HND in Business Management

Module: Strategy Management

Lesson: The Vocabulary of Strategy
Lecturer:Randika Dulanthi

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Lecture Outline
What is strategy?
Levels of strategy
Process of strategic management
Vision statement
Mission statement
Objectives and goals
Core competencies
Competitive advantage
The vocabulary of strategy

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What is Strategy?
An action plan to implement in a challenging environment .
A plan of action designed to achieve a long term or overall aim .
"Strategy is the direction and scope of an organization over the long-term:
which achieves advantage for the organization through its configuration of
resources within a challenging environment, to meet the needs of markets
and to fulfill stakeholder expectations".
Johnson and Scholes

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Strategy At Different Levels Of
Business

Corporate level
SBU level (strategic business unit)
Product-market level
Operational Strategy

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Corporate Level
Is concerned with the overall purpose and scope of the business to
meet stakeholder expectations. This is a crucial level since it is heavily
influenced by investors in the business and acts to guide strategic
decision-making throughout the business. Corporate strategy is often
stated explicitly in a "mission statement".

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SBU Level
(Strategic Business Unit)

Is concerned more with how a business competes successfully in a

particular market. It concerns strategic decisions about choice of
products, meeting needs of customers, gaining advantage over
competitors, exploiting or creating new opportunities etc.

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Product-Market Level
To all intent and purposes, that is a marketing strategy. A marketing
strategy, which is contained in a marketing plan, involves the allocation
of resources to and co-ordination of marketing activities such as the
elements of the marketing mix (4ps), to achieve marketing objectives
specific to a product-market.

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Operational Strategy
Is concerned with how each part of the business is organized to deliver
the corporate and business-unit level strategic direction. Operational
strategy therefore focuses on issues of resources, processes, people etc.

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How Strategy is Managed?
Strategy is managed by the use of strategic management.
Strategic management is the process of examining both present and
future environments, formulating the organization's objectives, and
making, implementing, and controlling decisions focused on achieving
these objectives in the present and future environments.

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 In practice, a thorough strategic
management process has three main
components, shown in the figure below:

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Strategic Analysis
This is all about the analysing the strength of businesses' position and
understanding the important external factors that may influence that
position.

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Strategic Analysis
Stage Comment Key tools, models, techniques

Step 1 Mission Mission denotes values, • Mission statement

and/or vision the business's rationale
for existing, vision refers
to where the organization
intends to be in a few
years’ time
Step 2 Goals Interpret the mission to • Stakeholder analysis
different stakeholders
Step 3 Objectives Quantified embodiments • Measures such as
of mission profitability, time scale,
deadlines
Step 4 Environment Identify opportunities and • PEST analysis
al analysis threats • Porter’s five forces analysis
and competitive advantage
of nations
• Scenario building
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Strategic Analysis
Stage Comment Key tools, models, techniques

Step 5 Position Identify strengths and • Resource audit

audit or weaknesses • Distinctive competence
situation Firm’s current • Value chain
analysis resources, products, • Product life cycle
customers, systems, • Boston (BCG) matrix
structure, results, • Directional policy matrix
efficiency, • Marketing audit
effectiveness • Market share (PIMS)
Step 6 Corporate Combine step 4 and 5 SWOT analysis charts
appraisal
Step 7 Gap Compares outcomes Gap analysis
analysis of step 6 with step 3

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Strategic Choice
This process involves understanding the nature of stakeholder
expectations (the "ground rules"), identifying strategic options, and
then evaluating and selecting strategic options.

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 Strategic Choice
Stage Comment Key tools, models, techniques
Strategic options Come up with new ideas • Value chain analysis
generation • How to compete • Scenario building
(competitive advantage) • Porter’s generic strategic
• Where to compete choices
• Method of growth • Ansoff’s growth vector
• Acquisition vs. organic growth
Strategic options Normally, each strategy has • Stakeholder analysis
evaluation to be evaluated on the basis • Risk analysis
of • Financial measures
• Acceptability
• Suitability
• Feasibility
• Environmental fit

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Strategy Implementation

Often the hardest part. When a strategy has been analyzed and
selected, the task is then to translate it into organizational action.

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Implementation
Stage Comment Key tools, models, techniques
Resource Deploying the resources to • Critical success factors
planning achieve the strategy • Outsourcing
Operations plans • Activity schedules
• Budgets
• Project management

Organization Designing the organization to • Centralization vs. decentralization

structure and implement the strategy
culture
Change Implement changes
Functional HRM • Personnel planning
strategies • Appraisal schemes
Production • Quality management
Marketing • Marketing information systems (MIS)
• Marketing mix
• Segmentation
• Product life cycle
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Vision Statement
Vision statement is basically “where do you want to go?”
A vision statement is a vivid, idealized description of a desired outcome
that inspires, energizes and helps you create a mental picture of your
target.

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Mission Statement

Describes the purpose of the existence of the company

◦ Why do we exist?

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Objectives

Specific outcomes that an organization wishes to achieve by carrying

out its activities.

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SMART Objectives
Specific
Measurable
Agreed
Realistic
Timely

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The Levels Of Goals
The 3 levels of goals within an organizations form a hierarchy of goals.
1. Strategic goals : these are broadly defines targets or future end
results set by top management.
2. Tactical goals : are targets or end results usually set by middle
management for specific departments or units.

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The Levels Of Goals

3. Operational goals : are targets or future end results set by lower

management that address specific, measurable outcomes required

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Core Competencies
Cluster of extraordinary abilities or related 'excellences' that a firm
acquires from its founders , after consistent striving over the years, and
which cannot be easily imitated. Core competencies are what give a
firm one or more competitive advantages , in creating and delivering
value to its customers in its chosen field . Also called core capabilities or
distinctive competencies.

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Competitive Advantage

Superiority gained by a firm when it can provide the same value as its
competitors but at a lower price , or can charge higher prices by
providing greater value through differentiation. Competitive advantage
results from matching core competencies to the opportunities.

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The Vocabulary Of Strategy
Term Definition

Overriding purpose in line with the values

Mission
or expectations of stakeholders.

Vision or strategic Desired future state: the aspiration of the

intent organization.
Goal General statement of aim or purpose
Objective Quantification or more

Resources, processes or skills which

Core competences
provide distinctive competitive advantage

Strategies Long-term direction

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The vocabulary of strategy
Combination of resources,
Strategic architecture
processes and competences to
put strategy into effect.

The monitoring of action steps

to:
Control • Assess effectiveness of
strategies and actions
• Modify strategies and/or
actions as necessary

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