You can have the best business strategy in the world, but without the ability to put that strategy into action, you won't succeed. You have to know whether you possess the capability to do what you want to do. To determine whether you have that strategic capability, you can conduct a strategic analysis. While this analysis includes considerations like identifying customer needs and setting goals, part of it focuses on your business's capabilities.
When you set a strategy, it can involve getting your products or services to more customers, or creating a better price. You must evaluate whether you have the manufacturing ability to create those products at a price you can afford. If you do not manufacture, you must analyze your cash reserves or projected income to see whether you will have the money to purchase inventory. For a service business, you need to evaluate equipment and personnel needed to deliver your service in the way your strategy calls for. To give an example, if your strategy is to capture market share by offering volume discounts, you must have the capacity to make more products, buy more products or hire more service personnel.
Your capability to execute a strategy might depend on suppliers. You need a strong supply chain that includes providers of raw materials or products for resale, shipping companies to deliver those goods, warehouse processing and distribution within your company to ensure that you receive what you need and get it to the people who will use it. Without this capability, a new strategy can get bogged down in flawed logistics. For example, if you need raw materials like wood and wood screws to make your product, but your supplier does not deliver on time, your entire strategy of selling wooden Christmas toys can have to wait until the following year.
Your ability to get your products or services to the market in a timely manner can help you successfully implement your strategy. Conversely, if you can't deliver your offerings on time, the competition might beat you to it or customers might lose faith in your ability to make good on your promises. For example, if your strategy is to offer a cellphone that has fewer features than the competition but costs less, an inability to get that phone into stores can result in consumers buying the product elsewhere.
Your strategy can depend on your ability to develop new products. This means you must have the capacity to conduct research and development. Otherwise, you can't come up with the unique offerings your strategy calls for. If you want to introduce an advanced version of a previous product, for example, your research and development department must be able to explore what additional features customers are willing to pay for.
A strategy that takes you into new markets or changes the way you do things can call for new skills. Your managers need to have the skills to implement the strategy, and your employees might need new skills to do new tasks. For example, if you run a consulting business that specializes in software training, and you decide to offer training in customer service as well, your management and employees will need to learn customer service techniques. Your other option is to hire people who have those skills.