Determinants of a Business Strategy

Competitive business advantage grows out of the difference in the cost of creating the value offering and what buyers are willing to pay for it. Value represents what buyers are prepared to pay. Superior value comes from offering superior value for prices lower or equal to competitive offerings.

Many, factors need to be considered in formulating strategy.   Six broad determinants usually dominate the design of strategy:

1.         Market opportunity, industry attractiveness, and competitive forces.

2.         The social, political, regulatory, ethical, and economic aspects of the external environment in which the enterprise operates.

3.         What an organisations skills, capabilities, and resources allow it to do best.

4.         Emerging threats to the organisation’s performance.

5.         The organisation’s culture, core beliefs, and business philosophy.

6.         The personal values, aspirations, and vision of managers, especially the most senior executive(s).

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