An Introduction to Business Strategy

What is Strategy?
• A company's objectives and philosophy
• Defining strategy
– the five 'Ps' of strategy
• a plan • a ploy • a pattern of behaviour • a position with respect to others • a perspective

– strategy as a mix of the five Ps

B. perspective. C. position with respect to others. pattern of behaviour. plan. D. E.Q Cutting price to try to drive a new entrant from the market would be an example of a A. ploy. .

C. perspective. position with respect to others. ploy. E. D.Q Meeting with employees to explain the business’s goals in an attempt to get everyone ‘on board’ would be an example of a A. pattern of behaviour. B. . plan.

What is Strategy? • Strategic management – strategic and day-to-day management – the components of strategic management • strategic analysis • strategic choice • strategic implementation – different business types • • • • • big or small business manufacturing or service provider business domestic or multinational business private-sector or public-sector business for-profit or not-for-profit organisations .

strategic implementation. C. B. strategic choice. D.Q Deciding who in the organisation would be responsible for carrying out a strategy would be an example of A. routine management. strategic analysis. .

strategic implementation. routine management.Q Identifying which parts of the business are underperforming would be an example of A. C. . strategic choice. strategic analysis. D. B.

strategic implementation. strategic analysis. D. C. routine management. strategic choice. B.Q Deciding to diversify into new products would be an example of A. .

Strategic Analysis • Factors affecting strategic choices • Vision and mission – attitudes towards various stakeholders – influences on a firm's vision and mission • corporate governance • stakeholders' interests • business ethics • cultural context .

Factors influencing organisational purpose Corporate governance Stakeholder views Organisational purpose Business ethics Cultural context .

Strategic Analysis • The business environment – PEST analysis ("Political. and Technological analysis" ) – Porter's five forces model • the bargaining power of suppliers • the bargaining power of buyers • the threat of potential new entrants • the threat of substitutes • the extent of competitive rivalry . Social. Economic.

1980) .Porter's Five Forces Model Industry competitors Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors. (The Free Press.

1980) . (The Free Press. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors.Porter's Five Forces Model Industry competitors Rivalry among existing firms Source: Michael E.

Porter's Five Forces Model Potential entrants Threat of new entrants Industry competitors Rivalry among existing firms Source: Michael E. (The Free Press. 1980) . Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors.

Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1980) .Porter's Five Forces Model Potential entrants Threat of new entrants Industry competitors Rivalry among existing firms Threat of substitutes Substitute products Source: Michael E. (The Free Press.

1980) .Porter's Five Forces Model Potential entrants Threat of new entrants Bargaining power of suppliers Industry competitors Suppliers Rivalry among existing firms Threat of substitutes Substitute products Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors. (The Free Press.

Porter's Five Forces Model Potential entrants Threat of new entrants Bargaining power of suppliers Industry competitors Bargaining power of buyers Suppliers Rivalry among existing firms Buyers Threat of substitutes Substitute products Source: Michael E. (The Free Press. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1980) .

the bargaining power of buyers. the bargaining power of suppliers. the threat of substitutes. B. E. C. D. the threat of potential new entrants. the extent of competitive rivalry .Q Under which of Porter’s five forces of competition would you classify an international agreement to eliminate restrictions on imports? A.

Strategic Analysis • The business environment – PEST analysis – Porter's five forces model • the bargaining power of suppliers • the bargaining power of buyers • the threat of potential new entrants • the threat of substitutes • the extent of competitive rivalry – Factors affecting each of the forces .

Strategic Analysis • The business environment – PEST analysis – Porter's five forces model • the bargaining power of suppliers • the bargaining power of buyers • the threat of potential new entrants • the threat of substitutes • the extent of competitive rivalry – Factors affecting each of the forces – Limitations of the five forces model .

Strategic Analysis • Value chain analysis – nature of value chain analysis • sustainable competitive advantage – the value chain • primary activities – – – – – – – – – inbound logistics operations outbound logistics marketing and sales service procurement technological development human resources management firm infrastructure • secondary activities .

The value chain After-sales service Marketing and sales Outbound logistics Operations Inbound logistics .

. one of the five forces of competition. management of the labour force is A. none of the above. D. one of the primary activities in the value chain.Q According to Porter. one of the secondary activities in the value chain. C. B.

B. one of the five forces of competition. D. none of the above. . purchasing and shipping parts from suppliers is A. C. one of the secondary activities in the value chain.Q According to Porter. one of the primary activities in the value chain.

Strategic Choice • Environment or market-based strategy – types • cost leadership • differentiation • focus – importance of establishing:• the basis of a firm's competitive advantages • the nature of the target market • Resource-based strategy – exploiting core competencies – defining and establishing core competencies .

Resource-based . Cost leadership C. Differentiation B. Focus D.Q Which strategy are ‘No frills’ airlines pursuing? A.

Business Strategy in a Global Economy • Why go global? – market size – increased profitability • • • • location economies scope for significant cost reductions using core competencies learning from experience in diverse markets – spreading risks – keeping up with rivals • The global strategy trade-off – economies of scale or higher costs of customisation? • determinants of trade-off .

Lower total revenue B. Reduced scope for new techniques .Q Which of the following is a possible danger of ‘going multinational’? A. Reduced market size E. Lower unit profits D. Using core competencies C.

Strategy: Evaluation and Implementation • Evaluation – importance of weighing up alternative strategies • how feasible are they? • how do they relate to the firm's goals? • how will they affect the firm's competitive position? • Implementation – need to assess the following • resourcing • business culture and structure • managing change .