Strategic Choices, Implementation and Evaluation
Closing the cycle
The introduction chapter set out the three-stage strategic management process: formulation, implementation, evaluation. The previous chapter supplied the analytical tools — PESTLE, Porter's five forces, SWOT, resource and capability analysis — that inform formulation. This chapter closes the cycle: it covers the actual strategic choices a firm makes once analysis is complete, and then the implementation and evaluation work that determines whether those choices ever translate into real outcomes.
Porter's generic strategies
Given a firm's analysis of its industry and its own capability profile, Porter's generic strategies frame the fundamental choice of how a business should compete within its industry, at the business level of strategy introduced two chapters ago.
Cost leadership means competing by being the lowest-cost producer within the industry, allowing the firm to either match competitors' prices while earning superior margins, or undercut competitors on price while still earning acceptable margins. Cost leadership typically requires efficient-scale facilities, tight cost control across the value chain, and often accepting comparatively little product differentiation, since elaborate differentiation usually adds cost. This strategy suits a firm whose core competence, in the internal-analysis sense from the previous chapter, genuinely lies in operational efficiency and cost management.
Differentiation means competing by offering something genuinely unique that customers value enough to pay a premium for — superior quality, distinctive design, superior service, strong brand image, or genuine innovation. Differentiation typically requires strength in research and development, marketing, or brand-building, and this strategy suits a firm whose core competence lies in one of these areas rather than in cost efficiency.
Focus, sometimes called a niche strategy, means competing by concentrating on a specific, narrow market segment rather than the broad market, and pursuing either a cost focus, being the lowest-cost provider within that narrow segment specifically, or a differentiation focus, being the most differentiated provider within that narrow segment specifically. Focus works because a firm concentrating exclusively on a narrow segment can often serve that segment's particular needs more effectively than broad-market competitors who must spread their attention and resources across a wider range of customer needs.
Porter's central warning, tested regularly, is the danger of being "stuck in the middle" — a firm that pursues neither genuine cost leadership nor genuine differentiation, attempting some of both without excelling at either, typically ends up with higher costs than the cost leader and less differentiation than the true differentiator, leaving it without a defensible competitive position against either type of focused competitor. A firm's generic strategy choice should be a deliberate, committed choice, consistent with the capability profile established through internal analysis, not an unfocused attempt to be moderately good at everything.
Directions and methods of growth
Beyond the competitive-approach choice generic strategies address, firms also face choices about the direction and method of growth, operating largely at the corporate level of strategy.
On direction, a firm can pursue market penetration, growing by selling more of its existing products to its existing markets, typically the lowest-risk growth direction since it builds on what the firm already knows; market development, taking existing products into new markets, whether new geographies or new customer segments; product development, offering new products to existing markets, drawing on established customer relationships and market knowledge while extending the product line; or diversification, moving into new products and new markets simultaneously, the highest-risk direction since it involves the least reliance on existing knowledge and capability. Related diversification moves into a new business that shares some meaningful link with the firm's existing operations, whether in technology, customers, or distribution, allowing some transfer of existing capability; unrelated diversification moves into a genuinely unconnected business, typically justified, where it is justified at all, by financial logic such as risk-spreading or the pursuit of superior returns on capital, rather than by any operational synergy.
On method, a firm can grow organically, through internal development and investment using its own resources and capabilities; through acquisition, buying an existing company that already possesses the assets, market position or capability the firm seeks, trading the time and uncertainty of organic development for the cost and integration challenge of an acquisition; or through strategic alliance or joint venture, partnering with another organisation to pursue a shared strategic goal while both partners retain their independence, often used where a firm wants access to a partner's specific capability or market position without the full commitment and cost of an outright acquisition.
The choice among these methods should itself connect back to the firm's own capability profile: organic growth suits a firm confident it possesses the necessary capability internally and has the time to develop it; acquisition suits a firm that needs a capability quickly and is willing to pay the cost and accept the integration risk of acquiring it externally; and alliance suits a firm seeking a specific complementary capability without the full commitment either alternative requires.
Strategy implementation: turning choice into action
A strategic choice that is analytically sound produces no benefit at all until it is implemented, and implementation is where many strategies that looked entirely sound on paper actually fail, as the previous chapter's discussion of the limits of strategic planning already flagged.
Organisational structure must be aligned with the chosen strategy — a firm pursuing a differentiation strategy built on innovation typically needs a more flexible, less rigidly hierarchical structure that allows ideas to surface and be acted on quickly, while a firm pursuing cost leadership typically benefits from a more standardised, tightly controlled structure that enforces cost discipline consistently across operations; a structure poorly matched to the chosen strategy can actively undermine that strategy's execution regardless of how sound the underlying analysis was.
Leadership and culture matter because a strategy ultimately requires people throughout the organisation, not merely senior management, to act in ways consistent with it day to day, and leadership's role in implementation is substantially about communicating the strategy clearly enough, and building a supportive culture consistently enough, that this alignment of everyday behaviour with strategic intent genuinely occurs, rather than the strategy remaining a document understood only at the top of the organisation.
Resource allocation must be genuinely redirected to match the chosen strategy — a firm that formulates a differentiation strategy emphasising research and development but continues allocating its budget and its best people to routine operational activities as it always has, without genuinely shifting resources to support the new strategic direction, has not actually implemented the strategy at all, regardless of what the strategy document says, since a strategy is realised through where an organisation's resources actually go, not through what its stated intentions say.
McKinsey 7S framework as an implementation lens
The McKinsey 7S framework is commonly used to assess whether an organisation is genuinely well-configured to implement a chosen strategy, structuring the assessment around seven interconnected elements: Strategy itself; Structure, the organisational hierarchy and reporting lines; Systems, the formal processes and procedures through which work actually gets done; Shared values, the core beliefs and culture at the centre of the organisation; Style, the leadership and management approach actually practised; Staff, the people and their capabilities; and Skills, the organisation's actual distinctive competencies. The framework's central insight is that these seven elements must be mutually reinforcing — a change in strategy that is not accompanied by corresponding adjustment across structure, systems, shared values, style, staff and skills is unlikely to be genuinely well-implemented, since misalignment among any of these elements creates friction that undermines execution, echoing precisely the coherence-across-levels concern the introduction chapter raised about the three levels of strategy.
Strategic evaluation and control
The final stage of the cycle asks whether the implemented strategy is actually delivering the intended results, and whether the strategy itself, or its implementation, needs adjustment.
Strategic control involves establishing measurable performance standards consistent with the strategy's objectives, monitoring actual performance against those standards on an ongoing basis, and taking corrective action where a meaningful gap between actual and intended performance emerges. This evaluation stage is what feeds back into the beginning of the cycle, since a significant, sustained gap between intended and actual performance may indicate that the strategy itself needs to be reconsidered, not merely that its implementation needs minor correction, closing the loop back to strategy formulation and confirming, as the introduction chapter stated at the outset, that strategic management is a continuous process rather than a linear, one-time sequence that ends once a strategy has first been chosen and implemented.
Bringing the whole subject together
This final chapter is where every earlier SM chapter converges: the strategic choice made here should follow logically from the internal and external analysis of the previous chapter, should sit coherently within the corporate, business and functional level structure the introduction chapter established, and should be pursued in service of the vision, mission and objectives that chapter also introduced. Implementation and evaluation then determine whether that choice, however sound its analytical foundation, actually delivers results in practice — and the fact that evaluation feeds back into fresh formulation is precisely why this subject, across all three of its chapters, insists on describing strategic management as a genuinely continuous cycle rather than a sequence with a defined end point.
