Strategy Formulation in Start Ups

Strategy designing and management is a process through which organizations, at whatsoever level of growth, guarantee desired results in the future. It provides long term goals and defines ways of attaining the desired. Proper strategy designing and implementation ensures start ups break even and compete favorable as they grow to maturity. Failure to plan is recipe of failure. To succeed in the long run, long term plans and strategies or tactics have to be instituted or put in place.Advertising We will write a custom essay sample on Strategy Formulation in Start Ups specifically for you for only $16.05 $11/page Learn More The strategy process is standard whether the business in question is a start up or an established entity. Business strategy begins environmental scanning and then business modeling so as to suit into and control the business environment (Dess Taylor, 2004, p. 68). It is the control over the business environment i.e. capacity to influenc e environment in own favor that is widely known as a competitive edge. When it comes to a business start up, there is no historical data or experience to rely on. Much strategic options for start ups are derived from environmental scans and tested business models that allow for benchmarking against best practices in industry. Due to the lack of experience in the industry; a weakness of most start ups, planning has to be taken very seriously. This is why all business start ups have to prepare a good business plan. Start ups have to be clear on what they are about. Therefore, the planning process begins with spelling out a clear vision. Defining the business vision offers a long term focus that will direct the business. The vision for a start up should in line with how they want to differentiate themselves in the market (Dess Taylor, 2004, p. 45). Differentiation in the market is about uniqueness or specialty in offering. It is this uniqueness or proper differentiation that will give the start up a competitive advantage. It is the reason why customers will choose the start up over already established business or products. Once a start up has defined clearly what it is about i.e. the vision, the next step is defining the vision in terms of a mission. The mission statement connects vision to actionable undertakings (Joyce Woods, 2001, p. 64). In other words, the mission explains what the business is about and what ought to be done for the business to achieve desired status as stated in vision statement. Once the actionable aspects of the vision are clear, this should be broken down into objectives or goals. Objectives are the issues to be looked into or actual action details that fulfill the mission. Start ups have to identify the particular goals to be achieved and describe in detail what the action items are about. For start ups, more focus is given to the short term goals (Dess Taylor, 2004, p. 115). It is the attainment of this short term goals that will en able the start up to break even.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Values, often neglected or assumed, are an integral part of strategy formulation. For an organization to attain a competitive advantage, people are of critical value. It is people who translate plans into results. People also act as organizational interface with customers i.e. their experience with customers either keeps the customers coming or repels the customers. A start up can not fail to invest in quality. Quality deployment starts with full participation of all employees. It requires that all employees be convinced and adopt a certain way of doing business. To guide employees, the start-up managers have to define the qualities or values by which organizational employees will be identified. Such values may include integrity, punctuality, honest, respect, passion etc. As already indicated, lack of experienc e and not having been experienced by customers is the biggest huddle for start ups. The offer or initial stages in operation should be geared towards striking the right cord with customer. The approach towards desired brand resonance i.e. striking chord with customers has to be based on thorough market research. Therefore, a crucial step in strategy formulation for a start up business is research and industry analysis. There are many ways of doing an industry analysis or market research. The most commonly used methods are doing a SWOT analysis or applying the fives forces approach developed by Porter. As SWOT analysis basically looks at the internal and external business environment and identifies things that can work for and things that can work against the organization. The internal environment of a business consists of such facets as employees, suppliers, organizational structure, organizational culture or generally the resources, competencies and capacity that an organization ha s (Ogidefa, 2008). These resources, competencies and general capacity define what strengths and weaknesses an organization has. The strategy design process will look into how to reinforce or maximize utilization of strengths while reducing or eradicating the weaknesses (Ogidefa, 2008). The external environment of a business comprises of social structures, environmental related regulations or demands, legal framework, political issues, geographical issues, technological climate and economic climate. The most important factor in the external environment is competition. The fierceness and responses of competition have a direct impact on business. The external environment of a business frames where the threats and opportunities are. For example, changes in technology are bound to influence business operations. A start up has to consider how it is placed technologically and devise ways of positioning itself correctly. For a start up, the challenge is being able to identify gaps in the ma rket and galvanize resources as to ride on the gaps before competition makes a counter move (Joyce Woods, 2001, p. 118).Advertising We will write a custom essay sample on Strategy Formulation in Start Ups specifically for you for only $16.05 $11/page Learn More A SWOT analysis is easy to use and is applied widely. However, an organization can also beneficially consider the Five Competitive Forces of Porter. Porter’s five forces are based on the assumption that once an organization identifies the relative power of the different players in the market, it is better placed to coin or develop a competitive advantage (Mind Tools Ltd, 1998). The five forces in the market include supplier power, buyer power, the threat of new entrants, the threat of substitutes, and competition rivalry. Supplier power refers to how much influence suppliers have on an organization. If suppliers are few or overly differentiated in their offering, they wield a lot of influ ence in the market. Buyer power is capacity of buyers to influence the offering of suppliers. If a start up has capacity to buy in bulk, it means it will have more buyer power. Competition rivalry refers to how competitive the market is. This is a crucial element because if the market is full of sharks, the start up has to devise strategies that enable it to fight and bite hard. The start-up managers have to consider possible entrants in the industry and what substitutes are available to its offering. This information should guide in segmentation of the market and proper positioning as to achieve a unique position in the market (Mind Tools Ltd, 1998). Environmental scanning is crucial because it provides raw data that can be used in decision making (Joyce Woods, 2001, p. 225). Start ups do a lot of forecasting and statistical tools come in handy. However, given there is no much historical data, managers judgment is of critical value. Managers have to critically analyze market chara cteristics and employ such efforts like benchmarking to be able to break through. The managerial qualitative judgments or conclusions backed by quantitative extrapolations from proper market surveys should lead into devising appropriate responses. The responses given should be able to give a start up competitive advantage. Some of the sources of competitive advantage or areas of focus when designing a competitive advantage include technological superiority, employee skills and knowledge, first to enter market strategies, benchmarking strategies, customer orientation, entering virgin market segments, conducive organizational structure and culture, awesome product design, strategic partnerships, distribution characteristics etc. The managers of a start up business have to look into all elements, both in the external and internal business environment, and devise appropriate strategy.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The implementation of strategy takes into account functional or operational plans that define what to be done, where to be done, when to be done, how to be done and by whom. The strategic concern with details and statistical mapping, when it comes to operational plans, enables the organization to cut on costs, deliver to customers on time, reduce idle time, maximally utilize capacity of organization and avoid wastage. Such a concern translates into reduced prices enabled by efficiency and effectiveness plus improved productivity or performance in organization. When the mentioned happens, an organization has a high likelihood of doing well in the market. Reference List Dess, G. G., Taylor, M., L. (2004). Strategic Management: Creating Competitive Advantages. New York: McGraw Hill Book Co. Joyce, P., Woods, A. (2001). Strategic Management: A Fresh Approach to Developing Skills, Knowledge and Creativity. New York: Kogan Page Publishers. Mind Tools Ltd. (1998). Porter’s Five F orces. Mind Tools Ltd. Retrieved from https://www.mindtools.com/pages/article/newTMC_08.htm Ogidefa, I. (2008). Strategic Analysis of Internal Environment of a Business Organization. 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