Business Strategies

Understanding Strategic Position of Your Organization

Written by Rahul Kumar for Gaebler Ventures

Organizations are not isolated entities but operate in the context of an external environment. It is therefore imperative to not only evaluate oneself on an absolute scale but more so in relation with what is happening on the exterior.

One of the foremost prerequisites in defining an organization's strategic orientation is the knowledge of the organization's current positioning.

An organization operates within certain bounds that are created by its direct competitors and industry of operations (the immediate neighborhood) as well as the macro-environment.

To estimate the current positioning, these elements have to be analyzed separately and in unison to understand the possible effects and develop a clearer image of strategic positioning.

Over the years, various frameworks have been provided by researchers to make our analysis simpler. We begin stepwise by first understanding the macro environment and then the industry and competitors.

It is common understanding that a country's economic health is inseparably conjoined with its polity. We are aware of the repercussions of the world wars, the current hyperinflation in Zimbabwe and many other such examples from the history that have validated this notion.

So without even going into the nuances of the political impact, one can empirically claim that political environment should be necessarily studied to assess the strategic position of the organization. In what ways it has a bearing is manifold and specific to the industry; for the polity being both the legislative and executive body for the entire nation.

The second important aspect that needs to be analyzed is the economic health of the country of establishment and the world market. For this, regular scrutinizing has to be done to decipher the influence of economic decisions made by the government on the industry and possible turbulences in the external world.

As I said before, polity has a tremendous bearing on economics and their exchange has to be thoroughly studied to figure out strategic position.

Once we have analyzed the political and economic environment, we should begin to understand the social factors. The social fabric of the society is of tremendous significance in shaping up an organization. Extensive research goes into figuring out the needs and demands of the people and their expectations, which by itself is quite a task for market research companies.

Not just that, the culture of the place, the traditions, the history ... everything contributes to the making of the social fabric. It is within the dynamics of this fabric that an organization directly interacts with making it one of the key macro environmental factors for assessment.

The final analysis deals with the current technology and its relevant future advancements. Over the years, we have seen how this world has changed due to the development in science and technology. Many companies that failed to adapt to the changing environments either perished through major defaulting or were hostilely acquired by black nights.

As Darwin's theory suggests, the world is all about survival of the fittest. To remain strong in today's competitive world, technological update is of prime relevance and organizations need to be aware of it.

The four factors mentioned above cover the major areas of analysis in understanding strategic position. In separate other articles I shall follow it up with further details so as to give a better technique in evaluating each one of them.

Rahul Kumar writes about entrepreneurial topics while he completes his Masters in Management degree at the ESCP-EAP European School of Management. He completed his undergraduate studies at the Indian Institute of Technology (IIT) in Delhi, India.

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