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“Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.”
In other words, strategy is about:
How Strategy is Managed
- Where is the business trying to get to in the long term? (direction)
- Which markets should a business try to compete in and what kind of activities are involved in such markets? (markets; scope)
- How can the business perform better than the competition in those markets? (advantage)
- What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)
- What external, environmental, factors affect the business' ability to compete? (environment)
- What are the values and expectations of those who have power in and around the business? (stakeholders)
In its broadest sense, strategic management is about taking “strategic decisions” - decisions that answer the questions above.
In practice, a thorough strategic management process has three main components, shown in the figure below:
- Strategic Analysis - Strategic Analysis is concerned with scanning of the environment to ascertain the key influences like the impact on the organisation, and specially to gauge the strengths and weak points (SWOT analysis) and the political, social and economic environment (PEST analysis).
- Strategic Choice - Strategic Choice is concerned with the decisions about the purpose and future of the organisation and the way in which it responds to many pressures and influences (political, economic, financial) identified in the strategic analysis. Strategic decisions involve the generation of options and their evaluation, influenced by the missions and objectives determined by the government.
- Strategic Implementation - Strategic Implementation means the acceptability of such option by stakeholders and its feasibility, given the resources and competencies the administrative institution posses, ensuring that objectives to be met are clearly set up, and that responsibility and resources are correctly allocated. It may also be necessary to change the behaviour, beliefs and assumptions of those working in the organisation in order to achieve these objectives.
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