Concepts and Context

of Business Strategy

By: Dr. Waseem Hassan

 Business Strategy
Mission

Goals

Objectives

Marketing oriented efforts Strategies

Sales oriented efforts Tactics

Business Strategy Hierarchy
Corporate Strategy

Business Unit Business Unit Business Unit

Strategy Strategy Strategy

Product Product Product

Strategies Strategies Strategies

Functional Area Functional Area Functional Area

Strategies Strategies Strategies
Critical Elements of Strategy
Development
• Set Goals and Objectives
• Understand Environment of Business
Operations
• Learn from Experience, Update
Experience
• Critical Thinking
Strategic Management Process
• Setting Goals and Objectives
• Environmental Analysis
• Strategy Design and Choice of the best Strategy
• Implementation Plan Design
• Strategy Implementation
• Monitoring of Environment and Performance Results
• Analysis of Variance from Desired Performance Level
• Adjustments
Key Strategy Concepts

Seek to establish a fit between the business

environment and the strategy

Fit—providing superior value through

differentiated pieces of the total offering
Key Strategy Concepts
• Drive Change rather than adapting to it
• Quality and Process Improvement are essential to superior value
• Measuring and Tracking results necessary for continuous
improvement
Summary Strategy Concepts
• Change in customers, Channels and Competitors cause
discontinuities in the evolution of industries or markets
• Companies seldom impact change in market
• Keep up with changes in the rules of the market
Resource Allocation
• Includes Infrastructure, personnel, finances etc.
• They are not limitless
• Strategic Planning Process is a resource allocation
process
Boston Consulting Group: Growth Share
Matrix

Relative Market Share

High Low

High

Market Stars Question Marks

Growth
Rate

Low Cash Cows Dogs

Growth Share Matrix
Star
 High Growth, high Share
 Needs heavy investment; builds market share
 Manage with market ownership
 Eventually become Cash Cows
 Growth Share Matrix:
Cash Cows
 Low growth, high Share
 Established, successful, invest enough to hold
market
 Cash generators
 Harvest to increase short term cash
Growth Share Matrix:
Question Marks

 Low share, high growth markets

 Requires cash to hold share
 What should be done?
 Match with organization’s distinctive
competencies
 Obtain resources needed
Build these into stars or
phase out, sell
Growth Share Matrix:
Dogs

 Low growth, low share

 May be self-sustaining
 One organization’s dog could be another’s cash cow
 Discontinue, divest
Growth Share Matrix and Product Life
Cycle
Maturity
Sales
Revenue/
period

Decline
Growth

Introduction

Time
Strategy of Market Ownership

 Define
 Evolve
 Collaborate
Strategy of Market Ownership

Define Evolve Collaborate

 Define Market Niche
 Work towards domination
 Brand identified as standard
 Competitors note equivalence to such products
Strategy of Market Ownership

Define Evolve Collaborate

 Continue to evolve offerings
 Keep definitions of value current with market
 Present these values to consumers
Strategy of Market Ownership

Define Evolve Collaborate

 Development of ancillary products by other
organizations help owners build the market
 Third parties define their products as compatible
with market owner
 Market owner gains insight to other points of view
within the market
GE Multi-Factor
Attractiveness/Strength Matrix
MARKET
ATTRACTIVENESS
Protect Position Invest to Build Build Selectively
High

Build Selectively Limited

Build Selectively or Manage for Expansion or
Medium Earnings Harvest

Protect & Manage for

Low Divest
Refocus Earnings
Invest/Grow
Selectively Earn Medium
Strong Weak
Harvest/Divest
BUSINESS STRENGTH
The Balanced Scorecard
Focus on forward-looking measures in four core areas:
1. Financial Performance Perspective
2. Customer Perspective
3. Stakeholder Perspective
a) Upper Management
b) Partners
c) Channels
4. Value Perspective
Special Issues in Business Strategy
• Strategy Implications of Value Networks and Integrated Supply Chain
• Strategy Development and the Internet
• Volatility and Uncertainty Require Flexibility
• Strategy Development in New Businesses
Special Issues in Business Strategy

Strategy Implications of Value Networks and

Integrated Supply Chain

• Agility
• Adaptability
• Alignment of members’ interests
o Strong supply chains lead to inflexibility
o Value networks
Special Issues in Business Strategy

Strategy Development and the Internet

• Manage customer relationships
• Streamline purchasing relationships
• Increase the speed with which the environment changes
• Reduce transaction, shipping and inventory costs
Special Issues in Business Strategy

Volatility and Uncertainty Require Flexibility

• Increased uncertainty and speed of change makes
future inexact
• A pursued task is short lived as definition and
boundaries of a business become blurred
• Resource allocations across businesses become more
critical
• Core competencies take on increased importance