C. Strategy

Fundamental Nature of Strategy

• Definition of Strategy : A strategic direction that involves resource configuration aimed at achieving competitive advantage and fulfilling stakeholder expectations.

Direction of Growth

• Market Penetration: Increase company's market share in existing markets.

• Product Development: Broaden existing product range.

• Market Development: Enter new markets or geographical areas.

• Diversification: Expand into related or unrelated businesses.

Method of Growth

• Internal Growth: Organic expansion.

  • Example: 99 Speedmart growing its own operations.

• Mergers/Acquisitions: Gain growth through integrating other companies.

• Strategic Alliances: Partnering with other firms for mutual benefits.

Characteristics of Strategic Decisions

• Concern long-term direction and competitive positioning.

• Involve resource reallocation and organizational harmonization.

• Complex and made at the top management level.

Levels of Strategy

• Corporate Level: Broad strategic decision-making affecting the entire organization.

• Business Level: Strategies specific to particular business units.

• Functional Level: Tactical strategies concerning individual operational functions.

Strategic Management

• Components:

  • Strategic Position: Environment analysis, capability assessment.

  • Strategic Choices: Corporate, business strategies.

  • Strategy into Action: Implementing and evaluating strategies.

Macro and Micro Environment Analysis

• Macro-environment: PESTEL (Political, Economic, Social, Technological, Ecological, Legal).

• Micro-environment: Industry analysis, competitor dynamics.

  • Use of Porter’s Five Forces and strategic groups for understanding competition.

SWOT Analysis**

• Internal Factors: Strengths and Weaknesses.

• External Factors: Opportunities and Threats.

Scenario Building**

• Involves creating narratives about possible future conditions to aid strategic planning.

  • Categorizes scenarios and develops implications for strategies.

Porter’s Diamond

• A framework detailing key factors affecting national competitiveness:

  • Factor Conditions: Availability of resources.

  • Demand Conditions: Customer sophistication.

  • Related and Supporting Industries: Presence of related businesses.

  • Firm Strategy, Structure, and Rivalry: Market dynamics affecting competition.

Porter’s Value Chain

• Displays activities within an organization that add value and contribute to competitive advantage through:

  • Primary Activities: Inbound logistics, operations, outbound logistics, marketing & sales, and service.

  • Support Activities: Procurement, technology development, human resource management, firm infrastructure.

Sources of Competitive Advantage

• Best achieved through unique resources and core competencies.

• Consideration of how resources can sustain competitive position in changing environments.

Strategic Capability

• Assessing unique resources, competencies, and their role in achieving competitive advantage.

Methods of Development

• Internal Development: Growth from within the organization.

• Mergers/Acquisitions: External growth through acquiring or merging with businesses.

• Strategic Alliances: Collaborations with other firms for strategic purposes.

• Franchising and Licensing: Expanding through partnerships.

Sustainability of Competitive Advantage**

• Should focus on rarity, inimitability, and dynamic capabilities to adapt to environmental changes.