BUSINESS OPERATION SKILLS- KIM

104
Session 02: Introduction to Business Strategy
Presented By: Muhammad Mahbub Alam FCA
Organisational Structure
Formed by the grouping of people into Departments or Sections and the allocation of responsibility and authority.
Organizational Structure sets out how the various functions are formally arranged.

Mintzberg’s Suggests that all business structure can be

analyzed into six building blocks :
 Operating Core: people directly involved in the process of
obtaining inputs and converting them into outputs
 Middle Line: conveys the goals which are set by the strategic apex.
 Strategic Apex: ensure the organization following it mission
 Support Staff: Ancillary services such as PR, legal counsel, the
cafeteria and security staff.
 Techno structure: analysis determine and standardize work process
and technique
 Ideology : values, beliefs and tradition i.e. the business culture
What is Strategy
Strategy is course of action, including specification of resources required, to achieve a specific objectives and a
strategic plan as a statement of long term goals along with a definition of the strategies and policies which will
ensure achievement of these goals.

Strategy is concerned with:

• The long-term direction (objectives) of the business
• The environment in which it operates
• The resources at its disposal
• The return it makes to stakeholders

Drucker suggested that an organisation needed to ask five
fundamental questions in relation to its strategy. 
Levels of Strategy
Strategy can exist at several levels in an organisation as shown in the diagram below:
Levels of Strategy
Corporate strategy
Corporate strategy is generally determined at head office/main board level. The types of matters dealt with include:
 Determining the overall corporate mission and objectives
 Overall product/market decisions, e.g. expand, close down, enter new market, develop new product etc. via methods such as
organic growth, merger and acquisition, joint venture etc.
 Other major investment decisions besides those for products/markets, e.g. information systems, IT development
 Overall financing decisions - obtaining sufficient funds at lowest cost to meet the needs of the business
 Relations with external stakeholders, e.g. shareholders, bondholders, government, etc.

Business strategy
This normally takes place in strategic business units (SBUs).
An SBU is 'a section, within a larger organisation, which is responsible for planning, developing, producing and marketing its
own products or services’.
Competitive strategy is normally determined at this level covering such matters as:
 How advantage over competitors can be achieved
 Marketing issues, such as the 4Ps (product, price, promotion, place).

Functional (operational) strategies

This refers to the main functions within each SBU, such as production, purchasing, finance, human resources and marketing, and
how they deliver effectively the strategies determined at the corporate and business levels.