A business strategy review can deliver big benefits to your business.
There are the direct financial benefits that come from improving performance and targeting new
But the process can also improve alignment within the business. Between employees,
senior management teams and other key stakeholders.
This can help to drive a high performance culture. It can also help clarify the future direction of the business.
However, developing a business strategy is complex. It can be hard to know where to start. Furthermore, there are so many competing frameworks and approaches out there.
We have therefore compiled this checklist of areas to consider when developing business strategy. We use this checklist ourselves when working with clients.
As a result, we ensure our strategies are robust and comprehensive.
Business strategy cannot be developed in isolation of the broader market.
This section of the strategy provides the supporting context into the market. This is likely for instance to include the growth outlook, segmentation of the market, and any relevant key trends or developments. Especially those that impact on your position in the market.
Our market context checklist for strategy includes the following questions and outputs:
- How big is the market, and what is the growth outlook?
- What are the key underlying drivers of market growth, and how volatile are these drivers?
- Does the market break down into customer segments?
What are the characteristics of each segment?
- Which segments are the most attractive?
- Are there any key trends that might impact on the market (e.g. new products, disintermediation, M&A, technological disruption)?
- What adjacent markets are potentially addressable?
- Market size estimates (for core market and any potential adjacency markets)
- Market growth projections (for core market and any potential adjacency markets)
- Segmentation of the customer base, and profiles of key segments
- Key market trends (e.g. customer behaviour, technological disruption)
Understanding your own strategic positioning is a critical part of strategy development.
This includes insights into how you add value to customers. In addition, you should include the key resources and advantages you have that influence your market position.
This ensures that your resulting strategy builds on your current strengths. Moreover, it should address any areas where you currently face challenges.
Our strategic positioning checklist for strategy includes the following questions and outputs:
- What is the core of our value proposition?
- How do we compete within the market (e.g. price-led, premium service positioning, technological innovation)
- What are the key strategic capabilities that underpin our competitive positioning (e.g. R&D, unique products, customer relationships, economies of scale)? How can we build on these strengths?
- What are our main areas of weakness? How are these impacting on our performance? How can we address them?
- Analysis of competitive positioning
- Review of strategic capabilities
- Review of strategic weaknesses
The internal context takes into account the way you are organised, your culture, the way you go about things.
Without this understanding, you could end up with a strategy which is fine on paper, but not realistic for your business.
Our internal context checklist for strategy includes the following questions and outputs:
- Is our organisation structure aligned with our strategic positioning and market segmentation?
- How effective are our core processes?
- Does our internal culture support our strategic positioning?
- Key process review
- Culture assessment
The purpose of business strategy is to maximise the value of the business.
A clear understanding of the key drivers of value is therefore fundamental to business strategy.
This allows potential alternate strategic options to be assessed according to their expected impact on long-term value creation.
Our financial analysis checklist for strategy includes the following questions and outputs:
- What are the key drivers of financial performance?
- How can we drive an uplift in performance through strategic initiatives?
- Does our strategy require more capital? How can we fund this?
- Historical financial performance
- Underlying financial drivers
- Capital required
As we have seen, your business strategy should be based on an analysis of:
- Market context
- Strategic position
- Internal context
- Financial drivers
You should work through each section of this business strategy checklist systematically. This will ensure that you have supporting context for your own strategy.
With this context, you can identify the key areas of opportunity for your business. And also the things you need to watch up for or address. You will end up with a strategy that is realistic, tailored completely to your own business context, and underpinned by careful financial analysis.
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