By creating value for employees, suppliers, and customers, you’re creating value for your firm, too.

To ensure you’re tracking to goals, determine your key performance indicators, what metrics constitute success, and how you’ll report results over time. Then, break each of the above value-creation goals into action items. For instance, what steps can you take to increase your employees’ compensation? Who will be responsible for each task?

Having actionable assignments and clear metrics for success will allow for a smooth transition from strategy formulation to execution.

Building Your Strategic Skill Set

By leveraging the value stick, you can create a business strategy that provides value to employees, customers, suppliers, and your firm.

To develop your strategies further and dig deeper into how to navigate value creation, consider taking an online course like Business Strategy . Professor Oberholzer-Gee walks through real-world examples of business challenges, prompts you to consider how you’d create value, and then reveals what those business leaders did and how you can apply the lessons to your organization.

Want to learn more about how to craft a successful strategy for your organization? Explore Business Strategy , one of our online strategy courses , to learn how to create organizational value. Not sure which course is the right fit? Download our free flowchart .

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