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CHAPTER 08 - BUSINESS STRATEGY, Demographic changes - ageing or youthful…

- - - - 03 - STRATEGIC IMPLEMENTATION
        
        STAGES OF STRATEGIC MANAGEMENT -
        allocating sufficient resources to put decisions into effect, and evaluating success
        
        MAIN PURPOSE
        
        new business strategies require additional resources. these must be provided at the right time and in sufficient quantities to allow the new strategies to be effective
        
        01 - without successful implementation, there can be no effective change within an organisation
        02 - implementing a major strategic change is a very important cross-functional management task
        03 - it involves ensuring that all of the following factors are in place:
        A - an appropriate organisation structure to deal with the change
        B- adequate resources to make sure the change happen
        C - well-motivated staff who want the change to happen successfully
        D - leadership style and organisational culture that allow change to be implemented with wide ranging support
        E - control and review systems to monitor the firms progress towards the final objectives
        
        STRATEGIC CHOICE - the process that leads to a decision to choose a particular strategy from various alternatives and the techniques used to help make that choice
        STRATEGIC IMPLEMENTATION - the process of planning, allocating and controlling resources to support the chosen strategy
      - STAGES OF STRATEGIC MANAGEMENT - taking important long-term decisions that will push the business towards the objectives set
        
        MAIN PURPOSE -
        a new direction for a business will require key decisions to be taken about products and markets
        
        01 - after potential strategies have been identified through strategic analysis then strategic choice is the next stage.
        02 - strategic choice analyses the benefits and limitations of different strategic options and decides between them
        03 - successful strategic choices have to be challenging enough to gain competitive advantage
        04- they must also be achievable and affordable within the resources available
        05 - there are techniques available to assist managers in making strategic choices, but judgement, skills and experience are also important
    - - MAIN PURPOSE - decisions that do not start from knowledge where the business is at its current position may be inappropriate and ineffective
        
        strategic analysis is about looking in detail at a business's current position and identifying what is now and what might happen in the future
        
        then managers can make sure that the long-term plans or strategies fit in with the external analysis
        
        strategic analysis tries to find the answers of these 3 questions:
        
        01 - where is the business now?
        02- how might the business be affected by what is happening and what is likely to happen ?
        03 - how could the business respond to these likely changes?
  - - - TACTICAL DECISIONS (EX --> to sell a product in different sized packaging)
        01 - tactical decisions are short term to medium term
        02 - the decision is reversable but there are still costs involved
        03 - it is taken by less senior managers and subordinates who have been delegated authority
        04 - the impact of tactical decisions is only by one department
- - - - 03 - SWOT ANALYSIS
        
        04 - PEST ANALYSIS
        
        05 - PORTERS FIVE FORCES ANALYSIS
        
        06 - CORE COMPETENCIES
        
        07 - ANSOFF MATRIX
        
        08 - FORCE- FIELD ANALYSIS
        
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        model is used to show the degree of risk associated with the 4 growth strategies of market penetration, market development, product development and diversification
        
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        A strategic analysis done on marketing to show the risks and potential gain of the 4 growth strategies
        
        CORE COMPETENCIES - an important business capability that gives a firm a competitive advantage
        CORE PRODUCT - product based on a business's core competencies but not necessarily for the final consumer or end user
        
        CORE COMPETENCIES -
        01 - they can give a firm a competitive advantage over rival businesses
        02 - to be commercial and profitable for a business they have to be
        01 - providing clear benefits to consumers
        02 - be difficult for other businesses to replicate (ex --> if it is a patented design)
        03 - be applicable on a range of products and markets
        
        core competencies should lead to the development of core products
        
        they are not necessarily to be used by end user or even sold to them
        
        they are instead used to produce a large number of end-user products
        
        ex --> black and decker has core competencies with the design and manufacturing of their small electrical mototrs which were then used in a variety of their product ranges such as power tools and food processors
        
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        An important business capability that gives a business a competitive advantage
        
        micheal porters provides this model to respresent the industry with 5 forces
        
        02 - managers are developing a new strategy, attempting to establish a competitive advantage over rivals, they can use this model to understand the business operates in
        03 - the model has similarities with other tools for an external environmental audit such as a PEST analysis
        04 - focuses on business units, rather than on a single product or product ranges
        for ex --> dell can use porters five forces model to analyse the market for business computers at its strategic business unit (SBU) level
        
        01 - BARRIERS TO ENTRY
        
        02 - THE POWER OF SUPPLIERS
        
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        01 - this means the case in which other firms can join the industry and compete with existing businesses
        02 - threat to entry is greatest when -
        01 - economies of scale are low in the industry
        02 - technology needed to enter the industry is relatively cheap
        03 - distribution channels are easy to access
        04 - there are no legal or patent restrictions on entry
        05 - the importance of product differentiation is low, so extensive advertising may not be required to get established
        
        model for analysisng competive forces within an industry
        
        the strategic analysis of a firms macro environment including Political, Environmental, Social and Technological factors
        
        01 - it focuses on analysis on macro environment in which the business operates in
        02 - the macro environment means the wide-ranging and major factors the influence the future strategies of the business
        03 - all four areas covered are external to the business and beyond its control
        04 - they can also be considered as opportunities or threats
        05 - PEST is a complementary to SWOT not an alternative
        
        PEST EVALUATION -
        
        01 -any significant new business strategy should be provided a detailed analysis of the wider environment in which the strategy has to operate and be successful
        02 - the use of PEST formalises this process
        03 - once completed PEST analysis does not just stop
        04 - it needs to be constantly updated and reviewed esepcially in a rapidly changing wider environment
        05 - for a multinational businesses, or for a business considering foreign expansion for the first time, it will be important to undertaken PEST analysis for each country in which it operates in
        
        POLITICAL
        
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        ENVIRONMENTAL
        
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        SOCIAL
        
        TECHNOLOGICAL
        
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        A form of strategic analysis that performs an assessment of the macro environment of the business it operates in
        
        form of strategic analysis technique which helps identify future strategies
        
        INTERNAL
        STRENGTHS - internal factors about a business current real advantages
        
        used as a basis for developing competitive advantage
        
        includes - experienced management and good product range
        
        these factors are identified from an internal audit
        
        often undertaken by specialist maangement consultants who will analyse the effectivenesss of the business, its departments and its products.
        
        WEAKNESSES -
        
        again done by internal audit
        
        weaknesses are identified and are business factors about a business that can be viewed as a disadvantage
        
        opposite of strengths in some cases --> ex - spare manufacturing capacity might be a strength in times of rapid economic upturn, however if capacity continues to be unused, then it could add substantially to the average costs of production
        
        weakness include - a poor trained workforce, limited production capcity and ageing equipment
        
        EXTERNAL
        OPPORTUNITIES - Potential areas for expansion of the business and future profits
        
        can be identified from an extenal of the business of the market it operates in and its major competitors
        
        ex --> new technologies, export markets, expanding faster than domestic markets, and lower interest rates increasing consumer demands
        
        THREATS - analyses the external environment, market conditions and the strength of its competitors
        
        examples include --> competitors entering the market, globalisation driving prices down, changes in law regarding some goods and changes in the economic policy
        
        SWOT ANALYSIS AND STRATEGIC OBJECTIVES
        01 - SWOT helps managers assess the most likely sucessful future strategies and the constraints on them
        02 - a business stands a good change of developing a competitive advantage by identifying a good match between strengths and potential opportunties
        03- in many cases, a business may need to overcome a weakness in order to take advantage of a potential opportunity
        04 - SWOT is a common starting point for developng new corporate strategies but is rarely sufficient
        05 - further planning and analysis is often needed before strategic choices are made
        
        EVALUATION OF SWOT -
        01 - subjectivity is often a limitation of SWOT
        02 - different managers would not necessarily agree on the assessment of the company they work for
        03 - not a quantitiave form of assessment so costs of correcting a weakness cannot be compared with the potential profit for persuing an opportunity
        04 - SWOT should be used as a management guide for future strategies but not as a guide to take direct actions
        05 - mainly used by senior managements undestanding about their business from what SWOT analysis provides
        
        strategic analysis that helps to identify future strategies by making an overall assessment of the company and its external market, competitors and other external environment to make sure if it would be effective
      - 01 - in an uncertain and fast-changing world, no one really knows what the future holds for any business
        02 - making no plans for the future leads to being unprepared for any future development or trend
        03 - making fixed plans for the future leads to inflexbility
        
        04 - in scenario planning , a group of senior managers identify a limited number of scenarios or possible outcomes or situations
        05 - each business scenario will likely to be different
        06 - the identification of these future events will depen on the key risk factors that affect each particular business
        for ex --> these could be economical, technological or competition factors
        07 - scenario planning is regularly used not just by businesses
        08 - many of the big international organisation including amnesty international and Greenpeace use it to improve strategic thinking
        
        -- BENEFITS OF SCENARIO PLANNING --
        01 - It forces managers to consider the main risks and uncertainities that effect their business
        02 - managers have to develop a range of strategies to deal with different scenarios
        03 - it makes managers adopt a flexible approach as different scenarios require different strategies
        
        LIMITATIONS OF SCENARIO PLANNING -
        01 - Managers often times consider too many uncertainities and become confused by the possible scenarios
        02 - in contrast some managers might only focus one possible future scenario and be unprepared for others
        03 - it will be less effective if only short-term risks are considered. looking far into the future can lead to more creative strategies
      - strategy effectively done for dynamic environments by managers by making scenarios
        
        identifying future possible future situations and how the business might respond to them
    - - RED OCEAN STRATEGY - one that competes with rivals in existing markets
        
        01 - approach of this strategy is to stop competing and start creating
        02 - means not focusing on strategy involving existing markets with several or many competitors
        03 - it means finding and developing uncontested markets
        04 - this means not focusing on strategies that involves existing markets with several or many competitors
        05 - referred to blue oceans
        06 - high contested markets are red oceans
        07 - in blue ocean, redefine the terms of competition and move into the blue ocean where you have the water to yourself
        08 - the goal is not to beat the competition but to make it irrelevant
        09 - BLUE OCEAN FOUR ACTIONS FRAMEWORK -
        A - RAISE --> what factors could be raised above the industry standard such as quality or customer service ?
        B - REDUCE --> what factors such as cost competitive advertising were a result of competing against other businesses and which of these can be reduced
        C - ELIMINATE - what factors that were used to compete with rival businesses can be eliminated altogether ?
        D - CREATE - which factors can be created that the industry has never offered before ?
        
        RED OCEAN STRATEGY - FOCUSING ON EXISTING CUSTOMERS
        
        01 - compete in existing markets
        02 - out compete the competition
        03 - exploit existing demand
        04 - product differentiation or low cost
        05 - high value to customer = high costs to business
        
        BLUE OCEAN STRATEGY -
        FOCUS ON POTENTIAL CUSTOMERS
        
        01 - Create uncontested markets to enter
        02 - make the competition irrelevant
        03 - create and exploit new demand
        04 - product differentiation or low cost
        05 - high value to customer = low cost to business