business management

• A business strategy aims to improve financial performance, strengthen market position, and ensure long-term business sustainability.
• Strategy can be described as the long-term direction of the organisation, a pattern in a stream of decisions, the means by which organizations achieve their objectives and the deliberate choice of a set of activities to achieve competitive advantage
• Strategy is the direction provided by the actions and decisions of strategists in pursuit of organizational goals
• Strategy is generally acknowledged as the result or outcome of fundamentally important pre-emptive, innovative management decisions about an organization's strategic direction and strategic action plans to attain a sustainable competitive advantage and achieve its long-term objectives in rapidly changing and competitive external business environments
• Managing an organization in a competitive and globalized environment is a difficult task
• Management should address 4 key questions to determine strategy:

  • Where are we now? Reflect on the competitive position, resources, products/services, performance, environmental integrity, and stakeholder needs
  • Where do we want to go? Consider the strategic direction the organization should adopt
  • How will we get there? Formulate strategy based on stakeholder needs, leadership, values, culture, and organizational architecture
  • How are we doing? Utilize strategic control and risk measures to enhance performance
• Key aspects of strategy:

  • Strategy focuses on the long-term direction and sustainability of the organisation
  • Strategy exploits the links between internal and external environments
  • Strategy requires resources for execution
  • Strategies usually take a holistic approach across the organization
  • Strategy is shaped by organizational values and stakeholders' expectations
  • Strategies are driven by the organization's vision and drive to move forward
• The 5 Ps of strategy:

  1. Strategy as a Plan - involves brainstorming new prospects and utilizing tools like PESTEL Analysis and SWOT Analysis

  2. Strategy as Ploy - specific maneuvers to outwit competitors

  3. Strategy as Pattern - consistency in behavior over time

  4. Strategy as Position - deciding the organization's position in the marketplace

  5. Strategy as Perspective - decisions influenced by organizational culture and thinking patterns
• Planned strategies are termed intended strategies, while realized ones are deliberate strategies. Unplanned strategies that emerge over time are termed emergent strategies
• Levels of strategy:

  • Corporate level strategy: outlines what the organization wants to achieve
  • Business level strategy: focuses on how the organization will compete
  • Functional level strategy: concentrates on how the organization will grow and deliver corporate and business level strategies
• Strategic management entails determining what is most important to the company's long-term performance and working on it through planning, assessing, and implementing a corporate strategy
• Strategic management defines the organization's goals for value creation and distribution, involving strategy development, implementation, and evaluation and control
• Reasons why strategy is important:

  • Involvement of the entire organization in strategic decision-making
• Why is strategy important:

  • The entire organization becomes involved in the business's future orientation
  • It aids the organization in not only surviving but also adding value to its stakeholders
  • Strategy development helps in establishing a relationship with the environment
  • An appropriate strategy is crucial for a company to achieve a long-term competitive advantage
  • Good corporate governance is necessary for successful strategic management
• 3 Phases of Strategic Management:

  Strategy Formulation:

  • Deciding on the organization's strategic direction (Vision & Mission)
  • Leads to more specific long-term strategic objectives with measurable outcomes
  • Analyzing the organization's external & internal environments (internal and external consistency)
  • Selecting appropriate competitive strategies - strategic choice

  Strategic Implementation:

  • Leadership & culture: aligning culture with strategic choice
  • Competencies: ensuring the right mix of knowledge, skills & attitudes in individuals
  • Learning organization
• • Systems, policies and procedures
  • Structure and organizational architecture
  • Cascading strategic objectives into short-term, functional strategies and policies

  Strategic Control:

  • Control measures ensuring that strategies are on track
  • Feedback allowing the organization to adapt or react to the changing environment
• Benefits of strategic management:

  • Prevention of problems by encouraging employees to pay attention to planning and flag potential problems
  • Group-based decisions generate a greater variety of strategic alternatives
  • Higher productivity by efficiently utilizing company resources
  • Improved communication across different organizational functions
  • Reduction of gaps and overlaps in activities
  • Reduction of resistance to change
  • Improved commitment from all employees
  • Forward thinking and disciplined approach towards the future
• Two Perspectives on Managing Strategically:

  • Strategy must be consistent with the internal and external environment to achieve sustainable competitive advantage and above-average returns

  Resource-based viewpoint:

  • Resources at the core of achieving and sustaining competitive advantage over time
  • Characteristics of valuable resources, capabilities, and competencies
  • Value, Rarity, Inimitability, Organization

  Internally: coordinated behavior creating synergy

  Externally: integrating value-adding networks in the value chain
• Inside out perspective: strategies designed around the organization's resources and capabilities

  Outside in perspective: market-driven strategy identifying opportunities in the external environment
• Tests for a Winning Strategy:

  • Goodness of fit test: how well the strategy fits the organization's situation
  • Competitive advantage test: whether the strategy can achieve sustainable competitive advantage
  • Performance test: measures profitability, financial strength, competitive strength, and market standing
  • Additional tests: Social impact and Environmental system tests
• Strategic Paradoxes:

  • Past and future management balance
  • Intended and emergent strategy
  • Reactive or proactive approach to strategy
  • Inside out or outside in driven strategies
  • Profitability vs sustainability
• Short term strategies are good for-profit maximization but not good for sustainability
• Short term focus have negative impact on social and environmental effects
• Strategic responsibilities of top management teams include:

  • Setting overall strategic direction
  • Conducting analyses
  • Allocating resources
  • Formulating & choosing appropriate strategies to attain competitive advantage
  • Ensuring implementation as well as review and control of the implemented strategies
  • Effectively communicating strategies to middle and lower organizational levels
• Shareholders are persons, companies, or institutions that own at least one share of a company's stock, known as equity
• Stakeholders are parties that have an interest in a company and can either affect or be affected by the business operations and performance
• Stakeholders can be categorized as:

  • Crowd: group of people with little interest or influence on the organization, requiring minimum management
  • Subjects: group with high levels of interest in the organization but not much power, managers need to communicate with and understand their concerns
  • Context settlers: group with high power but low interest, managers need to keep this group satisfied
  • Players: group with high interest and power, managers need to give ongoing attention
• Social ecological risks refer to risks faced by organizations due to changes in social ecological context
• Shared value refers to policies and operating practices that enhance the competitiveness of a company while advancing economic and social conditions in the communities where it operates
• 3 dimensions for creating shared value are:

  • Redefining productivity by relooking at the value chain
  • Enabling local cluster development to enhance competitiveness and alleviate social problems
  • Reconceiving products and markets to create new demand and expand markets
• Context based strategy making refers to the continuous process of linking broader societal ambitions and requirements at global, national, and local levels to the circumstances of the organization
• Integrated Reporting brings together material information about an organization's strategy, governance, performance, and prospects in a way that reflects the commercial, social, and environmental context within which it operates
• Principles of Integrated Reporting include:

  • Strategic Focus
  • Connectivity of information
  • Future orientation
  • Responsiveness and stakeholder inclusiveness
  • Conciseness, reliability, and materiality
• Inclusive business model seeks to create value for low-income communities by integrating them into a company's value chain on the demand side as clients and consumers, and/or on the supply side as producers, entrepreneurs, or employees in a sustainable way
• The purpose of an inclusive business model is to generate net positive social impact
• Strategic planning benefits:

  • Allows organizations to be proactive rather than reactive
  • Sets up a sense of direction by establishing realistic objectives and goals aligned with the vision and mission
  • Increases operational efficiency by aligning functional activities to achieve set goals and serving as a benchmark for resource allocation
  • Helps increase market share and profitability by providing insights on market trends, consumer segments, and product/service offerings
  • Makes a business more durable
• Strategic intent:

  • Envisions a desired leadership position and establishes criteria for charting progress
  • Creates a sense of urgency through setting an overarching, ambitious goal
  • Provides direction and purpose to management and staff
  • Hierarchy includes a broad vision, organizational mission, specific goals, and strategic objectives
• Value statement:

  • Reflects the future standing of the organization
  • Comprises a set of key values or behaviors for employees to subscribe to
• Vision statement characteristics:

  • Powerful, ambitious, imaginable, and specific
  • Inspires the whole organization
  • Should be easy to understand, explain, and communicate
  • Flexible enough to allow adaptation to changes in the environment
  • Forward-looking, idealistic, provides no detail on how it will be achieved, and somewhat philosophical
• Approaches to developing a vision statement:

  • Intuitive approach: structured and introspective
  • Analytical approach: based on gathering information from various individuals
  • Benchmark approach: considers competition for standards and creates a vision based on findings