introduction to management [email protected]

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By Albaghdaad

1. INTRODUCTION TO STRATEGIC MANAGEMENT PROCESS Lecture 1& 2

2. Business strategy refers to the actions and decisions that a company takes to reach its business goals and be competitive in its industry. It involves a comprehensive plan that sets out how the company will compete in its market, what its objectives are, and how it will achieve these objectives .   Introduction to Business Strategy

3. Vision and Mission: The overarching goals and purpose of the business. Goals and Objectives: Specific outcomes the business aims to achieve. Core Competencies: Unique strengths and capabilities that give the business an advantage. Market Analysis: Understanding of the market environment, including competitors, customers, and market trends. Key Elements of Business Strategy

4. Resource Allocation: Efficient use of company resources to achieve strategic goals. For Instance: Apple Inc. employs a differentiation strategy focusing on innovation, user-friendly design, and a high-quality customer experience. This has helped Apple maintain a strong market position and high-profit margins.

5. The following are some of the fundamental ideas and concepts used in management:  1. Competitive Advantage: Is the condition or circumstance that puts a company in a favorable or superior business position. It involves a chieving superior performance relative to other competitors in the same industry. Concepts Revision

6. Competitive Advantage can be achieved through various strategies including; Cost Leadership: Achieving the lowest operational cost in the industry, allowing the firm to offer lower prices than competitors. Example: Walmart utilizes its efficient supply chain and economies of scale to keep prices low.

7. Differentiation: Offering unique products or services that stand out in the market. Example: Apple differentiates its products through innovative technology, design, and a strong brand. Focus: Targeting a specific niche market. Example: Rolls-Royce targets the luxury automobile segment with high-end, customized vehicles.

8. 2 . Value Proposition : Is a statement that summarizes why a consumer should buy a product or use a service. It explains what makes the product unique and how it will benefit the customer and why it's better than alternatives. Example: Tesla's value proposition revolves around sustainability, performance, and cutting-edge technology in electric vehicles .

9. 3. SWOT Analysis: Is a strategic planning tool that identifies Strengths, Weaknesses, Opportunities, and Threats related to a business or project. Components: Strengths: Internal attributes that help achieve objectives. Weaknesses: Internal attributes that hinder progress. Opportunities: External factors that the company can exploit to its advantage. Threats: External factors that could cause trouble for the business.

10. For instance : SWOT analysis of Starbucks revealed strengths in brand reputation and weaknesses in over-dependence on the US market. Strengths: Strong brand recognition, extensive global presence. Weaknesses: High prices, dependence on the US market. Opportunities: Expansion into emerging markets, product diversification. Threats: Intense competition, economic downturns affecting consumer spending.

11. 4. Core Competencies: Are u nique abilities or advantages that a company possesses, which are difficult for competitors to replicate. They are d ifficult to imitated by competitors. Example : Google's core competency in search engine algorithms and data analytics enables it to dominate the search market and monetize through targeted advertising.

12. 5. PEST Analysis: Is a framework used to analyze the external macro-environmental factors affecting an organization: Political, Economic, Social, and Technological. Components: - Political: Government policies, regulations, trade tariffs. - Economic: Economic growth, interest rates, inflation.

13. - Social: Cultural trends, demographics, consumer attitudes. - Technological: Technological advancements, innovation, automation. For Example: Amazon: Conducts PEST analysis to understand how political regulations, economic conditions, social trends like increased online shopping, and technological advancements impact its operations and strategy.

14. Strategic thinking involves a holistic approach to planning and anticipating the future needs of an organization. It includes understanding the complex interplay between different elements within the business and the external environment. Components of Strategic Thinking: 1. Systems Perspective: Understanding the organization as a part of a larger system, recognizing the interdependencies within and outside the organization. Strategic Thinking

15. Example : Toyota uses the systems perspective in its lean manufacturing approach, optimizing each part of the production process to enhance the overall system efficiency. 2. Long-term Orientation: Emphasizing future implications and sustainability rather than short-term gains. The main focus is on the future implications of current decisions. Example: Unilever’s Sustainable Living Plan focuses on long-term sustainability goals, aiming to separate business growth from environmental impact.

16. 3. Intelligent Opportunism: Balancing strategic plans with the ability to adapt to new opportunities as they arise. Example: Microsoft shifted its focus to cloud computing, an emerging opportunity, resulting in the successful growth of its Azure platform. 4. Hypothesis-Driven: Formulating hypotheses based on assumptions and testing them through experiments to guide strategic decisions. Example: Google’s innovation labs often test new technologies and business models, validating hypotheses before large-scale implementation.

17.  Henry Mintzberg, a renowned management theorist, proposed five definitions of strategy to encompass its multi-faceted nature:  1. Plan: Strategy as a consciously intended course of action. Example: IBM: IBM’s strategic plan to transition from hardware manufacturing to a focus on software and services, including cloud computing and AI, demonstrates a well-defined plan to transform its business model. Mintzberg's 5 Ps for Strategy

18. 2. Ploy: Strategy as a specific maneuver intended to outwit a competitor. Example: Ryan air: Engages in fare wars to undercut competitors on key routes, using aggressive pricing strategies to increase market share and eliminate competition.

19.   3. Pattern: Strategy as a consistent pattern of past behavior, implying a realized strategy from actions taken over time. Example : Coca-Cola: Consistently invests in global branding and marketing strategies, maintaining a strong market presence and consumer loyalty through a recognizable pattern of promotional activities.

20. 4. Position: Strategy as the location of particular products in particular markets. It is referred as the company’s strategic positioning in the industry. Example: Tesla: Positions itself as a leader in the electric vehicle market, focusing on innovation, luxury, and sustainability, distinguishing itself from traditional automobile manufacturers.

21. 5. Perspective: Strategy as an ingrained way of perceiving the world. It involves shaping the strategic approach based on the company’s identity and ideology. Example: Google: Operates with the perspective of organizing the world’s information and making it universally accessible and useful, driving its innovation and strategic initiatives in search technology and beyond.

22. Plan: Transitioned from DVD rentals to streaming, and then into original content production. Ploy: Exclusive content deals and original productions to attract and retain subscribers. Pattern: Continuously invests in technology and content creation. Position: Positioned as a global leader in streaming services. Perspective: Focuses on user experience and content quality, aiming to become the preferred entertainment service worldwide.  Case Study of Mintzberg’s 5 Ps on Netflix

23. Businesses can adopt various types of strategies depending on their goals, resources, and market conditions. They include: 1. Cost Leadership: Achieving the lowest operational cost and the lowest prices. Example: Walmart’s strategy of everyday low prices. 2. Differentiation: Offering unique products or services that stand out from competitors. Example: Apple’s differentiation through innovative technology and sleek design. Types of Business Strategies

24. 3. Focus Strategy: Concentrating on a specific market niche. Example: Rolls-Royce’s focus on the luxury automobile market. 4. Growth Strategy: Expanding the company’s operations or market reach. Example: Amazon’s strategy of entering new markets and acquiring other companies.   5. Innovation Strategy : Emphasizing new product development and technological advancements. Example: 3M’s innovation culture leading to a diverse product portfolio.