Business Strategy

Lesson 1

Module Overview

Business Strategy
Strategy Formulation Strategic Planning Strategy Evaluation and Selection Strategy Implementation

Strategy Formulation
Strategic contexts and terminology
Role of strategy, mission, vision, objectives, goals

Stakeholder analysis
Types of stakeholders & stakeholder mapping

Environment auditing:
PEST Analysis Porters 5 force analysis

Strategy Formulation
The organisational audit
SWOT analysis Product portfolio analysis Value-chain analysis

Strategic positioning
Ansoff growth matrix Mergers and acquisitions Benchmarking

Strategic Planning
The Planning Framework
The nature of Planning The Process of Planning Strategic Planning

Strategic planning techniques:

BCG growth-share matrix Directional policy matrices SPACE (Strategic Position and Action Evaluation) PIMS (Profit Impact of Market Share)

Strategy Evaluation and Selection

Market entry strategies
Organic growth Merger or acquisition Strategic alliances, joint ventures & franchising

Substantive growth strategies:

Horizontal and vertical integration Related and unrelated diversification

Limited growth strategies

Ansoff growth matrix Innovation

Strategy Evaluation and Selection

Disinvestment strategies
Retrenchment Turnaround strategies Divestment & liquidation

Strategy selection
Suitability, Feasibility & Acceptability

Strategy Implementation
The realization of strategic plans to operational reality:
Communication Teams

Resource allocation:
Finance, human resources, materials & time

Review and evaluation

Performance monitoring & Review

Strategy Formulation

What is Strategy
"Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".
(Johnson and Scholes, 2006)

Role of Strategy
In general terms strategy means ways of achieving ones objective. Strategy is a decision or a stream of decisions taken and act upon to achieve a particular objective. The primary and fundamental purpose of using strategy is to ensure survival, superiority and strength over its rivals. Strategy was originated in the pre-civilized society and kept on evolving with the mankind. Strategy was used in building core civilizations of the society such as Greek and Roman civilizations. Strategy has evolved in modern society where it has become the foundation of todays modern management.

Vision
Vision is what keeps us moving forward, even against discouraging odds. For example, a business may envision a community where every person has access to their product. Vision is the most powerful motivator in an organization. If it's vivid and meaningful enough, people can do astounding things to bring it to realization. A vision statement describes an ideal future. It answers the question, "what impact do we want to have on society?" The vision of a business conveys a larger sense of organizational purpose, so that employees see themselves as "building an apartment complex " rather than "laying stones."

Mission
Mission is what you want to achieve by starting the business. This must be reexamined and refreshed periodically if an organization is to remain dynamic. Mission statements describe the overall purpose of an organization: what you do, who you do it for, and how and why you do it. It sets boundaries on the organization's current activities. Reviewing the mission gets an organization back to basics.

Objectives
Objectives are specific outcomes that an organization wishes to achieve by carrying out its activities. Functions of objectives are
It can be broken down in to different levels Provide clear statements Provide a focus to all activates Provides Control of actual performance Provide a base for evaluation.

The objectives hierarchy

Mission

Corporate Objectives Functional Objectives

Team Objectives

Individual Objectives

Business goals and objectives

Goals can be defined as the intentions behind decisions or actions, the states of mind that drives individuals or organizations to what they want to do Operational goals can be used in developing objectives;
An operational goal: Cut cost The objective: Reduce budget by 5%

SMART Objectives
Specific with regard to what intended Measureable based upon performance criteria that can be used to judge whether the objectives are being achieved according to plan Attainable it should be achievable Realistic relevant needs of the organization and the people involved, and capable of being achieved within the time and resources available. Time bound - have a time scale for achievement

Stakeholder Defined
A group of people or a body who has an interest on the organization A group of people or a body who will influence the direction and interests of the organization A group of people or a body who can be influenced by the organization

Types of Stakeholders
Internal Managers Employees Connected Shareholders Bankers Customers Suppliers External Government Local Authorities Pressure Groups Competitors

Stakeholder Map
Keep Satisfied Key Players

Large Shareholders

Major Customer

Minimal Effort

Keep Informed
Pressure Groups

Stakeholder mapping

Thank you!