Strategy -

Strategy is the direction and scope of an organisation over the long term which achieves
advantage in a changing environment through its configuration of resources & competencies
with the aim of fulfilling stakeholder expectations.

Characteristics of Strategic decisions -

1. Strategy is likely to be concerned with the long-term direction of an organisation
2. Strategic decisions are concerned with the scope of the organisation’s activities
3. Strategic decisions are normally taken trying to achieve some advantage for the
organisation over competition
4. Strategy is the search for a strategic fit with the business environment
5. Strategy is creating opportunities by building on organisation’s resources and
competences
6. Strategy of an organisation is also affected by the values and expectations of those
who have power within and around the organisation

Levels of Strategy -
The three levels of strategy are interdependent
and must be aligned to achieve an organisation's
overall goals and objectives.
For example, A corporate-level strategy of
diversifying a company's portfolio by acquiring a new
business unit would require a business-level strategy
to integrate the new business and align it with the
company's existing operations. The functional-level
strategy would then focus on optimising processes,
allocating resources, and developing capabilities to
support the new business unit's operations and
ensure its success.

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Corporate Level Strategy:
A corporate-level strategy refers to the overarching strategic plan that dictates the direction
of the entire organisation. It’s the highest level of strategy, covering all of the firm’s diverse
operations, and is typically set by top management and the board of directors.

What Are The 4 Components Of Corporate Strategy?

Visioning
Visioning involves setting the high-level direction of the organisation—namely, the vision,
mission, and corporate values.
Objective setting
Objective Setting involves defining specific and measurable outcomes you want to achieve
over a chosen time frame.
Resource allocation
This is the practice of allocating human and capital resources to support objectives.
Strategic trade-offs
This is an essential part of corporate strategic planning since companies can’t always take
advantage of all feasible opportunities. Leaders must learn how to determine the optimal
strategic mix that will balance risks with returns.

Types Of Corporate Strategy And Examples -

Growth strategies
● These are strategies that focus on a company’s growth and might include entering
new markets, increasing or diversifying existing ones, or using forward or backward
integration to take advantage of economies of scale.
● E.g. When Facebook launched in 2004, it was a small social media network among
several competitors. Using a market penetration growth strategy aimed at Harvard
college students and eventually a tech acquisition strategy that purchased emerging
technology, Facebook grew from that small campus social network into the ubiquitous
company it is today.
Stability strategies
● These are designed to consolidate an organisation's current position, with an eye
toward creating a strategic environment that will provide greater flexibility for the
future employment of growth or retrenchment strategies.
● Stability strategies are more conservative strategies, focused on preserving profit,
reducing costs, and investigating future strategic possibilities.
● E.g. Steel Authority of India adopted a stability strategy focused on increasing
efficiency rather than increasing the number of plants. This move helped address the
over-capacity in the industry and retain the company’s position as the third-fastest
growing steel producer in the world.
Retrenchment strategies
● These are a response to unprofitable or damaging elements of a business or
organisation, such as eliminating unprofitable assets or product lines.
● E.g. General Motors (GM), once the world’s largest automaker, started implementing
retrenchment strategies as it pulled out its brands from major global markets like
Russia, India, and Western Europe. Declining sales and profitability were the main
culprits as its competitors consistently took the top sales spots.

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Combination Strategy
● Sometimes, organisations combine the above-mentioned strategies even if they
appear contradictory.
● A combination strategy is useful when organisations are large and operate in
complex environments, such as having several enterprises operating in different
industries with different needs.
● For example, McDonald’s continues to pursue growth by expanding to new markets
worldwide while maintaining a profitable core menu and focusing on improving
operational efficiency.

Benefits of a Corporate Strategy Plan

1. Provides strategic direction

● By implementing a corporate strategic plan, an organisation can establish its desired
direction and provide clear guidance to leaders, stakeholders, and employees on
how they prioritise decisions, making strategy execution and goal achievement much
easier.

2. Helps you stay flexible and adapt when needed

● In a dynamic world, organisations need to keep pace with changes as they happen.
● By continually defining corporate strategies and strategic goals in relation to
opportunities or threats as they appear, your organisation will be able to consistently
perform optimally.

3. Improves decision making

● Without clearly defined strategies at a corporate level, business, and functional level
units will perform sub-optimally.
● The abstract level of decision-making at the corporate level will translate to better
results at other decision-making levels and help employees feel that their
organisation has a clear direction and purpose.

Business Level Strategy

Business level strategy is a sum of the strategic planning and implementation activities that
set and steer the direction of an individual business unit. These activities will generally
include how to gain a competitive advantage and create customer value in the specific
market the business unit operates in.

Benefits:
● Provides a clear roadmap and purpose, guiding decision-making and resource
allocation.
● Helps align the efforts of different departments and teams, fostering coordination and
synergy.
● Enhances competitive advantage by identifying unique value propositions and
differentiation opportunities.
● Aids in identifying and capitalising on market opportunities while mitigating potential
strategic risks.
● Improves organisational efficiency, promotes innovation, and enables effective
measurement and performance evaluation.

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The Key Focus Areas For Business Level Strategies

Core Competencies
● Core competencies are the unique elements of a business that set it apart in the
market and provide value to customers.
● Identifying and leveraging these competencies to gain a competitive advantage is a
major aspect of business level strategy.

Customers
● Understanding your customers is another essential aspect of business level strategy.
● You need to know who your current and potential customers are and how they
interact with your business.
● To develop this understanding, consider the following who, what, and how questions:

Who are the customers?

Look at demographic descriptors and consumption patterns to paint a clear picture of your
customer base.

What are the products that customers need?

Understanding the wants and needs of your customers is vital for developing and
maintaining a competitive advantage.

How can the business satisfy customer needs?

Finally, organisations need to leverage core competencies, resources, and their
understanding of their target audience to ensure customer satisfaction. Businesses need to
create a solution to a pressing problem and create a product or service that’s perceived as
valuable in the eyes of the target market segment.

Types of Business Level Strategy

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Cost Leadership
A cost leadership strategy is all about offering products at a lower price than your
competitors. To become cost leaders, businesses employ economies of scale and various
tactics such as improving facilities, investing in tools, reducing overhead costs, and
minimising expenses related to R&D and POS operations. The ultimate goal is to achieve
the lowest cost for your product or service.
Differentiation
Rather than focusing on lower costs and passing the savings onto customers, differentiation
strategies emphasise the development and marketing of products in a manner that provides
greater value to customers and focuses on unique features that warrant a higher price point.
Focused cost leadership
Businesses can concentrate their efforts by targeting a niche market or even a subset of that
niche to further reduce costs.
For instance, a tool manufacturer might choose to focus their cost leadership strategy solely
on the professional tradesperson market.
By narrowing their focus, companies can better understand their customers' needs and
create value more efficiently.
Focused differentiation
A focused differentiation strategy involves standing out from competitors while concentrating
efforts on a smaller subset of their customer base.
This might seem counterintuitive, but deeply understanding a smaller customer segment
allows businesses to anticipate customers’ needs more accurately, making value creation a
smoother process.

Functional Level Strategy -

Functional level strategies are those put in place at the operational level of an organisation
and will facilitate the corporate (or business) level strategy implementation.
In terms of strategic planning, a functional strategy should be the last strategy level created
during the strategic management process as it defines the 'HOW are we going to support
business objectives on the departmental level?’.

Types of Functional Level Strategies:

1. Human Resources Strategy
HR strategy should outline how the organisation will manage its human resources to achieve
its strategic goals.
2. Financial strategy
This strategy highlights how finances will align with company goals for growth & innovation.
3. Research & Development Strategy
R&D strategy should specify how R&D contributes to corporate strategy by developing
competencies through new products, services, and business models.
4. Marketing Strategy
It can cover many areas, from customer identification to market research to customer
acquisition through social media. Still, its primary goal should be to generate demand for the
company’s products and services.
5. Production Strategy
Production strategies should focus on supply chain management, operation planning, and
overall manufacturing system. The main objectives are improving quality, minimising
production costs, and increasing quantity.

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Importance of functional level strategy
● New technologies, automation, sustainability initiatives, and ever-changing customer
expectations are redefining the business world as it was known. As businesses
compete for their market share, those who master organisation-wide alignment will
be well positioned to outperform their peers.
● The success of functional-level strategies has a direct correlation to the success of
your organisation's corporate-level strategy. Even the most thoughtful corporate-level
strategies will fail to produce results if a functional-level strategy is overlooked,
misaligned, or poorly executed (or all three).
● Functional level strategy is the direct concern of managers at the departmental level,
but this doesn’t mean that corporate level strategists can ignore it. In fact, emerging
into the details of strategic initiatives of disparate departmental units is probably one
of the most significant tasks of corporate-level strategists.

Environmental Influences that affect an enterprise -

PESTEL Framework: It categorises environmental influences into six main types

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Product Lifecycle -
A product life cycle is the total amount of time that a product is available to consumers, from
when it’s first introduced until it’s removed from the market. A product’s life cycle begins
when it’s initially developed and introduced to the market and ends when the product is no
longer available for purchase.

Marketing professionals and organisational leaders can map a product’s lifecycle to guide
core decision making processes. This lifecycle map will help leaders determine product price
points, identify ideal audiences, select advertising strategies, design packages, and more.
The product life cycle map also outlines a product’s path from development to market
maturity.

The product life cycle is divided into four total stages, including Introduction, growth,
maturity, and decline.

Introduction Stage:
Companies create awareness and generate interest in their new product during this stage.
Strategies in this stage include heavy advertising and promotion, building distribution
channels, offering free samples, and pricing strategies such as penetration pricing.

Growth Stage:
In this stage, sales and revenue start to increase, and companies focus on building brand
loyalty and market share. Strategies in this stage include product improvements and new
features, expanding distribution channels, pricing strategies such as skimming or
maintaining prices, and building customer relationships.

Maturity Stage:
In this stage, sales growth begins to slow down, and the market becomes saturated with
competitors. Strategies in this stage include extending the product life cycle through product
improvements or new product lines, pricing strategies such as discounts or bundling, and
building customer loyalty and retention.

Decline Stage:
In this stage, sales begin to decline, and the product becomes obsolete. Strategies in this
stage include focusing on cost reduction and maximising profits, discontinuing the product,
or finding new uses for the product in different markets.

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Overall, the key to successful product life cycle management is to constantly evaluate the
product’s performance, adapt to changes in the market, and implement appropriate
strategies at each stage of the product’s life cycle.

Porter’s 5 forces model of industry attractiveness -

[Link]
Stakeholders’ expectations and importance -
[Link]

The levels of operation in different business structures and the resultant conflicts and
their resolutions -
Business structures can be broadly categorised into various levels of operation, each with its
own set of responsibilities, decision-making authority, and potential conflicts. The specific
levels can vary depending on the size, type, and complexity of the organisation, but common
structures include top-level management, middle management, and front-line employees.
Let's explore these levels and the conflicts that may arise at each level, along with potential
resolutions:

Top-Level Management:
Responsibilities:
● This level typically consists of executives such as CEOs, presidents, and other senior
leaders. They are responsible for making strategic decisions, setting overall direction,
and ensuring the organisation's long-term success.
Conflicts:
● Strategic Direction: Conflicts may arise over the strategic vision and direction of the
company.
● Resource Allocation: Disputes can occur over the allocation of financial and human
resources.
Resolutions:
● Clearly communicated organisational goals and strategies can help align the
management team.
● Establishing a transparent decision-making process for resource allocation can
mitigate conflicts.

Middle Management:
Responsibilities:
● Middle managers bridge the gap between top-level management and front-line
employees. They focus on implementing the strategic decisions, managing teams,
and ensuring day-to-day operations run smoothly.
Conflicts:
● Interdepartmental Conflicts: Disputes may arise between different departments or
teams.
● Communication Breakdown: Lack of communication can lead to misunderstandings
and conflicts.
Resolutions:
● Implementing effective communication channels and collaboration tools.
● Encouraging team-building activities to foster better interdepartmental relationships.

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Front-Line Employees:
Responsibilities:
● These are the employees directly involved in the production, sales, or delivery of
goods and services.
● They execute the day-to-day tasks necessary for the organisation's operations.
Conflicts:
● Task-related Disputes: Conflicts can arise over work assignments, deadlines, or
workload.
● Employee Relations: Issues may occur among team members or with immediate
supervisors.
Resolutions:
● Providing training in conflict resolution and interpersonal skills.
● Establishing clear policies and procedures for task assignments and workload
distribution.

The various conflicts between major and minor stakeholders -

Conflicts between major and minor stakeholders can arise in various situations, often rooted
in differences in interests, priorities, and influence. Stakeholders are individuals or groups
who have an interest in or are affected by the activities of a project, organisation, or system.
Here are some common areas of conflict between major and minor stakeholders:

Power and Influence:

● Major stakeholders, such as top executives or large investors, may have more power
and influence over decision-making compared to minor stakeholders like employees
or local communities.
● This power imbalance can lead to conflicts when major stakeholders make decisions
that primarily benefit them but negatively impact minor stakeholders.

Economic Interests:
● Major stakeholders may prioritise financial gains and profit maximisation, while minor
stakeholders, such as customers or employees, may prioritise fair treatment, job
security, or product quality.
● Conflicts may arise when decisions favouring major stakeholders' economic interests
lead to negative consequences for minor stakeholders.

Communication and Transparency:

● Major stakeholders may control communication channels and information flow,
potentially leading to conflicts with minor stakeholders who seek transparency and
open communication.
● Lack of information or selective disclosure can breed mistrust and conflict between
major and minor stakeholders.

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Risk Tolerance:
● Major stakeholders, particularly investors, may have a higher risk tolerance in pursuit
of higher returns, while minor stakeholders may have a lower tolerance for risk due to
concerns about job security or community well-being.
● Decisions that involve significant risk-taking can lead to conflicts between these
divergent risk tolerances.

*Long-Term vs. Short-Term Goals:

● Major stakeholders might focus on short-term financial gains, while minor
stakeholders, especially employees or local communities, may be more concerned
with long-term sustainability and well-being.
● Conflicts can arise when decisions prioritise short-term gains at the expense of
long-term stability and ethical considerations.

Resolving conflicts between major and minor stakeholders often requires effective
communication, negotiation, and finding a balance that considers the interests of all parties
involved. Establishing clear channels for dialogue, promoting transparency, and
incorporating diverse perspectives in decision-making processes can contribute to
minimising conflicts and fostering a more collaborative environment.

Analysis of Resources -

Resources can be tangible or intangible.

Tangible resources: Physical assets of an organisation such as plant, labour and finance
Intangible resources: Non -physical assets of an organisation such as information, reputation
and knowledge

Categories of Resources:

1. Physical Resources
● They include no. of machines, buildings or the production capacity of the organisation
● The nature of these resources viz., the age, condition, capacity and location of such
resource will determine the usefulness of such resources
2. Financial Resources
● Such as, capital, cash, debtors and creditors and suppliers of money (shareholders,
bankers etc.,)
3. Human Resources
● Includes the number and mix (eg., demographic profile) of people in an organisation
● The intangible resource of their skills and knowledge is also important
● This applies both to employees and the other people in the organisation’s networks
● In knowledge based economies people are the most valuable asset
4. Intellectual Resources
● This includes patents, brands, business systems and customer databases
● Intangible resources have a value, when the businesses are sold part of the value is
‘goodwill’

BCG Matrix, SWOT Analysis -(DIY)