BUSINESS STRATEGY

A strategy is any action plan that can help a business move from its
current position to the new position it wants to. Strategies are action
plans that help achieve objectives.

Once a business has a clear objective only then it can come up with the
strategy needed to achieve it. There can be multiple strategies to
achieve a certain objective.

If the business objective is to increase its sales in the next 5 years then
there are many possible strategies to achieve this
-a joint venture with another business
-launching new products
- a takeover of the competitor

The strategy a business will select will depend on many factors such as
- the current strengths of the business
- the resources and funds it has
- the type of competition it faces
- the nature of objective[ long or short term]

STRATEGIC MANAGEMENT
Strategic management are the long term action plans that are carried
out by all the function of the business in order to achieve along term
objective.

Strategic management comprises of 3 stages:

1.STRATEGIC ANALYSIS: IN THIS STAGE THE BUSINESS GATHERS

INFORMATION SO THAT IT CAN ANSWER THE FOLLOWING
QUESTIONS
WHAT IS ARE CURRENT POSITION IN TERMS OF SALES, PROFITS,
BRAND IMAGE , MARKET SHARE, RELATIONS WITH STAKEHOLDERS?

HOW ARE WE BEING AFFECTED BY THE CHANGES TAKING PLACE IN

THE MARKETS?

2. STRATEGIC CHOICE: THIS IS THE SECOND STAGE WHICH COMPARES

THE DIFFERENT POSSIBLE STRATEGIES THE BUSINESS CAN OPT FOR.
STRATEGIC CHOICE HELPS THE BUSINESS SELECT THE MOST
SUITABLE(IN TERM OFRISK) STRATGEY,
THE MOST ACCEPTABLE(TO ALL STAKEHOLDERS) STRATEGY,
THE MOST FEASIBLE(IN TERMS OF PROFITS) STRATEGY

3. STRATEGIC IMPLEMENTATION- THIS IS THE 3RD AND LAST STAGE

OF THE STRATEGIC MANAGEMENT AND THIS STAGE DOES THE
PLANNING, AND REVIEWING OF THE WORKFORCE AND THE
RESOURCES AS THE NEW STRATEGY IS IMPLEMENTED.

APPROACHES AND TECHNIQUES THAT HELP TO

DEVELOP BUSINESS STRATEGY

DEVELOPING CORE COMPETENCIES

A CORE COMPETENCY IS A FEATURE IN THE BUSINESS THAT COMPRISES OF THE
FOLLOWING 3 CHARACTERISTICS:

1- ANY FEATURE THAT CAN BE APPLIED TO A RANGE OF BRANDS THE BUSINESS

MAKES [ TOUGHNESS IN ALL NOKIA MOBILES]

2- CANT BE EASILY COPIED [QUICK SERVICE OF MCDONALDS]

3- IT GIVES CONSUMERS A DISTINCT ADVANTAGE [ STANDARDIZEQUALITY AND

HYGIENE IN ALL MACDONALD FOOD]

IT IS VERY IMPORTANT FOR A BUSINESS TO DEVELOP A CORE PRODUCT WHICH

HAS A CORE COMPETENCY AND THEN ALL FUTURE PRODUCTS SHOULD BE
BASED ON IT.

IF A BUSINESS DOES NOT HAVE A CORE COMPETENCY THEN IT MUST TRY TO

DEVELOP ONE OTHERWISE IT WILL BE DIFFICULT TO FIGHT WITH COMPETITORS

HONDA- DEVELOPED THE FUEL EFFICIENT ENGINE

NOKIA - DEVELOPED DURABLE AND TOUGH PHONE FRAME
MICROSOFT-DEVELOPED USER FRIENDILY SOFTWARE COMMANDS
NANDO- DEVELOPED PERI PERI FLAVOURING
LIMITATIONS OF DEVELOPING CORE COMPETENCIES
1. THEY ARE EXOENSIVE TO DEVELOPS AND THE CONSUMERS MAY NOT PAY THE
HIGHER PRICE ESPECIALLY IN DEVELOPING COUNTRIES

2. MANAGERS TEND TO CONCENTRATE ON CORE COMPETENCIES AND THIS CAN

STAGNATE THE BUSINESS PROGRESS AS THEY WILL CONTINUE MAKING
PRODUCTS BASED ON IT.

3. CORE COMPETENCIES MAY IGNORE CHANGING MARKET TRENDS AND

CONSUMER DEMANDS.

PORTER’S FIVE FORCES

THIS TECHNIQUE HELPS A BUSINESS DETERMINE THE LEVEL AND

NATURE OF COMPETITION THEY ARE FACING IN AN INDUSTRY. A
BUSINESS CAN USE THE PORTER’S FIVE FORCES TO GAIN COMPETITIVE
EDGE OVER ITS RIVALS.
ACCORDING TO PORTER’S FIVE FORCES THE FOLLOWING 5 FACTORS IN A MARKET
DETERMINE THE LEVEL OF COMPETITON THE BUSINESS WILL FACE.

BUYER POWER- WHERE THE THERE ARE FEW BIG BUYERS THEY CAN ASK FOR
DISCOUNTS,DELAY PAYMENTS, PUT STRICT TERMS AND CONDITIONS MAKING IT
DIFFICULT FOR THE BUSINESS TO EARN PROFITS THIS MEANS HIGH COMPETITIVE
RIVALRY. IT IS BETTER TO BE IN AN INDUSTRY THAT HAS MANY SMALL BUYERS
SO THE BUYERS CANNOT DOMINATE THE BUSINESS.

SUPPLIER POWER- WHERE THE SUPPLIER CAN OPEN ITS OWN OUTLETS, HAS THE
ABILITY TO SET HIGH PRICES, IS THE ONLY SUPPLIER OF A CERTAIN RAW
MATERIAL OR IT IS DIFFICULT TO CHANGE SUPPLIER THEN THIS MEANS THERE IS
HIGH COMPETITIVE RIVALRY AND THE SUPPLIER CAN NEGATIVELY AFFECT THE
BUSINESS PROFITS. IT ISBETTER TO BE IN AN INDUSTRY THAT HAS MANY
SUPPLIERS.

THREAT OF SUBSTITUTES

THE GREATEST THREAT IS IF THE SUBSTITUTE HAS COME FROM ANOTHER

INDUSTRY(GENERIC COMPETITOR). SUCH AS A CINEMA NOW HAS TO COMPETE
WITH A THEME PARK OR GAMING ZONE. SUCH GENERIC COMPETITORS ARE
VERY THREATENING AS IT IS DIFFICULT TO FIGHT AGAINST THEM.
CARS MAY FACE GENERIC COMPETITORS FROM PUBLIC TRANSPORT.
DESIGNER CLOTHES FACE GENERIC COMPETITOR FROM SMART PHONES

BARRIERS TO ENTRY
IF THE BARRIERS TO ENTRY IN AN INDUSTRY ARE HIGH THEN IT IS SAFE FOR THE
EXISTING BUSINESSES AND THEY CAN ADOPT PROFIT MAXIMIZING STRATEGIES.
HIGH

IF THE BARRIERS TO ENTRY ARE LOW THEN EXISTING FIRMS WILL HAVE TO FACE
CONSTANT COMPETITION PRESSURE FROM THE NEW FIRMS SETTING UP.

COMPETITIVE RIVALRY
THIS IS THE MOST IMPORTANT PART OF THE TECHNIQUE AS IT SUMS UP THE THE
COMPETITON FACED IN THE FIRST FOUR FACTORS.

LETS LOOK AT THE COMPETITVE RIVALRY A LARGE SUPERMARKET GROCERY

STORE LIKE AL-FATAH FACES.

BUYER POWER- VERY LOW COMPETITIVE RIVALRY AS THERE ARE THOUSANDS OF

SMALL BUYERS WHO BUY FROM THE STORE.

SUPPLIER POWER- VERY LOW COMPETITVE RIVALRY AS THE SUPPLIERS LIKE

NESTLE, COCA COLA, UNILEVER CANNOT SELL THEIR OWN PRODUCTS AND DEPEND
ON AL- FATAH TO SELL THEIR BRANDS.
THREATS OF SUBSTITUTES- MEDIUM TO HIGH COMPETITIVE RIVALRY AS NOW
ONLINE GROCERY STORES ARE COMING WHICH CAN TAKE THE SALES OF AL FATAH

BARRIERS TO ENTRY- HIGH COMPETITIVE RIVALRY AS IT IS EASY FOR NEW

SUPERMARKETS TO SET UP.

COMPETITIVE RIVALRY NOT THAT HIGH AS ONLY 2 FACTORS ARE PRESENTING

COMPETITION WHILE THE OTHER TWO FACTORS ARE NOT.
PROS OF PORTER’S 5 FORCES CONS OF PORTER’S 5 FORCES

-BUSINESS ANALYSE -IT IGNORES THE ROLE OF

COMPETITION FROM DIFFERENT
ANGLES
-HELPS EXISTING BUSINESSES TO
DECIDE WHETHER THEY CAN
STAY IN A CERTAIN INDUSTRY
-HELPS NEW BUSINESSES DECIDE
WHICH INDUSTRY TO ENTER
GOVERNMENT
-IT IS TOO SIMPLISTIC IN ITS
SUGGESTIONS=ENTER /STAY IN OR
LEAVE A CERTAIN MARKET
-IT UNDERESTIMATES THE POWER
OF A BUSINESS TO FIGHT
COMPETITION THROUGH
-FRANCHISING
-INTEGRATIONS
-JOINT VENTURES

-IT IS A PURELY QUALITATIVE

TECHNIQUE
-HELPS IN MAKING ONLY SIMPLE
DECISIONS: STAY/ENTER OR LEAVE
 SWOT ANALYSIS
STRENGTH WEAKNESSES

HIGH QUALITY NO WEBSITE

OPPORTUNITIES THREATS

RISING INCOMES INCREASE USE OF ONLINE BY

CONSUMERS AFTER COVID

SWOT STANDS FOR STRENGTHS, WEAKNESSES, OPORTUNITIES AND

THREATS.

IT MATCHES THE INTERNAL STRENGHTS AND RESOURCES OF A

BUSINESS WITH ANY POSSIBLE EXTERNAL OPPORTUNITY AVAILABLE.

SWOT ALSO HIGHLIGHTS THE INTERNAL WEAKNESSES THE BUSINESS

HAS AND THE POSSIBLE THREATS AND DISADVANTAGES IT CANFACE
FROM THE EXTERNAL ENVIRONMENT

IN THE ABOVE EXAMPLE THE STRENGHT OF HIGH QUALITY CAN BE

USED AS A STRATEGY AS THE INCOMES ARE RISING AND PEOPLE WILL
BE MORE WILLING TO BUY HIGHER QUALITY SO THE BUSINESS
STRENGHT HAS AN OPPORTUNITY . THE STRENGHT OF HIGH QUALITY
WOULD BE OF NO USE IF THE INCOMES WERE FALLING. AS WHEN THE
INCOMES FALL PEOPLE THEN BUY LOW QUALITY GOODS AS THEY
CANNOT AFFORD HIGH QUALITY.

LIKEWISE THE WEAKNESS OF HAVING NO WEBSITE IS TRULY A

DRAWBACK FOR THE BUSINESS AND MUST BE ELIMINATED AS WE
CAN SEE THAT THERE IS AN EXTERNAL THREAT THAT NOW PEOPLE
ARE INCREASING THE USE OF ONLINE AND IF THIS WEAKNESS OF NOT
HAVING A WEBSITE IS NOT QUICKLY ELIMINATED THE BUSINESS WILL
LOSE SALES. THE WEAKNESS OF NO WEBSITE WOULD NOT HAVE
BEEN AN ISSUE IF THE PEOPLE WERE NOT USING INTERNET
THEREFORE SWOT IS A VERY GOOD TECHNIQUE THAT TRIES TO FIND
POSSIBLE OPPORTUNITIES FOR THE BUSINESS STRENGHTS SO THAT
THE BUSINESS CAN BUILD ON THEM AND ALSO HIGHLIGHTS
POSSIBLE THREATS SO THAT THE BUSINESS CAN ELIMINATE ITS
WEAKNESSES.

PROS OF SWOT ANALYSIS CONS OF SWOT ANALYSIS

IT CONSIDERS BOTH IT IS A VERY SUBJECTIVE
INTERNAL( STRENGHT , TECHNIQUE AND CAN BE BIASED AS
WEAKNESS) AND EXTERNAL DIFFERENT MANAGERS MAYHAVE
FACTORS ( OPPORTUNITIES AND DIFFERENT VIEWS ABOUT
THREATS) STRENGHTS AND WEAKNESSES OF
THE SAME BUSINESS.
IT HELPS A BUSINESS FIND OUT IF
THEIR STRENGHTS ARE GIVING IT IS PURELY QUALITATIVE AND
ANY OPPORTUNITY OR NOT. IF DOES NOT CONSIDER SALES AND
NOT THEN NO NEED TO CONTINUE PROFITS
INVESTING IN THEM/ UPDATED
DECISION MAKING IT REQUIRES VERY EXPERIENCED
MANAGERS TO MAKE THE SWOT OF
SWOT HIGHLIGHTS THE A PARTICULAR BUSINESS.
IMPORTANCE OF ANALYSING THE
WEAKNESSES OF A BUSINESS
IT MAKES THE BUSINESS MORE
IT IS A CROSS FUNCTIONAL AWARE OF IT POSITION AND ITS A
ACTIVITY AND THEREFORE GOOD STARTING POINT FOR FINDING
IMPROVES THE HORIZONTAL OUT THE POSSIBLE OPTIONS THE
COMMUNICATION IN THE BUSINESS HAS IN THE FUTURE.
BUSINESS= BRAINSTORMING/NEW
IDEAS/CORDINATION/TEAM WORK

EVALUATION
OVERALL SWOT IS A GOOD STARTING POINT FOR DECISION MAKING AND
IT MAKES THE MAMAGERS AWARE OF THE CURRENT POSITION OF THE
BUSINESS. BUT IT IS AN AID TO DECISIONMAKING AND CANNOT BE USED
AS THE ONLY TECHNIQUE TO MAKE FORMULATE A STRATEGY.
ANSOFF MATRIX

THE ANSOFF MATRIX IS A TECHNIQUE THAT HELPS THE BUSINESS JUDGE

THE LEVEL OF RISK OF FUTURE STRATEGIES TO INCREASE THE SALES OF
THE BUSINESS.

ANSOFF MATRIX JUDGES THE RISK OF SLAES GROWTH STRATEGIES IN

TERMS OF TWO FACTORS:
-THE PRODUCT
- THE MARKET TARGETTED

MARKET PENETRATION
THE LEAST RISK STRATEGY ACCORDING TO ANSOFF MATRIX IS MARKET
PENETRATION AS INTHIS STRATEGY THE BUSINESS TRIES T SELL MORE
OF ITS EXISTING PRODUCTS IN THE EXSITING MARKET. THERE IS NO NEW
PRODUCT DEVELOPMENT AND NO MARKET RESEARCH INVOLVED

MARKET DEVELOPMENT
THE SECOND STRATEGY IS MARKET DEVELOPMENT WHICH IS LOW RISK
AS THE BUSINESS IS ENTERING A NEW MARKET WITH ITS EXISTING
PRODUCT SO THE BUSINESS HAS TO CARRY OUT MARKET RESEARCH

PRODUCT DEVELOPMENT
THE THIRD STRATEGY PRODUCT DEVELOPMENT IS MEDIUM RISK AS THE
BUSINESS IS NOW LAUNCHING A NEW PRODUCT IN THE EXISITING
MARKET AND A LOT OF COST IS REQUIRED TO DEVELOP AND LAUNCH A
NEW PRODUCT AS IT IS COSTLY AND THERE IS HIGH CHANCE OF THE
NEW PRODUCT TO FAIL.

DIVERSIFICATION
THE FOURTH STRATEGY OF INCREASING SALES IS THE HIGH RISK
STRATEGY OF DIVERSIFICATION AS IN THIS STRATEGY THE BUSINESS IS
LAUNCHING A NEW PRODUCT IN A NEW MARKET AND IT REQUIRES
BOTH THE DEVELOPMENT OF A NEW PRODUCT AND THE CARRYING OUT
OF MARKET RESEARCH. THERE IS HIGH COST AND HIGH RISK OF FAILURE
IN DIVERSIFICATION.
ADVANTAGES TO THE BUSINESS OF LIMITATIONS TO THE BUSINESS OF ANSOFF
ANSOFF MATRIX MATRIX
-IT HELPS RANK GROWTH STRATEGIES - IT IGNORES THE COMPETITORS AND
ACCORDING TO THE RISK LEVEL T AND EXTERNAL FACTORS LIKE GOVERNMENT
THIS HELPS A BUSINESS DECIDE WHICH POLICIES COMPLETELY
LEVEL OF RISK IT CAN UNDERTAKE
ACCORDING TO ITS OWN FINANCIAL -IT IS PURELY QUALITATATIVE IN NATURE
POSITION. AND CANNOT CALCULATE COST AN
REVENUE OF ANY GROWTH STRATEGY
-ALL GROWTH STRATEGIES CAN BE
PLACED IN THE ANSOFF MATRIX - THE ANSOFF MATRIX DOES NOT OFFER
ANY SUGGESTIONS OR SOLUTIONS ON
- IT IS SIMPLE TO UNDERSTAND HOW TO PURSUE ANY OF THE STRATEGIES

- IT ANALYSES RISK IN TERMS OF NEW

PRODUCT DEVELOPMENT AND
MARKET RESEARCH SO BUSINESSES
CAN MAKE BETTER DECISIONS
FORCE FIELD ANALYSIS
IT IS A METHOD OF LISTING, DISCUSSING AND ASSIGNING WEIGHTS TO
THE VARIOUS FORCES FOR AND AGAINST A NEW STRATEGY.

THE FORCES THAT ARE IN FAVOUR OF THE NEW STRATGEY ARE CALLED
DRIVERS. THESE ARE THE POTENTIAL BENEFIT THE STRATEGY WILL GIVE

THE FORCES AGAINST THE STRATEGY ARE CALLED THE CONSTRAINERS.

THESE ARE THE POTENTIAL DISADVANTAGES OF THE STRATEGY.

ALL THE FORCES FOR AND AGAINST THE STRATEGY ARE LISTED AND
THEY ARE ASSIGNED WEIGHTS DEPENIND UPON THEIR IMPORTANCES.
1 WEIGHT IS GIVEN TO THE WEAKEST FORCE AND 10 WEIGHT IS GIVEN
TO THE STRONGEST FORCE.

THE MAIN AIM OF THE FORCE FIELD ANALYSIS IS TO TRY TO GAIN

MAXIMUM WEIGHTS FOR THE DRIVERS IF THE BUSINESSS WANT THE
NEW STRATEGY TO BE DONE.
IN THE ABOVE FORCE FIELD ANALYSIS AFTER ASSIGNING WEIGHTS TO
ALL THE FORCES FOR AND AGAINST CHANGE THE SUM IS SHOWING
THAT FORCES AGAINST CHANGE ARE GREATER.

MANAGEMENT CAN NOW CONDUCT A FURTHER ANALYYSIS TO SEE IF

THE FORCES FOR CAN BE INCREASED IN WEIGHT.

-STAFF COULD BE TRAINED IN THE NEW MACHINERY THIS WILL ADD

TO COST[+1] BUT WILL REMOVE THE FEAR OF THE STAFF[-3].

THIS MEANS THE FORCES AGAINST CHANGE [ 11- 3 +1= 9]

NOW WE CAN SEE THAT 10:11 HAS BECOME 10:9 AND THE MACHINERY
CAN BE INSTALLED.
ADVANTAGES OF USING FORCE LIMITATIONS OF FORCE FIELD
FIELD ANALYSIS ANALYSIS
-THE BUSINESS VIEWS ALL -PURELY QUALITATIVE AND DOES
STAKEHOLDERS OPINIONS SO A NOT CALCULATE PROFIT OR LOSS
COMPLETE PICTURE OF
STAKEHOLDER CONCERNS CAN BE - FORCE FIELD ANALYISIS IS
SEEN. SUBJECTIVE AS WEIGHTS ARE
ASSIGNED BY THE MANAGEMENT
-THE WEIGHTS AND EVALUATIONS AND MAY BE BIASED AND NOT
ARE ASSIGNED ACCORDING TO FAIR.
THE BUSINESS POINT OF
VIEW( BUSINESS OBJECTIVES ARE - IT IS A VERY TIME CONSUMING
GIVEN PRIORITY)- PROCESS TO LIST DOWN ALL THE
FORCES FOR AND AGAINST A
BY EVALUATIING DRIVERS AND STRATEGY AND THIS SLOWS DOWN
CONSTRAINERS SIMULTANEOUSLY THE DECISION MAKING PROCESS
THE RELATIONSHIP BETWEEN
THEM CAN BE STUDIED -INEXPERIENCED MANAGERS
CANNOT ASSIGN THE WEIGHTS
PROPERLY
DECISION TREE
The decision tree can be understood by looking at the
following example:
EXAMPLE
A BUSINESS WANTS TO GOROW AND HAS LIMITED RESOURCES .
IT HAS TWO OPTIONS FOR FUTURE GROWTH.:

IT CAN MODIFY THE EXISITING PRODUCT AND LAUNCH IT IN THE MARKET

OR
IT CAN LAUNCH A NEW PRODUCT.

COSTS
MODIFYING THE EXISITING PRODUCT $1M
LAUNCHING NEW PRODUCT $5M

POSSIBLE ECONOMIC OUTCOMES DEPEND ON SUCCESS OR FAILURE

SUCCESS FAILURE
MODIFYING EXISITING PRODUCT $3M RETURN $1.5M
RETURN
LAUNCHING NEW PRODUCT $30M RETURN $8M LOSS

THE PROBABILITY OF SUCCESS FOR THE NEW PRODUCT IS 40%

THE PROBABILITY OF SUCCESS FOR THE MODIFIED EXISTING PRODUCT IS 80%

QUESTIONS
1. CONSTRUCT THE DECISION TREE
2. CALCULATE THE EXPECTED MONETORY VALUES

1.
2.
EXPECTED MONETORY VALUES ARE CALCULATED AS FOLLOWS

LAUNCHING NEW PRODUCT

STARTING FROM LEFT TO RIGHT

-MULTPLY POSSIBLE OUTCOMES WITH PROBABILITY

SUCCESS :30M X 40% = 12M

FAILURE :(8M) X 60% = (4.8M)

ADD BOTH
12M RETURN + (-4.8M LOSS)= 7.2M RETURN

NOW DEDUCT FROM INITIAL INVESTMENT

7.2M-5M= 2.2M
THE EXPECTED MONETORY VALUE OF LAUNCHING THE NEW PRODUCT IS $2.2M

MODIFYING EXISITING PRODUCT

SUCCESS :3M X 80%= 2.4M

FAILURE :1.5M X 20%= 0.3M

ADD BOTH[ BOTH ARE RETURNS SO BOTH ARE +VE]

2.4M +0.3M= 2.7M
THE EXPECTED MONETORY VALUE OF MODIFYING THE PRODUCT IS $2.7M

THE DECISION TREE SUPPORTS MODIFYING THE EXISITING PRODUCT AS IT WILL GIVE A
HIGHER PREDICTED EXPECTED MONETORY VALUE.

ADVANTAGES OF DECISION TREES LIMITATIONS OF DECISION TREES

1. IT SHOWS PROFITS AND
LOSSES SO MANAGERS CAN TAKE
DECISIONS
2. IT CONSIDERS THE EXTERNAL
FACTORS AND LOOKS AT POSSIBLE
SCENARIOS LIKE SUCCESS FAILURE/
BOOM AND RECESSION.
3. IT IS OBJECTIVE AS IT IS BASED
ON QUANTITATIVE DATA AND NOT
OPINION
4. IT INVOLVES A LOT OF
RESEARCH INTO THE “WHAT IF”
SCENARIOS SO THE BUSINESS IS MORE
AWARE AND PREPARED FOR THE
FUTURE.
1. IT IS PURELY FORECASTED AND
CANNOT BE RELIED ON.
2. IT ADDS UP THE OUTCOMES OF
DISTINCT EVENTS[ IN THE ABOVE EXAMPLE
IT ADDS SUCCESS AND FAILURE OUTSOMES
BUT IN REALITY ONLY SUCCESS OR FAILURE
WILLOCCUR NOT BOTH TOGETHER] WHICH
IS NOT PRACTICAL IN REAL LIFE
3. IT DOES NOT CONSIDER OF THE
QUALITATIVE ASPECTS SUCH AS ETHICS
IT DOES NOT HELP MAKE A DECISION ON
ITS OWN. IT IS AN AID TO DECSION MAKING
IN THE STRATEGIC CHOICE STAGE

PEST ANALYSIS

THE BUSINESS BEFORE MAKING ANY NEW STRATEGY MUST ANALYSE THE
EXTERNAL INFLUENCES THAT ARISE FROM THE THE ENVIRONMENT IN WHICH A
BUSINESS OPERATES .
A SUCCESSFUL STRATEGY CANNOT BE MADE UNITL THE BUSINESS DOES NOT
STUDY THE COUNTRY AND ITS SITUATION SO THAT IT IS AWARE OF THE CURRENT
EVENTS HAPPENING.
WHEN A BUSINESS CARRIES OUT AN ANALYSIS OF ITS EXTERNAL ENVIRONMENT IT
IS CALLED A PEST-ANALYSIS
PEST IS AN ACRONYM : POLITICAL&LEGAL, PHYSICAL
ECONOMICAL, ETHICAL, ENVIRONEMTAL
SOCIAL
TECHNOLOGICAL
BLUE OCEAN STRATEGY
The market universe is composed of two types of oceans: red
oceans and blue oceans

RED OCEANS are all the industries in existence today –such as

fast foods, clothes, t.v channels, academies. In red oceans,
industry boundaries are defined and accepted, and the competitive
rules of the game are known

Here, companies try to outperform their rivals to grab a greater

share of existing demand. As the market space gets crowded,
profits and growth are reduced.

There is intense competition against each other such as coca cola

v pepsi and Ariel vs express powder

BLUE OCEANS, in contrast, are all the industries not in existence

today , the market gaps that exist in every industry.that are yet to be
explored.In blue oceans, demand is created rather than fought over. There
is ample opportunity for growth that is both profitable and rapid.
The blue ocean strategy says do not fight with competition but
through product differentiation and low cost innovative products
make the competition irrelevant. The blue ocean is a market that the
business has all to itself.

Instead of going into the red ocean of online sales and competing with
Amazon and other online retailers. Alibaba targeted selling to
chinese people living in America with all products translated into
chinese. This was a blue ocean that allowed the Alibaba to grow.

Elon Musk did not enter the petrol car market which is a red ocean
full of competitors but rather he went into the blue ocean of electric
cars where he made the competitors irrelevant

Blue ocean philosphy

-DO NOT COMPETE IN EXISITING MARKETS AND CAPTURE EXISITNG
DEMAND BUT RATHER CREATE NEW MARKET AND CREATE A NEW
DEMAND

- DO NOT TRY TO BEAT COMPETITORS BUT RATHER MAKE

COMPETITORS IRRELEVANT

- DO NOT GO FOR USP OR LOW COST BUT RATHER USP AND LOW COST
SCENARIO PLANNING
THE BUSINESS WORLD IS VERY DYNAMIC AND THE TRENDS ARE
CONSTANTLY CHANGING ALL THE TIME SO THIS MEANS IF THE
MANAGERS ONLY CONCENTRATE ONMAKING ONE STRATGY THERE IS
A HIGH RISK IT WILL FAIL DUE TO CHANGES IN TRENDS AND
ECONOMIC CONDITIONS
MANAGERS THINK OF A LIMITED NUMBER OF POSSIBLE SCENARIOS OR
FUTURE EVENTS THAT MAY OCCUR AND THEN MAKE A STRATEGY
FOR EACH ONE OF THEM SO THAT THE BUSINESS IS BETTER PREPARED
FOR THE FUTURE.

Benefits of scenario planning Limitations of scenario planning

- It forces managers to consider -As managers have to plan many
all the main risks and strategies simultaneously they may
uncertainties that may affect their not be able to specialize in one
business. strategy properly

-Managers develop a range of -Managers can become confused and

strategies so the business is better overburdened by the range of
prepared for sudden changes in possible scenarios and making
the future strategies for all of them

THE MEANING AND IMPORTANCE OF

CORPORATE PLANNING

Corporate Planning:

A detailed document describing the strategies and tactics that will be

needed to achieve the cooperate objectives both in short and long term. It
is the document that provides guidance in day to day activities.
BENEFITS OF CORPORATE LIMITATIONS OF COPORATE
PLANNING PLANNING
➢ Removes confusion so all
the staff is clear about ➢ Time consuming and such
what to do detailed planning may not be
➢ A cross functional activity suitable in very dynamic
that improves horizontal environments
communication which ➢ High costs/resources required
helps generate new ideas ➢ Distracts managers from daily
➢ Ensures business activities operational details such as
in case key person leaves supervising and training the
➢ Helps measure success workforce
and failure in the short run ➢ Plans can easily become
(the corporate plan is a outdated or obsolete due to
key performance revolutionary changes
indicator)
Strict adherence to plans discourages
The planning process creates creativity and initiatives from talented
following advantages: junior managers and this will
demotivate talented workers as they
(1) Grooms and trains junior don’t like following strict plans
managers in planning
(2) Business becomes more
aware of its strengths
and weaknesses
because of the plan.

➢ Has to be shown to
external stakeholders eg:
govt, community which
makes it easy for
businesses to expand
➢ Business can learn from
mistakes made during the
planning process and not
repeat the mistakes so they
will make better strategies
in the future

➢
Evaluation:

➢ No alternative to planning
➢ Plans must be flexible and should adopt to change
➢ able to evolve into better plans
➢ Planning process gives data
➢ Plan depends on the people

THE MEANING OF CORPORATE CULTURE AND ITS

IMPACT ON DECISION MAKING

(2) Corporate culture and strategy:

Corporate culture represents the values, attitudes and beliefs, accepted
within an organization that determines how workers interact with external
stakeholders.
The corporate culture determines how the work is done in an organization.

Companies that have strong cultures are able to implement new

strategies quickly as compared to companies with weak cultures

For example lets take a college. If there is a weak culture among the
students of attending classes and bunking is considered normal. Then a
new strategy of extra classes or remedial classes will fail as the current
culture of attending classes is weak. Therefor we can see the impact
culture has on new strategies and their implementation. Only companies
with strong cultures where workers are motivated and are proud of their
jobs can take decisions in both the short and long term

There are different types of corporate cultures in business organizations

Types of Culture:

1. Power Culture: Authority concentrated in few individuals

2. Role Culture: Workers only perform designated role
3. Task Culture: Multi roles/project teams/dynamic
4. Entrepreneurial Culture: Encourage to give new ideas, if fail no
criticism
5. Person Culture: Individual freedom to do work and take decisions

Many times it becomes important to change the corporate culture of the

company otherwise it will not survive.
 For example a family business has a power culture where only family
members take decisions and give ideas. If the family business is going
into losses and need new ideas they will first have to change their culture
to entrepreneurial culture so that the rest of the employees will now be
encouraged to come up with innovative new ideas on how to improve the
business and come out of the losses.

How to change the Corporate Culture in a business?

1. When the new culture is introduced the workers resist it. The
Workers must be allowed to communicate with managers openly
about the new culture and why they are resisting it so managers can
understand the workers’ concerns and find a solution
.
2. The Management must lead the change in new culture practically
and must show the workers how to do it.

3. The Management should stop providing bonus and salary

increments to those workers that are not adopting the new culture.
Only the workers adopting the new culture should be rewarded so
this will encourage all the workers to adopt the new culture and
way of working.

4. The old culture should not be completely thrown out. The Positive
aspects from the old culture should be carried forward and merged
with new culture

5. Motivation and training must be provided by the management to

help the workers adopt the new way of working and the new
culture.

6. The managment must clearly define the negotiables and non-

negotiables,
Negotiables are things in the new culture that the managers can
change if the workers don’t like them. Non negotiables are those
things in the new culture which WILL NOT BE CHANGED and
workers will have to adopt them.for example if the new culture states
that Saturday is now a working day then the management can say this
is a non negotiable
EVALUATIVE COMMENT:
A CULTURE CAN ONLY BE CHANGED SUCCESSFULLY IF :

-THE WORKERS ARE EXPLAINED THE BENEFITS OF THE NEW

CULTURE FOR THEM ALSO

- THE MAMAGMENT PLAYS THE LEAD ROLE

- TIME SHOULD BE GIVEN AS A NEW CULTURE CANNOT BE

ENFORCED OVER NIGHT.

Importance of having strong corperate

culture/culture of change:

1. Quick solutions to crisis and problems

2. Culture determines how much effort workers puts in
3. Determines customer services
4. Determines ethics
5. Workers can become advocates of the business and write good
things about their workplace on the social media
6. Unites workers and there is team work a
7. Healthy competitors within the business
8. Retains best staff and there is low labour turnover as worker stay in
businesses that have good cultures
9. Improves communication within the business

THE MEANING AN IMPORTANCE OF TRANSFORMATIONAL

LEADERSHIP

What is tranformational leader?

Transormational leaders are those that don’t just set targets and
supervise workers. They are leaders who want to lead workers
by changing the organization for the better. These type of
leaders introduce change and inspire the workers to take on new
challenges.
Transformational leaders have the following characterisitics:
- they introduce change and inspire others to follow by setting
example and leading from the front
- they take personal interest in each worker’s career and
encourage workers to take on new challenges and learn new
skills
-they have excellent communication skills and are democratic

Importance of transformational leadership for a business

- they increase the chances of success of implementing new
cultures as workers follow their lead
- they motivate workers as they lead by example rather than
force workers to do work
- under tranformational leaders the workforce is more flexible
and they create a multitasking workforce that can easily adopt
new ways of working quickly

THE MANAGEMENT AND CONTROL OF STRATEGIC

CHANGE

Strategic change is the continous implementation of new

strategies that businesses have to do in order to cope up with the
rapid changes that occur in the world and markets.

Management must face changes positively and have a strong

change management process so that their business and products
do not go out of date.
Change can be evolutionary such as since so many years there
has been slow change towards being eco-friendly and all
businesses have got a lot of time to adopt to this change by
using less plastic, by introducing recycling, by installing solar
panels. Evolutionary changes are easy to manager.

Revolutionary changes come suddenly such as the pandemic

came and it is this type of change that businesses find difficult to
manage. Examples of revolutionary changes are sudden change
in laws, economic downturn, climatic disaster like earthquake.
 -A good change managment process will have the following
features

1. Managers must understand the stages of the change process

- training will be required

- resources will need to be available
- employees must have been informed beforehand so they are
ready
- proper supervision must be done to see how the employees are
coping with the new way of working
- new objectives and vision statements must be made
-the workers must know the benefits they will get due to the
changes taking place only then will they adapt to it.

2. Management must lead

- the managers will have to convince and motivate the workers
to adopt
- managers will have to draw up budgets and come up with the
right strategies
- managers must have the right vision on how to handle the
change and it is their responsibility

Kotters 8 steps shows the best way how a change can be

promoted and successfully dealt with in an organisation.

KOTER’S 8 STEPS:
Steps Methods

1. Create Urgency Meetings/Head office representative emails, circulars,

notice boards, CEO VIDEO conference

2. Create Teams teams must have project champions[these are managers

Who Have influence over others in the company]
3. Create Vision use Democratic approach

4. Communication Strong communication network, feedback ensured

official statement

5. Empower the action Training provided and resources to workers

6. Celebrate QUICK WINS Reward the quick achievers, highlight any positives
of the new strategy

7.Build on change Firm and flexible deadlines,

Assign new duties, roles, hold staff accountable

8. Consolidate new strategy Part of cares/create new poSts, positions, change

mission
statements, make new cooperate objectives,
‘INCENTIVIZE’’.
 CONTINGENCY PLANNING/CRISIS MANAGMENT
CONTINGENCY PLANNING IS PREPARING AN ORGANIZATIONS
RESOURCES FOR THE POSSIBLE DISASTERS/ CRISIS THAT CAN
OCCUR. IT IS A BACK UP PLAN.

PROS OF COMTINGENCY CONS OF CONTINGENCY

PLANNING PLANNING
>LOWERS INSURANCE COST >COSTLY AND REQUIRES
RESOURCES
>AVOIDS LEGAL ISSUES ( IN
CASE OF SAFETY > TIME CONSUMING TO MAKE
PROCEDURES) BACK UP PLANS

>MINIMIZES DAMAGE WHEN >MAY QUICKLY BECOME

DISASTERS OCCUR OUTDATED

>ENSURE BUSINESS >TRAINING FOR BACK UP PLANS

CONTINUITY AFFECTS THE WORK

>QUICK RESPONSE TO >BETTER TO SELECT STRATEGIES

MEDIA REPORTS THAT HAVE LITTLE OR NO
CHANCES OF LOSS/
>GOOD BRAND IMAGE IN DISASTERS/CONTINGENCIES
FRONT OF CUSTOMERS
>MAY NOT BE COST EFFECTIVE

>SMALL BUSINESSES MAY NOT BE

ABLE TO AFFORD SO MANY BACK UP
PLANS
 CRISIS MANAGEMENT

.LARGE COMPANIES CARRY OUT A LOT OF CONTINGENCY PLANNING.

HOWEVER THERE WILL ALWAYS BE CRISIS THAT WILL ARISE SUCH AS
AIRPLANE CRASH FOR AN AIRLINE, CREDIT CARD FRAUD FOR BANKS,
FIRE FOR SUPERMARKETS. ONCE THE CRISIS HAS OCCURRED THE
BUSINESS MUST REACT QUICKLY TO MINIMIZE THE DAMAGE OF THE
DISASTER.

SHORT TERM CRISIS MANAGEMENT. THE BUSINESS MUST DEAL WITH

THE FOLLOWING STAKEHOLDERS IMMEDIATELY MEDIA +
GOVT+VICTIM AND THEIR FAMILY+CONSUMERS

THE BUSINESS CAN ADOPT THE FOLLOWING TACTICS IN THE SHORT

RUN TO DEAL WITH THE CRISIS:
1. PAY COMPENSATION
2. TOTAL RECAL OF THE PRODUCT AND REPLACE
3. OUT OF COURT SETTLEMENTS IF THE VICTIM GUARANTEE TO BE
QUIET
4. HOLD PRESS CONFERENCES TO SHOW BUSINESS SIDE OF STORY
5. FILE DEFAMATION CASE AGAINST THE CONSUMERS ACCUSING THE
BUSINESS OF WRONGDOING.THIS IS AN AGGRESSIVE TACTIC.
6. START CSR ACTIVITIES TO SHOW BUSINESS IN GOOD WAY
7. SHOW ADVERTISEMENTS HIGHLIGHTING THE QUALITY ASSURANCE
OF THE BUSINESS
8. HIRE CELEBRITIES TO ENDORSE THE PRODUCT

LONG TERM CRISIS MANAGEMTN WILL INVOLVE INVESTIGATING INTO

THE CRISIS INTERNALLY SO THAT IT DOES NOT OCCUR AGAIN
THE BUSINESS CAN DO THE FOLLOWING

1. LEAN PRODUCTION
2. TRAINING PROGRAMME
3.DISMISSAL OF STAFF RESPONSIBLE
4. INVESTIGATING THE SUPPLIER
5. ADOPTING NEW TECHNOLOGY

EVALUATION= THE BUSINESS MUST BE HONEST AND OPEN/ETHICAL

BEAR THE HIGH SHORT RUN COSTS OF RECALLING THE
FAULTY PRODUCTS
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