Strategy and Leadership in Business Decision-Making

• This session is being recorded for use as an internal online resource.

Strategy and Leadership

• Topics covered: Strategy and Leadership

Learning Outcomes

• Explain the meaning and significance of strategy to business decision-making.
• Explain and identify the techniques used to set a firm's strategy.
• Understand the difference between leadership and management.

Goals

• Goals are general statements of what needs to be accomplished to implement a strategy.
• Business goals should be specific, measurable, achievable, and timely.
• Businesses set goals to have a clear understanding of what they expect to accomplish in a specific time period.
• Tesco's goals include understanding customers, being first to meet needs, and acting responsibly.
• Tesco aims to help communities, reduce food waste, promote healthy living, source sustainable products, and maintain transparency.
• Tesco treats people how they want to be treated by working as a team, and trusting and respecting each other.

Strategy Defined

• Strategy is the long-term direction of an organization.
• Strategy is a business approach to set competitive moves that generate a successful outcome.
• Key questions in strategy: Where are we now?, Where do we want to go?, How will we get there?, and How do we know if we got there?

Strategy Inclusions

• A strategy includes strengthening the organization's competitive position.
• A strategy includes satisfying customers, achieving targets, and helping the business to grow.
• Types of growth inlcude organic growth by increasing the customer base and improving productivity.
• Types of growth include acquisition by purchasing another corporation.
• Strategies should respond to market conditions.

Strategic Plan

• A strategic plan involves mapping where the organization is headed.
• A strategic plan involves setting short and long-range performance targets.
• A strategic plan involves defining the actions of management to achieve desired outcomes.
• A strategic plan typically includes a mission statement, strategic and financial performance objectives, and a comprehensive strategy.

Strategy Formulation

• Strategy formulation includes identifying an organization's external opportunites and threats.
• Strategy formulation includes determining internal strengths and weaknesses.
• Strategy formulation includes establishing long-term objectives, and generating alternative strategies.
• Formulation includes deciding which new businesses to enter, how to allocate resources, and whether to expand or diversify operations.
• Formulation includes wheter to enter international markets, whether to merge or form a joint venture, and how to avoid a hostile takeover

Strategy Formulation: The Rational Approach

• The rational approach to strategy formulation consists of conducting a SWOT analysis.
• The rational approach to strategy formulation consists of applying Porter's five forces.
• The rational approach to strategy formulation consists of using the Ansoff Matrix.

SWOT Analysis

• SWOT Analysis is a method for analyzing a business and its environment.
• Internal strengths and weaknesses, and external opportunities and threats are all components of the SWOT analysis.
• The SWOT analysis aims to discover what the business does better or worse than competitors, and makes the most of available opportunities.
• A good SWOT analysis identifies how a business should respond to changes in its external environment.

Internal vs External Factors

• Strengths and weaknesses are internal to the business and relate to the present situation.
• Opportunities and threats are external to the business.
• Opportunities and threats relate to changes in the environment that impact the business.
• Strengths are internal to the business, represent capabilities, and provide a clear advantage over rivals.
• Strengths should be used to build up competitive advantage and serves as a fundemental of strategy.

Strengths

• Strengths include market share, technological advantages, leadership, reputation, and flexibilty.
• Strengths also include economies of scale, distribution network management skills, quality, productivity, and financial resources.

Weaknesses

• Weaknesses are sources of competitive disadvantage.
• Weaknesses represent things a business lacks or does poorly, and places the business at a disadvantage.
• Examples of weaknesses may include outdated technology, high costs, inefficiency, or a skills gap.
• Weaknesses can also be cash flow problems, poor quality, a weak brand, or de-motivated staff.
• Weaknesses should be seen as areas for improvement.

Opportunities

• Opportunities are external features that create positive potential for the business to achieve its objectives.
• Opportunities include economic innovation, new demand, market growth, or demographic/social changes.

Threats

• Threats are any external development that hinders the business from achieving its objectives.
• Threats may include new market entrants, economic downturns, change in customer behavior, or higher costs.
• Threats may also include new regulations, or competitive price pressures

Key Words in SWOT

• The key words in SWOT analysis are MATCH and CONVERT.
• Strengths should be matched with Opportunities.
• Weaknesses should be converted into Strengths.

Competitive Rivalry

• This force is the major determinant on how competitive and profitable an industry is.
• Firms have to compete aggressively for market share in competitive industries

Competing among Competitors

• Competition among competitors is intense when there are many competitors.
• Exit barriers are high when industry growth is slow or negative.
• Products are not differentiated when competitors are of equal sizes.
• Competition is intense when low customer loyalty occurs.

Ansoff Matrix

• Igor Ansoff created the Ansoff Matrix.
• It is a framework for identifying corporate growth opportunities.
• Product and market dimensions determine the scope of options.
• Four generic growth strategies are identified: Market Penetration, Market Development, Product Development, and Diversification.
• Market penetration involves selling more of the same product to the same customers.
• Market development involves securing new customers for existing products.
• Product development involves creating new products for existing customers.
• Diversification involves introducing new products to new customers.
• The greater degree of newness involves greater risk.
• Market penetration has little risk, market and product development has moderate risk, and diversification has high risk.

Growth Strategies

• Growth Strategies include Diversification, Mergers / Acquistions, Joint ventures, Franchising and Exporting

Management Responsibilities

• Managers are responsible for supervising the use of resources to meet goals.
• Managers rights to manage is saved by law.
• Managers of public limited companies have a legal duty towards their shareholders.

Managerial Power

• Types of power include Position, Reward, Charisma, Political and Expertise power.
• Activities for managers include forecasting, planning, organising, coordinating, and Commicatuing

Leadership vs Management

• Leadership involves creating a vision, values, and transformation.
• Management involves carrying out the vision, planning, and organizing.