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