Lecture twenty

1. Strategy formulation
 Setting organisational objectives
 evaluating the organisational environment
 Setting targets
 Performance analysis
 Choice of strategy

A recap:
 Choice of strategy
Strategy development and implementation occur at different levels (three in
number) in the business organisation, hence levels of strategy.
The three levels are:
- Corporate-level strategy or simply corporate strategy
- Line-of-business strategy or simply business strategy
- Functional-level or operational-level strategy or simply functional strategy

The dynamic concept of strategy involves establishing objectives for the future and
determining how they will be achieved.

Main lecture
Future objectives relate to the overall purpose of the business organisation as
captured in:
- The vision
- The Mission
Terminology
This brings us to what is referred to as a hierarchy of strategy statements which
comprises:
- Vision statement
- Mission statement
- Statement of principles or values
- Strategy statement

Elaboration
The vison statement projects “what we want to be”.
The mission statement is the basic statement of organisational purpose; it addresses
“why we exist”.
A statement of principles or values states “what we believe in and how we will
behave”.
The strategy statement articulates “what our competitive game-plan will be”.

‘Conclusion’
In light of these, we identify three definitive components of a strategy:
Objectives – what is it that we strive to achieve now and in the future?

Scope – where will we compete (corporate strategy)

Advantage – how we will compete (competitive strategy)

Illustrative example
We consider Barloword Equipment : values (7 in number)
Integrity
+
Uncompromising customer service
+
Long-term customer relationship
+
Passion for our brands
+
Professionalism
+
Effective communication
+
Winning through team-work

Cont’d
Identifying a business organisation’s strategy
Note
Business organisations see value in communicating their strategy to:
- Employees
- Customers
- Investors
- Business partners
- Business partners
- Public at large
‘Caution’
What is hidden is the tactics and action-plans.

A comparable example
In a football match, each of the two teams may reflect its game-plan ahead of the
game, such as ‘4,4,2’ or 3,2,1, but each will definitely display its unique tactics, in
order to win the match! The same goes for business organisations competing in the
same industry – they may have almost similar strategies but far different tactics.
For example; M-Pesa and Ecocash provide almost similar services, but Ecocash
tends to differentiate itself when it comes to converting airtime into physical
money, which is not the case with M-Pesa. What practically differs in this case is
the action-plan of Econet Telecom Lesotho as far as ‘playing’ in this money
market is concerned.

Cont’d
The purpose of a business strategy
Note
The purpose of a business strategy is to create differences between the business
organisation’s position and those of its competitors.
‘Conclusion’
To position itself differently from competitors, a business organisation must decide
whether it intends:
To perform activities differently
or
To perform different activities
Note
In fact, choosing to perform activities differently or to perform different activities
than rivals, is the essence of business strategy.
‘Conclusion’
Thus, a business organisation’s business strategy is a deliberate choice about how
it will perform the value chain’s primary and support activities to create unique
value.
‘Application’
Note
A successful use of a business strategy results only when the business organisation
learns how to integrate the activities it performs in ways that create superior value
for customers, thus contributing to competitive advantages.
Strategic fit
Note
Strategic fit among many activities is a key to the sustainability of competitive
advantage.
Why?
It is harder for a rival to match an array of interlocked activities.
‘Conclusion’
Positions built on systems of activities are far more sustainable than those built on
individual activities.

End of Lecture twenty