PHAR 4105 Community Pharmacy Practice: Business Strategy

Strategy Formulation and Implementation

• Business strategy is a general direction set for the company and its components to achieve a desired state in the future.

Purpose of Business Strategy

• Achieving effectiveness and meeting challenges and threats
• Perceiving and utilizing opportunities
• Mobilizing resources and securing an advantageous position
• Directing efforts and gaining command over the situation

Strategic Management

• The process of evaluation, planning, and implementation to maintain or improve competitive advantage
• Evaluating external and internal environments
• Developing business models, corporate direction, competitive tactics, and international strategy
• Implementing requires leadership to build the organizational structure, develop management culture, control strategic processes, and steer the organization through corporate governance

Strategic Management Process

• Environmental scanning to collect information for strategic purposes
• SWOT analysis to identify strengths, weaknesses, opportunities, and threats
• PEST analysis to identify external factors affecting the organization

Strategy Formation

• Choosing the most appropriate course of action for realizing organizational goals and objectives
• Examining resources, providing a financial plan, and establishing an action plan to increase profits

Mission and Vision

• Mission: the organization's business, objectives, and how to achieve them
• Vision: where the organization aspires to go and how it will reach its objectives

Steps of Strategy Formation

• Factors affecting organizational goals, strengths, and limitations
• External opportunities and threats

Levels of Strategy

• Corporate Level: long-range, action-oriented, integrated, and comprehensive plan
• Business Level: relates to a particular business and developed by general managers
• Functional Level Strategy: involves decision-making at the operational level concerning specific functional areas

Corporate Level Strategies

• Stability: keeping operations within normal parameters to increase profit and minimize risk
• Expansion: expanding the company's business operations to achieve long-term goals
• Retrenchment: reducing the size and scope of the company's operations to cut costs and improve efficiency
• Combination: simultaneously implementing two or more strategies

Porter's Five Forces

• A model that identifies and analyzes five competitive forces that shape every industry
• Helps determine an industry's weaknesses and strengths

Business Level Strategies

• Depends on the organization's mission and vision

Strategy Implementation

• The process of turning plans into action to reach a desired outcome
• Implementation is vital to success

Strategic Evaluation

• The process of assessing the effectiveness and efficiency of a strategic plan or initiative
• Set critical feedback mechanism to determine whether the strategy has achieved its intended objectives

Strategic vs Operational Decisions

• Strategic decisions are long-term, related to overall planning, and concern the organization's growth
• Operational decisions are short-term, based on daily needs, and related to production and factory growth
• Administrative decisions are medium-term, based on strategic and operational decisions, and concern the working of employees in an organization

Advantages of Strategic Management

• Provides a framework for decision-making
• Supports understanding and buy-in
• Provides an organizational perspective
• Enables measurement of progress

Disadvantages of Strategic Management

• Accurate anticipation of the future may be difficult
• Impedes flexibility
• Can be expensive
• Long-term benefit vs immediate results is difficult to balance