Introduction to Business

Strategy

Prof. Megha Trivedi

What is Strategy???
 The strategy
is about winning !
The Characteristics of
Strategic Decisions

Strategy is concerned with the

long term direction of an
organization.

Itis concerned with the Scope of

an organization's activities.

Itis to achieve advantage for

the organization over competitors.
Itis a search for Strategic Fit
with the business environment.
(addressing changes)

Itcreates opportunities by
building on an organization's
recourses and competences.
(skills, assets, finance,
relationships, technical
competence, facilities)
 The strategy is affected not only
by the environmental forces
and strategic capabilities but
also by the values and
expectations of those who have
power in an organization.
 Elements of successful
strategy
Well defined Knowledge of
Appraisal of the
long-term own resources
environment
goals & capabilities

Successful implementation

Successful
Strategy

R. Grant “Contemporary Strategy

Analysis”, 2000 7
Johnson and Scholes define
strategy as follows

"Strategy is the direction and

scope of an organisation over the
long-term: which achieves
advantage for the organisation
through its configuration of
resources within a challenging
environment, to meet the needs
of markets and to fulfil
stakeholder expectations".
 Is a continuous, interactive process
aimed at keeping an organization as a
whole appropriately matched to its
environment
(Peter,
1988)

 A company’s strategy consists of the

competitive efforts and business
approaches that managers employ to
please customers, compete successfully
and achieving organizational objects
 A strategy is the pattern or plan
that integrates an organization’s
major goals, policies and action
sequences into a cohesive whole. A
well-formulated strategy helps to
marshal and allocate an
organization’s resources into a
unique and viable posture based on
its relative internal competencies
and shortcomings, anticipated
changes in the environment and
contingent moves by intelligent
opponents.
A company’s strategy is
management’s game plan for
growing the business, staking
out a market position, attracting
and pleasing customers,
competing successfully,
conducting operations, and
achieving targeted objectives
Corporate Strategy

The pattern of major objectives,

purposes or goals and essential
policies or plan for achieving
those goals, stated in such way as
to define what business the
company is in or to be in and the
kind of company it is or is to be.
Why is corporate strategy
important?
It deals with major, fundamental issues that
affect the
future organisation
◦ It involves the entire organisation
◦ It involves the survival and development of
the organisation
◦ Covers the range and depth of the
organisation’s activities
◦ Directs the changing and evolving
relationship of the organisation with its
environment
◦ Is central to the development of sustainable
competitive advantage
◦ Is crucial to adding value
Some of the consequences of
strategic decisions are:
Strategic decisions can be
complex in nature(geographic
scope)
Uncertainty about the future.
It can affect operational
decisions (finding new suppliers,
building strong brand)
Integration (outside and inside
the organization
Relationships and network
outside the organization

Strategicdecisions involves
considerable change for e.g.
Mergers
Levels of Strategy
Corporate Level Strategy: It is
concerned with the overall
purpose and scope of an
organization and how values will
be added to the different parts
(business units) of the
organization ie. Geographical
coverage, diversity of
products/ services or business
units and how recourses
should be allocated to
 Corporate strategy is often stated
explicitly
in a "mission statement".
 Business Level Strategy (SBU): It is about
how to successfully compete in a particular
market to increase the long term profitability
and market share growth.

It concerns strategic decisions about

choice of products, meeting needs of
customers, gaining advantage over
competitors, exploiting or creating new
opportunities etc.

Corporate-level strategy involves decisions

about the organisation as a whole, strategic
decisions are related to strategic business units
(SBU)
Operational Strategy - is
concerned with how each part of
the business is organized to
deliver the corporate and
business-unit level strategic
direction. Operational strategy
therefore focuses on issues of
resources, processes, people
etc.
Levels of Strategies

Corporate Corporate
HQ strategy

Competitiv
SBU A SBU B SBU C e
strategy
Manufacturi
ng Function
Marketing al
Accounting strategie
HR
….

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Content of strategy at different levels

corporate Portfolio and resource

allocation

SBU How to
compete

Function Product,
market
Plans…

21
Vocabulary of Strategy
 Mission - Overriding purpose in line with
values/expectations of stakeholder e.g Be
healthy and fit

 Vision or strategic intent - Desired future state:

the aspiration of the organization e.g. To run the
London Marathon

 Goal - General statement of aim or purpose e.g.

Lose weight and strengthen muscles

 Objective - Quantification or more precise

statement of goal
e.g. Lose 5 kilos by 1stSeptember & run the
 Strategic capability - Resources, activities and
processes: some will be unique and provide
competitive advantage e.g. Proximity to a fitness
centre; a successful diet (unique recourses and
core competence)

 Strategies- Long term direction e.g. Exercise

regularly, compete in marathons locally, stick
to appropriate diet

 Business model - How product, service and

information flow between participating parties e.g.
Associate with a collaborative network (join a
running club)

 Strategic Control- Monitoring of action steps to

(a) assess effectiveness (b) modify
strategies/actions e.g. Monitor weight,
British Airways and the vocabulary of
strategy
 Vision
◦ ‘The BA Way’ – Service that matters for people who
value how they fly
 Goals
◦ Profitability (operating margin 10% target)
◦ Customer advocacy (the number of customers who
recommend BA)
◦ Safety and security (the number of customers who
feel safe with BA)
◦ Respected company (the number of community
stakeholders who respect BA)
◦ Employee motivation (the number of employees who
feel motivated to deliver BA’s goals)
 Values
◦ The BA Way is based on five core values:
Understanding, Focused, Cost-conscious, Supportive,
Trustworthy
Strategies
The BA Way provides a high level
statement of Strategies:
- To be the best UK based network
- To understand customers better than
competitors
- To develop a powerful brand that
people know and trust.
- To establish a competitive cost base.
- To work together as one team.
 Competitive Strengths

◦ A « full service » airline with a strong brand

identity, associated with high standards of
service, comfort and safety
◦ Clearly defined and well-branded products
targeting specific customer segments
◦ Membership of the One World Alliance
providing customers with a far more
extensive network than BA could provide
alone
◦ Dominance of national and international slot
allocations at London Heathrow airport
◦ A modern, flexible and cost-effective aircraft
fleet
◦ As a listed company, BA must satisfy
shareholder expectations, achieving
profitability through a combination of
service quality and operational efficiency
Strategic Management

It includes understanding the

strategic position of an
organization, strategic choices
for the future and turning
strategy into action.
Exhibit 1.3 A model of the elements of
The Strategic Position

It is concerned with the impact

of strategy of the of the
external environment, an
organization's strategic
capability (recourses and
competence) and the
expectations and influence of
stakeholders
The Environment- Impact of
complex political, economical,
social, technological,
environmental and legal world on
the organization. It can create
opportunities or prove to be a
threat.
The Strategic Capability - It is
with the help of resources and
competence that an organization
achieves competitive advantage.
The aim of strategic capability is
to find out the strengths and
weaknesses in an organization
Expectations and Purposes –
Expectation depends on the power
in the organization
 It is important to understand
strategic position to form a view of
the key influences on the present
and future well being of an
organization, and what
opportunities and threats are
created by the environment,
the capabilities of the
organization and the
expectations of stakeholders.
 Strategic Choices
It involves understanding the
underlying bases for future
strategy at both the business unit
and corporate levels and the
options for developing strategy in
terms of both the directions and
methods of development

3. Business Level Strategy :

Identifying the bases of competitive
advantage.
2. Corporate Level Strategy: It is
concerned with relationship
between the separate parts of the
business and how the corporate
‘parent’ adds values to these
various parts.

Corporate level Strategy includes

decisions about the portfolio of
product and /or businesses and
3. Development Directions and
Methods: It is concerned with
development in different
directions i.e. New product, new
market, different customers with
different methods like growing
current business, mergers and
acquisitions and /or strategic
alliances with other organizations.
Strategy into Action
It is concerned with ensuring that
strategies are working in practice.
1. Structuring : Coordinating the
activities to support successful
performance. This includes
organizations structures,
processes and relationships (and
the interaction between these
elements.
2. Enabling : Enabling success
through the way in which the
separate resource area i.e. People,
Information, Finance, and Technology
of an organization support
strategies.

The reverse is also important to

success, namely the extent to which
new strategies are built on the
particular recourses and competence
3. Managing Change: Managing
strategy very often involves
change.

How to manage change?

Different types of role of people n
managing change?
Organizations approach towards
change?
Strategy Development
Processes
 Theway in which strategy develops in an
organization.

1. Intended Strategies: Strategy

development as deliberate management
intent

2. Emergent Strategies : Strategy

emerging out of the social and political
processes that exist in and around all
organizations
The Strategic Process

Constant
Analysis of monitoring
environment

Strategy
Identification of
Development
vision,
and
mission,
implementatio
and objectives
n

Analysis of
resources Constant
monitoring

Strategic analysis Strategic development

and implementation
 Tesco’s current strategy is clearly 
stated in its annual report. 
1. to develop and maintain the core business 
2. to expand its non-food range (TVs, computers 
clothes; cosmetics and toiletries). 
3. to expand services: on-line shopping, credit 
cards, utility payments etc (in association 
with the Royal Bank of Scotland). 
4. international expansion through a steady 
series of joint ventures and acquisitions in 
Central Europe and Asia

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The following quotations from Porter (1996) and Porter
(2001)5 capture the gist of this most recent thinking:

1. “The goal of strategy is to achieve a “superior

long-term return on investment.”

“Economic value is created when customers are

willing to pay a price for a product or service that
exceeds the cost of producing it.” (Porter 2001,
p.71)

2. “Competitive strategy is about being different.”

(Porter 1996, p.64)

3. “Strategy is the creation of a unique and valuable

position, involving a different set of activities….
different from rivals” (Porter 1996, p.68)
5. “Strategy defines how all the elements
of what a company does fit together.”
(Porter 2001, p.71)

6. “Operational effectiveness and strategy

are both essential to superior
performance, which, after all, is the
primary goal of any enterprise. But they
work in different ways.” (Porter 1996,
p.61)

7. “Operational effectiveness means

performing similar activities better than