Business Strategy

Definition

Strategy is the direction and scope of an organisation over the longterm: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".

In other words, strategy is about:

What is the business trying to get to in the long-term (direction). Which markets should a business compete in and what kinds of activities are involved in such markets? (markets; scope) How can the business perform better than the competition in those markets? (Advantage)? What resources (skills, assets, finance, relationships, technical competence, and facilities) are required in order to be able to compete? (Resources)? What external, environmental factors affect the businesses' ability to compete? (environment) What are the values and expectations of those who have power in and around the business? (stakeholders)

Company Strategy

Mission

Vision

Mission Statement:
A strategic plan starts with a clearly defined business mission. A mission describes the organisations basic function in society, in terms of the products and services it produces for its customers. " Mintzberg" A clear business mission should have each of the following elements:

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Mission Statement

2004 by Prentice Hall 1-8 Terrie Nolinske, Ph.D.

Mission Statement: Otis Elevator

Our mission is to: provide any customer a means of moving people and things up, down and sideways over short distances with higher reliability than any similar enterprise in the world.

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Vision

To succeed in the long term, businesses need a vision of how they will change and improve in the future. The vision of the business gives it energy. It helps motivate employees. It helps set the direction of corporate and marketing strategy.

What are the components of an effective business vision?

Six requirements for success: - Provides future direction - Expresses a consumer benefit - Is realistic - Is motivating - Must be fully communicated - Consistently followed and measured

Vision Statement: Otis Elevator

We intend to be the recognized leader in service excellence among all companiesnot just elevator companiesworldwide. We will inspire our customers total confidence through exceptional service that earns us 100 percent of their business, 100 percent of the time.

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Value
Values provide the justification of behaviour and, therefore, exert significant influence on marketing decisions We put customers first - We are professional - We respect each other - We work as one team - We are committed to continuous improvement

Objectives

Objectives set out what the business is trying to achieve, so objectives are the anticipated end result of programmes of activity, and therefore have a central role in strategy formulation.

Objectives level
Corporate objectives (Long term objectives) It is should be clear, quantifiable and capable of being achieved Corporate objectives should relate to those factors that determine an organisations success Market share Growth Profitability. B. Functional objectives (Medium-term) Functional objectives are specific to individual units of an organisation, it relates to the tactical or operational aspects C. Individual objectives (short-term) What are the members expected to achieve over a given period. Task-related objectives: e.g. To reduce operating errors Self-development objectives
A.

Function of Objectives
Enable overall objectives of the organisation to be broken down into clear statements of what needs to be done at each level. Provide clear statements of what action need to be taken Provide focus for all activities Provide targets for both individual and group achievement. Provide a basis for evaluation

Setting objectives
Agree the objectives

"What do we want to achieve?"

Prioritise objectives

"How important are they?"

Define the activities and tasks

"What has to be done?"

Agree the standards of performance

"Measuring the quality of work?"

Allocate role

"Who should perform the required task?"

Timetable performance criteria

"Writing down the objectives"

Objectives should be:

Complete, Controllable, Concise, Measurable and Understandable Another advice "a person should be SMART while setting out the objectives Specific, Measurable, Agreed, Realistic and Timetabled.

Stakeholder
The different stakeholder groups have different interests some in common with other stakeholders and some in conflict.

Examples of common interests:

Shareholders and employees have a common interest in the success of the organisation. High profits which not only lead to high dividends but also job security. Suppliers have an interest in the growth and prosperity of the firm

Examples of conflicting interests

Wage rises might be at the expense of dividend. Managers have an interest in organisational growth but this might be at the expense of short term profits. Growth of the organisation might be at the expense of the local community and the environment.

Importance of stakeholder

Stakeholder analysis is important for the development of knowledge and understanding about other organisation in the firm's environment. This analysis can indicates the main relationships of interdependence between stakeholders and help in identifying all those that indirectly assist the business in achieving its objectives. It can be classified into two groups performance role and support role.

However the degree of dependence can be analysed according to the following criteria
Disruption: can the stakeholder disrupt the organisation's plans (e.g. a bank withdrawing overdraft facilities?) Replacement: can the firm replace the relationship Uncertainty: does the stakeholder cause uncertainty in the firm's plan?

Stakeholder analysis

Steps:
Identifying Your Stakeholders: The first step is to list all stakeholder, think of all the people who are affected by your work, who have influence or power over it, or have an interest in its successful Prioritize Your Stakeholders: Some of these may have the power either to block or advance. Some may be interested in what you are doing, others may not care. So, Map out your stakeholders on a Power/Interest Grid on our free template as shown in figure, and classify them by their power over your work and by their interest in your work

Someone's position on the grid shows you the actions you have to take with them:

High power, interested people: these are the people you must fully engage and make the greatest efforts to satisfy. High power, less interested people: put enough work in with these people to keep them satisfied, but not so much that they become bored with your message. Low power, interested people: keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project. Low power, less interested people: again, monitor these people, but do not bore them with excessive communication.