Strategic driver

From CEOpedia | Management online

Strategic drivers are determining factors of key success factors , durable and high prosperity, and, moreover - key value propositions. Companies usually have more than one factor, among three up to five strategic drivers at the same time, there is a main subcategory of the whole factors, which have a big influence for the industry contest where participate a lot of companies(S. Rush 2011, p. 38).

The place of the strategic drivers in the company

They key strategic drivers must present the factors, which company has decided to choose for the enclosure in and stand out with a purpose to participate in the competition in the industry. Leadership establishes that factors which are the most important (priorities) at the level of the organizing process due to comprehension of the strategic drivers key and, moreover, the corresponding priority amid that strategic driversS. Rush 2011, p. 38).

For instance, the delivery and cargo industry include a big quantity, of various key drivers. A few firms concentrate their attention on costs, quickness of delivery, or universal range. YRC, famous trucking company, decided to rival due to two main drivers like: delivery at term and dependability. The firm found out that their customers put these value as the most important over all other factors: customers want their shipment to be delivered at the time it was promised to come (though the transit time might be even not so fast as in the rival companies), and their goal is to supply goods in not damaged or harmed condition. Such example of YRC calls attention to the significant singularity of the strategic drivers. Strategic drivers represent a profound realization of the customer and his needs, actual possibilities of the company and that possibilities it can have in the perspective and comprehension of the industry(S. Rush 2011, p. 39).

After the moment when the company is conscious of their strategic drivers, they should to set range priority of that drivers. It is not easy to decide which one single driver is more significant than other one. It is considered to affirm that every of them is significant as much as others, but such accepted strategy is hazardous and may be finished with a strategy that tries to suit everything to everyone. The reason, that causes occasion for estimating a comparatively low quantity of that drivers and putting them in a range of the most important is done for ensuring the company starts concentrate on the template of the essentially restricted investments, which will cause to the successful strategic steppingstone. To place resources in a rational way, strategic leaders should make harsh decisions. Except this they should inform everyone in the organization about the accepted prioritization(S. Rush 2011, p. 39).

The process that includes realization of strategic drivers and ranging priorities can take some time. It needs usually different actions during the course of the months or years, and after that the company has to be able acquire a knowledge of the result of that actions(S. Rush 2011, p. 41)

Examples of strategic drivers

Strategic drivers can also be new findings, new scientific knowledge, trials, labor disputes, new laws and so on. Disposing the information what influences the firm to work and what will keep it on the same level is one of the main things in basic planning. It is considered that when the worker is conscious of the strategic drivers of the company he works in, he is able to satisfy all IS or IT demands. Much more significant and appropriate to the task that should be done, is fulfilling a domain system to please to that drivers which have the impact the tomorrow of the business(J. R. Shapiro, J. Boyce 2006, p. 275).

In the film Wall Street, character of Michael Douglas estimated his strategic driver, which motivated him to raid other companies and earn as much as possible, as greed. Greed actually is accepted to be a main strategic driver in many different organizations and companies. However, not all companies are like that., And still is the controversy whether that companies depend on profit or greed . The Internet can be a strategic driver or the aspiration of the CEO or enclosure in technologies or other things(J. R. Shapiro, J. Boyce 2006, p. 275).

Resource-based strategy

That approach asserts that company should position itself on the strategy that is ground on their exceptional and incomparable resources and possibilities than on their services and products that have been created already from those capabilities. It is considered to say that in such approach that demands and products can appear or disappear, however capabilities and resources will remain in existence(P. Gottschalk 2005, p. 50).

Cost drivers

The main statements of the cost drivers are(J.K.Shank, V. Govindarajan, S. Govindarajan 1993, p. 59-60):

  • Value chain analysis is the broader framework; the cost driver concept is a way to understand cost behavior in each activity in the value chain. Thus, ideas such as ABC are only a subset of the value chain framework.
  • Volume is not enthralling way to interpret the cost behavior, for strategic research,
  • Much more helpful in a strategic meaning is to interpret position of the costs in bounds of the choices in the system and realization skills that create the rival place of the company among competitors.
  • Not every strategic driver is so important as others for the whole time, but a few (not one) of that drivers always stay in the same position of the significance.
  • A specific cost analysis structure is decisive for comprehension of the positioning of the organization (for each cost driver).
  • Different cost drivers often have a big impact on various value actions in the chain of worth. The example can be: the comparable cost driver for marketing is market percentage, in which costs of promotion are often changeable.

Advantages of Strategic driver

A strategic driver can provide numerous advantages to a company. These advantages include:

  • Increased Efficiency: Strategic drivers can help to optimize and streamline operations, leading to cost savings and improved productivity. This is because they provide a more holistic view of the business, allowing for the identification of areas where improvements can be made.
  • Improved Decision Making: Strategic drivers allow for a better understanding of the competitive environment, which can provide insights into the potential success or failure of specific business strategies. This can help decision makers to make more informed decisions, leading to better outcomes.
  • Increased Visibility: Strategic drivers can provide visibility into the business environment and help to identify potential opportunities or risks. This can help a company to stay ahead of the competition and to better position itself in the market.
  • Improved Profitability: Strategic drivers can help to identify areas of the business which can be improved and lead to increased profitability. This can be achieved by identifying areas where cost can be reduced and revenue can be increased.

Limitations of Strategic driver

  • Strategic drivers may be difficult to measure. Without proper metrics and tracking, it can be difficult to know how well a company is performing with regard to its strategic drivers.
  • Strategic drivers can be difficult to link to tangible outcomes. As a result, it can be difficult for executives to assess the impact of the strategic drivers on the company’s performance.
  • Strategic drivers can be difficult to adjust. It is often difficult to make changes to a company’s strategic drivers in response to shifting market conditions and customer needs.
  • Strategic drivers can be difficult to prioritize. It can be hard to determine which of the strategic drivers is the most important to focus on and which should be de-prioritized.
  • Strategic drivers can be difficult to align. It can be a challenge to ensure that all the members of an organization are working towards the same strategic drivers.

Other approaches related to Strategic driver

  • Customer-focused strategy: This approach focuses on the customer, their needs and wants, and how the company can use its resources to provide them better goods and services.
  • Innovation-driven strategy: This approach centers on the company's ability to innovate and create new products and services to gain a competitive advantage.
  • Cost-cutting strategy: This strategy focuses on reducing expenses in order to remain competitive and increase profits.
  • Competitive advantage strategy: This approach centers on the company's ability to out-perform its competitors through superior products, services, or pricing.
  • Growth strategy: This strategy focuses on expanding the company's reach either through organic growth or through mergers and acquisitions.

The various approaches to strategic drivers focus on different elements of the company's operations, such as customer focus, innovation, cost-cutting, competitive advantage, and growth. By understanding these drivers and their implications, companies can make informed decisions on how to move forward and gain an edge over their competitors.


Strategic driver — recommended articles
Organizational strategy — Business capabilities — Strategic goal — Strategic position — Benefits of strategic management — Marketing myopia — Strategic management — Key success factors — Competitive environment

References

Author: Diana Fandul

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