Components of strategy

Sample Solution

  The four components of strategy can be divided into two broad categories: external analysis and internal analysis. External analysis involves looking at the broader context and environment in which a business operates, while internal analysis focuses more on the resources, capabilities, and competencies available to a business.

External Analysis: SWOT (Strengths, Weaknesses, Opportunities, Threats) is an effective tool used by many businesses to analyze the external environment or industry they operate in. It helps identify potential opportunities and threats that may have an effect on their performance. Porter’s five forces industry analysis is another useful tool that evaluates the attractiveness of an industry or sector from an external perspective by looking at factors such as threat of new entrants; bargaining power of suppliers/buyers; substitute products; barriers to entry/exit and competitive rivalry within the sector. Internal Analysis: Components of corporate level strategy involve understanding how different strategic decisions can affect all functional areas within a company - finance, marketing etc., Differentiation strategy looks at creating unique products or services that are not readily available from competitors - focusing on product features to give customers something extra. Cost leadership strategy looks at reducing costs so that businesses can offer lower-priced products compared to its competitors without compromising quality. Understanding how difficult it will be for competitors to imitate these strategies is key in order to sustain any competitive advantage gained from them. Finally performing VRIO (Valuable Resources; Rarely Imitable; Organized Resources)analysis helps investigate if resources within a firm are valuable enough in order for it help gain competitive advantage over other firms operating in same market space. International Expansion: For those companies who want global growth there’s no better way than international expansion - setting up shops abroad provides accesses to new markets with fresh customer bases bringing further growth potential with it. Understanding different cultural nuances between countries is important when expanding internationally as well as exploring emerging markets ahead of others so getting there first provides you first mover advantages which cannot be underestimated either! Additionally analyzing financial statements including horizontal & vertical analyses can highlight any discrepancies indicating problems before they become too big enabling corrective measures early on keeping profitability levels intact..