Start with the strategy question
Strategy is the set of choices that determines where a firm competes and how it wins. A strategy paper therefore needs a thesis about the firm's position, not a tour of frameworks. Good theses sound like this: the firm's advantage rests on a distribution network competitors cannot copy quickly, but that advantage erodes as direct-to-consumer sales grow, so it should invest in its own online channel.
Plan the paper around three questions: What is the firm's environment doing? What does the firm have that others lack? Do its choices fit both?
Analyze the industry, not just the firm
Begin outside the firm. Porter's five forces assesses the structural profitability of an industry through rivalry, threat of entrants, threat of substitutes, buyer power and supplier power. A broader view (political, economic, social, technological, legal and environmental factors) captures trends outside the industry. Use these to identify two or three forces that matter, and explain how they affect profit.
| Force | Question to ask | Evidence to look for |
|---|---|---|
| Rivalry | How intense is competition? | Number and balance of competitors, growth rate, fixed costs, price wars |
| New entrants | How easy is it to enter? | Capital needs, scale advantages, brand loyalty, regulation |
| Substitutes | Can customers meet the need another way? | Alternatives, relative price and performance |
| Buyer power | Can customers push prices down? | Concentration, switching costs, price sensitivity |
| Supplier power | Can suppliers push costs up? | Few suppliers, unique inputs, forward integration risk |
Finish this section with a verdict: is the industry attractive, and which forces will decide returns over the next five years? See our guide to market entry strategy for a related application.
Assess resources and capabilities with VRIO
The resource-based view argues that lasting advantage comes from resources that are valuable, rare, costly to imitate and exploited by the organization (VRIO). Test each major resource against the four questions in order.
VRIO analysis (hypothetical regional logistics firm)
| Resource | Valuable? | Rare? | Costly to imitate? | Organized to exploit? | Implication |
|---|---|---|---|---|---|
| Nationwide warehouse network | Yes | No (several rivals) | - | - | Parity: necessary, not an advantage |
| Proprietary routing software | Yes | Yes | No (can be replicated in 12 months) | - | Temporary advantage |
| Long-term contracts with 40 retail chains built on 20 years of trust | Yes | Yes | Yes | Yes | Sustained competitive advantage |
| Brand name | Yes | Yes | Yes | No (marketing is fragmented) | Unused advantage: fix the organization |
The value of VRIO is the last column. It tells you which resources to protect and which gaps to fix. Warehouses and brand matter, but the answer here is the customer relationships.
Identify the strategy and test fit
Name the firm's strategy using a framework: Porter's generic strategies (cost leadership, differentiation or focus), Ansoff's growth options (market penetration, market development, product development or diversification), or business-unit roles from a portfolio view. Then test fit: do the firm's activities reinforce each other and match the environment?
| Strategy | Needs | Warning signs of poor fit |
|---|---|---|
| Cost leadership | Scale, tight cost control, efficient processes | Costs rising faster than rivals; niche products that add complexity |
| Differentiation | Distinct quality, brand or innovation customers will pay for | Premium too high for the benefit; competitors match features |
| Focus | Deep knowledge of a narrow segment | Segment shrinking or attracting large rivals |
| Stuck in the middle | None; the firm tries both and does neither well | Margins below cost leaders and below differentiators |
For growth moves, apply a simple test: does the option build on a VRIO-strong resource, fit the industry, and carry a risk the firm can bear? Ansoff's matrix shows risk rising as you move away from the current market and product, so penetration is the least risky and diversification the most.
Support the analysis with numbers
Strategy without figures is opinion. Use whatever financial evidence the case or company reports provide: revenue and margin trends, market share, return on invested capital, and cash available for investment.
A quick market-share example: if the firm has sales of $240 million in an industry of $1.6 billion, its share is 240 / 1,600 = 15 percent. If the largest rival has $480 million, relative market share is 240 / 480 = 0.5, which says the firm is half the size of the leader. Relative share matters because cost advantages from scale typically belong to the leader.
Working on this assignment now? Get a price for help with your paper.
Get an instant quoteA worked mini-analysis: a regional grocery chain
To see how the steps join up, take a hypothetical regional grocery chain with 60 stores, $900 million in sales and a 3 percent operating margin, facing a national discounter entering its region.
| Step | Finding | Implication |
|---|---|---|
| Industry forces | Rivalry rising with the new entrant; buyers have low switching costs; suppliers moderately concentrated | Price competition will intensify; margin pressure on staples |
| Resources (VRIO) | Prime sites: valuable, rare, hard to copy quickly. Fresh-food sourcing network: valuable, rare, hard to copy. Loyalty app: valuable, not rare | Sustained advantage in fresh food and locations; app is parity |
| Current strategy | Mid-price, broad assortment, trying to match discounter prices on 400 items | Stuck in the middle: cannot match discounter cost, dilutes its own position |
| Fit | Strengths in fresh food and convenience do not support a price war | Strategy and strengths do not match |
Recommendation: reposition around fresh food and convenience (differentiation with a focus), stop price matching on staples beyond a small set of signal items, and invest in the fresh sourcing network. A reasonable measure of success is fresh category share and margin: for example, lifting fresh from 28 to 35 percent of sales while holding total sales, which at the same margin structure raises gross profit even as staples erode.
Notice how each row feeds the next, and the recommendation follows from the mismatch. This is more persuasive than listing every framework you know.
Corporate strategy: a portfolio view
If the assignment covers a diversified company, add a corporate-level view: which businesses to be in and how to allocate resources among them. The growth-share matrix classifies units by market growth and relative market share.
| Category | Market growth | Relative share | Typical action |
|---|---|---|---|
| Stars | High | High | Invest to hold leadership |
| Question marks | High | Low | Invest selectively or divest |
| Cash cows | Low | High | Harvest cash to fund others |
| Dogs | Low | Low | Fix, harvest or exit |
Treat the matrix as a starting point, not an answer. It ignores synergies among units and the fact that a low-share unit can be profitable in a niche. Better corporate strategy asks whether the parent adds value to each unit (the parenting advantage) and whether shared capabilities justify keeping the businesses together.
Writing tips that raise a strategy paper
- Write a thesis in the first paragraph It should be one sentence that connects advantage and recommendation.
- Use evidence the case or filings provide Margins, share, growth and capital spending beat adjectives.
- Separate description from judgment A table can describe; the text must evaluate.
- Discuss trade-offs Every strategic choice gives something up; name it.
- Show timing Advantages erode; say how long yours is likely to last.
Make the recommendation actionable
Close with a recommendation that follows from your analysis, includes a timeline and says how success will be measured. Good strategy recommendations are specific about what the firm will do, what it will stop doing and how it will fund the change.
| Element | What to include |
|---|---|
| The choice | Where to compete and how to win, in one or two sentences |
| The first moves | Three to five actions in the next 12 months with owners |
| The resources | Investment, people and capabilities required |
| The measures | Two or three indicators such as share, margin or customer retention |
| The risks | What could undermine the strategy and early warning signs |
- State a thesis Your analysis should defend a single clear position.
- Use each framework once and to a purpose Every tool must change the recommendation.
- Link internal and external Fit between the firm and its environment is the heart of strategy.
- Include numbers Share, margins, growth and investment give weight to your argument.
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