Business strategy Primary data collection techniques Define the goals.

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Section 1 – Confirm the Vision and Mission
This section is about confirming the organisation’s current vision and mission statements as part of the strategic planning process. It includes making refinements to the vision, reviewing core values and identifying key stakeholders who will assist with the process. It also includes a section on understanding how the strategic planning process takes place.
Scenario: Review strategic direction
The strategic direction of an organisation must be regularly reviewed and evaluated to ensure that it is current, relevant and achievable. As a senior manager, you will be involved in the strategic planning process. This means reviewing operations, and gaining adequate and honest feedback from all key stakeholders. A range of approaches to strategic planning must be evaluated for the best option, and approval sought from senior leadership to carry out the review. The vision, mission and values of the organisation must be reviewed and aligned with the future direction of the organisation.
What skills will you need?
In order to effectively confirm the organisation’s vision and mission, you must be able to:
Demonstrate an understanding of the strategic planning process
Refine the vision and mission
Review organisational values
Gain stakeholder
Understanding the strategic planning process
Before embarking on the strategic planning process, a key issue is to discover the status of the existing business strategy, so that you can determine whether or not the strategy needs to be continued or changed. The business strategy for your organisation is the long- term purpose and positioning of the organisation within its industry. It also sets the direction for your organisation.
Strategy defined
Strategies are comprised of four or five key approaches that the organisation will use to accomplish its mission and vision during the next 1–3 years. Strategies may change when there are modifications made to the organisation’s mission; these change with seasons, markets, innovations and growth.
Graham Hubbard defines strategy as decisions which have high medium to long-term impact on the activities of the organisation, including the implementation of those decisions, to create value for customers and key stakeholders and to outperform competitors.
This definition highlights six aspects of strategy:
Strategy is about decision making. Strategy is not simply analysis, it involves action. For action to occur, decisions must be
Strategy is about the long-term impacts of important decisions. Strategy involves commitment.
Strategy is about the integration and focus of business functions. Decisions affect every section of the organisation. There must be synergy, unity and commitment from everyone
Strategy is about the implementation of decisions. Many organisations are good at thinking and analysis, but not so good at implementation; as a result they do not fulfil their
Strategy is about creating value for customers and key stakeholders – they do not carry out activities for their own
Strategy is about outperforming competitors. There must be a commitment to doing something unique and better than the
Three levels of strategy
There can be confusion over the use of the word of ‘strategy’. One of the reasons might be that there are three levels of strategic decision making; corporate, business and functional.
Corporate strategy deals with issues related to the variety of businesses held by a multi-business organisation/corporation.
Business strategy deals with how one particular organisation positions itself, relative to its competitors, to create a sustainable and competitive
Functional strategy deals with how each component (function or department) of the organisation will contribute towards achieving the business
This unit is focused on the development of an organisation’s business strategy and how it is implemented at a functional level. The clear distinctions between these levels are more theoretical than practical. For single business organisations, corporate strategy and business strategy are effectively the same.
Strategic options
There is no one perfect strategic planning model for each organisation. Each organisation ends up developing its own nature and model of strategic planning, often by selecting a model and modifying it as they work through the process of developing their own plan.
The following models provide a range of alternatives from which organisations might select an approach, and begin to develop their own strategic planning process.
There are many strategic models that you could use in your strategic planning process. It is important that you gain support from the senior leaders and key stakeholders on which process you will use. Raymond Miles and Charles Snow suggest that business-level strategies fall into one of four categories; prospector, defender, analyser and reactor.
Prospector strategy – a strategy by which the organisation encourages creativity and flexibility and is often decentralised. An organisation that follows this model is highly innovative, constantly seeking new markets and new opportunities. It is oriented toward growth and risk
Defender strategy – a strategy by which an organisation focuses on lowering costs and improving the performance of current products. Rather than seeking new opportunities and innovation, a company that follows this model concentrates on protecting its current markets, maintaining stability and serving its current customer base. They emphasise efficient manufacturing and customer
Analyser strategy – a strategy by which an organisation attempts to maintain its current businesses and be somewhat innovative in new businesses. A business that adopts this approach will use elements from both the prospector and defender models. This is a popular alternative as large organisations want to protect their base of operations and create new market
Reactor strategy – a strategy by which an organisation has no consistent approach to strategy. An organisation that follows this model is reacting to, but failing to anticipate or influence environmental events. Most organisations would deny using this strategy, but the truth is a lot of companies do, because they don’t have a clear strategy. As a result they do not perform well.1
A number of frameworks have been developed for identifying the strategic alternatives that organisations could use. According to Michael Porter, organisations may pursue a differentiation, overall-cost leadership or focus strategy at the business level.
Differentiation strategy – a strategy in which an organisation seeks to distinguish itself from competitors through the quality of its products or services. Companies that successfully implement this strategy are able to charge more for their products/services compared to their competitors because customers are willing to pay more to obtain the extra value they
Overall – cost leadership strategy – a strategy by which an organisation attempts to gain a competitive advantage by reducing its costs below that of the competition. By keeping costs low, the organisation is able to sell its products at low prices and still make a
Focus strategy – a strategy by which an organisation concentrates on a specific regional market, product line or group of buyers. It may utilise a combination of the other two strategies; it may differentiate its products in the focus market, or it may manufacture and sell its products at a low cost in the focus market.2
There are some organisations that develop strategies based on their products’ life cycle. This type of model shows how sales volume changes over the life cycle of a product.
Understanding the four stages in the ‘product life cycle’ helps leaders to recognise that strategies need to evolve over time.
Introduction stage – when a new product or technology is introduced, the demand may be high and can even exceed the company’s ability to supply the product. Leaders need to focus on matching demand without compromising on quality. Managing new employees and systems is a challenge in this
Growth stage – sales continue to grow and more companies begin producing the product. Issues include ensuring quality and delivery, and differentiating the quality or uniqueness of your product over competitors’ products. Slowing the entry of new competitors is a key strategy in this stage including lowering prices, improving distribution, or increasing company
Mature stage – overall demand for the product slows down and the number of new companies offering the product may also begin to decline. Product differentiation is still important during this stage, as well as keeping costs low. Searching for new products and services are important strategic
Decline stage – demand for the products and services you provide decreases; production and sales drop. Organisations that fail to anticipate these declines may go out of business.
Learning activity: Researching strategic processes
Using the internet, research Henry Mintzberg’s ten schools of strategic formulation from his book ‘Strategy safari – a guided tour through the wilds of strategic management’. Summarise each of the ten schools with no more than one or two sentences each.
An overview of the process
The strategic planning process is the primary vehicle for achieving strategic alignment across an organisation, to ensure the effective execution of a company’s strategy. The result of the planning process is a strategic plan.
The strategic planning process typically begins with extensive research and analysis that helps senior leadership to identify and focus on the top three or four priority issues for the company to achieve long-term success. For each priority issue, senior leadership empowers key individuals, teams and stakeholders to create action plans. Once these action plans are developed, the company’s strategy can be approved, written and communicated to all relevant parties. The strategy is implemented and its progress monitored.
Regardless of which model or process you use, basic strategic planning consists of ten steps; each step will be examined in more detail later in the unit.
Review the current status of the
Analyse external
Analyse internal
Identify gaps and
Identify priority
Outline action plans and
Write the strategic
Communicate the
Implement the
Monitor and evaluate the
Learning activity: Vision and mission
Using the internet, research the strategic plans of well-known organisations and compare their layout to the one suggested above. Select two companies and list, in bullet point format, the structure of their strategic plan.
Here are some suggestions: LJ Hooker Real Estate, News Corporation, BHP, Qantas, Virgin Blue, Boral, AGL.
While this process may seem straightforward, strategic planning is anything but. It takes time and requires high levels of communication between senior leadership and key stakeholders where all parties examine, analyse, discuss and refine the plan.
There are many terms that are used interchangeably in business: vision and mission; leadership and management; goals and objectives; culture and values, etc. It is very important to establish the language and terminology that best suits your organisation. Confusing language leads to inconsistent communication which hinders the organisation from achieving its vision.Refining the vision and mission
Your organisation should have an established strategic framework consisting of the following six elements:
Vision statement describing your future.
Mission statement that defines what you are doing.
Core values that unite and bring synergy to all employees.
Strategies that focus on how you will accomplish the vision.
Goals and critical success factors that shape your actions.
Action plans and processes that drive your daily schedule.
This unit is focused on the development and implementation of the organisation’s strategies. It is therefore necessary to refine the components of your current vision and mission statements, make any changes required, and to review your core values to support those changes.
At the commencement of the strategic planning process, the following questions need to be asked of the organisation’s vision:
What milestones have we reached and does our organisation plan to grow? How are we positioned within our industry?.
Most companies plan to grow because of shareholder and stakeholder expectations, however, some smaller companies and government organisations have no plans to expand. A smaller family-owned company may want to maintain control of operations, assets and profits, while some government organisations are interested in maintaining the status quo, meeting requirements and nothing more.
What products and services does our organisation want to produce? In other words, what business are we in? Are these the products and services we want to continue to provide in the future?
What customers or markets do we want to service? In other words, who wants to purchase our goods or services? How will we service them? Do we have a lot of competitors?
Which strategy do we want to follow in order to be competitive? In other words, what makes us unique? How are we different from our competition? Do we have a different range of products and services; a better range; a cheaper range; do we provide the same range in a different/better way?
What position do we want to hold in the future? In other words, what is our vision for the future? Where is our organisation heading? What do we hope to achieve? What are our goals?
A business strategy should address these types of questions. The answers to these questions might be found within the vision, mission or other direction statements, in the existing strategies, from stakeholder feedback, customer surveys and observations by consultants or from a marketing audit.
Learning activity: Vision and values
Research the core values of three organisations that declare their future intention to be competitive and a leader within their industry. Write the key statement/s for each below.
Here are a few suggestions: ANZ, Pepsi, Adidas, Kodak, IBM, Hewlett Packard.
Identifying gaps
In order to be successful, your organisation’s strategy must be consistent with the requirements of its current and future environment. The capabilities (and strengths) of your organisation must also be consistent with the strategy being pursued in the future. All of these factors must be acceptable to your key stakeholders.
When research and analyses (e.g. PEST and SWOT) have been conducted on your organisational environment (discussed at length in Section 2), there will be obvious gaps that appear. A ‘gaps analysis’ reveals the difference between where you are currently and where you need to be positioned. This is a positive process as it leads to discussion around what your organisation needs to address, improve, maximise or harness in order to fulfil your objectives.
Core values define the business and what it stands for. Core values are intrinsic to the organisation; they represent an organisation’s highest priorities and driving forces. What an organisation values the most will ultimately become their priorities.Reviewing organisational values
Value statements describe the priorities, preferences and attitudes of the organisation, and define how people will behave in the workplace. They are statements about how the organisation will value customers, suppliers, stakeholders and the community.
Identifying your values
The culture of your organisation is a corporate expression of these core values. Culture describes ‘how things are done around here.’ When changes are made to the strategies of an organisation, values will also need to be modified in order to be aligned with priorities for that season. There needs to be consistency between culture and strategy. Failure to align values with the business strategy makes it difficult to implement the strategic plan successfully.
When reviewing the values statement for your organisation, four questions must be asked:
Are the values listed appropriate for your organisation?
How are the values unique or different compared to the competition?
Do these values represent a part or the complete culture of your organisation?
How do these values enhance the organisation’s ability to be successful and have an advantage over its competitors?
Key elements of culture
Over time, the culture of your organisation has strengthened. It has been embedded by the actions of your senior leaders, the behaviour of your employees and the operating methods of your company on a daily basis. There are both positive and negative elements of the culture which may be enhancing or limiting your ability to achieve your mission.
There is no ‘right’ culture. Organisations across different industries (and positions within industries) require different strategies. Different business strategies require different cultures. The culture must be aligned with the strategy.
When you are reviewing and developing organisational values, you are also reshaping the culture. Understanding the key components of organisational culture is important in this process:
Routines: These are the ‘assumed ways’ of operating in your organisation. Routines are almost second nature, often taken for granted, and affect what an organisation can and cannot do on a daily basis.
Rituals: Similar to routines, except that they mark a particular value with a special occasion or event. Rituals help to reinforce the organisation’s values, and might include what the organisation does with staff meetings, training events or retreats, rewarding outstanding achievement, Christmas bonuses and birthdays.
Rules: Every organisation has rules that affect the culture of the organisation, and these are often defined in company manuals. Rules may cover the use of log books, timesheets, OHS policies, attendance at meetings, coffee breaks, annual leave, sick leave, and use of technology.
Symbols: Reinforce organisational values by sending a message to stakeholders and customers. Symbols may be used in the décor of offices, technology used in stores, the expense invested in advertising, employee uniforms, logo design and colours used.
Stories: Such as those from history, which highlight and add meaning to the organisation’s established values. The story usually starts with ‘Do you remember when?’. It might be an event that required a great response from the leader. It could have been a crisis that caused people to re- evaluate what was really important to them. It may have been the achievement of major milestones and achievements.
Systems and structures: Provide reflections of the underlying culture, including the way decisions are made, how performance is measured, the way structures are set up to be customer-focused or production-focused, etc.
Values and beliefs: These are the foundations of the culture, describing how the organisation will value customers, suppliers, stakeholders and the community.
Learning activity: Identifying cultural symbols
Some organisations in recent years have changed their logo or symbol in order to communicate a value and strengthen their position within the industry. Using the internet, research three companies and describe their reasoning for making these changes.
Some suggestions are: Woolworths, Qantas, Nokia, Google, Palm, Apple, Microsoft, Firefox.
Analysing the values
When reviewing your organisation’s values and bringing them into alignment with the strategic plan, each component (listed above) needs to be questioned and re-evaluated.
Routines, rituals and rules
What values are being reinforced?
What types of behaviour do they encourage?
How difficult would it be to change them?
To what extent are they consistent with the business strategy?
Symbols
What beliefs and values do they emphasise?
Which symbols are important?
Are they aimed at the internal organisation or external market?
To what extent are they consistent with the business strategy?
Stories
What core beliefs do they reflect?
What are the dominant themes behind the stories?
Are they still relevant?
Are they supportive or in conflict with the business strategy?
Systems and structures
Do they emphasise people or productivity?
What values and behaviours are they reinforcing?
How difficult are they to change?
Are they supporting or detracting from the strategy?
Values and beliefs
What are the real values held by the organisation?
Is there consistency across the organisation?
What inconsistencies exist that might hinder the strategy?
What needs to change in order for these values to fit with the new strategic plan?
Implementing values
All high-performing organisations have a strongly defined culture. A strong culture will bring these components into alignment. Once this process is complete, it is necessary to reaffirm the agreed values to everyone, and define the role each person plays in value formation.
Once new values are articulated, you now have the challenge of implementing them. To do this, you could take the following steps:
As the leader, begin to role model the new
Document the set of newly defined
Use every communication means available to state the new desired
Conduct a ‘values alignment’
Identify ‘cultural architects’; those who epitomise the new values and
Reward individuals and departments exhibiting the new
Change systems and structures to reinforce the
Allocate resources to areas favoured by the new desired
The key stakeholders are individuals or groups who can influence the business strategy of the organisation, and are affected by its outcomes. In strategic thinking, analysis and action, it is the key stakeholders we are most interested in, because they will have the greatest influence on the direction and decision-making. Key stakeholder feedback and participation is critical to the planning process.
Gaining stakeholder support
Identifying your key stakeholders is important in determining the relevance of the current strategy, and what it is likely to become in the future. Understanding the role of key stakeholders, and the contribution they can make to the strategic planning process, starts by asking questions, such as:
Which individuals or groups can influence the business strategy?
Which stakeholders could make a valuable contribution to the planning process?
What are their expectations of the organisation?
Why is the organisation important to the key stakeholder?
What are the attitudes and values of the key stakeholder?
What value does the organisation create for the stakeholder?
Identifying stakeholders
Stakeholders can be found in any or all of the following groups, depending on the type of organisation. Remember, a stakeholder is any group that is affected in one way or another by the activities of an organisation.
employees – staff, managers, directors, non-executive directorscustomers and clientssuppliers and service providersshareholders and trusteesguarantors and investorsfunding bodiesdistribution partners
marketing partnerslicensorslicenseesapproving bodies and regulatory authoritiesendorsers and sponsorsadvisors and consultantslocal community3.
Learning activity: Stakeholders
Consider an organisation that may want to establish a new branch in another capital city. Who would be considered the key stakeholders in the decision? What is the expected impact of the venture on each one?
Gaining stakeholder support
Creating value for key stakeholders determines how they will influence and support the strategy development. For example, creating value for customers determines whether they continue to buy your products and services or not. Creating value for a shareholder will determine the level of their investment. Creating value for an employee will determine their attitude and work ethic.
A stakeholder analysis or matrix could be used to show:
their position or level of influence
their interest in the organisation’s future
the degree of benefit they would experience from these strategic changes
the possible costs they would incur as a result of these
The benefits of using a stakeholder analysis are:
You can use the opinions of the most powerful stakeholders to shape and improve your strategy at an early
Gaining support from influential stakeholders can help you to win more resources, which makes implementation of strategy more
By communicating with stakeholders early, you can ensure that they fully understand the benefits of your strategy and are better positioned to support you when
You can anticipate what other people’s reaction to your plan may be, and prepare in advance to win people’s support.4
Learning activity: Key stakeholders
Using the list of stakeholders you created in the previous activity, create a power/interest grid and map the stakeholders where you think they best fit.
Stakeholder involvement
Informed people are supportive people. Where possible, involve key stakeholders in setting your strategic plan, informing them of your progress every step of the way.
Obviously not every stakeholder can be involved, nor should they be. At each of the ten suggested levels of the strategic planning process (discussed earlier), key individuals and groups can assist you in the following ways:
provide valuable feedback on the current status of the organisation
refine the mission statement
review the core values
assist with research
agree with the selection of strategic process
analyse the external and internal factors
identify priority issues
formulate action plans
Section summary
You should now understand how to determine the best strategic process to use for your organisation. You should also understand the process of reviewing the vision, mission and core values and how to gain the support of your leadership for the process of strategic planning.
Further reading
Hill, C. W. L., Jones, G. I. R., Galvin, P., and Haidar, A., 2007, Strategic management: An integrated approach, 2nd Australasian edn, John Wiley & Sons, Australia (Chapters 1 and 2).
Smith, C., ‘Stakeholder analysis – winning support for your projects’, Mind Tools, viewed August 2015,
<http://www.mindtools.com/pages/article/newPPM_07.htm>
Harvard Business Press, 2009, Executing strategy, Harvard Business School Publishing, USA (Chapters 1, 2 and 3).
Before you proceed to the next section, make sure that you are able to:
Section checklist
demonstrate an understanding of the strategic planning process
Refine the vision and mission
Review organisational values
Gain stakeholder support

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