business strategy

Corporate Strategy

  • Definition: Medium to long term plans allocating resources to achieve corporate objectives.

  • Purpose: Meets shareholder expectations while providing value to customers and employees.

  • Decision-making: Made by top management, applicable organization-wide.

Managing Product Portfolio

  • Challenge: Need to allocate investment across product portfolio.

  • Boston Matrix: Analyzes products based on market share and growth.

    • Stars: High growth, high market share; requires investment; potential to become cash cows.

    • Cash Cows: Low growth, high market share; generates cash with little investment.

    • Question Marks: Low market share, high growth market; requires investment decisions.

    • Dogs: Low market share, low growth; generally not worth investing in.

Achieving Competitive Advantage

  • Definition: Advantage over competitors through lower prices or greater value.

  • Types:

    • Cost Advantage: Lower production cost than competitors.

    • Differentiation Advantage: Products perceived as better by consumers.

  • Distinctive Capabilities: Activities performed better than competitors to sustain a competitive edge.

Porter's Generic Strategies

  • Cost Leadership: Aim to become the lowest-cost producer; often associated with large-scale production.

  • Cost Focus: Lower-cost advantage in a small market segment.

  • Differentiation Focus: Targeting a narrow market with differentiated products.

  • Differentiation Leadership: Broad market targeting with unique offerings, charging premium prices.

Strategic Decisions

  • Types:

    • Strategic Decisions: Long-term, complex decisions shaping firm direction.

    • Tactical Decisions: Medium-term, support strategic decisions, often reactive.

    • Operational Decisions: Daily operations, routine decisions.

  • Strategic Choice: Selecting options that help achieve organizational objectives, balancing competition and cooperation.

External Influences on Strategy (PESTLE)

  • Political: Impact of government policies and stability.

  • Economic: Economic growth, interest rates, and inflation effects.

  • Social: Cultural trends and demographics affecting demand.

  • Technological: Rate of technological change impacting operations.

  • Environmental: Climate factors affecting certain industries.

  • Legal: Laws affecting operations and market behavior.

SWOT Analysis

  • Definition: Analyzes internal strengths and weaknesses alongside external opportunities and threats.

  • Factors:

    • Strengths: Internal capabilities aiding mission accomplishment.

    • Weaknesses: Factors hindering organization potential.

    • Opportunities: Environment-based possibilities for growth.

    • Threats: External risks jeopardizing business stability.

  • Advantages: Aids in strategy formulation and competitive positioning.

  • Limitations: May oversimplify and lead to subjective assessments.