Chapter 8: Business Strategy

Establishing business strategy

• STRATEGY

  • Competitive environment

  • Strengths of the business

  • resources available

  • objectives

• Strategic management

  • strategic analysis

    • assessing the current position of the company in relation to its market, competitors, and external environment —> Decisions without analysis may be inappropriate or ineffective

  • strategic choice

    • taking important long-term decisions that will push the business towards the objectives set —> a new direction will require key decisions to be taken about products and the market

  • Strategic implementation

    • allocating sufficient resources to put decisions to effect and evaluate success —> new strategic businesses will require additional resources, these must be provided at the right time and in sufficient quantities to allow the strategy to be effective

• KEY TERM: strategic management: analysis of the current business situation, setting long-term objectives, deciding on business strategies to achieve them, and then implementing these strategies

• KEY TERM: strategic analysis: the process of conducting research into the business environment and into the business itself, in order to help identify future strategies

  Strategic choice: the process that leads to a decision to choose a particular strategy from various alternatives and the techniques used to help make the choice

  Strategic implementation: the process of planning, allocating, and controlling resources to support the chosen strategy

  • adequate resources needed

  • well-motivated staff who want the change to happen successfully

  • leadership style and organisational

  • culture that allows change to be implemented

  Strategy and tactics: strategic management is undertaken by the CEO and approved by the board of directors, tactics focus on scale decisions aimed at reaching more limited and measurable goals

• Blue ocean: one that exploits uncontested market space through product differentiation and low-cost —> businesses will look for opportunities in a new market, focus on potential customers

  • create uncontested markets to enter

  • make the competition irrelevant

  • create and exploit new demand

  • high value to customers but low cost to business

  • product differentiation and low lost

• Red Ocean: one that competes with rivals in existing markets, focus on existing customers

  • create uncontested markets to enter

  • make the competition irrelevant

  • create and exploit new demand

  • high value to customers but low cost to business

  • product differentiation and low-cost