So, what happens in strategic management once all the external and internal analysis is done and the SWOT framework is complete? Is it time to start developing strategies? No, not yet. One more thing needs to happen: defining the strategic issue or issues the firm needs to be sure to address.
What is a strategic issue? First, it is an issue, something that needs to be addressed and resolved. Second, it is strategic. It is a long-term issue whose resolution will help move the organization toward its vision. Resolving the strategic issue will have a major impact on the direction and success of the firm (Ambler, 2020). The strategic issue is derived from the facts and data provided by the external and internal analysis and its synthesis through the SWOT framework. The business decision makers do not define the strategic issue(s) at the beginning of the strategic management process, through a hunch or guess, but after the analysis is completed. Once defined, the strategic issue helps drive the strategies that the organization develops and pursues. A strategic issue, when identified correctly and used effectively, becomes the strategic focus of the organization. In this process, more than one strategic issue may surface. Generally, decision makers will condense these into a single statement, or deal with less important strategic issues when establishing strategies or lower order goals.
The word “issue” often connotes a negative situation that a firm may be facing. For example, Southwest Airlines was faced with much lower passenger volumes as a result of the COVID-19 pandemic that started in 2020. However, the Subway example discussed at the beginning of this chapter demonstrates that the strategic issue was framed as capitalizing on an opportunity—how to move into untapped international markets.
Ideally, the strategic issue is reduced to one concise sentence, so that it is easily captured and understood. Amplifying information may be provided to further explain the situation and justify the choice of the strategic issue. Often, the strategic issue starts with the word how. In the Southwest Airlines example, the strategic issue could be: “How does Southwest Airlines adjust to long-term, lower passenger volumes and remain the preferred, low-cost leader in the industry?” For Subway, it may have been “How does Subway enter untapped international markets?” Once defined, these companies would develop strategies that move their organization towards its vision, while addressing the strategic issue.
The strategic issue will change over time, as the external, competitive and internal dynamics change. For organizations working through the strategic management process, defining the strategic issue may not be simple. The planning team members may interpret data differently or through the lens of their own perspective. The CFO may see the strategic issue in financial terms, the marketing director as a marketing issue, and the human resources director as an issue with manpower and training. One process organizations can use to determine the strategic issue is for planning team members to study the data from the analysis and each draft and share their idea of the strategic issue. The team then has a process to prioritize these, dropping some, combining some, until they arrive at a consensus on the wording of the strategic issue (Ambler, 2020).
Strategic Issues [01:57]
The video for this lesson discusses Strategic Issues.
You can view this video here: https://youtu.be/Zj_dxbJpCqo.
- It is important to define the strategic issue of an organization using the information and data from the external and internal analysis and the SWOT framework. The strategic issue sets the strategic focus for the development of strategies. The strategies will address and attempt to resolve the strategic issue and move the organization toward accomplishing its vision.
- Suppose internal and external analysis data from Apple show an upcoming slump in sales of desktop and laptop computers and tablets for years to come. What might the strategic issue for Apple be?
- You are a college senior preparing to graduate in six months. The COVID-19 pandemic has caused massive furloughs and layoffs nationwide. What might be your strategic issue?
Ambler, T. E. (2020). Strategic issues: The pivotal process for strategic success. The Center for Simplified Strategic Planning, Inc. https://www.cssp.com/CD0799/ProcessForStrategicSuccess/.
Figure 5.2: Morillo, Christina. “People on conference room.” Pexels license. Retrieved from www.pexels.com/photo/people-on-conference-room-1181427/.
Gregg Learning. (2018, June 9). Strategic issues [Video]. YouTube. https://youtu.be/Zj_dxbJpCqo.