Business Strategy

LO1: Analyse the impact and influence which the macro environment has on an
organization and its business strategies.
Learning Outcomes
LO1: Analyse the impact and influence which the macro environment has on an
organization and its business strategies.

LO2: Assess an organization’s internal environment and capabilities.

LO3: Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a
given market sector.

LO4: Apply models, theories and concepts to assist with the understanding and
interpretation of strategic directions available to an organization.
 External Environment : Turbulent
• The world is changing rapidly- technology , mergers, acquisitions ,laws, competition
• Companies have to react to changes
• Do we get the time to reflect on what our organisation should do ?

Strategic Management
 Definition of Strategy
(Johnson, Scholes & Whittington)
Strategy is the direction and scope of an organization over the long term, which achieves
advantage in a changing environment through its configuration of resources and
competences with the aim of fulfilling stakeholder expectations.
Strategic Management Process
 Overview
• Why do some firms succeed while others fail?
• A central objective of strategic management is to learn why this happens.
• What is strategy?
• An action a company takes to attain superior performance.
• What is the strategic management process?
• The process by which managers choose a set of strategies for the enterprise to pursue
its vision.
 Strategy is about ?
 Where is the business trying to get to in the long-term (direction)

 Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope)

 How can the business perform better than the competition in those markets? (advantage)?

 What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? ( resources)?

 What external, environmental factors affect the businesses' ability to compete? (environment)?

 What are the values and expectations of those who have power in and around the business? (stakeholders)
Components of Strategy
Context
(why/where?)

Process
(how?)

Content
(what?)
Mission as the Peak of a Hierarchy of Objectives

Mission Statement

Strategic Objectives

Tactical Objectives

Operational Objectives

Individual Performance
Targets
 Vision, Mission, Objectives, Strategy:
• Vision How do they all fit together?
• Mission
• Objectives
• Strategy

https://www.youtube.com/watch?v=dR-ZT8mhfJ4
 e at ur es
teg y f
d s t ra
ba nd one
Company A
Planned Strate
gy
Experiences, New initiative
s plus ongoin
Know-how, strategy featu g
res continued
prior periods from
Resource
Actual
Strengths and Company
Weaknesses, Strategy
h angin g
and ti ons t o c
e re a c
Competitive Adaptiv umstances
circ
Capabilities tegy
e Stra
Reactiv

A Company’s Strategy is Partly Planned and Partly

Reactive
 Social, Company
Competitive
political, opportunities
conditions and
regulatory and and threats to
industry
community company’s
attractiveness
factors well-being

Determine
relevance
Identify and Craft
of internal
Company’s Strategic Situation and
evaluate the
alternatives strategy
external
factors

Resource
strengths, Shared values
Influences of
capabilities, and company
key executives
and
weaknesses
culture
 Internal Factors

Factors Shaping the Choice of Company Strategy

 Why Do Strategies Evolve?
• A company’s strategy is a work in progress
• Changes may be necessary to react to
– Shifting market conditions
– Technological breakthroughs
– Fresh moves of competitors
– Evolving customer preferences
– Emerging market opportunities
– New ideas to improve strategy
– Crisis situations
What makes a decision Strategic?
 Hierarchy of Strategies

CORPORATE STRATEGY

BUSINESS UNIT BUSINESS UNIT BUSINESS UNIT

STRATEGY STRATEGY STRATEGY

FUNCTIONAL FUNCTIONAL STRATEGIES FUNCTIONAL STRATEGIES

STRATEGIES
Formulation and Implementation Across Strategic
Alternatives
Corporate Strategy Implementation
Formulation
Competing in the markets via
existing operations, mergers,
Decisions about which
acquisitions, new ventures,
markets to compete in divestitures

Business Strategy Implementation

Formulation
Carrying out the business-level
Decisions about how to strategies chosen for each
compete in each market business

Functional Strategy Implementation

Formulation
Carrying out the functional-level
Decisions about how to
strategies chosen
address each function
within the organization for each business function
 Strategic Planning-Types of strategy
Business strategy can be classified into several types, such as:
• functional strategy,
• business strategy,
• corporate strategy.

Differences between these strategies can be seen as follows in the table:

 Types of strategies

Type of strategy Examples of such a strategy

Functional strategy Marketing strategy
HR strategy
Production strategy
R&D strategy

Business strategy Cost leadership strategy

Differentiation strategy
Focus strategy
Withdrawal strategy
Market penetration strategy
New product development strategy

Corporate strategy Internal development strategy

Takeover & merger strategy
Strategic alliances
Strategic Planning Process-Overview
• The purpose of strategic planning
is to position the organization to
create the future it hopes to
achieve

• Strategic plans focus on both

internal and external issues
The Strategic Journey
Managing Stakeholder Expectations
Stakeholders
Stakeholder Analysis and Management
Identifying and managing internal and external
stakeholder interests

https://www.youtube.com/watch?v=LFHlal9fwkU&t=103
s
Example: Stakeholder Needs Assessment

Sample Organization=
Condominium Building
 Stakeholder Analysis

1. Identify Stakeholders.

2. Determine the importance of each stakeholder.

3. Identify the interest of the project for each

stakeholder.

4. Determine how you will engage each

stakeholder.

5. Gain agreement when necessary. In some cases,

stakeholders want things from your project.

6. Move the activities to the workplan.

 Class Activity – In Groups
Analyse the needs and expectations of stakeholders of an organisation.
External Environment
Environmental Analysis: PESTLE
Environmental Analysis: PESTLE
PESTLE Analysis
Environmental Analysis:
Porter’s Five Forces
SWOT Analysis
Competitive Analysis: SWOT Analysis
Assignment Discussion
Any Questions???