Goldman Sachs Training: Strategy Development in an Unregulated ...

Strategy development is an expansive but integral part of any company, big or small, and as a result, there are a number of business practices geared towards this functional area. To begin with corporate strategy development, you should determine your strategic barriers by defining where you want your company to be, how you can get your company there, and where you currently are. The evolution from your current state to your desired end state is a matter of strategy development and strategy execution. Even though the end goal of any corporate strategy is winning, it involves a number of important pieces, including defining your companys value proposition, competitive advantages, and business transformation.

Within the strategy development process, it is important to develop a cohesive and definitive qualitative model for the market place. Market analysis is driven by both supply and demand side analyses that affect the market, which is comprised of goods and services. The market environment can be evaluated by conducting the PEST analysis, which evaluates the political, legal, economic, socio-demographic, cultural, and technology factors that are existent in the market. Once we understand the market, a business can develop informed strategic options and recommendations leading to the strategy development. Developing a market study will allow us to understand the market environment, the market dynamics, and the market outlook.

There are numerous core components to the design of strategy execution. You should construct the organizational context that governs how the business operates. Strategy planning and budgeting projects can include growth scenario planning, growth strategy design, and product innovation management. Under the category of strategic initiatives, we should evaluate the organizations portfolio and priorities, championing and management, and maneuvering tactics. Within strategy execution, a critical element is developing the annual strategy planning and budgeting process. organizational context includes such initiatives as governance, org structure, performance metrics, rewards and incentives, as well as management teams capabilities and cognitive frames. Strategy execution projects need to be diligently controlled.

Different sized businesses naturally go through different challenges and therefore, undertake different approaches to managing their strategy development approach. A global company may employ a more structured strategic management model, due to its greater size and scope of operations. Some businesses companies may be in the nascent growth stages, whereas more established multi-nationals are in the sustain phase. A SMB may be more entrepreneurial in its approach to business growth and its operations are often much more agile and lean.

Activity Based Costing is a business analysis framework developed to improve upon the accuracy of conventional forms of business costing, so that key business decisions can be fact based. Whereas, in traditional costing methods, indirect costs are distributed across all products based on a standard, volume-based cost allocation, which is highly inaccurate and misleading, and therefore prone to leading to misinformed business decisions. The reason that Activity Based Costing is better is because it follows a 7-phase process of gathering cost objects, cost components, activities, and resources drivers to understand true cost paths. Activity Based Costing allows for true profitability to be understood around critical areas of product lines, customer segments, target geographies, and other markets.

As hinted to earlier, when we analyze the market, both supply analysis and demand analysis need to be performed, which includes looking into all the following areas. The innate structure of both the supply chain and value chain ought to be created and studied. Know the historical and emerging trends in the market. Truly know buyer behavior, such as purchase criteria, creating the customer value chain, determining the points of purchase, and characterizing customer loyalty. Identify the areas of integration, both vertical and horizontal points. Know all the key players and know their market shares, split by overall and by product category, core competencies and characteristics, and market positions. Spot where the trends are, as they relate to socio-environmental trends, supply side trends, and demand trends. Create a diagram of the market force landscape. Do segment analysis, including segment definition, deriving segment volumes, and segment characterization.

Strategy development has evolved through 5 defining stages over the years. Business strategy development started with a focus on financial planning in the 1950s, moving to sustainable planning in the 1960s, to strategic planning in the 1970s and eventually to a focus on strategic management in the present day. Shifts in strategic mindset represent an ever evolving, emerging business leaders, and emergence of disruptive technologies and trends. In the current day, the strategic development theme is on integrating strategic planning and execution with a stress on the primary notions of core competencies, strategy planning and execution, and balance scorecard analysis. Much of business strategy is also hinged on ideas in the 1970s, where the focus of what business leaders devote their efforts to was around thinking strategically to beat competition and the business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were actively used for the first time.

An important activity used in strategic planning is scenario planning analysis. Oftentimes, the scenario planning process is performed in a workshop environment, where key stakeholders, executives, subject matter experts, and third party consultants, are gathered in a 2-4 day off-site conference to decide on various future state situations. Scenario planning is also called scenario thinking and scenario analysis. An important task in the scenario planning framework is defining the primary axes of uncertainty within the context of a scenario map. Scenario planning is used to help businesses plan for and make flexible long term corporate plans.

Structured business communication is usually formed under a framework. Popular ones include Pintos Pyramid Principle, which is commonly used by management consultants and management executives in developing PowerPoint presentations. Crawl Walk Run is a popular framework for illustrating the progression of change, from an initial crawl stage eventually to walk activities and eventually to the run phase of streamlined processes. The Pyramid Principle is intertwined into the presentation storyboarding process.
Business Strategy Development

Source: http://stuff-ari.com/2011/goldman-sachs-training-strategy-development-in-an-unregulated-environment/

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