Business Strategy

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  • Created by: A92
  • Created on: 11-04-13 18:04


Strategic analysis:

In order for an organisation to make strategic decisions, it must first analyse it's mission and vision.

Vision & Mission -

There are 4 main factors that could influence organisational purpose..

  • Corporate Governance (the way a business is run and it's structure of decision making)
  • Stakeholders
  • Business ethics
  • Cultural context
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The business environment -

The 5 forces model of competition..

This model helps a firm choose an appropriate strategy to enhance its competitive opportunities and to protect itself from competitive threats.The 5 forces include..

  • The bargaining power of suppliers
  • The bargaining power of buyers
  • The threat of potential new entrants
  • The threat of substitues
  • The extent of competitive rivalry

The limitations of the 5 forces model..

  • Takes a static view of the business environment, when in actual fact it is everchanging
  • Fails to take sufficient account of the microenvironment of the organisation and its HR
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Strategic choice:

Theories of strategic choice fall into 2 main categories..

- Market based theories..

Understanding and identifying ways to deal with the competitive environement, will determine whether a firm is successful or not.

- Resource based theory..

This looks at how strategic decision making is affected by the ownership, control and use of an organisations resources.

Environment or market-based strategy -

There are 3 fundemetal strategies that a business might adopt..

  • Cost leadership - (i.e. - low cost leader)
  • Differentiation - (i.e. - emphasise and promote unique products)
  • Focus strategy - (i.e. - focus on market niches)
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Resource-based strategy -

This focuses on exploiting a firms internal organisation and production process in order to develop its competitive advantage. A firms distinctiveness sets it apart from rivals.

  • Core competencies..

These are key skills of a business that underpin its competitve advantage.

  • What defines a core competence?

A core competence must satisfy the following 4 capabilities to serve as a source of competitive advantage for the business. It must be..

- Valuable

- Rare

- Costly to imitate

- Non-substitutable

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Business strategy in a global economy:

Why go global? -

The following are reasons why a firm may wish to expand beyond it's domestic market..

  • Scope for significant cost reductions (i.e - learning by doing)
  • Using core competencies
  • Spreading risk (diversification)
  • Keeping up with rivals
  • Location economies
  • Market size
  • Increased profitability
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Business Strategy

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