BUSINESS STRATEGY

Lecturer: PHD. PHM QUC KHNH Banking Academy (Vietnam)

Introduction
Business today:
Dynamic y Turbulence Uncertainty Complexity

Yesterday Inside strategy development Inside Structured market Calculating area Stable forecasts

Today Consideration of environment Consideration strategy development. Reactors in market. Future not f F t t foresee. Trends are surprising. in

Business Strategy
Developing the ability to plan and implement strategy for general business organisations.

Strategic St t i formulation

Strategic St t i planning

Strategy Strategy evaluation andselection

Strategy Strategy implementat ion

Strategic formulation
Strategic formulation: Analyse how the business environment is considered in strategy development.
Missionand Vision External environment analysis l i Internal Assessment Strategic p positioning g

Objectives

What is our business? What do we want to become?

Where are we going? How can the mission be achieved?

Possible influences; Current and future competition.

Resources; Standing marketplace; Competence

Corporate analysis: S&W; P&T; How can we improve to get the objectives?

Strategic formulation
Strategic formulation: What is our business?

What do we want to become?

Strategic formulation
Business goals and objectives Primaryandsecondaryobjectives Longtermandshorttermobjectives Long term and short term objectives Financialobjectives Multiplesobjectives Corporateandunitobjectives Corporate and unit objectives Technologicalobjectives Product marketobjectives

Strategic formulation
Setting bj ti S tti objectives process
Agreetheobjectives A th bj ti Prioritisetheobjectives j Definetheact.andtask Agreestandardsof performance Allocateroles Setandtimetable S d i bl performancecriteria
Wh t d Whatdowewanttoarchive? tt hi ?

Howimportantarethey? p y

Whathastobedonetoarchivetheobjective? Howwillwebeabletotellthatthetaskshavebeen completedtoasatisfactorystandards? Whoshouldperformtherequiredtasks? Atwhatstageswillwebeabletoidentifythatthings arebeingdonetostandardandtoplan?

Strategic formulation
Setting bj ti S tti objectives
Specifi c

Timeta ble

Measu rable

SMART

Realisti c

Agreed d

Strategic formulation
Stakeholders
Communities Interest Interest groups

NGOs

Strategic partners Managers Resource owners Donor Regulators Providers

Press/med ia

Localauthorities

Strategic formulation
Political Economi c

Legal

Environ e ta / mental/ ecologic al

PES TEL
Soc o Socio cultural Technol ogical

Theenvironmentisa majorsourceof major source of uncertainty!!!

Strategic formulation
Potential entry of new competitors

Bargaining power of suppliers

Rivalry among competing firms p g

Bargaining power of consumers

Potential development of substitute products

Strategic formulation
Assets

Financial resources

Products, brands, markets

Position/ Resource
Operating results Operating systems y

Organisatio nandHR n and HR

Strategic formulation

Strategic formulation

Strategic formulation
Firm Infrastructure

Support Activities

Human Resource Management Technological Development Procurement Mar rketing and Sales d Inbound Logistics Out tbound Logistics

Ope erations

Primary Activities

Ser rvice

Strategic formulation

Standardizati onbyskills and knowledge

Mutual adjustment

PDCA

Standardizati St d di ti onof outputs Standardizat ionofwork processes

Direct supervision

Strategic formulation
Operating core: The basic work of producing the organizations d i th i ti products and services gets done. Strategic apex: The home of top management Middle line: Managers who stand in a direct line relationship between the strategic apex and the operating core. Techostructure: The staff analysts who design the systems by which work processes and outputs are standardized in the organization. Support staff: The specialists who provide support t th organization id t to the i ti outside of its operating workflow.

Strategic formulation
STRATEGY SKILLS STRUCTURE

VALUES/ SUPERORDINATE GOALS

STAFF

SYSTEMS

STYLE

Strategic formulation
Step 1 S Prepare current product-market profile. f

Step 2

Identify Id tif sources of competitive f titi advantage and disadvantage in the main product-market segments. Describe all the organizational capabilities and competencies. Sort the core capabilities and competencies according to strategic importance. t t i i t y g Identify and agree on the key capabilities and competencies.

Step 3

Step 4 p

Step 5

Strategic formulation

Strategic formulation
CorporateAppraisal GapAnalysis MonitoringCompetitors CompetitiveStrategies Competitive Strategies ValueChaininCompetitiveStrategy ScenarioPlanning Directionofgrowth Methodofgrowth GlobalFactors Global Factors Benchmarking

Strategic formulation
Strengths S SWOT matrix Opportunities O
List Opportunities List Strengths

Weaknesses W
List Weaknesses

SO Strategies
Use strengths to take advantage of opportunities

WO Strategies
Overcoming weaknesses by taking advantage of opportunities

Threats T
List Threats

ST Strategies
Use strengths to avoid threats

WT Strategies
Minimize weaknesses and avoid threats

Strategic formulation

Targetfor achievementover planningperiod l i i d

F0Forecast

Forecastcanneverbe completelyaccurate!!!

Strategic formulation
Cost Leadership
Product Differentiation Low (principally by price) Low (mass market)

Differentiation
High (principally by uniqueness) High (many market segments) Research and de e op e t, sales development, sa es and marketing

Focus
Low to high (price or uniqueness) Low (one or a few segments) Any kind of d st ct e distinctive competency

Market Segmentation

Distinctive Co pete cy Competency

Manufacturing a d ate a s and materials management

Strategic formulation
Existing g Existing PRODUCTS New

MARKET PENETRATION

INCREASING RISK PRODUCT DEVELOPMENT IN NCREASING RISK Sell new products in existing markets

Sell more in existing Markets MARKETS MARKET EXTENSION Achieve higher sales/market share of existing products in new markets

DIVERSIFICATION

Sell new products in new a ets markets

New

Strategic planning
Setobjectives andareas Key performance measures

Monitor improvement

Select department/ branch/ organisation

Benchmarking

Improve

Measureown andothers performance

Compare performance

Strategic formulation
Setobjectives andareas Key performance measures

Monitor improvement

Select department/ branch/ organisation

Benchmarking

Improve

Measureown andothers performance

Compare performance

Strategic planning
Apply the process of strategic planning.

Planning framework

Approaches

Strategic g thinking

Preparea g p strategicplan

Strategic planning
Planning is the process of deciding:
What should be done. How should be done. When should be done done. Who should do it.

Strategic planning
1.Set Objectives 2.Plan Strategies

Periods/Timelines Periods/ Timelines

Review progress

3.Decide Tactics

Implement strategies

Strategic planning
Levelsofstrategy

PlanningandDecisions
Missionand vision Strategicdecisions Particularareasofcorporate

Corporate strategy Business strategies

Functional/ operational Differentdepartments(Marketing, HRM,IT,Finance, R&D,etc.) HRM IT Finance R&D etc ) strategies t t i

Strategic planning
Emergent and deliberate strategies .
Plans Unrealised strategies Deliberate strategies

Realised Realised strategies

Patternsof behaviour

Emergent strategies

Strategic planning
Crafting emergent strategies.
Emergent strategies may:
Be inappropriate for long-term direction. Create implications for resources use, different part of the business compete for resources. resources Devote more resources.

Strategist must be able to recognise patterns and to St ateg st ust ab e ecog se patte s a d manage the process by which emergent strategies are created.
Manage stability Detect discontinuity discontinuity Knowthe business Manage patterns Reconciling g changeand continuity

Strategic planning
Creating sustainable strategic position

Operational effectiveness

Strategyrest Strategy rest onunique activities

Trade offs

Strategyabout Strategy about combining activities

Strategyis aboutchoices