ABSTRACT
A business strategy is a company’s game plan. Just as a football team needs a good game plan to have a chance for success, a company must have a good strategic plan to compete successfully against business competitors. Because the profi t margin of a normal fi rm is not large in most industries, even a slight error in the strategic plan becomes fatal. A business strategy includes the following:
Developing a vision and mission ◾ Identifying the organization’s external opportunities and threats ◾ Determining internal strengths and weaknesses ◾ Establishing long-term objectives ◾ Generating alternative strategies ◾ Choosing particular strategies to pursue ◾
In this chapter, I will focus on (1) SWOT (strengths-weaknesses-opportunities-threats) analysis for analyzing overall internal and external environments, (2) STEP (social/cultural, technological, economic, and political) four-force analysis for external factors, and (3) using Porter’s fi ve forces to analyze proximate internal environment. Product portfolio management (PPM) developed by Boston Consulting Group (BCG), which was introduced in Chapter 8, is another important analytical tool for business strategy. I am indebted to Strategic Management by F. David [1] for the material used to describe general issues in this chapter.
