Strategic

Direction
Module 1:
Setting Strategic Direction
 Learning Objectives

• Understand the concept of strategic direction

• Understand how important it is for a business to determine its
strategic direction
• Discuss the relationship between strategic planning and
strategic direction

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 What’s your strategic direction?

Bill Gates Jeff Bezos

Build Platforms and Put the customer first.
Ecosystems—Not Just Invent. And be
Products. patient.

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 What’s your strategic direction?

Richard Branson Oprah Winfrey

Train people well The challenge of life, I have
enough so they can found, is to build a resume that
leave. Treat them well doesn’t simply tell a story
enough so they don’t about what you want to be, but
want to. it’s a story about who you want
to be. 4
 What is Strategic Direction?

• A strategic direction includes the central forces that propel

your business toward its intended objectives.

• An effective business leader refers to the elements of the

strategic direction to generate synergy and positive morale in
an organization.

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 What is Strategic Direction?
• “Strategic direction” refers to the actions taken to achieve the
goals of an organizational strategy.
• Some companies use a “vision statement” or “mission
statement” to define where the organization wants to be, but
in short, this statement is a way for the organization to set the
direction that the organization wants to go, and define what it
wants to be in the future.
• Strategic direction includes the plans and actions that need to
be put in place to work toward this vision of the future for the
organization.

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 Why Strategic Direction?

• Organizations should establish their strategic direction and

then translate their vision to every area and process.
• Much better results will be obtained if the corporate wide
objectives are defined at the beginning and then applied area
by area.

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 Breakdown of Strategic Management

1. Strategic Direction – Setting high level purpose of the

organization
2. Strategy Formulation – Establishing how that purpose will be
pursued
3. Strategy Implementation – Carrying out the plan
4. Strategic Evaluation – Measuring the results and adapting

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 Importance of Strategic Direction

• It is the basis upon which the company operates.

• A clear vision allows each worker to know the company's
purpose and objectives.
• Strategies and tactics allow each worker to understand the
part he plays in contributing to the achievement of the vision
and objectives.
• If there is no agreement on what or where you are moving to,
agreeing on approaches for how to get there will be that
much more difficult.
• If you know that you are all moving in the same direction, you
will find it easier to gather support for the planning process.

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 Importance of Strategic Direction

• Allocation of resources and ongoing evaluation of progress

toward strategic objectives are key features of a well-directed
company.
• Evaluation of company, department, and employee goals
allows you to monitor and adjust any facet of the business
that isn't moving toward the right targets.
– Possible changes that result from ongoing assessment include tactical
adjustments and more training.

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Core Elements of Strategic Direction

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 Components of Strategic Direction

Making Strategic Decisions

• Obviously setting a strategic direction involves making
strategic decisions. Therefore, it is important to understand
what a strategic decision is.
• More specifically, a decision is strategic when it leads a
company into a new business area, changes the future
direction of the firm, affects the firm as a whole, has a
significant financial impact on the firm, and can result in a
significant response from competitors or other stakeholders.
• In other words, it is strategic if it impacts your company’s
business model, future direction, and competitors.

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 Components of Strategic Direction
Assessing the Competition
• The traditional view of competitive analysis utilizes information and data
to set a strategic direction by understanding your strengths and
weaknesses as well as those of your competitors and discover their
competitive advantages or vulnerabilities.
• From a business model point of view, the critical areas to understand
revolve around the difficulty of recognizing market shifts. Those include
having a grasp of the assumptions that are being made about the market,
understanding the competitors’ positions and potential to create a market
shift, and realizing the conditions that exist to make competitors move
industries in a certain direction.
• If a competitive analysis addresses those areas, you will be in a much
better position to make the right assumptions in order to create the
market shift and move your industry with your business model.

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 Components of Strategic Direction

Understanding the Industry Dynamics

• The most famous framework to understand industry dynamics
remains Michael Porter’s Five Forces.
• Looking at the five competitive forces—threat of new
entrants, bargaining power of suppliers, bargaining power of
customers, rivalry among competitors, and threat of
substitutes—will give you insight into the drivers of
competition in your industry, understand what influences
profitability, and develop strategies to enhance the long-term
profitability of your business model.

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 Components of Strategic Direction

Developing a Strategic Vision

• Former IBM CEO, Louis V. Gerstner, once said

“…the time to set a vision is when you need a new strategic
direction.”
Defining a Business Mission
• As the boundaries of industries are blurring, it is helpful to
define your mission by refocusing on the business or business
arena you are in or wish to be in and the level of integration
you can realistically achieve based on your business model.

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 Components of Strategic Direction

Setting Performance Objectives

• A performance objective is a specific, measurable, and
attainable performance target to be achieved within a specific
period. In the realm of setting a strategic direction, your
objectives are a direct conduit to your company performance
assuming the right strategies.
Creating a Strategy
• Strategy is developed at the corporate level, the competitive
level (also known as the business level), and the operational
level (also known as the functional level).

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 Strategic Direction & Leadership

• Leadership is essential to setting and achieving the strategic

direction.
• Effective leadership is a prerequisite for effective governance
and effective management.
• Leaders are critical to the governing and management
processes.
• The full potential of governance and management cannot be
realized without strong and effective leadership.

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Strategic Direction Setting: The Process

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 Strategic
Planning Tools &
Techniques
• VMOST: This stands for
Vision, Mission,
Objectives, Strategy,
and Tactical.
• Success in an
organization can
happen with top-down
or bottom-up
alignment. VMOST
analysis is meant to
help connect the
tactical to the strategic.

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 Strategic Planning Tools
& Techniques
• SWOT: The standard analysis tool,
defined as Strengths, Weaknesses,
Opportunities, and Threats.
• Strengths and weaknesses are
internal to the organization,
opportunities and threats are
external. SWOT requires you to be
candid and provide an honest
assessment of the state of things. It
forces you to create a dialogue with
stakeholders to get different
viewpoints. Eventually, you focus in
on the key issues.

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Strategic Planning Tools
& Techniques

• PEST: This is a great tool to use

in tandem with SWOT. The
acronym stands for Political,
Economic, Social, and
Technology.
• PEST reveals opportunities and
threats, the direction of
business change, projects that
will fail beyond your control,
and country, region, and market
issues by helping you create an
objective view.

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 Strategic
Planning Tools &
Techniques
Boston Matrix : This
tool requires you to
analyze your business
product or service and
determine if it is a cash
cow, sick dog,
questionable, or a flying
star.

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 Strategic
Planning Tools &
Techniques
Porter’s Five Forces: This tool helps
you understand where your
business power lies in terms of
present competitiveness and
future positioning strength. It
forces you to analyze the
bargaining power of suppliers and
customers, the threats to new
entrants and substitutes, and
competitive rivalry in your
marketplace. Using this tool helps
you understand the balance of
power and to identify areas of
potential profitability. It is a highly
applicable tool in strategic
planning.
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 Skills & Knowledge Required for Setting
a Strategic Direction

• Attention to detail
• Calculating costs for implementation
• Critical thinking
• Defining mechanisms for input for various levels of
participants
• Defining strategies for reaching goals

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 Skills & Knowledge Required for Setting
a Strategic Direction

• Defining the purpose of the strategic planning process

• Developing a plan for implementing strategies
• Logical thinking
• Questioning the connection between new initiatives and the
strategic plan
• Setting meeting agendas
• Systematic thinking

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 Summary

• Examined the concept of strategic direction

• Understand how important it is for a business to determine its
strategic direction
• Discuss the relationship between strategic planning and
strategic direction

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