Business Strategy

Business Strategy

1. Business Strategy

2. Business Strategy

3. Corporate Culture

4. Types of Strategy

5. Market Dominance
•Internal growth
•Acquisitions

6. Evaluation

7. Analysis

8. Required Inputs
•Land
•Labour
•Capital

9. SWOT
•Strengths
•Weaknesses
•Opportunities
•Threats

10. PEST
•Political
•Economic
•Social
•Technological

11. Five-Forces
•Strength of Barriers to Entry
•Extent of rivalry between firms
•Supplier power
•Buyer power
•Threat from substitutes

12. Strategic Planning

13. Business Strategy

14. Business Strategy

15. Corporate Culture

16. 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.

17. 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

18. 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

19. Corporate Culture
What corporate
culture do you think
the following
businesses have
managed to
develop?
Virgin Group
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http://www.sxc.hu
The Body Shop
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www.sxc.hu
McDonalds
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http://www.sxc.hu
Nike
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http://www/sxc.hu

20. Strategic Planning

21. 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!
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22. Strategic Planning
•The Vision
–Communicating to all staff where the
organisation is going and where
it 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

23. 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

24. Strategic Planning
•Once the direction is identified:
Analyse position
Develop and introduce strategy
Evaluate:
–Evaluation is constant and the results
of the evaluation feed back
into the vision

25. Analysis

26. 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?

27. 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!

28. 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

29. 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?

30. 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

31. Evaluation

32. 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.
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33. Types of Strategy

34. 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.

35. 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?

36. 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

37. 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

38. Business Strategy

39. Business Strategy

40. Corporate Culture

41. Types of Strategy

42. Market Dominance
•Internal growth
•Acquisitions

43. Evaluation

44. Analysis

45. Required Inputs
•Land
•Labour
•Capital

46. SWOT
•Strengths
•Weaknesses
•Opportunities
•Threats

47. PEST
•Political
•Economic
•Social
•Technological

48. Five-Forces
•Strength of Barriers to Entry
•Extent of rivalry between firms
•Supplier power
•Buyer power
•Threat from substitutes

49. Strategic Planning

50. Business Strategy

51. Business Strategy

52. Strategic Analysis

53. 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

54. Where Is The Business Now?
•Internal Audits – uses data and information
generated from within the business
Internal 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

55. 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?

56. 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?

57. External Audits
•The Market
–Size – growing, stagnant
or 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!
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58. Strategic Planning

59. 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

60. 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

61. 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?
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62. Business Strategy

63. Business Strategy

64. Strategic Analysis

65. Where Is The Business Now?
•Internal Audits
•External Audits

66. 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

67. 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

68. Strategic Planning

69. 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