business strategy


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A strategy is a way of achieving an objective
Businesses of all sizes have to make many decisions each day some are fairly simple and routine,
whilst others are more complex and require significant management time and effort. Some
examples of decisions that all businesses need to make are:
Where should we locate the business?
What goods should we produce?
What price should we charge?
What should we do if a supplier fails to deliver on time?
Which job agency should we use to provide us with some temporary workers?
Which employee appraisal system should we use?
Decisionmaking is the basic task of all managers in all departments of the business, and both in the
private and the public sectors. These decisions are, effectively, designed to influence the actions of
other people.
A strategic decision is one which is very highrisk and is likely to influence the overall longterm
policy and direction of the business. As such, it is likely to be dealt with by senior management (e.g.
what new products to develop).
A tactical decision is a fairly routine, predictable, shortterm decision, which is normally handled
by middle management (e.g. what price to charge for products). Other decisions which are
repetitive, daytoday and fairly riskfree are handled by lowerlevel management, and are generally
referred to as operational decisions (e.g. how long should teabreaks be?).
Businesses have to make decisions in order to achieve their objectives.
There are eight key stages involved in the traditional decisionmaking process:
1. Set objectives. The decisionmaking process cannot proceed without an achievable,
realistic and identifiable target to be met.
2. Gather data. Use market research to collect as much information as possible from inside
and outside the business, so to enable the decisionmakers to have the necessary data with
which to make an effective decision.

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Analyse the data. Look at the different courses of action and decide which ones look the
most achievable and realistic to meet the objective.
4. Make a decision. This stage is vital to the whole process. The decisionmakers must
ensure that they follow the correct course of action and do not reject a better alternative.
5. Communicate. This to the whole organisation. The relevant people, both inside and outside
the organisation, need to be informed about the decision and how it may affect them.
6.…read more

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Three types of decision making tools are shown
Decision tree
A decision tree is a diagram that sets out the different options that are available to a business when
making decisions and it also shows the chance (or probability) of their occurrence. It sets out the
actual values to be expected should a particular course of action be followed.…read more

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Node B is represented as a circle and is called a chance node (i.e. there are several possible
outcomes from this node, one of which will definitely happen).
4.Each event stemming from a chance node has a probability attached to it (these probabilities must
always add up to 1).
5.The actual values are always listed at the end of each branch.
In order to calculate the expected value at a chance node (e.g.…read more

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A threat represents a potential future problem which the business may face in the future, such as
new competitors entering the industry, new legislation restricting the use of certain raw materials, or
the possibility of being takenover by another company.
Remember, the strengths and weaknesses are internal factors which the company currently
faces. The opportunities and threats are external factors which the company may face in the
The S.W.O.T. analysis is represented in a simple fourbox diagram, as illustrated below:
Example of a S.W.O.…read more

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Before contingency planning can take place, a business must consider many possible threats and
crises that it may face, in order to be able to react to them swiftly and efficiently if they do ever
occur. These potential scenarios are often computersimulated, and they can predict to a high level
of accuracy the likely effects of a crisis on the finances and resources of a business.
Crisis management is the response of an organization to a crisis (e.g. a fire, terrorist activity,
natural disaster).…read more


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