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MACRO ENVIRONMENT BUSINESS STRATEGIES (STAGE 2 (environmental scanning…
MACRO ENVIRONMENT
BUSINESS STRATEGIES
STRATEGIC MANAGEMENT
process of formulating, evaluating & monitoring business strategies in response to the challenges of the macro environment & in light of the mission of the business
Purpose of strategic planning
• distribute skills & resources equally throughout the bussines
• focus on all activities to ensure that the vision and mission of the business are fulfilled
•enable businesses to adapt to changes in the business environment
• focus on the business as a whole and on the long term
STAGE 2
environmental scanning & analysis of the 3 business environments
SWOT analysis (internal & external)
--strengths of business
--weaknesses of business
--opportunities of business environment
--threats of businesses in the environement
PESTLE analysis (macro environment)
--political impact or physical factors
--economic impact
--social impact
--technological impact
--legal impact (CPA)
--environmental impact or ethical impact
Porters 5 Forces Model
1) Power of competitors
2) Bargaining power of suppliers
3) Bargaining power of buyers
4) Threats of substitute good & services
5) Threats of new entrants
STAGE 3
TYPES OF
BUSINESS
STRATEGIES
Integration
•backward vertical integration (business buying supplier)
•forward vertical integration (business buying another business further down supply chain
•horizontal integration (business acquiring a competitor)
Diversification
•concentric (when business uses same tech. to produce new product thats related to its core business)
•horizontal (when business enters new industry or makes new products that will appeal to existing customers)
•conglomerate (when business starts to produce a new & totally different product for a new market)
Intensive
•market penetration (when business & market share of product in existing market)
•market development (when business explores new markets for existing products)
•product development (when business develops new products for existing market)
Defensive
•retrenchments
•divestiture (business sells part of business or assets)
•liquidation
Other strategies
•replacing individuals
•allocating resources differently
•policy development
•revision of vision & mission
•appointing of additional sales personnel
STAGE 4
strategy implementation
CEO & department heads responsible for implementation
Aims
solve strategic questions
improve business on ongoing basis
build strong & sustainable business
unite all employees around the strategy
Process
1) draw up budget
2) apply resources where it can be used effectively
3) create organised structure that supports new strategies
4) motivate employees to achieve goals of strategies
5) communicate new strategies to all relevant people in business
6) create & implement policy that supports new strategy
Factors that hamper S4
mobility of workforce
attitude of workforce
pace at which change happens
regular technology change
STAGE 5
Strategy evaluation & monitoring
Steps
examine
define limitation
define target values
perform measurements
compare expectations to reality
take corrective action
STAGE 1
• set clear vision, mission & realistic goals
• involves:
---set short term goals
---write vision, mission to adapt
---set long term goals
---incorporating financial goals (sales, growth)
---incorporating strategic goals (shares, reputation)