Managers, researchers, and academics have developed a variety of frameworks to help you shape your strategic thinking and business success as a result of this process.
Unfortunately, there are so many strategic frameworks that it’s difficult for most new managers, CEOs, or executive directors who want to lead their teams to know where to begin
We think that each firm develops its own unique Business strategy framework based on its capabilities and preferences as business strategy consultants. All of the amazing strategic tools that exist that you can bring into your business to help reach your organizational goals may benefit organizations like yours.
We want you to have as many amazing tools as possible so you can figure out which ones are ideal for you, your team, and your plan.
There are many more business strategy framework planning tools available than those listed here. We’ve chosen a handful of things we believe will assist most managers and leaders in their planning efforts.
External Analysis Strategic Tools
Understanding what’s going on outside of your company is the first step toward developing your own internal strategy.
“How can you plan a day at the park if you don’t know what the weather is going to be like?” Anthony Taylor is an author.
Before you and your team establish future plans, you must first determine:
- Is there anyone else in the game?
- How difficult will the game be?
- What changes in the globe are likely to occur or have already occurred?
- In light of these shifts and uncertainties, can we forecast the future?
Porter’s Five Forces of Competition
Porter’s Five Competitive Forces is one of the most effective techniques for determining where power sits outside your organization and how it might affect your company’s future.
This tool assumes that your profitability and organizational future are influenced by your competitive environment, which isn’t just for business school scenarios.
The more competitive the market is, the less likely you are to profit from it. Use this tool to evaluate your market’s profitability or identify new chances to enter profitable markets (by launching a new product or business for example).
The following five key forces that drive industry rivalry are assumed in this analysis:
- New Entrants: How serious is the threat of new entrants to the market?
- Suppliers: How strong is your suppliers’ bargaining power?
- Buyers: How strong is your consumers’ bargaining power?
- Competitors’ Substitutes: How easy is it for others to copy your product or service?
- Existing competitor rivalry: How competitive is your industry?
You can evaluate who holds the power in your business and how profitable the market is by rating each force on a scale of 0 to 10. The more powerful the forces, the more difficult it is to make money.
Using this approach, you can uncover new markets with few competitors, allowing you to optimize revenues and prospects.
The Blue Ocean Strategy
Assume you’re the only fisherman in a vast ocean teeming with life.
How successful will your fishing day be?
Without a doubt, unrivaled…
The Blue Ocean Strategy is as straightforward as it sounds: sailing the vast ocean in a market free of competition. You can maximize profits until others notice the potential and enter the market because of your unique competitive position.
Getting into a blue ocean is easier said than done; doing something new necessitates change and innovation. If done correctly, your competitors will ultimately mimic you, turning the market into a Red Ocean.
A Red Ocean Strategy, on the other hand, deals with a highly competitive market and strives to outperform the competition by elevating your company to the top of the market.
How do you transition from a Red Ocean Strategy to a Blue Ocean Strategy when the first option is more profitable?
The Blue Ocean Strategy is based on a variety of strategic frameworks that enable you to discover new ways to create value through innovation. One of the most crucial is the “Strategy Canvas,” which helps you differentiate your product from the competitors.
By evaluating what is valuable for your customers and where the entire industry is investing, Strategy Canvas identifies markets your competition is ignoring.
To use the Strategy Canvas, you’ll need to determine the primary elements on which your industry competes and grade the level of your competitors’ offerings for each factor.
By comparing these two factors, you’ll be able to identify places where you can set yourself apart from the competition and build your own market.
PESTLE Analysis is a straightforward and easy-to-use method for determining patterns in your company environment.
PESTLE assists you in analyzing changes in the landscape that may affect your future decision-making and identifying areas where future advantages may exist.
PESTLE is an abbreviation that stands for “Pesticides, Toxic Substances, and Tox
For example, currency rates between countries, which is an economic element, are an external factor for an import/export corporation.
A political component would be a non-profit group looking at potential changes in government to determine future funding.
A socio-cultural aspect might be a retail corporation looking at improvements in technology to see how they can better their point of sale system and changes in client preferences to predict future stock.
Use this framework to identify the major trends in your industry and identify future possibilities and risks.
Being able to identify environmental patterns can aid you in creating several “realities” in which your company will operate. Identifying these various realities will aid you in developing better plans and “scenarios for the future.”
Planning a scenario
Scenario planning allows you to “predict” what the future will look like by developing several “reality” scenarios in which your company will run.
While it is impossible to foretell the future, scenario planning helps you and your planning team to evaluate critical elements that will affect your company and build various “scenarios” depending on those factors.
Instead of developing a single scenario on which all future strategic decisions are based, you create four separate scenarios depending on the high and low implications of your two most key uncertainties.
Rather than relying on a single point of reference and increasing your risk of that event occurring, you spread out your risk by considering alternative paths and solutions.
Using scenario planning in your organization will make your plan more robust and lower your organization’s risk in the long run.