MBA-FPX5006 Business Strategy essay

MBA-FPX5006 Business Strategy essay

Components of AFI Framework

The key components of the AFI Strategy Framework are strategy analysis, strategy formulation, and strategy implementation. All three work together to improve the profitability of a company, make day-to-day operations more efficient and satisfy both shareholders and stakeholders. The first stage that we begin with is the analysis stage. In this beginning stage, a company can perform an internal and external analysis of the company in addition to an in-depth evaluation of the firm’s financial performance. The external analysis helps a company to deal with outside factors beyond the firm’s control. For example, the position of the company within the industry, outside competitive forces that affect the company, and strategic comparison groups are all factors that contribute to the external environment of a company. It is hard for a company to control the outside environment but based on any results received during the external sweep, a company can do everything in its’ power to keep from falling prey to its’ competitors. The internal sweep can encompass a SWOT analysis depending on the company and industry. A SWOT includes the strengths and weaknesses of that specific company, opportunities for growth within a particular sector, and any external threats that the company could potentially face. A complete SWOT analysis includes the day-to-day activities of a company, the resources readily available to use, and their own capabilities at their disposal.

After conducting a thorough and in-depth analysis of the company, a firm should have gathered enough information to make an honest assessment of the company’s current standing. Based on those conclusions they can begin to formulate strategies that can improve their weaknesses, help them arrive at fresh new, innovative ideas, or assist the company in moving forward in a different direction if needed. The strategy formulation stage has a lot to do with the Strategies of the business as a whole, Corporate Strategies, and strategies from a global perspective. Within business strategies, the company will examine ways to set themselves apart through differentiation, learn how to provide quality products and competing prices through cost and thought leadership, and successfully integrate new innovative ideas formed through the analysis stage of the strategic planning process. Corporate strategies, on the other hand, can be formulated through the establishment of long-term objectives developed by leadership executives and upper-level managers. Their ideas can flow down through the company resulting in a theory known as top-down management which could ultimately be a detriment to employee creativity within an organization if they are not a part of the process every step of the way (Lucas, 2018). Global strategies can help to improve the company’s overall competitiveness and profitability in the foreseeable future because it allows the company to weigh their actions beyond the borders of just the company.

Moreover, the strategies that were analyzed and formulated must be implemented to ensure that all the time spent planning and analyzing can be put into action. To execute the best plans, a company must have a competitive advantage over other companies within the industry. The implementation process includes the governances of the corporate body, design of the organization, ethical business practices, and leadership strategies. In this stage, communication is essential to the successful implementation because these ideas must be made known company-wide to reduce resistance to change and straighten out any errors way before the project is well underway. Strategy Implementation consists of 6 steps which include 1) establishing objectives annually; 2) revisiting old policies to meet new goals 3) placing resources in strategic areas; 4) restructuring the organization to accommodate new strategies 5) handling opposition to change and 6) offering a performance-based reward system (Jurevicius, 2013).

Preparation for Implementing the Plan

“Companies that achieved such success used strategic planning not to generate strategic plans but as a learning tool to create “prepared minds” within their management teams” (Beinhocker, 2003). A lot of times companies go in with the mindset that they have to concoct this great plan going into each fiscal year. According to the Beinhocker quote from above, that is far from the truth. It is much more beneficial to prepare hearts and minds for the changes, ideas, and strategies that will be implemented within the management team rather than focusing all efforts, energy, time, and resources, on planning the strategy. Management at many companies would have to agree that they spend a lot more time coming up with grand plans only to fail to execute them properly. However, if we focus our minds on the execution/implementation stage, then we will see better long-lasting results.

Value of Strategic Planning

After developing a greater understanding of the AFI Framework, it is incredibly beneficial and vital to the success of organizations in the long-run and can help maintain a competitive advantage over other companies. When used correctly, the strategic planning process is highly valuable to an organization. When misused, however, it can be the source of great confusion and can often leave a company in a worse predicament than initially intended. The entire Framework makes up the process. Strategic planning is the process of an organization clearly defining its strategies, a path forward, and decision-making goals on how to properly allocate resources for the overall betterment of the said organization. The analysis stage provides a sound foundation for the process by mapping out any issues that need addressing or areas for improvement in the long-run. In the implementation stage, if all goes well and strategies are adequately executed then automatically the company gains leverage over the competition by staying ahead of the game and embarking on new projects before other companies in their respective industry have a chance to play catch-up.

The value of the process is pointed out in the 5 Benefits of Strategic Planning written out by Cara Ong. The 5 benefits of strategic planning are 1) helping a business to engage in proactive planning rather than reactive planning, 2) giving everyone within a firm a sense of organization, 3) improving the overall efficiency of daily operations, 4) increasing profitability of a company and affecting the bottom line and 5) planning so that businesses can stand the test of time (Ong, 2015).

Importance of Leadership and Ethics

Without leadership, the strategic management process would fail. Leaders are needed at every stage of the process to make sure that the correct factors are analyzed, the right strategies formulate, and proper procedures are in place to implement strategies. Leaders steer organizations to meeting goals in a timely fashion. Without leaders, the company would fail miserably. “Leadership doesn’t necessarily equate with output. It’s much bigger, and much more personal (Robichaux, 2018)”. It is all about the inner work. Leaders give everyone within the organization a better sense of where they are going, but if those who are leading aren’t in tune with themselves, it can lead to more significant issues including breaches in company security, loss of confidentiality, a decrease in integrity, and a reputation of bad character. While leadership is crucial in the strategic planning process, misuse of power can happen if the correct precautions and measurements are not in place. Whenever leaders and guidelines are in place, stakeholders should be the first individuals considered for the ‘ethical guidelines’ conversation. A board of directors and a code of ethics should be established during the strategic management process to ensure that all guidelines are adopted by the organization to enforce the difference between right and wrong. Ethical standards will keep leaders accountable and responsible for their actions at all times.

Strategy analysis, formulation, and implementation all work together to produce ethical leaders and reliable companies. Adopting the AFI Framework would be beneficial for companies worldwide.

References

Jurevicius, O. (2013, February 13). What are the Flaws in a Strategic Management Process?

Retrieved December 7, 2018, from

https://www.strategicmanagementinsight.com/topics/strategic-planning-process.html

Kaplan, S., & Beinhocker, E. D. (2003, January 15). The Real Value of Strategic Planning.

Retrieved December 7, 2018, from https://sloanreview.mit.edu/article/the-real-value-of-strategic-planning/

Lucas, S. (2018, May 21). The Perils of Top Down Management to Your Organization.

Retrieved December 7, 2018, from https://www.thebalancecareers.com/perils-of-top-down-management-4151058

Ong, C. (2015, January 9). 5 Benefits of Strategic Planning. Retrieved December 7, 2018, from

Robichaux, A. (2018, November 09). Inner Work: Becoming a Better Leader. Retrieved

December 7, 2018, from https://www.betterup.co/inner-work/

MBA-FPX5006: Business Strategy