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The better the organization sees them, the better its chances of success.

The better the organization sees them, the better its chances of success.

To avoid such a situation, a strategy is being worked out.

The main elements of the strategy are:

scope of strategy; resource allocation; competitive advantages; synergy.

The scope of strategy – is a means of adapting the organization to its external environment. This means that the strategy should identify such means of interaction of the organization with its external environment, which would take into account both the favorable opportunities of the environment and the threats that arise from it; would allow organizations to achieve their goals under such conditions.

Resource allocation is an indication of how an organization’s limited resources are allocated to individual units. This means that the strategy should identify the units of the organization: where the resources are directed (promising units); where resources are taken from (low- or unpromising units). The proportions of resource allocation are determined by the choice of strategy.

Competitive advantages – is the definition of the advantages of the organization compared to its competitors. This means that the strategy should contain information about the strengths of the organization, on which it will be based in its activities. Competitive advantages derive from the scope of strategy and the corresponding allocation of resources of the organization.

Synergy is the effect of integrity. Synergy as an element of strategy means that the strategy must take into account the possibility of obtaining additional effect by integrating all the capabilities of the organization. The synergistic effect arises as a result of the integrated implementation of all previous elements of the strategy.

There are three main levels of strategies:

General corporate strategy; Business strategy; Functional strategy.

At the level of the whole organization, its top management develops a corporate strategy. She has to find answers to the question: “What kind of business does the organization intend to do?”

The corporate strategy defines:

the mission of the organization, types and markets of its activities, the desired growth and profitability.

Thus, the main elements of the corporate strategy are: the scope of strategy and resource allocation.

The business strategy is being developed at the institution of general corporate strategy. It is a further detail of the corporate strategy, but focused on a specific structural unit of the organization. The business strategy is aimed at ensuring the competitive advantages of this structural unit in a particular market or in a particular industry.

Functional strategy. The organization is managed by functions (production, marketing, finance, accounting, etc.). Functional services of the organization develop strategies for optimal use of resources of the organization as a whole for certain functions, rather than individual structural units.

Defining the mission of the firm. The company’s mission is its main purpose, a clear reason for its existencewhich form the main directions and guidelines of its activities. The company’s mission allegedly outlines the boundaries of the organization’s business, allows you to imagine the company’s capabilities and determine what should not be wasted. In practice, the company’s mission is formulated in the process of finding an answer to the question: “What kind of business does the company intend to do?”

According to P. Drucker: “Business is not determined by the name of the company, its status or form of organization. It is determined by the desire to satisfy the consumer when he buys a product or service. So, the question:” What is my business? “on the other hand, from the point of view of the consumer and the market”.

Thus, the company’s mission should be sought outside it, in its consumers and the market in which it operates.

The very wording of the mission should be clear and concise, contain the following elements:

What are the main goals of the company? who are the main consumers of the company’s products? What goods (services) does the company produce for its customers? in which markets or market segments does the firm operate? what are the specifics of the company in terms of meeting customer needs? What are the competitive advantages of the firm?

Having formulated the mission, the organization allegedly finds its own special way in business, which distinguishes and distinguishes it from competitors. But in this way, as a rule, there are obstacles and dangers. The better the organization sees them, the better its chances of success. To identify such barriers and threats, the following two strategic planning steps are performed: external and internal analysis.

External analysis is the process of assessing external factors in the organization. Under external factors understand all those conditions that objectively arise in the environment of the organization and which it is not able to influence. External analysis has a dual purpose:

identify opportunities, ie factors that can contribute to achieving the goals of the organization; identify threats and dangers to the organization, ie external conditions write my lab report for me online that limit the organization’s ability to move towards the goal.

To study the influence of external factors, their whole set is divided into:

a) global factors (conditions and trends that are formed in the macro-environment of the organization): general economic, social, demographic, political, legal, natural, international, etc .; b) industry factors (a set of organizations that produce products or services that are able to replace each other in terms of consumer qualities and areas of their use).

Of course, it is difficult to assess the future impact of global factors. At the same time, the very attempt to make such an assessment forces the managers of the organization to think about the problems that may befall the organization, to think about their behavior in case of their occurrence.

Sectoral factors are much easier to predict and assess. They are more specific, more closely related to a particular business. Specifically, the sectoral analysis should assess the following factors:

a) consumers (size and characteristics of the market, market growth rates, the nature of demand (seasonality and cyclicality), product differentiation, price sensitivity, the ability of consumers to dictate their prices); b) suppliers (intensity of competition between suppliers, availability of substitute materials, level of vertical integration with suppliers, ability of suppliers to dictate their prices); c) competitors (the main competing forces in the industry, the distribution of the market between them, the intensity of competition in the industry, competitive advantages in the industry, etc.); d) technology (the degree of variability of the technology of production of this product, the impact of changes in technology on product quality, the possibility of obtaining additional benefits through changes in technology, the impact of changes in technology on prices).

An important result of industry analysis is the identification of key success factors in this industry. Any business is characterized by many indicators that can be managed and controlled (production volumes, quality level, price level, etc.). However, only a few of them determine the ability and capacity of the organization to compete in its market. Such indicators are called key success factors.

Internal analysis is the process of assessing the factors that can be managed and controlled by the firm, ie the factors that “grow” within the organization and are the result of the activities or inaction of its management.

The main task of internal analysis is to identify the strengths and weaknesses of the organization.

Strengths are special, unique, original features of the organization or, at least, the qualities that distinguish it from competitors. Such qualities are relied on in the company’s business.

Weaknesses are qualities that an organization lacks against successful competitors.

There are many different aspects of the activity that determine the strength and power of an organization. In order to streamline the process of their evaluation, in practice the form of balance is often used (Table 3.).

Table 3. Strengths and weaknesses of the organization.

Strengths (+)

Weak sides (-)

Specific, special qualities of the firm in the field of: marketing, production, personnel, finance, research and development, etc.

What qualities does the company lack in the field of: marketing, production, personnel, finance, research and development, etc.

Unique knowledge: patents, now-how, trade secrets, trade secrets, etc.

What resources are scarce for the firm

Original resources used by the organization

The balance sheet asset reflects the presence of unique, special, specific qualities of the organization, grouped by main functions. The liabilities of the balance sheet with maximum objectivity should include internal factors that limit the competitiveness of the organization.

Finding out the strengths and weaknesses of the organization allows you to identify areas:

increased priority (weaknesses); areas that can be relied on in the business in the process of developing its strategy (strengths).

The process of external and internal analysis usually ends with a comparative SWOT analysis. SWOT – abbreviation of 4 English words:

S – strenght – strength, W – weakness – weakness, O-opportunites – opportunities, T – threats – threats.

The SWOT analysis is based on a comparison of the strengths and weaknesses of the organization, potential business opportunities and threats from the external environment. Comparative SWOT-analysis is conducted in the process of finding answers to the following questions:

How are the main problems of the organization related to its strengths and weaknesses, as well as to favorable factors and threats to the environment? How to most effectively use the strengths of the firm and favorable external factors to solve the main problems of the organization? How to eliminate or minimize the impact of weaknesses and external threats on the business of the organization?

In the process of SWOT-analysis, pairwise combinations of all components of SWOT-analysis are also investigated in order to:

search for positive synergy: strengths / favorable external factors; elimination of negative synergies: weaknesses / external threats.

As a result, we obtain a SWOT matrix, which considers all possible paired combinations in each of the fields (Fig. 1.).

Features: 1.2 …

Threats: 1.2 …

Strengths: 1.2 …

“SIM” field (strength and capabilities)

“PPE” field (force and threats)

Weaknesses: 1.2 …

SLM field (weaknesses and opportunities)

Tear field (weakness and threats)