Strategy Case

One of the first things to do in strategic analysis is to understand the true nature of the company, its essential purpose, its existence, its long term objectives which we often call vision, mission and objective.

Vision statement is a statement that identifies the long-term strategic purpose of the organization. It should be short and succinct. It should represent a realistic concept of the desired long-term position of the organization, and of the type of organization the company is trying to create. It should be memorable and it should inspire employees. A vision statement should be future-oriented.

Mission statement originally had the characteristics outlined above for a vision statement. If an organization has no vision statement, its mission statement should reflect the above description of a vision statement. However, over time, as mission statements become common, they tend to focus on the current business and addressed the question: What business are we currently in, in product and market terms?

Objective is the status, milestones, the specific critertia that the organization want to archive within certain time, to ensure the successful implementation of the vision and mission of the organization.

Enviromental Scanning is to understand the company's current situation, its weaknesses and strengths, opportunities and threats.

Enviromental scanning is data collecting and analyzing process for strategic purposes.

Pestle describes the macro- environmental factors to analyse the effect of macro- environment to business.

- Political: how and to what degree government decisions affect the economy

- Economic: how and to what degree the economy impacts on business, including economic growth, interest rates, exchange rates and the inflation rate.

- Social: how and to what degree the cultural aspects impacts on business, including population growth rate, age distribution, health consiciousness, career attitudes and emphasis on safety.

- Technological: how and to what degree technology development impacts on business, including R&D activity, technology incentives and the rate of technological change.

- Environment: how and to what degree environment impacts on business, including weather, climate and climate change.

- Legal: how and to what degree legal system impacts on business, including legal system itself and changes in legal system.

Michael Porter's Five Forces is a simple but important in order to understand where power lies in a business situation. This is very useful because it helps scan external environment and then, to analyse power of suppliers, buyers, substitutes, competitors and entry of new competitors. Five Forces analysis is designed to explain why certain industries are more profitable than others.

- Bargaining power of supplier assesses how easy it is for supplier to drive up prices and how easy it is for firm to change its suppliers. Factors that influence the power of supplier include diffrentiation of inputs, switching costs of suppliers, presence of substitue inputs, supplier concentration relative to industry concentration, importance of volume to suppliers, cost relative to total purchases in the industry, information about supplier's product, supplier profitability, decision maker's incentives, threat of forward integration.

- Bargaining power of buye: assesses how easy it is for buyer to drive down prices and how easy it is for buyer to change to other firms for similar products/ services. The bargaining power of buyers is essentially the mirror image of the bargaining power of suppliers to it.

- Power of substitutes assesses the ability of customer to find a substitution. The power of subsitutes depends on relative price/ performance of substitutes, switching costs and buyer propensity to substitutes.

- Threat of new entrants assesses how easy it is for new competitor to enter the market. Factors that influence the threat of new entrants include economies of scale, proprietary