Lecture 9 - Organisational Aspects Of Business Flashcards
What is a business strategy?
A long-term plan developed by a company to achieve specific goals and objectives. Serves as a roadmap to guide decision-making and aligns organisational resources toward achieving competitive advantage.
- Apple’s strategy focuses on product differentiation through innovation and premium pricing to maintain market leadership in tech industry.
The role of strategy in business?
A well-formulated strategy helps a business navigate competition, adapt to market conditions, and achieve sustainable growth. Essential for
positioning a company in the market and ensuring long-term viability.
- Tesla’s strategy to focus on electric vehicle innovation and sustainability
allowed it to stay ahead in rapidly evolving automotive market.
What is strategic management?
Involves continuous process of formulating, implementing, and evaluating strategies to meet an organisation’s goals. Requires constant adjustment in response to both internal and external factors.
Microsoft’s strategic shift from a software company to a cloud and services company (Azure)
involved a deliberate process of strategic management
Vision and Mission Statements
Vision statements outline long-term aspirations of a business, while mission statements describe company’s purpose and core values.
Environmental Analysis (SWOT Analysis)
Helps businesses assess their internal strengths and weaknesses and external opportunities and threats. E.g Netflix’s strength is its original content, a weakness is high content acquisition costs, an opportunity is global expansion, and
a threat is competition from Disney+ and Amazon Prime.
Setting strategic objectives
Objectives should be SMART (Specific, Measurable, Achievable, Relevant,
and Time-bound). Act as benchmarks for the strategic plan and align with
the company’s mission.
- Tesla’s objective is to produce 20 million electric vehicles annually by 2030, aligning with its vision of accelerating the world’s transition to sustainable energy.
Strategy implementation
Turning strategies into actionable plans involves
- resource allocation
- setting timelines
- assigning roles.
Organisational culture and leadership play key roles in implementation.
- Starbucks’ global expansion strategy was implemented through store openings in key markets, supported by training and consistent customer experience.
Strategy evaluation and control
Regularly evaluating a strategy’s performance through key performance indicators (KPIs)
helps businesses make necessary adjustments.
- Zara evaluates success of its fast fashion strategy through KPIs like supply chain efficiency, sales performance, and market trends.
Cost Leadership Strategy
The business aims to become the lowest-cost producer in its industry to offer competitive prices.
- Walmart maintains its cost leadership strategy through economies of scale and efficient supply chain management, allowing it to offer low prices.
Differentiation Strategy
The business offers unique products or services that stand out from competitors.
- Apple’s differentiation strategy is built on innovation, premium design, and an ecosystem of integrated products.
Focus strategy
The business targets a specific market niche and tailors its products or services to that segment.
- Rolls-Royce follows a focus strategy, catering to a high-end market niche with luxury automobiles.
Hybrid strategy
The business combines elements of cost leadership and differentiation to gain a
competitive edge. IKEA’s hybrid strategy involves offering stylish, affordable furniture with
a unique customer experience.
Challenges in strategy formulation and implementation 1/3
Uncertainty and Change:
In rapidly changing business environment, economic fluctuations, technological advancements, and competitive pressures make it difficult to formulate stable
strategies.
- During COVID-19 pandemic, businesses like Zoom thrived due to sudden shift to remote work, while other industries, like travel, had to quickly adapt their strategies.
Challenges in strategy formulation and implementation 2/3
Organizational Resistance:
Resistance to change from within the organisation can hinder successful strategy implementation. Employees may be reluctant to embrace new technologies or processes.
- General Motors faced
resistance when it attempted to introduce electric vehicles, leading to delays in its innovation strategy
Challenges in strategy formulation and implementation 3/3
Resource Constraints:
Financial, human, or technological resource limitations can affect the formulation and execution of
strategies. Small businesses often face financial constraints that limit their ability to invest in advanced
technologies, hindering their competitive positioning.
