Strategy is the plan of action, the grand design, the scheme…the blueprint. Called by many names, but in the world of management accounting, strategy is no different. It is the very definition of a company and the backbone it needs to stand up straight and say to the world, “Lookout, here I come!”
And while formulating a strategy may seem daunting, it need not be. Strategy formulation can be chopped into three bite-size parts for easier understanding and precision focus. It also gives us a good reason to make this into a three-part series (position, choice, implementation).
So let’s shout out our first battle cry…the strategic position / analysis.
Strategic position / analysis is concerned about the company taking stock of what it currently has by way of strengths and weaknesses, what is currently happening in the company’s surroundings by way of opportunities and threats, and figuring out what makes the company truly special by way of competitive advantage over its rivals.
During this stage of strategy formulation, environmental analysis tools like PESTEL and SWOT are used to determine the true position of the company in the industry and how it competes with other companies in the market.
Not only that, strategic position also helps the company envision itself to the place it aspires to be. Every company considers success based on different metrics, and performing a strategic analysis will identify what currently lacks in the strategy and what needs fixing to get the company to its destination.
There is something to be said about the power of knowing yourself and knowing where you need to be. These two truths are the first steps to becoming a success.
In a much simpler day-to-day terms, it’s like being at home and making a decision to go to your friend’s house. You know where you are and you know where you need to go.
And off we go!