Business Strategy & Analysis

Costin Ciora, Assistant Professor

The Bucharest University of
Economic Studies (ASE)
costin.ciora@cig.ase.ro

Lectures 1&2
 The Motivation
Current global issue of increasing company performance in order to improve
how people will live and organization will work.

Costin Ciora - Business Strategy & Analysis 2

 The Motivation
Current global issue of increasing company performance in
order to improve how people will live and organization will
work

Source: Global cities of the future: An interactive map, 2012 - http://www.mckinsey.com/

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 Course content

• Strategic planning
• Understanding competitive forces
• Internal resources & capabilities
• Strategies for competitive advantage
• Methods of strategic development
• Business process design
• Financial Analysis
• Strategies for value creation

Costin Ciora - Business Strategy & Analysis 4

 Course schedule
Session Lecture Topic

Lecture 1 Strategic planning (I)

SESSION 1
Lecture 2 Strategic planning (II)
Lecture 3 Understanding competitive forces (I)
SESSION 2
Lecture 4 Understanding competitive forces (II)
Lecture 5 Internal resources & capabilities
SESSION 3
Lecture 6 Strategies for competitive advantage (I)
Lecture 7 Strategies for competitive advantage (II)
SESSION 4
Lecture 8 Methods of strategic development
Lecture 9 Business process design (I)
SESSION 5
Lecture 10 Business process design (II)
Lecture 11 Financial Analysis (I)
SESSION 6
Lecture 12 Financial Analysis (II)
Lecture 13 Strategies for value creation (I)
SESSION 7
Lecture 14 Strategies for value creation (II)
FINAL EXAM

Costin Ciora - Business Strategy & Analysis 5

 Learning outcomes

• Understand what is strategic planning and main

challenges in this field;

• Be familiar with the features of competitive forces and

internal capabilities;

• Understand the strategies for increasing competitive

advantage and what are successful strategies in Central
and Eastern Europe;

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 Learning outcomes

• Be familiar with methods for business process design

and important performance measurement;

• Understand the use of financial analysis in the strategic

planning process;

• Understand the methods of value creation.

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 Assessment methods

5 Homeworks = 20%

1 Project presentation = 30%

1 Final Exam –written = 50%

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 Project Requirements (I)
The purpose of the project:
• Assess the strategic position of the company
• Evaluate the strategic choices available
• Propose a reliable strategy for the subject company

Structure of the project

A. Strategic position analysis:

1.The environment analysis:

Competitors, markets, regulations, discoveries, opportunities and threats
2.The strategic capabilities:
Resources, competences, strengths and weaknesses
3.The culture, beliefs and assumptions of the organisation
4.The expected power of stakeholders

Costin Ciora - Business Strategy & Analysis 9

 Project Requirements (II)

B. Strategic choices:

5.Generation of strategic options: growth, acquisition, diversification or

concentration
6.Evaluation of the options to asses their relative merits and feasibility
7.Selection of the strategy or option

C. Strategy proposal

8.Present the appropriate strategy

9.Conclusions

Group: 3-4 students

To be presented at the last lecture.
Print A4 (no more than 20 pages) & presentation.

Costin Ciora - Business Strategy & Analysis 10

 Lecture 1 & 2

Strategic planning

http://essentialsofbusiness.ufexec.ufl.edu/media/3844259/value-strategic-planning.jpg

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 1. What is strategy?

Costin Ciora - Business Strategy & Analysis 12

 Strategy is a high level plan to achieve one or more
goals under conditions of uncertainty.

Strategy is important because the resources available to

achieve these goals are usually limited.

Source: Wikipedia

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 “Strategy without tactics is
the slowest route to victory.

Tactics without Strategy is

the noise before defeat.”
Sun Tzu
Chinese military general,
strategist, and philosopher

Costin Ciora - Business Strategy & Analysis 14

“Good business planning is 9 parts execution
for every 1 part strategy.”
Tim Berry
Founder and chairman of
Palo Alto Software

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 What is business strategy?

“Strategy is how a company achieves its goal by developing

its scarce resources to gain a
sustainable competitive advantage”.
Source: Vaughan Evans – Key strategy tools
(Pearson Publishing), 2013

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 https://www.bcgperspectives.com/yourstrategyneedsastrategy#introduction

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Costin Ciora - Business Strategy & Analysis 18
 Source: The Boston Consulting Group, Your strategy needs a strategy. How to
Choose and Execute the Right Approach. Harvard Business Review Press – Martin
Reeves, Knut Haanaes, Janmejaya Sinha

Costin Ciora - Business Strategy & Analysis 19

Costin Ciora - Business Strategy & Analysis 20
 Strategic • A firm’s values and purpose and the scope of its
Mission operations in product and market terms

• How a firm positions itself in the market and

Strategic develops and leverages internal resources and
capabilities to accomplish its strategic mission
plan

Strategic • Individual actions taken to execute the strategic

actions plan in pursuit of the strategic mission

Michael J. Lenox – Foundations of Business Strategy University of Virginia

Costin Ciora - Business Strategy & Analysis 21

 2.Strategic Planning Characteristics

• Long term horizon (more than 5 years)

• Takes into consideration the entire organization
• It looks at how to gain a sustainable competitive advantage
• Forces organization to look on the future horizon providing direction
for the business
• Monitoring the progress of the organization
• It can be costly and could increase bureaucracy development
• Could be difficult to apply in very fast changing markets

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 2.Strategic Planning Characteristics

How important is Strategic planning?

• Commercial centre

• Real estate company

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 3.The rational top-down approach

Costin Ciora - Business Strategy & Analysis Source: ACCA – Paper P3 Business Analysis - Kaplan Publishing 24
 Johnson, Scholes and Whittington
(JSW) - model of strategic planning

Source: ACCA – Paper P3 Business Analysis - Kaplan Publishing

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 A. Strategic position / analysis

• Competitors, markets, regulations,

The environment discoveries, opportunities and
threats

• Resources, competences, strengths

The strategic and weaknesses
capabilities

• beliefs and assumptions of the

The culture organisation

The expected power • what do the stakeholders want ? Will

employees co operate?
of stakeholders

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 A. Strategic position / analysis

The aim of strategic analysis: To form a view of the main

influences on the present & future of the organization.

• The PESTEL environmental variables:

• The resources availability
• The aspiration & expectations (shareholders, managers,
owners, unions etc.)

Costin Ciora - Business Strategy & Analysis 27

 B. Strategic choices

• Generation of strategic options:

growth, acquisition, diversification
or concentration

• Evaluation of the options to

asses their relative merits and
feasibility

• Selection of the strategy or

option

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 B. Strategic choices
Strategic options
• A strategy can be pursued in 2 ways.
• Internal development
• External development (merger& acquisition,
franchising/licensing)
• Example: Facebook, McDonald’s, Carlsberg

• Classroom discussion .
• Facebook

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 B. Strategic choices
Strategic options
HOW you compete:
Porter define generic competitive strategies:
• Lowest cost or
• Differentiation

WHERE you compete:

Ansoff describes product-market strategies
• which market you should enter or leave

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 C. Strategy into action
• Organizing/ structuring
• Internal development need to split activity into
regional divisions

• Enabling resources to support the strategy

• Appropriate peoples and fixed assets

• Managing change
• Employees‘ fears and resistance

Costin Ciora - Business Strategy & Analysis 31

 Group work:
• Air France considering low-fare subsidiary;

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Costin Ciora - Business Strategy & Analysis 33
Group work: Air France

• Strategic position
• Competition, oil price forecast , passenger forecast,
availability of cheap landing rights, effect of the main
brand
• Strategic choices
• Which routes to launch, set up a new company or buy
an existing cheap airline, which planes to use
• Strategic implementation
• How autonomous should the new airline be?, recruit
and train staff, implementation the internal booking
system, acquisition of aircraft, obtaining the landing
slots
Costin Ciora - Business Strategy & Analysis 34
 4.Alternative approaches (1/8)
(A1) Emergent strategy
• Mintzberg (1987) suggest that in real word the
strategies evolves over time (emerge) rather
than result from an in-depth analysis;

• Emergent strategy
• Example: a salesman visits a customer. The
product isn’t good and they put together some
changes. The salesman coming back to the
company and get it right after couple of rounds.

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 4.Alternative approaches (2/8)
(A2) Freewheeling opportunities
• They prefer to see and grab opportunities

• Planning takes to much time and is too

constraining

• Often such peoples are entrepreneurs

Costin Ciora - Business Strategy & Analysis 36

 4.Alternative approaches (3/8)

(B) Level of strategic planning

• Corporate strategy
• What business is in the firm, what businesses should it be in

• Business strategy
• Analyze each strategic business unit (SBU)
• Which product should be developed
• Which market to enter

• Functional strategy
• Look at how different functions of the business support the
corporate and business strategy

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 4.Alternative approaches (4/8)

• Example Gap
• Corporate strategy
• Should another range of shop to be established ? (Banana
Republic)
• Should the company raise the capital
• Business strategy
• What markets should the new range of shops open it
• How often should inventories be changed
• Functional strategy
• Look at how different functions of the business support the
corporate and business strategy

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4.Alternative approaches (5/8)

(C)Strategic management & the entity’s dimension

• Small businesses
• Operates in single market with limited product range
• Expectations of founders – dominate

• Key strategic issues

• Pressure from large competitors, development of unique
capabilities, niche strategies
• Strategies may be limited by financing opportunities;
relationship with banks is vital
• Example: “Regina Maria” vs “Promed System”
Costin Ciora - Business Strategy & Analysis 39
 4.Alternative approaches (6/8)
• Multinationals
• Operates in many diverse markets with a wide
range of products

• Key strategic issues

• Control of diverse businesses is vital, relationship
between head office and local divisions
• Business unit strategy resource allocation and
coordination (logistics)

Costin Ciora - Business Strategy & Analysis 40

4.Alternative approaches (7/8)

(D).Strategic manag. and type of organization

• Public sector
• Significant government influence
• Planning horizon driven by political rather than market
condition
• Key strategic issues
• Role of ideology
• Competition for resources is not based on market
rules
• Strategic options limited by funding (tax implications)

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 4. Alternative approaches (8/8)

• Non – Profit Organizations

• Key objectives are not financial
• Funding often not linked to receipt of services
(discussion: professional associations)
• Key strategic issues
• Key decision usually centralized
• Competition for funds (meeting expectations of funding
bodies)

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 5.The Strategy lens (1/6)

Johnson and Scholes (JS) launch “strategic lens”

concept which means three ways of viewing

Strategy as design
Strategy as experience
Strategy as ideas

• Managers should try to look at strategy through all

three lenses in turn

Costin Ciora - Business Strategy & Analysis 43

 5. The Strategy lens

Costin Ciora - Business Strategy & Analysis 44

 5. The Strategy lens (3/6)
Strategy as design
• This is the view that strategy formulation is a rational,
logical process where information is carefully considered
and predictions made.
• Strategic choices are made and implementation takes
place.
• Essentially this is the same as the rational planning
model discussed earlier

Costin Ciora - Business Strategy & Analysis 45

 5. The Strategy lens (4/6)
Strategy as experience
• This is the view that future strategies are based on
experiences gained from past strategies.
• There is strong influence from the received wisdom and
culture within an organisation about how things should
be done.
• This reflects the emergent approach described above

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 5. The Strategy lens (5/6)
Strategy as ideas
• This is the view that innovation and new ideas are
frequently not thought up by senior managers at the
corporate planning level.
• Rather, new ideas will often be created throughout a
diverse organization as people try to carry out their
everyday jobs and to cope with changing circumstances

Costin Ciora - Business Strategy & Analysis 47

 5. The Strategy lens (6/6)

• IBM saw strategy as a matter of design and probably

one of experience

• No Strategy as ideas

Costin Ciora - Business Strategy & Analysis 48

 Case study

Costin Ciora - Business Strategy & Analysis 49

 Homework #1
Similar to Air France example, using JSW model assess the following
situation:

Apple to enter the Electrical Home Appliances sector (?)

Costin Ciora - Business Strategy & Analysis 50

Costin Ciora - Business Strategy & Analysis 51
 References
• ACCA P3 – Business Analysis, Kaplan Publishing, 2012

• Vaughan Evans – Key strategy tools, Pearson Publishing, 2013

• Martin Reeves, Knut Haanaes, Janmejaya Sinha - Your strategy

needs a strategy. How to Choose and Execute the Right
Approach. Harvard Business Review Press, 2015

Costin Ciora - Business Strategy & Analysis 52

Thank you for your attention!

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