Business strategy

• Mission statement


  Outlines the overall purpose of the organization
• Vision statement


  Describes a picture of the 'preferred future' and outlines how the future will look if the organization achieves its mission
• Porter's Five Forces analysis


  • Barriers to entry
  • Supplier power
  • Buyer power
  • Threat of substitutes
  • Competitive rivalry
• Barriers to entry


  The ease with which other firms can join the industry and compete with existing businesses
• Buyer power


  The power that customers have on the producing industry
• Supplier power


  Suppliers will be relatively powerful compared with buyers when the cost of switching is high, e.g. from PC computers to Macs, when the brand being sold is very powerful and well-known, etc.
• Threat of substitutes


  Substitute products in other industries, not alternatives in the same industry
• Competitive rivalry


  The most important factors that determine the level of competition or rivalry in an industry
• Core competencies


  • Provide recognizable benefits to consumers
  • Not easy for other firms to copy
  • Applicable to a range of different products and markets
• Core product


  Product based on a business's core competences, but not necessarily for final consumer or end user
• Core competence


  An important business capability that gives a firm competitive advantage
• Strategic choice


  Strategic decision-making that encompasses the entire process of selecting a specific option from a variety of possibilities
• Market penetration


  Achieving higher market shares in existing markets with existing products
• Product development


  The development and sale of new products or new developments of existing products in existing markets
• Market development


  The strategy of selling existing products in new markets
• Diversification


  The process of selling different, unrelated goods or services in new markets
• Expected value


  The likely financial result of an outcome obtained by multiplying the probability of an event occurring by the forecast economic return if it does occur
• Strategic implementation


  • The process of planning, allocating and controlling resources to support the chosen strategies
• Business plan


  A written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts
• Corporate plan


  • Contains details of the organization's central objectives and the strategies to be followed to achieve them
• Corporate culture


  The values, attitudes and beliefs of the people working in an organization that control the way they interact with each other and with external stakeholder groups
• Types of corporate culture


  • Power culture
  • Role culture
  • Entrepreneurial culture
  • Person culture
  • Task culture
• Change management


  • Planning, implementing, controlling and reviewing the movement of an organization from its current state to a new one
• Transformational leadership


  • Influence employees with their own (the leader's) behaviour and qualities
  • Demonstrate a genuine concern for the needs and feelings of employees
  • Promoting change
• Promoting change


  1. Establish a sense of urgency

  2. Create an effective project team to lead the change

  3. Develop a vision and a strategy for change

  4. Communicate this change vision

  5. Empower people to take action

  6. Generate short-term gains from change that benefit as many people as possible

  7. Consolidate these gains and produce even more change

  8. Build change into the culture of the organization so that it becomes a natural process
• Reasons for resistance to strategic change


  • Fear of the unknown
  • Fear of failure
  • Inertia: Many people suffer from inertia or reluctance to change and try to maintain the status quo
• Contingency planning and crisis management


  • Preparing an organization's resources for unlikely events
  • Reassures staff, minimizes negative impact on customers and suppliers
• Key steps in contingency planning


  1. Identify the potential disasters that could affect the business

  2. Assess the likelihood of these occurring

  3. Minimize the potential impact of crises

  4. Plan for continued operations of the business
• PEST analysis

  The strategic analysis of a firm's macro environment, including political, economic, social and technological factors. They are considered as either being opportunities or threats. PEST is complementary to SWOT, not an alternative.
• Political


  • Stability of the government
• Economic


  • Rate of economics growth
• Social

  • Demographic changes
• Technology

  • Rapidly changing technology allowing products to be made more cheaply
• Mission statement


  A statement of the business's core purpose and focus, phrased in a way to motivate employees and to stimulate interest by outside groups.
• Vision statement


  A statement of what the organization would like to achieve or accomplish in the long term.