AFI Strategy Framework

What is AFI Strategy Framework?

AFI Strategy Framework is a model that links three interdependent strategic management tasks that together help firms conceive of and implement a strategy that can improve performance and result in competitive advantage. The following are the 3 Tasks of the AFI Strategy Framework

• Analyze: The Strategic Management Process, External Analysis, Internal Analysis, and Firm Performance.
• Formulate: Business Strategy, Corporate Strategy, and Global Strategy.
• Implement: Organization Design, Corporate Governance, Business Ethics, and Strategic Leadership.

Diagrammatic Illustration of AFI Strategy Framework

source: Joe Mahoney

Practical Application of AFI Strategy Framework

In strategic management, one often takes the perspective of the CEO or person responsible for the strategy of the organization. One would normally use an inductive approach to the analysis. The following is a helpful overview of the AFI Strategy — analysis, formulation, and implementation and its practical application.

• Analysis
  • Perform an external environmental analysis of the:
    • Macrolevel environment (PESTEL)
    • Industry environment (Porter’s five forces)
    • Competitive environment
  • Perform an internal analysis of the firm using RBV/RBT:
    • Identify resources, capabilities, and competencies (VRIO analysis)
    • Identify value chain primary and support activities
  • Analyze competitive advantage and firm performance:
    • Use financial and market-based measures
    • Comparison of the firm to competitors, peers, industry average
    • Assessment of achieving and sustaining competitive advantage

• Formulation: Provide analysis of the firm’s business-level strategy and corporate-level strategy:
  • Business Strategy
    • Differentiation, cost leadership, integration
    • Innovation and strategic entrepreneurship
  • Corporate Strategy
    • Vertical integration and diversification
    • Potential acquisitions, alliances, networks
  • International strategy
    • Competing around the world

• Implementation: Explain how to put the strategy into action and align the strategy/structure relationship:
  • Organizational design, structure, culture, control
    • Functional, multidivisional, matrix structure
    • Control and reward systems
    • Strategy/structure relationship
  • Corporate Governance and Business Ethics
    • Agency theory
    • Shared value

See Also

1. SWOT Analysis
2. Porter's Five Forces Model
3. Balanced Scorecard
4. Value Chain Analysis
5. Blue Ocean Strategy
6. Strategic Leadership

Further Reading

• Strategic Management & Strategic Planning Process - AFI Strategy Framework
• Why Do We Need the AFI Strategy Framework?