Development of the organisation's strategy

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Mission Statement

A mission statement defines the core purpose of the organisation, by broadly stating the reasons why the organisation exists.

An effective mission statement should have the following characteristics:

  • Inspire change within the organisation
  • long term in nature
  • understandable and easily communicated

Benefits of the mission statement:

  • Describes what the organisation is about
  • Reveals the area in which the organisation is operating
  • enables communication of a common culture through the whole organisation
  • provides a guiding philosophy about the direction an organisation should take
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Core Values

Core values are the principles that guide an organisation by describing how every employee is expected to behave.

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Vision Statement

The vision statement defines where the organisation wants to go in the future.

The vision statement gives a clear picture in words of what the organisation wants to become ultimately in the future.

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Strategy is about choosing long-term activities to achieve the purpose set out in the mission statement and ultimately moving towards realising the vision.

Elements of strategy can be identified as follows:

  • The choice of activities of the organisation should focus on the key strengths as to provide a competitive advantage.
  • Trade-offs should be done about activities that are inline with the organisation's strategy and that fit into another in order to lead to success.
  • The formulation of strategy involves both conceptual and analytical thought processes and should display a broad conceptual knowledge of the operating environment of the organisation.
  • Strategy must take the organisation's core values into account.
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Cost leadership strategy

Aims to supply, no frills, high volume products or services at better prices than competitors.

Stresses that facilities are efficient for their purpose and engage in cost reductions in the manufacturing process.

Minimising expenses 

e.g. Shoprite

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Differentiation strategy

Aims to create products or services perceived as uniquely attractive, creative and well-designed.

Aim to gain a reputation for the excellent quality of their products or services, good corporate image, and first-rate marketing channels.  

Emphasises strong market abilities.

e.g. Woolworths

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Pricing strategies

Price skimming:

By setting high selling prices for unique products, thereby maximising short-term profits.

Selective pricing:

Setting different selling prices for the same product or service in different markets.

Market pricing:

Setting the selling price for a product or service on the perceived value to the customer

Predatory (penetration) pricing:

Setting a low selling price for a product or service in order to gain market share.

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Strategic objectives

Strategic objectives clearly formulate measures of progress and targets to be achieved in a specific time frame.


  • It is a precise formulation of the goals to be achieved
  • It contains a measure for progress towards the attainment of the attribute
  • It contains a target to be achieved
  • It contains a time-frame in which the target is to be achieved.

Strategic objectives should meet the following criteria (SMART)

  • Specific in what is to be achieved
  • Measurable, specified as a quantity
  • Attainable
  • Relevant to the mission
  • Time-bound with a completion date
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Primary stakeholders (have a contractual relationship):

Internal stakeholders:

  • Managers
  • Employees

Connected stakeholders:

  • Shareholders
  • Banks, creditors, suppliers
  • Secondary stakeholders (no contractual relationship):

External stakeholders:

  • Gov, proffesional bodies, community
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Factors that influence the development of strategy

External environment/external factors:

  • Political
  • Economical
  • Social
  • Technological
  • Competitive environment (Operating)

Internal environment/internal factors:

  • Corporate culture
  • Organisational leadership
  • HR policies
  • Industrial relations
  • Controls at organisation level
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Strategic planning

It is the process of defining the organisation's strategy and making decisions about the allocation of its resources to follow this strategy. The allocation of resources includes the organisation's capital and people.

A principle goal when drafting a strategic plan is to develop it in such a way that it can be easily turned into action plans.

Typical 3 step approach to strategic planning:

Step 1:

Evaluate the existing/current situation as well as how it developed (SEE)

Step 2:

Define goals (Think)

Step 3:

Design a workable method to achieve the goals (Draw)

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Types of goals

Typically organisations have several goals at the same time that can be dealt with in the following ways:

Goal congruency:

Different goals needs to blend/integrate to form an integrated strategy. The goals should not be in conflict with another goal.

e.g. a goal from dept A should combine or integrate with a goal from dept B.

Goal hierarchy:

Short, medium and long-term goals are an example whereby to achieve the long-term goal the short and medium term goals needs to be achieved.

Goal sequencing/goal stairway:

One goal is used as a method to obtain another goal.

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