Lecture nineteen

1. Strategy formulation
 Setting organisational objectives
 evaluating the organisational environment
 Setting targets
 Performance analysis
 Choice of strategy

A recap:
 Choice of strategy
Strategy development and implementation occur at different levels (three in
number) in the business organisation, hence levels of strategy.
The three levels are:
- Corporate-level strategy or simply corporate strategy
- Line-of-business strategy or simply business strategy
- Functional-level or operational-level strategy or simply functional strategy

Main lecture
- Line-of-business strategy or simply business strategy

Elaboration
- Line-of-business strategy or simply business strategy

Note
Business strategy is concerned with the operation of a strategic business unit in the
business organisation.
‘Conclusion’
Its concern is with how a specific market will be approached and it is responsible
for winning over the customer, thereby beating competition.
Cont’d
A competitive strategy; for example, differentiation, is decided on at this level.
Note
It is vital to remember that this strategy must be followed within the broad
framework of the corporate strategy.

Cont’d
The basic question facing a business organisation is: “How do we make money?”
‘Answer’
The answer to this question corresponds to two basic strategic choices we have
identified so far:
“Where do we compete?”
(in which industries and markets should we be?”) – Corporate strategy
and
“How should we compete?” – Business strategy

‘Trick’
In the case of a single-unit business organisation, corporate strategy = business
strategy

Cont’d
We illustrate an answer to the question: “how should we compete?” by considering
a business strategy for Coca-Cola company.
‘How to compete’
- Coca-Cola pursues a differentiation strategy whereby it relies on brand-
image developed through heavy advertising and promotion. For example;
hosting of a Coca-Cola Cup by South African Football Association (SAFA).
 - Coca-Cola seeks market share leadership through mass marketing and
through close relationships with the leading bottlers in every country where
it does business. For example; Marotholi beverages in Lesotho, whereby it
acknowledges Coca-Cola Company through the message: “Bottled for Coca-
Cola, owners of the trademark”

Cont’d
We end discussion on the business strategy by looking at the strategy-making
hierarchy; that is, who has primary responsibility for what kinds of strategy
actions?
This can be considered under three main columns, namely;
- Strategy level
- Primary strategy development responsibility
- Strategy-making functions and areas of focus
Note
This strategy-making hierarchy guides the crafting process, whereby it demarcates
responsibilities and strategy actions for various individuals in the business

Elaboration
Strategy level
Under this we have business strategy

Primary strategy development responsibility

Under this we have general manager (head), whereby decisions are
reviewed/approved by senior corporate executive, usually chief executive officer.
Strategy-making functions and areas of focus
- Devising moves and approaches to compete successfully and to secure a
competitive advantage
- Forming responses to changing external conditions
- Uniting the strategic initiatives of key functional departments
- Taking action to address company-specific issues and operating problems

Cont’d
Interrelation of corporate strategy and business strategy
Note
This is shown in the dimensions of these strategies, whereby they are both meant to
compete for both today and tomorrow.
‘Conclusion’
This dynamic concept of strategy involves establishing objectives for the future
and determining how they will be achieved.
For example, Coca-Cola Company’s dynamic dimension of its strategy (tapping
from both corporate and business) is outlined in broad terms in its statements of
vision: ‘To refresh the world’. This is evident in the billboard advert: ‘Refresh on
the Coca-Cola side of life’.

End of Lecture nineteen