Mainstream management theory and economic analyses of private industries see the aim of strategy as securing and sustaining ‘competitive advantage’. For the public sector and the various not for profit industries the processes will be very similar but there are differing objectives. Profit can be replaced by added value, or, surplus.
Definitions vary but generally seen as the ability to generate more value or to be more profitable than one’s competitors. It may be informed by other factors but it is expressed as superior profitability. Strategy in this narrow sense is about exploiting differences to produce products and services that are different and/or better or cheaper than one’s rivals.
Disadvantages may flow from poor or unpopular products, being too expensive, poor reputation, old technology, shifts in fashion and taste, inability to adapt.
There are three steps to developing a strategy.
In general terms these stages are:
- Analysis – Systematic examination of environmental and organisational factors (identifying external drivers, barriers to change, opportunities and threats)
- Choice – Direction setting, strategy formation and the development of
initiatives responding to opportunities and threats (e.g. product and service development).
- Implementation – Implementation and operationalisation of projects and
proposals identified in the analysis and synthesis processes.
There are two tools often used to assist this process:
- The SWOT analysis and
- The PEST(EL) analysis
Read more on other modules under this theme.
Read more about these topics in the Strategy in Context and Strategic direction modules