Foundations of business strategy - Lec 1.pdf

1. FOUNDATIONS OF
BUSINESS STRATEGY
MOHAMMED ALI ALNOOSH

2. Over 16 years business professional with wide experience at
management, leadership, developing teams and driving
organizational growth. A successful track record in delivering
significant improvements to the business, and development
of potentially viable business and corporate strategies,
branding, development and implementation of strategies
for growth. a creative and innovative leader.
Business Development
Consultant
MOHAMMED ALI ALNOOSH
+249 912319890
maalnoosh@gmail.com
maahmed82
 Professional sales management.
 Professional selling skills.
 Strategic management.
 Business development.
Training Programs: Areas of expertise:
 Strategic planning
 Business planning
 Business development
 Business Modelling
 Sales planning and Forecasting
 CRM
 Strategy implementation and
reviewing
 Balanced scorecard
 Coaching and Leadership
Area I can benefit you on
 Training and coaching
 Management consultancy
Sectors have work on:
 Industrial sector
 Commercial sector
 Sales and Distribution sector
 Mining sector
 Power sector
 Heavy machinery sector

3. Understanding Strategic Management
01
02
03
LEARNING OVERVIEW
04
05
Exploring the External Environment
Examining the Internal Environment
Crafting Business Strategy
Strategy in action

4. UNDERSTANDING
STRATEGIC MANAGEMENT
01

5. WHY STUDY STRATEGY?
Strategic management gives you the tools to understand and describe the big picture.
WHAT IS STRATEGY?
The coordinated means by which an organization pursues
its goals and objectives.
Strategy is the central, integrated, externally focused concept
of how the firm will achieve its objectives.
A strategy thus encompasses the pattern of actions that have been taken and
those that are to be taken by an organization in achieving its objectives.
.

6.  What is the goal of strategic management?
 What does “having a strategy” mean?
 how do we know whether we have a good strategy or a bad one?
What Is Strategic Management
Strategic management is the process by which a firm manages the formulation
and implementation of its strategy.
.
 Strategy formulation for current business or for new business?
Discussion
 Why do organizations fail? External causes, internal causes (strategy and management failure?

7. Business Strategy VS Corporate Strategy
Business Strategy Corporate Strategy
Strategy for competing against rivals within
a particular industry or industry segment.
is a strategy for guiding a firm’s entry and
exist from different businesses
1. How the firm will achieve its objectives
today, when other companies may be
competing to satisfy the same
customers’ needs.
2. How the firm plans to compete in the
future.
1. In what businesses will we compete?
2. How can we, as a corporate parent,
add value to our various lines of
business?
3. How will diversification or our entry into
a new industry help us to compete in
our other industries?

8. Strategic
Analysis
 Internal
 External
Implementation
Levers
and
Strategic
Leadership
Strategy
The coordinated means by
which an organization pursues
its goals and objectives
Arenas
Vehicles
Differentiators
Staging
Economic logic
Goals
and
Objectives
Specific
targets
Vision and
Mission
Fundamental
organizational
purpose
Organizational
values
Strategic Management Process

9. Strategy Formulation and Implementation
Strategy formulation Strategy implementation
Process of developing a strategy. Process of executing a strategy.
The process of deciding what to do
The process of performing all the
activities necessary to do what has been
planned
The goal of implementation is twofold:
 To make sure that strategy formulation is
comprehensive and well informed
 To translate good ideas into actions that can be
executed (and sometimes to use execution to
generate or identify good ideas)

10. Arenas
Vehicles
Differentiators
Staging Economic
Logic
The Strategy Diamond and the Five
Elements of Strategy
Arenas: Where will we be active
(and with how much emphasis)?
 Which product categories?
 Which channels?
 Which market segments?
 Which geographic areas?
 Which core technologies?
 Which value-creation strategies?
Vehicles: How will we
get there?
 Internal development?
 Joint ventures?
 Licensing/franchising?
 Alliances?
 Acquisitions?
Differentiators: How will we win?
 Image?
 Customization?
 Price?
 Styling?
 Product reliability?
 Speed to market?
Staging & pacing: What will
be our speed and sequence
of moves?
 Speed of expansion?
 Sequence of initiatives?
Economic logic: How will
returns be obtained?
 Lowest costs through scale
 advantages?
 Lowest costs through scope and
 replication advantages?
 Premium prices due to
 unmatchable service?
 Premium prices due to proprietary
 product features?

11. successful strategies are dependent on effective
implementation.
is the process of executing the strategy—of taking the actions that put the strategy into effect
and ensure that organizational decisions are consistent with it.
Strategy implementation
Intended
Strategy
Realized
Strategy
Implementation Levers
 Organizational structure
 Systems and processes
 People and rewards
Strategic Leadership
Implementation Framework
 Lever- and resource-allocation decisions
 Develop support among stakeholders

12. Implementation Levers
Organization Structure
Structure is the manner in which
responsibilities, tasks, and people are
organized. It includes the
organization’s authority, hierarchy,
units, divisions, and coordinating
mechanisms
 Is the current structure appropriate
for the intended strategy?
 Are reporting relationships and the
delegation of authority set up to
execute the strategic plan?
 Is the organization too centralized
(or decentralized) for the strategy?
Systems and Processes
Systems are all the organizational processes
and procedures used in daily operations.
Obviously, these include control and
incentive systems, resource-allocation
procedures, information systems, budgeting,
distribution, and so forth.
People and Rewards
having the right people and then developing
and training them in ways that support the
firm’s strategy.

13. Strategic leadership
Strategic leadership requires involving the right people in critical decisions
Task of managing an overall enterprise and influencing key organizational outcomes.
The basic responsibility of a CEO
Making big decisions or
solving major problems.
Learn to act decisively in
a way that is aligned with
the strategic direction of
the organization.
A strategic leader needs
first to know himself and
how his style affects others
Strategic thinking Strategic acting Strategic influencing
Motivate, Lead by example
to achieve the firm goals
Align structure, people,
system and decision with the
firm strategy.
Handle complications and
ambiguity within the internal
and external environment.

14. A firm’s ability to
create value in a way
that its rivals cannot.
Competitive Advantage
Gain &
Sustain
Competitive
Advantages
Establish A Clear
Vision & Mission
Formulate Strategies:
Collect, Analyze, &
Prioritize Data Using
Matrices; Establish A
Clear Strategic Plan
Implement Strategies:
Establish Structure;
Allocate Resources;
Motivate & Reward;
Attract Customers;
Manage Finances
Evaluate & Monitor
Results:
Take Corrective
Actions; Adapt
To Change

15. Internal
• Analyse firm resources.
• Use resources to embark
on strategies that rivals
cannot duplicate.
Dynamic
• Look for opportunities to
shape high velocity and
interconnected markets.
• Develop unique resources
to create disruptive
change.
External
• Analyse the industry.
• Position your firm to take
advantage of industry
opportunities.
Strategy Competitive
Advantage
Firm
Performance
Three Perspectives on Competitive Advantage
Resource-based
view
position of firms
within the industry
bridges the internal
and external
perspectives

16. Porter value chain
Firm infrastructure
Human resources
Technology
development
Inbound
logistics Operations
Outbound
logistics
Marketing
& sales
After-sales
service
Procurement
Primary Activities
Support
Activities

17. Defining Vision, Mission and Goals Firms with clearly
and widely
understood visions
and missions find it
easier to make
strategic decisions
Vision Mission Goals and objectives
Is a simple statement or
understanding of what
the firm will be in the
future. A statement of
vision is forward looking
and identifies the firms
desired long-term
status.
Is a statement of what a
firm is and stands for its
fundamental values
and purpose.
Combination of a
broad indication of
organizational
intentions (goals) and
specific, measurable
steps (objectives) for
reaching them.

18. Futuristic
Reveals what the firm
strives to become or
accomplish in five years
Clear
Reveals type of industry
and what firm strives to
become
One sentence in length
Concise
Reveals the firm’s
competitive advantage
Unique
Motivates the reader to
support the firm
Inspiring
Key Vision Statement Characteristics

19. 1) Broad in scope; does not include monetary amounts, numbers, percentages, ratios, or objectives
2) Concise; fewer than one hundred words in length
3) Inspiring
4) Identifies the utility of a firm’s products
5) Reveals that the firm is socially responsible
6) Reveals that the firm is environmentally responsible
7) Includes nine components: customers, products or services, markets, technology, concern for
survival/growth/profits, philosophy, distinctive competence, concern for public image, concern for
employees
8) Reconciliatory; resolves divergent views among stakeholders
9) Enduring but never cast in stone
10)Attracts customers; is written from a customer perspective
Characteristics of a Mission Statement

20. Customers
Products or
services
Markets Technology
Concern for
survival,
growth, and
profitability
Philosophy
Distinctive
competence
Concern for
public image
Concern for
employees
Components of a Mission Statement

21. Components of a Mission Statement
1. Customers—Who are the firm’s present and potential customers?
2. Products or services—What are the firm’s major products or services?
3. Markets—Geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to growth and financial
soundness?
6. Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
7. Distinctive competence—What is the firm’s major competitive advantage?
8. Concern for public image—Is the firm responsive to social, community, and environmental
concerns?
9. Concern for employees—Are employees a valuable asset of the firm?

22. The Importance (Benefits) of Vision and Mission Statements
1. To make sure all employees/managers understand the firm’s purpose or reason for being.
2. To provide a basis for prioritization of key internal and external factors utilized to formulate feasible
strategies.
3. To provide a basis for the allocation of resources.
4. To provide a basis for organizing work, departments, activities, and segments around a common
purpose

23. The Balanced Scorecard System
“To achieve
our vision,
how should
we appear
to our
customers?”
Customer
Objectives Measures Targets Initiatives
“To achieve
our vision,
how will we
sustain our
ability to
change and
improve?”
Learning and Growth
Objectives Measures Targets Initiatives
To satisfy our
shareholders
and
customers,
what business
processes
must we
excel at?”
Internal Business Process
Objective
s
Measure
s
Targets Initiatives
“To succeed
financially,
how should
we appear
to our
shareholders?
”
Financial
Objectives Measures Targets Initiatives Vision
and
Strategy
Strategic management
support system for measuring
vision and strategy against
business- and operating-unit-
level performance.

24. Develop a Vision and Mission Statement for Your business
EXERCISE 01
Purpose
 The purpose of this exercise is to give you practice comparing the effectiveness of vision
and mission statements.
Instructions
 Write a one-page summary of your analysis of the statements as per the needed 10
characteristics and 9 components
Assurance-of-learning exercises

25. Purpose
A personal vision and mission statement can be helpful to an individual in job-related decisions and
career paths. This exercise will give you practice developing and writing vision and mission statements
from a personal perspective. For most college students nearing graduation, it is nearly inevitable to be
faced with employability decisions. Developing vision and mission statements compels an individual
to think about the nature and scope of their skills and abilities and to assess the potential
attractiveness of future job opportunities and activities. These statements broadly chart the future
direction of a person’s life and serve as a motivating force and constant reminder of why the
individual continuously gets up in the morning and works hard.
 Develop a Vision and Mission Statement for Yourself
EXERCISE 02