Developing Grand Strategies

Abstract

In this paper, we analyze lessons learned from the "Developing Grand Strategies" simulation relative to the importance and effectiveness of strategy formulation and choice. We also discuss about the concepts and analytic tools we can use in the development of our strategic plan. Finally, we discuss the challenges facing strategic planners.

What are lessons learned relative to the importance and effectiveness of strategy formulation and choice?

We have learnt that the appropriate Grand strategies need to be selected based on the firm's quadrant positioning in the Grand strategy cluster. We also have learnt that a firm's quadrant position is identified using its competitive position and the market's growth capability. The firm's competitive position can be identified using a SWOT matrix and industry report. The industry report also can reveal whether the market is a slow growth or rapid growth market. The selected Grand Strategies based on the firm's quadrant positioning should help in selecting the correct action plan towards meeting the firm's goals. If the strategies are incorrect, the firm's action plans may not be accurate and may not help the firm meeting its goals. As an example in the simulation, Oz! was in quadrant II in Year 2. Oz! needed to achieve a profit margin of 13.5 percent and move back to quadrant I. Oz! opted to start an online channel and acquire a digital toys and games company which are the result of selecting horizontal integration and reformulation of concentrated growth as the strategies appropriate to quadrant II.

Concepts and analytic tools which can be used to build the strategic plan

Concepts

We have found that the Grand Strategy Cluster is the ideal platform for the selection of appropriate Grand Strategy. If the firm is in Quadrant I of the Grand Strategy cluster (strong competitive position and rapid market growth), the firm can be considered to be in a very good strategic position. In this situation, the firm can concentrate on its core business, or use excessive resources in vertical integration. It can also consider concentric diversification to show importance to its areas of proven ability. If a firm is in Quadrant II (weak competitive position in a rapid growth market), it can reformulate its ineffective strategies related to its core business. It can also consider removing the inefficient business units by liquidation and consider horizontal integration or divestiture. If a firm is in Quadrant III of the cluster (weak competitive position in a slow growth market), it needs to consider turnaround strategies or retrenchment to optimize thee business model. If an appropriate buyer is found, the firm can consider liquidation. Other possible options in this situation are divestiture, concentric diversification, and conglomerate diversification. If a firm is in Quadrant IV (strong competitive position in a slow growth market), the firm can be considered to be in an excellent position to do concentric diversification and establish joint ventures to expand its proven