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An Assignment
On
“Chapter 01- Theoretical concept of crafting and executing strategy”

Course Title: Strategic Management

Submitted to:
Mr. Md. Shamimul Islam
Assistant Professor (HRM)
Department of Business Administration
Leading University, Sylhet

Submitted by:
Arafat Hussain
Id: 1303010034
Department of Business Administration
Leading University, Sylhet

Submission Date: 21th June, 2020

Contents Page numbers

Table of content

What is strategy?
Strategy generally involves setting goals, determining actions to achieve the goals, and
mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be
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achieved by the means (resources). It involves activities such as strategic planning and strategic
thinking.

What is the definition of strategy in business?

The definition of strategy is a long-term plan of action designed to achieve a particular goal or a
set of objectives. A core management function, strategy states how business should be conducted
in each area of operations in order to successfully accomplish the goals and objectives.

Why strategy is important?

There are five Reasons Why Strategy is Important . Here are five reasons why strategy plays
such an important part of any company’s success.

1. Planning – Creating and tracking progress against an annual operating plan is an essential
management tool for any company. What is often missing is the relationship these plans have to
the future. Too often annual operating plans are created from the rear view mirror. What
happened last year and where should we go in the coming year? These are all good intentions.
However, without a clear picture of what you want the future to look like, it will always be more
reactive than proactive. A well-articulated 3 to 5 year long term view of the company should
serve to inform the annual operating plan. The annual plan then becomes the stepping stone
toward the achievement of the longer term goals.

2. Strengths and Weaknesses – At first glance this seems too obvious and you are saying to
yourself, “Of course we know what our strengths and weaknesses are!” We cannot disagree. No
one knows your business better than you. On the other hand, are you leveraging strengths
(competitive advantages) and do you have plans to close capability gaps in your organization
(weaknesses)? Strategy creates a higher level of awareness and provides greater focus on
activities that will make the organization more successful.
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3. Skills & Knowledge – If you know where you want to take your business over the long term,
you will have a much better idea of the kinds of capabilities you will need to achieve your goals.
Strategy defines and drives decisions in organizational design. Therefore by proactively pursuing
new skills and knowledge, you prepare the organization for the intended future state and your
odds of success increase.

4. Resource allocation – One thing is clear about any company, large and small—resources are
finite. We wish they were infinite, but that will never be the case. Strategy is about making
choices. What products, services and markets will be a part of the future and what we should not
do? These types of decisions are critical to ensuring that limited resources are being deployed to
the most promising opportunities that will provide the greatest return.

5. Environmental Scan – Too many CEOs don’t take the time to truly know the external
environment that can have a positive or negative impact on performance. This is not to say that
leaders are not in tune with their customers, or not aware of their competition. The question is,
how thorough an analysis are they doing? Jack Welch had it right when he asked his division
leaders to dig deep to understand how things might change before they really happened. Being
aware and prepared for potential shifts in your market or industry provides the opportunity to
take action before it happens.
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Steps to Create an Effective Business Strategy

1. Gather the facts

To know where you’re heading, you have to know where you are right now. So before you start
looking ahead, you should review the past performance, or the current situation. Look at each
area of the business and determine what worked well, what could have been better and what
opportunities lie ahead.

2. Develop a vision statement

This statement should describe the future direction of the business and its aims in the medium to
long term. It’s about describing the organisation’s purpose and values. Business gurus have
debated long and hard about what comes first – the vision, or the mission statement (see step 3).
But, in practice, you could develop both at the same time.

3. Develop a mission statement

Like the vision statement, this defines the organization’s purpose, but it also outlines its primary
objectives. This focuses on what needs done in the short term to realize the long term vision. So,
for the vision statement, you may want to answer the question: “Where do we want to be in 5
years?”. For the mission statement, you’ll want to ask the questions:

 What do we do?
 How do we do it?
 Whom do we do it for?
 What value do we bring?

4. Identify strategic objectives

At this stage, the aim is to develop a set of high-level objectives for all areas of the business.
They need to highlight the priorities and inform the plans that will ensure delivery of the
company’s vision and mission.
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By taking a look back at your review in step one, in particular the SWOT and PESTLE analysis,
you can incorporate any identified strengths and weaknesses into your objectives.

Crucially, your objectives must be SMART (Specific, Measurable, Achievable, Realistic and
Time-related). Your objectives must also include factors such as KPI’s, resource allocation and
budget requirements.

5. Tactical Plans

Now is the time to put some meat on the bones of your strategy by translating the strategic
objectives into more detailed short-term plans. These plans will contain actions for departments
and functions in your organization. You may even want to include suppliers.

You’re now focusing on measurable results and communicating to stakeholders what they need
to do and when. You can even think of these tactical plans as short sprints to execute the strategy
in practice.

6. Performance Management

All the planning and hard work may have been done, but it’s vital to continually review all
objectives and action plans to make sure you’re still on track to achieve that overall goal.
Managing and monitoring a whole strategy is a complex task, which is why many directors,
managers and business leaders are looking to alternative methods of handling strategies.
Creating, managing and reviewing a strategy requires you to capture the relevant information,
break down large chunks of information, plan, priorities, capture the relevant information and
have a clear strategic vision.

Strategy and the Quest for Competitive Advantage

1. Striving to be the industry’s low-cost provider, thereby aiming for a cost-based competitive advantage
over rivals. Wal-Mart and Southwest Airlines have earned strong market positions because of the low-
cost advantages they have achieved over their rivals and their consequent ability to underprice
competitors. Achieving lower costs than rivals can produce a durable competitive edge when rivals find it
hard to match the low-cost leader’s approach to driving costs out of the business. Despite years of trying,
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discounters like Kmart and Target have struck out trying to match Wal-Mart’s frugal operating practices,
super-efficient distribution systems, and its finely honed supply chain approaches that allow it to obtain
merchandise from manufacturers at super-low prices.

2. Outcompeting rivals based on such differentiating features as higher quality, wider product selection,
added performance, value-added services, more attractive styling, technological superiority, or unusually
good value for the money. Successful adopters of differentiation strategies include Johnson & Johnson in
baby products (product reliability), Harley-Davidson (bad-boy image and king-of-the-road styling),
Chanel and Rolex (top-of-the-line prestige), Mercedes-Benz and BMW (engineering design and
performance), L. L. Bean (good value), and Amazon. com (wide selection and convenience).
Differentiation strategies can be powerful so long as a company is sufficiently innovative to thwart clever
rivals in finding ways to copy or closely imitate the features of a successful differentiator’s product
offering.

3. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of
serving the special needs and tastes of buyers comprising.

A Company’s Strategy Is Partly Proactive and Partly Reactive

The evolving nature of a company’s strategy means that the typical company strategy is a blend
of (1) proactive actions to improve the company’s financial performance and secure a
competitive edge and (2) as-needed reactions to unanticipated developments and fresh market
conditions (see Figure 1.2).4 The biggest portion of a company’s current strategy flows from
previously initiated actions and business approaches that are working well enough to merit
continuation and newly launched initiatives aimed at boosting financial performance and edging
out rivals. Typically, managers proactively modify this or that aspect of their strategy as new
learning emerges about which pieces of the strategy are working well and which aren’t, and as
they hit upon new ideas for strategy improvement. This part of management’s action plan for
running the company is deliberate and proactive, standing as the current product of
management’s latest and best strategy ideas.
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But managers must always be willing to supplement or modify all the proactive strategy
elements with as-needed reactions to unanticipated developments. Inevitably, there will be
occasions when market and competitive conditions take an unexpected turn that calls for some
kind of strategic reaction or adjustment. Hence, a portion of a company’s strategy is always
developed on the fly, coming as a response to fresh strategic maneuvers on the part of rival firms,
unexpected shifts in customer requirements and expectations, fast-changing technological
developments, newly appearing market opportunities, a changing political or economic climate,
or other unanticipated happenings in the surrounding environment. These adaptive strategy
adjustments form the reactive strategy elements. As shown in Figure 1.2, a company’s strategy
evolves from one version to the next as managers abandon obsolete or ineffective strategy
elements, settle upon a set of proactive/intended strategy elements, and then adapt the strategy as
new circumstances unfold, thus giving rise to reactive/adaptive strategy elements. A company’s
strategy thus tends to be a combination of proactive and reactive elements In the process, some
strategy elements end up being abandoned because they have become obsolete or ineffective.
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What makes a strategy winner?

Three questions can be used to test the merits of one strategy versus another and distinguish a
winning strategy from a so-so or flawed strategy:

1. How well does the strategy fit the company’s situation? To qualify as a winner, a strategy has
to be well matched to industry and competitive Core Concept conditions, a company’s best
market opportunities, and other aspects of the a winning strategy must fit the enterprise’s
external environment. At the same time, it has to be tailored enterprise’s external and internal to
the company’s resource strengths and weaknesses, competencies, and situation, build sustainable
competitive capabilities. Unless a strategy exhibits tight fit with both the competitive advantage,
and improve external and internal aspects of a company’s overall situation, it is likely company
performance. to produce less than the best possible business results.

2. Is the strategy helping the company achieve a sustainable competitive advantage? Winning
strategies enable a company to achieve a competitive advantage that is durable. The bigger and
more durable the competitive edge that a strategy helps build, the more powerful and appealing it
is.

3. Is the strategy resulting in better company performance? A good strategy boosts company
performance. Two kinds of performance improvements tell the most about the caliber of a
company’s strategy: (a) gains in profitability and financial strength, and (b) gains in the
company’s competitive strength and market standing.

Why are the crafting and executing strategy important?

Crafting and executing strategy are top-priority managerial tasks for two very big reasons. First,
there is a compelling need for managers to proactively shape, or craft, how the company’s
business will be conducted. A clear and reasoned strategy is management’s prescription for
doing business, its road map to competitive advantage, its game plan for pleasing customers and
improving financial performance. Winning in the marketplace requires a well-conceived,
opportunistic strategy, usually one characterized by strategic offensives to out innovate and
outmaneuver rivals and secure sustainable competitive advantage, then using this market edge to
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achieve superior financial performance. A powerful strategy that delivers a home run in the
marketplace can propel a firm from a trailing position into a leading one, clearing the way for its
products/services to become the industry standard. High-achieving enterprises are nearly always
the product of astute, creative, proactive strategy making that sets a company apart from its
rivals. Companies don’t get to the top of the industry rankings or stay there with imitative
strategies or with strategies built around timid actions to try to do better. And only a handful of
companies can boast of strategies that hit home runs in the marketplace due to lucky breaks or
the good fortune of having stumbled into the right market at the right time with the right product.
There can be little argument that a company’s strategy matters—and matters a lot. Second, a
strategy-focused enterprise is more likely to be a strong bottom-line performer than a company
whose management views strategy as secondary and puts its priorities elsewhere.

There’s no escaping the fact that the quality of managerial strategy making and strategy
execution has a highly positive impact on revenue growth, earnings, and return on investment. A
company that lacks clear-cut direction, has vague or undemanding performance targets, has a
muddled or flawed strategy, or can’t seem to execute its strategy competently is a company
whose financial performance is probably suffering, whose business is at long-term risk, and
whose management is sorely lacking. In contrast, when crafting and executing a winning strategy
drive management’s whole approach to operating the enterprise, the odds are much greater that
the initiatives and activities of different divisions, departments, managers, and work groups will
be unified into a coordinated, cohesive effort. Mobilizing the full complement of company
resources in a total team effort behind good execution of the chosen strategy and achievement of
the targeted performance allows a company to operate at full power.
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References:http://docshare.tips/strategy-is-partly-proactive-and-partly-
reactive_574a4b8bb6d87f3e478b49a9.html.

https://portalcfo.com/identifying-business-strategy/.
https://www.business2community.com/strategy/6-steps-create-effective-business-strategy-
01391113.