The document outlines the key components of creating an effective business strategy: 1) Conduct an environmental analysis to understand market, competitive, transactional, and institutional factors. 2) Determine a competitive strategy by identifying why customers should buy the product/service and how the firm will make money. 3) Establish clear financial goals and targets with checkpoints to ensure the firm is on track to meet objectives. 4) Include execution guideposts across functions with metrics to achieve the financial outcome and ensure success.

1. Create a Sound Business Strategy and Deliver It
By Gautam Ahuja, University of Michigan
NOTES: THOUGHTS FROM THE THOUGHT LEADERS AT THE ROSS SCHOOL OF BUSINESS
Exceptional strategy wins in the or service and, when they buy it, “Identifying the synergies
current business environment. how will the firm make money?
Without strategy, backed by a To assure successful
that hold your individual
plan to deliver against, there's implementation, it is important business units together
no foundation to achieve to determine the resources at into one unified
objectives and meet financial the firm’s disposal as well as its corporation helps set
targets. value proposition. broad strategic
guidelines. With these in
The strategic planning process III. Clear Financial Goals
serves as the compass to help
place, individual units can
and Targets use them to set their own
steer the organization toward The intended financial outcome
achieving its objectives. A sound should be stated clearly in the
strategy and be
strategic plan consists of, at the plan, including appropriate competitive in their
minimum, four key components: checkpoints throughout the individual environments.”
different stages that will ensure
I. Environmental Analysis Write the page you want
the firm is on target to meet its
The company must understand everyone on with Strategic
objectives. These goals are
Planning and Implementation at
everything that is going on critical to understanding Ross Executive Education
around it, including four distinct intended results as well as
sub-environments: reaping financial gains. Upcoming Program Dates
1) Market – understanding May 16-21, 2010
consumer behavior patterns; IV. Execution Guideposts October 24-29, 2010
2) Competitive – understanding The plan must also include
what competitors are doing operational indicators Learn more about Ross Executive
and why; throughout the various functions Education programs at
3) Transactional – www.execed.bus.umich.edu
(marketing, finance, etc) across
understanding what buyers or call 734.763.1000
the organization that together
and suppliers are doing in will achieve the financial
relation to the firm’s outcome. Each function should quality of a strategic plan and
business; and have clear execution metrics, so ensure its effectiveness.
4) Institutional – understanding the entire organization
the political and legal understands its expected -continued-
framework that impacts the deliverables that will ensure
business. success.
II. Competitive Strategy If you follow the previous
Determine how the company will process, you can generally use
compete successfully. three criteria to assess the
Essentially, why should
customers buy the firm’s product

2. Create a Sound Business Strategy and Deliver It
By Gautam Ahuja, University of Michigan
External Consistency It is also important to create a
Does the strategic plan actually linkage between business unit
address the challenges in the strategies and the overall
environment? Understanding organizational strategy. A
the opportunities and threats in competitive strategy needs to be
the environment and how your developed at the business unit
plan is addressing them is critical level but as previously
to answering this question. mentioned, internal consistency
is critical. The overarching
Internal Consistency objectives must be clear across
The various distinct actions a all businesses within your
firm takes to address external organization. Identifying the
challenges need to be internally synergies that hold your
consistent too. For example, is businesses together into one
our strategy for dealing with unified corporation helps set
exchange rates consistent with these broad guidelines. With
your strategy for inflation, and is these guidelines in place,
that consistent with your individual units can use them to
strategy for dealing with set their own strategy and be
increased competition? You competitive in their individual
want to minimize conflicts across environments.
the various functional strategies.
Gautam Ahuja is a professor at
the University of Michigan Ross
Flexibility
School of Business Executive
What if the world doesn’t
Education program specializing
emerge in the way you predict;
in business administration and
can your strategy withstand the
strategy. Strategy without an
shock of that different world?
implementation plan is as good
The choices your firm makes
as having no strategy at all. Get
when developing a strategic plan
started with Ross today.
rely upon a series of assumptions
about the world for the next 3-5
years, and you need to be
prepared to adjust as the world
changes.
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