Question

9. Describe the four logical steps in developing a firm's strategy.

Answer 1

The steps in developing a firm's strategy are:

1) The data and information on firms performance as well as external environment is collected. This data is filtered and analysed to develop an insight on environmental factors such as competition, markets, consumer demands, suppliers, prevalent laws etc. as well as firm's internal working such as employee morale, financial condition, core competencies etc.

2) Based on insights gained from the data, strategy is formulated. For example, if the firm has strong research capability, it can go for differentiation strategy or else if the firm has availability of cheap labor, it can develop a low cost strategy.

3) The strategy formulated in the prevous stage is now implemented. The implementation can be on one go throughout the organisation, or it can be implemented in phases. Proper ressources are allocated for successful implementation of the developed strategy.

4) The implementation of strategy is evaluated now. This is a feedback and control stage. If the implementation is successful, the strategy is made final. Else, if there are gaps, the stages 1 to 3 above are repeated to identify the gaps. The process is continued till the implementation of the strategy succeeds.