In depth analysis on the main methods of strategic development.
There are several different methods that organisations can use to develop their strategic direction. Some of the main methods of strategic development include:
- Organic growth: This involves growing the organisation internally, through the expansion of existing products or services or the development of new ones. This can be achieved through a variety of means, such as increasing marketing efforts, investing in research and development, or expanding into new markets.
- Acquisition: This involves acquiring another organisation or its assets in order to expand the acquiring organisation’s business. Acquisitions can be used to gain access to new markets, technologies, or other resources that can help the organisation grow.
- Joint venture: This involves forming a partnership with another organisation in order to pursue a shared business goal. Joint ventures can be used to share risks and resources, and can help organisations access new markets or technologies.
- Franchising: This involves allowing other organisations to use the franchisor’s brand, products, and business model in exchange for a fee. Franchising can be a way for organisations to expand their business quickly, while still retaining control over the brand and business model.
BCG Matrix
One tool that organisations can use to analyse their strategic options is the BCG matrix. This tool classifies the organisation’s products or business units into four categories based on their relative market share and market growth:
- Stars: Products or business units with high market share in a growing market. These are typically the organisation’s most successful products or business units, and require significant investment in order to maintain their market position.
- Cash cows: Products or business units with high market share in a mature or declining market. These are typically the organisation’s most profitable products or business units, and generate excess cash that can be used to invest in other areas of the business.
- Dogs: Products or business units with low market share in a mature or declining market. These products or business units typically have low growth potential and may require significant resources to maintain.
- Question marks: Products or business units with low market share in a growing market. These products or business units have the potential to become stars if they are able to increase their market share, but may also become dogs if they are unable to do so.
In a public sector organisation, the BCG matrix can be used in a similar way to analyse the organisation’s programs or initiatives. In this context, the matrix can help the organisation prioritise its resources and allocate them to the programs or initiatives that have the greatest potential for impact.
Ashridge portfolio display model
Another tool that organisations can use to analyse their strategic options is the Ashridge portfolio display model. This model divides the organisation’s activities into four quadrants:
- Ballast: These are the organisation’s core activities that provide stability and generate a consistent return. They are typically low risk and low growth.
- Heartland: These are the organisation’s core activities that provide the majority of the organisation’s profits and growth. They are typically moderate risk and moderate growth.
- Alien territory: These are activities that are outside of the organisation’s core competencies, but have the potential to generate significant growth. They are typically high risk and high growth.
- Value trap: These are activities that are outside of the organisation’s core competencies and do not have the potential to generate significant growth. They are typically high risk and low growth.
The Ashridge portfolio display model can help organisations assess the risks and rewards of different activities and make decisions about where to allocate resources. It can be particularly useful for organisations that are trying to diversify their operations or enter new markets.
Summary: Methods of Strategic Development
Overall, strategic development is an important process for organisations to go through in order to identify and pursue new opportunities and to achieve their organisation’s goals and objectives, and can help the organisation make informed decisions about how to allocate resources and pursue new opportunities.
In conclusion, there are several different methods of strategic development that organisations can use to achieve their goals, including organic growth, acquisition, joint venture, and franchising. Tools such as the BCG matrix and the Ashridge portfolio display model can help organisations analyse their strategic options and make informed decisions about how to allocate resources and pursue growth. Ultimately, the key to successful strategic development is the ability to identify and pursue new opportunities, to develop and implement effective strategies, and to adapt and respond to changing market conditions.
Do you know of any other methods of strategic development? If so, comment below and let us know.
Is your business strategy set out to act in the best interest of all stakeholders? Do you understand how your organisation is directed and controlled? Understanding these concepts is referred to the general principles of governance.