Business strategy frameworks provide a structure for businesses to generate and implement new business strategies.
Business strategy refers to the aims and objectives of the company, while the firm’s competitive strategy is how it will pursue its goals. A business strategy can be thought of as an algorithm that maps out different courses of action as defined by changing variables such as competition, customer preferences, and environmental factors. Frameworks serve as an aid towards the development of these algorithms by providing a comprehensive guide for developing appropriate strategies.
Frameworks cover a range of issues from strategic planning, competitors’ behavior and capabilities, customers’ needs, and boundaries on market entry and exit strategies and help companies define what actions they should take in order to meet their goals. They also allow managers to evaluate various strategies more easily.
The first step for businesses is to identify the environment in which they are operating. The characteristics of this environment are called “factors outside of our control” or external factors, while changes within the company are known as “factors inside of our control”. For example, an increase in fuel prices may involve both internal and external factors whereas a decision to open more stores involves only internal factors. Businesses must then decide what kind of impact each factor will have on them before identifying any opportunities or threats that might come from these changes. Factors that will help the business grow are called opportunities, while those that pose a threat are referred to as threats.
How does business strategy differ from competitive strategy?
Business strategy refers to the goals and objectives of the business, while competitive strategy is how they will go about achieving these goals.
Strategy frameworks provide a structure for businesses to generate and implement new business strategies. When implementing an actual strategy, managers can choose from a number of different alternatives as defined by the framework.
Strategy frameworks are also able to assist companies in their analysis process as they allow them to compare different alternatives according to their ability to meet set objectives. In addition, they have the benefit of being widely accepted so that groups who use different frameworks can still communicate with one another easily or even switch between different versions of a particular framework. There are numerous types of frameworks including internal and external assessments, environmental scans, scenarios, and experience curves which serve towards the implementation of appropriate strategies for businesses to follow.
What Are Some Strategy Frameworks?
There are many types of strategy frameworks available for use by companies including Porter’s Five Forces model, Value Chain Analysis, SWOT analysis and others.
You may have experienced the frustration of losing market share or market position to competitors or not being able to see your way clear through challenges within your organization. Strategy frameworks can help you take a step back from all the activity going on in your business to find a way forward.
In addition to helping you keep your eyes on the big picture, frameworks can increase employee participation in the decision-making process and lead to better informed decisions. They allow for a more organized approach towards business problems and challenges in a diverse marketplace. These frameworks also promote alignment with higher management when it comes to tackling tough issues such as reducing costs, creating revenue growth plans or establishing new product development goals.
There are many different strategy frameworks that companies use including Porter’s Five Forces model , Value Chain Analysis , SWOT analysis , etc. However, two of the most commonly used strategy models are Porter’s Five Forces Model and SWOT Analysis.
