Good strategy leads to good outcomes

How competitive forces shape strategy

In 1979, a young associate professor at Harvard Business School published his first article in the Harvard Business Review, “How Competitive Forces Shape Strategy.” In the years that followed, Michael Porter’s explanation of the five forces has shaped academic research and business practice.

The five forces govern the profit structure of an industry. It determines how the economic value it creates is apportioned, which may be drained away through:

  1. Rivalry among existing competitors.
  2. Bargained away through the power of suppliers.
  3. Or the power of customers.
  4. They are constrained by the threat of new entrants.
  5. By the threat of substitutes.

Its can be viewed as building defences against competitive forces or finding a position in an industry where the forces are weaker. Changes in the strength of the forces can signal changes in the competitive landscape. It is critical to ongoing planning and strategy formulation.

A strategy is one of your most critical success factors.

Critical success factors (CSFs) define crucial areas of performance. Areas essential for any organisation to accomplish its vision. When CSFs are correctly targeted, they allow stakeholders to track the success of the mission. Your CSFs will vary depending on the type of project, industry, product and business model under which the business operates.

Planning, marketing and technology are essential. The emotional commitment of the people to a good strategy and the manner of execution is what determines how well you perform. Utilise technology and innovation to improve your chances of success in each area of your organisation.

CSFs are defined as a handful of critical areas where you must perform well consistently to achieve its vision. CSFs can be derived through a document review along with an analysis of the goals and objectives of the business and key personnel. Conduct additional interviews about employee’s specific areas and the barriers they encounter in achieving their goals and objectives. Take into account your performance in customer service and customer experiences is critical in formulating strategy.

The wrong strategy will take you to the wrong place.

Strategy, a word of military origin, refers to a plan of action designed to achieve a particular objective. The approach is distinct from tactics, which are concerned with the conduct of a business. While the strategy is concerned with how different operations are linked, how a battle is fought is a matter of tactics. The terms and conditions it is fought on and whether it should be fought at all is a matter of strategy.

Progress can be painfully slow without the right strategies. A sharks strategy, for example, is in tune with its environment, which is why they have survived for so long. Don’t continue struggling; don’t continue doing the same old things, because you can stop putting up with the same old problems and frustrations. Simply wishing and hoping is not counted as a strategy to overcome your challenges and frustrations. Your strategies need to show your approach to meet performance goals while keeping the business heading in the right direction,

To survive, many businesses need to grow. The new competitive global marketplace demands a good strategy if you are to fight the battles and survive. Too many focus on an operational strategy which improves efficiency. Instead, strategic improvement strategies will have the most significant impact on eventual outcomes. It is quite easy to come up with a random approach, but you probably won’t be happy with the consequences.  Try categorising your strategies into operational and strategic; consequently, you will be more likely to have successful results.

The purpose of strategic planning

The purpose of strategic planning, while it can be both complex and dynamic, is to outline where an organisation wants to go and how it’s going to get there. There are two critical techniques associated with the strategy. The critical success factor (CSF) method and future scenario planning. Both augment strategy planning efforts because they illuminate the present situation and potential future.

Explore multiple potential futures and generate robust strategies and actions using future scenarios. Scenarios also throw up early warning signs so they can help you to understand how the future is unfolding. A vision articulates a preferred future. Future scenarios describe how you might achieve that vision in different circumstances or environments.

Identify a focal issue or major decision the organisation faces because this will uncover the critical uncertainties in the environment. This would include such things as social, economic, political, environmental, and technical forces. Scenarios are developed based on combinations of these forces and robust strategies are identified. Put in place indicators and metrics needed to help your understanding of how the future is affecting your decisions.

The strategy needs to be aligned with your budget.

Align your budget and working capital with your strategies, therefore, helping your business to function more sustainably. All the functions of your business need to be aligned with your strategy and financial capacity. The business will operate more smoothly and with fewer headaches, when you are financially savvy,

The key to building the right strategies is focusing on improving customer services.  Find the sweet spot of what your customers want and need because this will ensure the strategy you are creating can connect in a more meaningful way. Take time to align your strategy because the right strategy leads to more substantial growth and better profitability.

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different”. Michael Porter

“Planning brings tomorrow into today, so you can set new strategies and move forward from the status quo”. Peter Sergeant


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