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Business Strategy
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Business Strategy
Business Strategy
Corporate Culture
Types of Strategy
Market Dominance
• Internal growth• Acquisitions
Evaluation
Analysis
Required Inputs
• Land• Labour• Capital
SWOT
• Strengths• Weaknesses• Opportunities• Threats
PEST
• Political• Economic• Social• Technological
Five-Forces
• Strength of Barriers to Entry• Extent of rivalry between firms• Supplier power• Buyer power• Threat from substitutes
Strategic Planning
Business Strategy
Business Strategy
Corporate Culture
Corporate Culture• The beliefs and values shared by people
who work in an organisation– How people behave with each other– How people behave with customers/clients– How people view their relationship with
stakeholders– People’s responses to energy use, community
involvement, absence, work ethic, etc.– How the organisation behaves to its
employees – training, professional development, etc.
Corporate Culture
• May be driven by:• Vision – where the organisation
wants to go in the future• Mission Statement – summary
of the beliefs of the organisation and where it is now
Corporate Culture
• May be reflected in:– Attitude and behaviour of the leadership– Attitude to the role of individuals in the
workplace – open plan offices, team based working, etc.
– Logo of the organisation – The image it presents to the outside world– Its attitude to change
Corporate Culture
What corporate culture do you think the following businesses have managed to develop?
Virgin GroupCopyright: Joshua2150, http://www.sxc.hu
The Body ShopCopyright: fadaquiqa, http://www.sxc.hu
McDonaldsCopyright: alexalliedhttp://www.sxc.hu
NikeCopyright: alexbolhttp://www/sxc.hu
Strategic Planning
Strategic Planning• First Stage of Strategic
Planning may involve:• Futures Thinking
– Thinking about what the business might need to do 10–20 years ahead
• Strategic Intents– Thinking about key
strategic themes that will inform decision making
• “The thicker the planning document, the more useless it will be”
– (Brent Davies: 1999)
Taking time to think and reflect may be more important than many businesses allow time for!Copyright: Intuitives, http://www.sxc.hu
Strategic Planning• The Vision
– Communicating to all staff where the organisation is going and whereit intends to be in the future
– Allows the firm to set goals• Aims and Objectives:
– Aims – long term target– Objectives – the way in which you
are going to achieve the aim
Strategic Planning• Example:• Aim may be for a chocolate
manufacturer to break into a new overseas market
• Objectives:– Develop relationships with overseas suppliers– Identify network of retail outlets– Conduct market research to identify
consumer needs– Find location for overseas sales team HQ
Strategic Planning
• Once the direction is identified:Analyse positionDevelop and introduce strategyEvaluate:
– Evaluation is constant and the results of the evaluation feed back into the vision
Analysis
SWOT
• Strengths – identifying existing organisational strengths
• Weaknesses – identifying existing organisational weaknesses
• Opportunities – what market opportunities might there be for the organisation to exploit?
• Threats – where might the threats to the future success come from?
PEST• Political: local, national and international
political developments – how will they affect the organisation and in what way/s?
• Economic: what are the main economic issues – both nationally and internationally – that might affect the organisation?
• Social: what are the developing social trends that may impact on how the organisation operates and what will they mean for future planning?
• Technological: changing technology can impact on competitive advantage very quickly!
PEST
• Examples:• Growth of China and India as manufacturing centres• Concern over treatment of workers and the environment
in less developed countries who may be suppliers• The future direction of the interest rate, consumer
spending, etc.• The changing age structure of the population• The popularity of ‘fads’ like the Atkins Diet• The move towards greater political regulation of
business• The effect of more bureaucracy in the labour market
Five-Forces• Developed by Michael Porter: forces that shape and
influence the industry or market the organisation operates in.– Strength of Barriers to Entry - how easy is it
for new rivals to enter the industry?– Extent of rivalry between firms – how competitive
is the existing market?– Supplier power – the greater the power, the less control
the organisation has on the supply of its inputs.– Buyer power – how much power do customers
in the industry have?– Threat from substitutes – what alternative products
and services are there and what is the extent of the threat they pose?
Required Inputs• Changing strategy will impact on the resources
needed to carry out the strategy:• Specifically the impact on:
– Land – opportunities for acquiring land for development – green belt, brownfield sites, planning regulations, etc.
– Labour – ease of obtaining the skilled and unskilled labour required
– Capital – the type of capital and the cost of the capital needed to fulfil the strategy
Evaluation
Evaluation
• Data from sales, profit, etc. used to evaluate the progress and success of the strategy and to inform of changes to the strategy in the light of that data
Information from a wide variety of sources can help to measure and inform the impact and direction of the strategy.
Copyright: Mad7986, http://www.sxc.hu
Types of Strategy
Types of Strategy
• Competitive Advantage – something which gives the organisation some advantage over its rivals
• Cost advantage – A strategy to seek out and secure a cost advantage of some kind - lower average costs, lower labour costs, etc.
Types of Strategy
• Market Dominance:• Achieved through:
– Internal growth– Acquisitions – mergers and takeovers
• New product development: to keep ahead of rivals and set the pace
• Contraction/Expansion – focus on what you are good at (core competencies) or seek to expand into a range of markets?
Types of Strategy
• Price Leadership – through dominating the industry – others follow your price lead
• Global – seeking to expand global operations
• Reengineering – thinking outside the box – looking at news ways of doing things to leverage the organisation’s performance
Types of Strategy
– Internal business level strategies –
• Downsizing – selling off unwanted parts of the business – similar to contraction
• Delayering – flattening the management structure, removing bureaucracy, speed up decision making
• Restructuring – complete re-think of the way the business is organised
Business Strategy
Business Strategy
Corporate Culture
Types of Strategy
Market Dominance
• Internal growth• Acquisitions
Evaluation
Analysis
Required Inputs
• Land• Labour• Capital
SWOT
• Strengths• Weaknesses• Opportunities• Threats
PEST
• Political• Economic• Social• Technological
Five-Forces
• Strength of Barriers to Entry• Extent of rivalry between firms• Supplier power• Buyer power• Threat from substitutes
Strategic Planning
Business Strategy
Business Strategy
Strategic Analysis
Strategic Analysis
• Most businesses will constantly evaluate their position
• Strategic analysis includes different methods of assessing the current position of the business in the market place
• Two basic methods:– Internal – External
Where Is The Business Now?
• Internal Audits – uses data and information generated from within the businessInternal audits may be carried out through recruitment of an outside consultant to look at how the business works and offer an ‘independent’ viewpoint
• External Audits – uses information and data from outside the business – such information may be outside of the business’s control but has to be factored into decision making
Internal Audits• Productivity – Human resources/capital• Efficiency – Using ratio analysis, investment data, etc.• Costs – Wastage? Unnecessary expense, cost cutting opportunities?• Internal Data
– Labour turnover, absenteeism– Customer satisfaction surveys– Quality procedures – defects, complaints, etc.– Cash flow statements – record what is actually happening– Sales trends – generate patterns– Skills audit – do the skills in existence match those required?
• SWOT analysis – Strengths and weaknesses can be viewed as internal aspects
• Core competencies – What is the business good at and recognised for?
External Audits• General business environment – Inflation,
competitiveness, unemployment/employment, growth, consumer spending
• Competitors – What are they doing? What threats do they provide?
• PEST factors– Political – e.g. change of government not only
in domestic country but in overseas markets– Economic – potential trends in economic growth,
inflation, etc.– Social – changing nature of social issues – environment,
ethical expectations, changed outlook, age structure of population, etc.
– Technological – rapid changes – firm gets left behind?
External Audits• The Market
– Size – growing, stagnantor shrinking?
– Share – rising, stable or falling?
– Growth – possible or at the maturity stage?
– Trends – changing fashions, new market opportunities
– Changes – new situations that may fundamentally change the market, e.g. technology
– Mix – 7 Ps• Boston Matrix – analysis
of products• Product Portfolio Analysis –
different stages of life cycle?
– Gaps – where there might exist a market that is not being catered for
Keeping up with the Jones’s – an important part of strategic analysis is knowing what your competitors are doing. Microsoft will be as keen to know what Apple are doing as Apple will be to know what Microsoft are doing!
Copyright: KayPat, http://www.sxc.hu
Strategic Planning
Where Will The Business Go In The Next Ten Years?
• How far can the business plan ahead?
• How valuable are such plans?• Strategic intent – provides
an outline framework of basic principles and targets to inform operational planning
Strategic Planning
• Competitive Advantage –seeking to identify sources of competitive advantage
• Adding Value – looking at ways to add value• Mass or niche markets? – which is the best
route?• Cost based strategies – focus on reducing
costs to compete and grow• Market based strategies – focus on
satisfying consumer needs as the means to growth
Strategic Planning• Contingency Plan –
fallback strategies in case things do not go as planned
• Growth Plans – how can the business grow in the future? e.g. Tesco may have now got to the stage where it is more difficult to see where future growth is coming from
Tesco’s growth in recent years has been phenomenal both in the UK and abroad. It has expanded into new markets, built dozens of new stores and moved into mini-supermarkets but where does it go from here?
Copyright: Mammuth, http://www.sxc.hu
Business Strategy
Business Strategy
Strategic Analysis
Where Is The Business Now?
• Internal Audits• External Audits
Internal Audits
• Productivity• Efficiency• Costs• Internal Data
– Labour turnover– Customer satisfaction surveys– Quality procedures– Cash flow statements– Sales trends– Skills Audit
• SWOT analysis• Core competencies
External Audits• General business environment• Competitors• PEST factors
– Political – Economic– Social– Technological
• The Market– Size– Share– Growth– Trends– Changes– Mix
• Boston Matrix• Product Portfolio Analysis
– Gaps
Strategic Planning
Where Will The Business Go In The Next Ten Years?
• Competitive Advantage
• Adding Value• Mass or niche
markets?• Cost based
strategies• Market based
strategies
• Business Planning - value?
• Strategic Intents• Contingency Plan• Growth Plans