three steps of the strategy-making process

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   Strategy-Making Process

   Learning objective: Describe the steps involved in the strategy-making process.

   There are three steps to create strategies that produce sustainable competitive advantage: 1) assess the need for strategic change; 2) conduct a situational analysis; and 3) choose strategic alternatives.

   2.1 Assessing the Need for Strategic Change

   The external business environment is changing more rapidly than ever, and often companies must assess their own need for change. Formerly successful companies can suffer from competitive inertia.

   Competitive inertia: a reluctance to change strategies or competitive practices that have been successful in the past.

   Example: Competitive inertia caused cable TV companies to lose share to satellite TV companies that offered small dishes capable of receiving 200 channels instead of 40.

   In addition to being aware of competitive inertia, managers must also look for strategic dissonance to avoid failure.

   Strategic dissonance: a discrepancy between upper management’s intended strategy and the strategy actually implemented by lower levels of management.

   Example: Coca-Cola used to use a centralized strategy in which all product offering decisions were made from the Atlanta headquarters for markets all around the world. However, headquarters didn’t always know what was the best for each market. The new CEO changed Coca-Cola’s strategy to be based on localized decision-making.

   Answer by simple 224 days ago