Chapter 4

CHAPTER 4
INTRODUCTION TO
BUSINESS STRATEGY
201053_Ch4_Introduction to business
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strategy
TOPIC LIST
1. What is strategy? 7. Setting strategic
2. Introduction to objectives
strategic management 8. Choosing a corporate
3. The strategic planning strategy
process 9. Implementing the
4. Analyzing the strategy
environment
5. Analyzing the
business
6. Corporate appraisal
201053_Ch4_Introduction to business 2
strategy
WHAT IS STRATEGY?
• Strategy is concerned with:

- Long-term direction (objectives) of the
business
- The environment in which it operates
- The resources at its disposal
- The return it makes to stakeholders
+ disposal (N): sự sử dụng
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Part 1. What is strategy?
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What is strategy?
- The long-term direction (objectives) of the business

- The environment in which it operates
- The resources at its disposal
- The return it makes to stakeholders
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strategic business unit (SBU): Đơn vị kinh doanh chiến
lược
Levels of strategy
Determined at Board Level:
- Overall corporate mission and objectives
- Overall product/market decisions
- Major investment decisions
- Overall financing decisions
Corporate - Relations with external stakerholders
Strategy
(Thượng tầng) - Forms strategic business units (SBU) – a section
responsible for its own products or services
Business - Competitive strategy:
strategy + How advantage over competitors can be achieved
(Chiến lược kinh doanh)
+ Marketing issues, such as marketing mix
Functional
Main functions: productions, IT, etc and how
(Operational) these deliver the strategies effectively
(Chức năng)
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Part 2. Introduction to strategic
management
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What is strategic management?
• Strategic management: management of resources of a
business in order to achieve its goals and objectives
• Organisations need to plan if they are not to drift.
Strategic management involves:
- Decisions about the scope of activities
- Long-terms direction of the business
- Allocation of resources
- Involves an entire cycle of planning and control ➔
called strategic planning.
• Drift: move slowly with no control of directions
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Formal (rational) strategic planning
• Formal strategic planning involves 4 key stages
Implementation
Strategic Strategic Review and
of chosen
analysis choice control
choices
Thực hiện Kiểm tra lại và

kiểm soát
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Formal (rational) strategic planning
A statement of long-term goals
The establishment of along with a definition of the
objectives and the strategies and policies which will
formulation, evaluation and ensure achievement of these goals
selection of the policies,
strategies, tactics and action
required to achieve them
Long-term/
strategic
planning
Planning
Short-term/
operational
planning
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Making strategic decisions
In order to develop a strategy, a business
has to answer the following questions:
- What is it good at?
- How might the market change?
- How can customer satisfaction be
delivered?
- What might prevent the plan?
- what should be done to minimize the
risk?
- What actions should be followed?
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Part 3. The Strategic Planning Process
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Strategic Planning Process
- appraisal (v): Đánh giá
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201053_Ch4_Introduction to business strategy
Strategic Analysis
Stage Comment Key tools, models,
techniques
Step 1 External Identify opportunities and - PESTEL
analysis threats in the business’ - Porter’s five forces
external environment - Competitors analysis
: Kiểm tra nguồn
Step 2 Internal Identify internal strengths - Resource audit
analysis and weaknesses
lực
- Distinctive competencies
- Value chain
- Supply chain
- BCG matrix
- Product life cycle
Step 3 Corporate Combines step 1 and 2 SWOT analysis
appraisal
Step 4 Missions, Mission denotes values; - Stakeholder analysis
goals and goals interpret the - Mission statement
objectives mission; objectives
quantify mission
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Strategic Choice
Stage Comment Key tools, models, techniques
Strategic - How to compete - Porter’s generic strategies
options (competitive advantage) in the - Ansoff’s product/market
generation market strategies
- Where to compete
- Method of growth : Phương án phát triển
Strategic Evaluating each strategic - Stakeholder analysis
options option carefully and - Risk analysis
evaluation objectively - SFA analysis
Strategy Choosing between alternative
selection strategies
After the process, the business should have three types of strategy:
- Competitive strategy: It determines how it competes
- Product/market strategy: determines where it competes and the direction of
growth
- Institutional strategy: method of growth (acquisition)
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Strategy Implementation
Strategy implementation is the

conversion of the strategies chosen into
detailed objectives for operating units,
and plans to achieve
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Part 4. Analysing the environment
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Analysing the environment
• Overview:
- Business’s external environment incorporates:
physical, general and task environments
- PESTEL analysis
- Porter’s five forces analysis
- Competitor analysis
Note
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What is in the business’s external
environment
Potential entrants
Substitutes
Industry competitors Suppliers
Customers
General
environment:
PESTEL
Task
environment: Task
environment
competitors,
customers, and
suppliers of
resources
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Environment uncertainty
Static environments (S) – Dynamic environment (D)
S S S S
• Static • Single • Simple • Safe
Environment Single product/ Low-tech Because change
changes market is slow and
slowly predictable
D D D D
• Dynamic • Diverse • Difficult • Dangerous
• Environment • Multiproduct, • Analysing • Ignoring the
changes rapidly various environment is environment
and markets, challenging may have
complicatedly internationally serious
consequences
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Analysing the general environment:
PESTEL analysis
P • Political
E • Economical
S • Social
T • Technological
E • Ecological
L • Legal
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Analysing the competive (task) environment
Porter’s five forces analysis
• Distinguish between a market and an
industry:
• Market: comprises the customers and/or
potential customers
• Industry: comprises those businesses which
use a particular competence, technology,
product or service to satisfy customer needs
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porter’s five forces analysis
Đối thủ tiềm năng
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competitor analysis
• Types of competitors CT cùng hướng tới 1 nguồn DT
nhưng cung cấp sp khác nhau
Cạnh tranh thương hiệu
Brand Industry Generic Form
competitors competitors competitors competitors
CT trong cùng 1 ngành
• Similar firms • Similar • Compete for • Distinctly
offering similar products but same different
products different ways disposable products
(different brand • E.g. Amazone income with satisfying same
names) and traditional different needs
markets. products • E.g. matches
• E.g. satisfying and lighters
• McDonald’s and different needs
(Cung cấp các sp khác nhau
Burger King • E.g. iTunes
nhưng phục vụ chung 1 nhu
(music) and cầu
Netflix (movies)
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competitor analysis
Factors to be analysed Comment
Competitor’s strategy Stated financial goals? Short and long- term
strategy?
Managerial belief?
Organizational structure
What is the favor of director? Particular strategy?
The competitor’s Its relative position in the industry (cost, product,
assumptions about the quality?)
industry Are there any cultural or regional differences?
Future of the industry?
The competitor’s Distribution, operation, overall costs, financial
current and potential strengths, products, etc
situation
Competitor’s Core competence? Ability to expand?
capabilities Competitive advantages
201053_Ch4_Introduction to business and disadvantages? 29
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Competitor analysis –
competitor reaction profile (kotler)
• All these above-analysed factors are combined into a
competitor reaction profile, and there are 04 reaction
profiles:
– Laid back : Không phản ứng gì, mặc kệ đời
– Tiger : Hổ báo, phản ứng dữ dội -> Pepsi and CocaCola
– Selective : Áp dụng có chọn lọc
– Stochastic : Không thể dự đoán đc
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Competitor analysis –
competitor reaction profile
➢The laid back competitor does not respond to
moves by its competitors
➢The tiger competitor responds aggressively to
all opposing moves
➢The selective competitor reacts to some
threats in some markets but not to all
➢The stochastic competitor is unpredictable
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Part 5
Analysing the business
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Analysing the business
• Introduction:
- Internal analysis: business’s resources and competencies,
value chain, supply chain and products/markets
- Value chain: primary and secondary/support activities
- Supply chain: all suppliers and partners working together to
produce goods and services for customers
- Product life cycle: introduction, growth, maturity and decline
- Boston Consulting Group (BCG) matrix
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Internal analysis- resources and
competences
The position audit
• Position audit: part of the planning process
which examines the current state of the entity
(Thực trạng hiện tại)
in respect of:
✓Resources of tangible and intangible assets and finance
(Năng lực cạnh tranh)
✓Its competencies, that is what it has the ability to do wel
✓Products, brands and markets
✓Operating systems such as production and distribution
✓Internal organisation
✓Current results
✓Returns to shareholders
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Resource audit – 9 ms model
Resource Example
Machinery Age, condition, cost, technological update?
Make-up Culture and structure?
Management Size, skills, loyalty, career progression
Management Info Information system, innovation,
Markets Products and customers
Materials Source, suppliers and partnering, waste, etc
Men and women Number, skills, wage cost, efficiency, labor turnover
Methods How are activities carried out?
Money Credit and turnover ratio, cash surplus/deficit, short/long

term financing etc
A resource audit should go on to consider how well and badly resources have
been used strategy
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Porter’s value chain
- Activities (Value activities): the means by which a business creates
value in its products (from taking inputs from the environment,
processing them and selling them at a price greater than the costs)
- Margin: the excess the customer willing to pay over the cost to the
business of obtaining inputs and providing value activities
- Value chain: the sequence of business activities by which (from the
perspective of the end-user) value is added to the products or
services
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Porter’s value chain
- Activities (Value activities): the means by which a business
creates value in its products (from taking inputs from the
environment, processing them and selling them at a price
greater than the costs)
(Yếu tố tác động lên giá)
- Value drivers: Elements of a product or service and activities
that increase the value consumers place on it. For example
branding, customer services, etc
(Yếu tố tác động lên chi phí)
- Cost drivers: any activity that affects the cost of a product or
service
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Activities in the value chain
Cơ cấu hạ tầng
Hoạt động thu mua
The margin is the excess the customer is prepared to pay over the cost to the
business of obtaining the 201053_Ch4_Introduction
resource input and providing value activities. 38
to business
strategy
Primary activities
Primary activities are directly related to production, operations, sales, marketing,
delivery, and services
• Receive, handle, store inputs ready for

Inbound logistics production (warehouse, transport,…)
• Convert inputs to final

Operations products/services
• Storing and distribution of products:

Outbound logistics packaging, warehousing, etc
• Introduce and sell the products:

Marketing and sales advertising, promotion etc
• Installing, guarantee/repairing,
Services upgrading, providing spare parts, etc
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Support activities
• Acquire inputs to the primary activities: eg
Procurement purchase of materials, equipments, etc
Human resource • Recruiting, training, developing, rewarding

management people
Technology • Product design, process improvement

development and/or resource utilization
• Planning, finance, quality control

Firm infrastructure
• Linkages connect the activities of the value chain

• Activities in the value chain affect one another: for exp better quality production
might reduce the need for after-sale services: sp chất lượng tốt -> Giảm nhu cầu sửa chữa
• Linkages require coordination: for exp reducing level of inventory held requires
the smooth functioning of operations, etc to business
201053_Ch4_Introduction
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Supply chain
- Simple view: about getting the best price from
suppliers for the best quality goods and
services
(Tối ưu hóa)
- Supply chain management (SCM): optimize
the activities of businesses working together
to produce goods and services.
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Analyzing products and markets-
Product life cycle
• Product life cycle: how a product
demonstrates different characteristics of profit
and investment over time => examine the
portfolio of goods/services
• Different aspects of a product:
✓Product class: broad category of product = generic product
✓Product form: different forms a product
within a class can take
✓Brand: the particular type of the product form
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Product life cycle
• Class Form Brand
Mazda 3 (hatchback)
Hatchback cars
Toyota yaris
(hatchback)
Car
Mazda 3 (sedan)
Sedans Toyota yaris (sedan)
Honda civic (sedan)

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Product life cycle
• Class/Generic product Form Brand
Asus laptop
Laptop
Apple laptop
Home computer
HP destop
Destop
Apple destop
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Product life cycle
Introduction Growth Maturity Decline
A new product If the new product Sale growth slows Sales begin to
takes time to find gains market down and the decline so there is
acceptable, acceptance, then product reaches over-capacity of
resulting in slow the product starts maturity. production in the
growth in sales. to have profit, industry.
Unit costs are high resulting in
increased sales and
production and
decreased unit cost
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Planning products and markets:
The BCG matrix
(MU)
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The BCG matrix
Require Little investment Opportunities May be ex-

capital needed, high need serious cash cows (on
expenditure to cash income thought hard times)
maintain Strategy: hold Strategy: build modest cash
market (maintain (invest) or outflows an
position, market position) harvest inflows
promise future or harvest Strategy:
high returns (maximise divest (release
earnings and
Strategy: build maybe, exit)
resources) or
hold
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PART 6: Corporate appraisal
• Corporate appraisal brings together the results of the external and
internal analyses so that the business can assess its strengths,
weaknesses, opportunities and threats (SWOT analysis)
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SWOT analysis
(Đánh giá cẩn thận)
• Corporate appraisal: a ‘critical assessment of the strengths and
weaknesses, opportunities and threats (SWOT analysis) in relation
to the internal and environmental factors affecting an entity in
order to establish its condition prior to the preparation of the long-
term plan’
• (CIMA Official Terminology)
• ‘Critical assessment’: not simply listing but requiring intimate

understanding of the nature and implications of factors
(Phải hiểu bản chất và quan hệ của các nhân tố chứ không chỉ đơn thuần
là liệt kê)
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PART 7: Setting strategic objectives
- What are we trying to achieve?
- Stakeholder analysis should be conducted.
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Stakeholder analysis
- Stakeholders’ goals and objectives are

balanced in order to determine the business’s
goals and objectives
- The needs of objectives of each set of
stakeholders are not always congruent, but
often conflict
- The business’s objectives follow the most
dominant stakeholders (Phải theo bên liên quan nào đang chiếm
ưu thế lớn nhất)c
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Stakeholder mapping:
power and interest
Low LEVEL OF INTEREST High
A - Minimal effort B – Keep informed

Low They can be directed Do not have great ability to
influence strategy, but may influence
more powerful stakeholders
E.g. Community representatives,
charities
POWER
TO C – Keep satisfied D – Key players
INFLUENCE Often passive, but capable of Strategy must be acceptable to
moving to segment D. The business them, at least and ideally
should intervene with these they should participate in it
High stakeholders and keep them E.g. Major customers
satisfied.
E.g. Large institutional shareholders
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Determine the mission and strategic
objectives
- Vision: Hướng đến; Mission: Chức năng cơ bản
Mission: states the business’s basic
function
Strategic objectives: profit for
shareholders plus other major
objectives Lợi nhuận cho cổ đông luôn đặt hàng đầu
Goals and targets: strategic goals
should be translated into
quantified and specific goals
Business strategies: competitive,
investment, or financial strategy?
Functional strategies for HR, IT, etc
Detailed plans and standards
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Part 8: Choosing a corporate strategy
• Generic competitive strategies (Porter, 1980)
- Cost leadership
- Differentiation
- Niche
• Product/market strategies (Ansoff’s matrix)
- Market penetration
- Product development
- Market development
- Diversification
• Corporate strategies:
– SFA analysis (Suitability, Feasibility, Acceptability)
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Porter’s generic competitive strategies
Cost leadership • Producing at lowest cost

Sản xuất ở mức chi phí thấp nhất
• The provision of products or services

Differentiation which are considered to be unique
Sản phẩm khác biệt
• Concentrating on only a part

Focus (or niche) (segment) of the market
Tập trung vào thị trường ngách
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Ansoff: product/market strategies
(Thâm nhập thị trường, Phát triển sản phẩm

mở rộng thị phần)
Đa dạng hóa
Phát triển thị trường)
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Ansoff: product/market strategies
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SFA analysis
• SFA analysis: three criteria for evaluating and
choosing alternative strategies – Suitability,
Feasibility and Acceptability
- Suitability: does the strategy fit the business’s
circumstance (use strengths and mitigate
weaknesses)?
- Feasibility: can it be implemented within the
availability of resources? Tính khả thi
- Acceptability: relates to people’s expectations of
it (e.g. risk vs. return)
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Part 9: Implementing the strategy
Choose corporate strategy
Competitive, investment and financial strategies
Business strategies and plans for each SBU
Functional strategies and operational plans

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Levels of plan
General direction that will be taken to
achieve the corporate objectives
Sets out the market(s) to be served, how the

Strategic plan business/SBU will serve the market(s), and what
finance is required (based on the business
strategy)
Business
plan
Specifies what is expected of each function
Operational based on the relevant functional strategy, and
how specific actions will be taken in order to
plan meet that expectation
Budgets have to be prepared based on the business plan for a defined

period 201053_Ch4_Introduction to business
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• END OF CHAPTER 4
• THANK YOU FOR YOUR

ATTENTION!
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strategy

Chapter 4 - Introduction To Business Strategy

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Chapter 4 - Introduction To Business Strategy

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• Strategy is concerned with:

- The long-term direction (objectives) of the business

Thực hiện Kiểm tra lại và

- appraisal (v): Đánh giá

Strategy implementation is the

Machinery Age, condition, cost, technological update?

Make-up Culture and structure?

Management Size, skills, loyalty, career progression

Management Info Information system, innovation,

Markets Products and customers

Materials Source, suppliers and partnering, waste, etc

Methods How are activities carried out?

Money Credit and turnover ratio, cash surplus/deficit, short/long

Hoạt động thu mua

• Receive, handle, store inputs ready for

• Convert inputs to final

• Storing and distribution of products:

• Introduce and sell the products:

Human resource • Recruiting, training, developing, rewarding

Technology • Product design, process improvement

• Planning, finance, quality control

• Linkages connect the activities of the value chain

Sedans Toyota yaris (sedan)

Honda civic (sedan)

Introduction Growth Maturity Decline

Require Little investment Opportunities May be ex-

• ‘Critical assessment’: not simply listing but requiring intimate

- Stakeholders’ goals and objectives are

A - Minimal effort B – Keep informed

Cost leadership • Producing at lowest cost

• The provision of products or services

• Concentrating on only a part

(Thâm nhập thị trường, Phát triển sản phẩm

Choose corporate strategy

Competitive, investment and financial strategies

Business strategies and plans for each SBU

Functional strategies and operational plans

Sets out the market(s) to be served, how the

Budgets have to be prepared based on the business plan for a defined

• THANK YOU FOR YOUR

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