Facts about strategy formulation you would not have learnt

Corporate management spend quite a lot of time on crafting useful business strategy. In doing so it undoubtedly dwells on analysing the external environment. Strategy formulation follows as the next logical step only if the assessment is thorough, impartial and objective, as this blog post illustrates: 

Understanding external environment mandates that company looks at the players as well as the elements prevailing in the market. How the overall industry behaves is only one part of the assessment, the vital other part is how the market leader conducts his business. How he foresees trends and discernible changes that would break out in near future. Would these changes impact the present state of affairs positively or negatively under normal conditions?

Equally important, is the elements that play out in the market at the present moment and in the foreseeable future. Amongst many of these elements, the following stand out in terms of significance and overall impact: 

a) Social dynamics and demographic structure cast a spell over buying patterns within a market

b) Technology used at present and innovations that are likely to take place in future. Whether these innovations could be disruptive to existing players

c) Size of the market and how the likely growth under normal circumstances compares with the aftermath of major innovations hitting the market

d) How the capacity of the existing players would function? Will there be appreciable changes in enhancing booked capacity and/or utilization level of overall capacity. Put differently, will there be a state of excess capacity that could drag down the efficiency of the players

e) Finally, in the downstream, how the barriers of entry works to stop unwanted new entrant flooding the market with cheap goods, becomes major challenge. The path ahead is rosy or not depends on the interplay between the current participants in the market and the potential new entrants into the market.

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist