Business Strategy Lecture Notes

Business Strategy Lecture Notes I. Introduction to Business Strategy A. Definition of Business Strategy Business strategy is a set of decisions and actions that guide a company in achieving its long-term goals and objectives. It involves determining how a company will compete in its industry and create value for its stakeholders. B. Importance of Business Strategy Helps a company adapt to changing environments. Provides a roadmap for resource allocation. Enhances competitive advantage. Guides decision-making at all levels. II. Strategic Analysis A. Environmental Scanning Identifying external factors that can impact the business. Tools: PESTEL analysis (Political, Economic, Sociocultural, Technological, Environmental, Legal). B. Industry Analysis Understanding the competitive forces within the industry. Porter's Five Forces Model: Threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, competitive rivalry. C. Internal Analysis Assessing the company's strengths and weaknesses. SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). III. Corporate-Level Strategy A. Cost Leadership Achieving the lowest cost of production in the industry. Examples: Walmart, Amazon. B. Differentiation Creating unique products or services. Examples: Apple, Tesla. C. Focus Strategy Concentrating on a specific market segment. Examples: Rolex, Ferrari. IV. Business-Level Strategy A. Competitive Advantage How a company positions itself in the market. Cost advantage or differentiation. B. Value Chain Analysis Examining the activities that create value for customers. Primary activities (e.g., production, marketing) and support activities (e.g., HR, procurement). C. Generic Business Strategies Michael Porter's strategies: Cost leadership, differentiation, focused low cost, focused differentiation. V. Corporate Growth Strategies A. Organic Growth Expanding through internal means, e.g., new product development, market penetration. B. Inorganic Growth Expansion through mergers and acquisitions (M&A). Reasons for M&A: synergy, diversification, market entry. C. Strategic Alliances Collaborations with other firms for mutual benefit. Joint ventures, partnerships, alliances. VI. International Business Strategy A. Globalization Expanding operations across borders. Considerations: cultural differences, legal regulations, exchange rates. B. Multi-Domestic Strategy Customizing products and strategies for each local market. High adaptation, high local responsiveness. C. Global Strategy Standardizing products and strategies for global markets. Economies of scale, low cost. VII. Strategy Implementation and Execution A. Organizational Structure Aligning the company's structure with its strategy. Centralized vs. decentralized. B. Leadership and Culture Leadership style and organizational culture must support the chosen strategy. C. Resource Allocation Allocating resources (financial, human, technological) in line with strategic priorities. VIII. Strategy Evaluation and Control A. Key Performance Indicators (KPIs) Metrics used to measure the success of the strategy. Financial (e.g., ROI, profit margin) and non-financial (e.g., customer satisfaction, employee engagement) KPIs. B. Balanced Scorecard A framework to assess performance from multiple perspectives (financial, customer, internal processes, learning and growth). C. Feedback Loops Continuously monitoring and adapting the strategy as needed based on feedback. IX. Conclusion A. Recap of Key Concepts Business strategy definition, analysis, types, growth strategies, international considerations, implementation, evaluation. B. Importance of Business Strategy Strategic thinking as a cornerstone of business success. C. Questions and Discussion