MGT Notes

Reference: Strategic Management (5e) – Frank T. Rothaermel (Pg 21)

This post will outline briefly a process that can be followed to craft and execute a successful strategy.

The three important steps are:

1. Analysis : This step lays out the role of strategic leaders and how they shape a firm’s vision, mission and values. Here, a study is done of forces in the firm’s external environment as well as to quantify the firm’s internal resources, capabilities and competencies. Two other important questions that can be asked here are: how does the firm make money (Business Model) and how do you measure competitive advantage ?
2. Formulation : Three broad questions addressed in this step are: how should the firm compete (Business Strategy, ex. cost leadership), in what areas should the firm compete (Corporate Strategy, ex. which industry) and in what geographical locations should a firm compete (Global Strategy).
3. Implementation: In this step the organizational structure is designed to convert the formulation into action, while simultaneously addressing questions on corporate governance and business ethics.

The above three categories are highly interdependent and are often addressed simultaneously.