ACC0055 Strategic Business Analysis 2018 PDF

ACC0055 STRATEGIC BUSINESS ANALYSIS  Module 1 Basic Concepts in Business Policy and Strategy Learning Outcomes: At the end of the session, the student is expected to: Differentiate the difference between business policy and strategy Discuss the strategic plann...

ACC0055 STRATEGIC BUSINESS ANALYSIS  Module 1 Basic Concepts in Business Policy and Strategy Learning Outcomes: At the end of the session, the student is expected to: Differentiate the difference between business policy and strategy Discuss the strategic planning phases Define globalization Discuss and understand the period age; and Enumerate and discuss the different theories on organizational adaptation ▪ For any organization to operate and effectively focus its efforts on certain tasks and avoid going astray or deviate away from targets, a sense of direction needs to be set and some sort of rules or guidelines have to be established and observed Do you agree? Concept of Business Policy Planning Evaluating Organizing Controlling Staffing Coordinating Concept of Business Policy ▪ Business policy generally refers to a set of rules that guides the conduct of the business in pursuit of profit and other objectives of the business organization ▪ Example of company policies: ▪ Intel: Cannibalize your product line ▪ General Electric (GE): GE must be number one or two wherever it competes ▪ 3M: Researchers should spent 15% of their time working on something other than their primary project ▪ Maytag Company: Maytag will not approve any cost reduction proposal if it reduces product quality in any way Concept of Strategy ▪ Strategy refers to top management’s plan to attain the outcomes consistent with the organization’s mission and goals ▪ Strategy is the management’s “game plan” to achieve the following: 1. Attract and please customers; 2. Stake out a market position; 3. Conduct operations; and 4. Compete successfully ► Strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission and objectives Concept of Strategy ▪ Three types of strategy: 1. Corporate strategy – describes the overall direction in terms of its general attitude toward growth and the management of its various business and product lines 2. Business strategy – Usually occurs at the business unit or product level and it emphasizes improvement of the competitive position of the corporation’s product or services in the specific industry or market segment served by that business unit 3. Functional Strategy – Is the approach taken by the functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity. ▪A hierarchy of strategy is the grouping of strategy types by level in the organization. This is a nesting of one strategy by level in the organization. Functional strategies support business strategies, which, in turn, support the corporate strategies. Strategic Management ▪ It is a set of managerial decisions and actions that determines the long-run performance of a corporation. It includes: ▪ Environmental scanning (both external and internal), ▪ Strategy formulation (strategic or long-range planning) ▪ Strategy Implementation ▪ Strategy Evaluation ▪ The study of strategic management emphasizes the monitoring and evaluating of external opportunities and threats in light of a corporation’s strengths and weaknesses. ▪ Strategic management incorporates such topics as long-range planning and strategy Strategic Management Process STRATEGY SITUATION STRATEGY STRATEGY EVALUATION AND ANALYSIS FORMULATION IMPLEMENTATION CONTROL Environmental Mission/Vision Programs/Activities Performance Scanning Strategies/Policies Budgets/Procedures Actual Result The Strategic Management Process ▪ Situation Analysis. This includes environmental scanning, this is the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the corporations. ▪ SWOT analysis – Is an acronym used to describe those particular Strengths, Weaknesses, Opportunities and Threats that are strategic factors for a specific company. ▪ External environment consists of variables (Opportunities and Threats) that are outside the organization and not typically with the short-run control of top management. ▪ Internal environment of a corporation consists of variables (Strengths and Weaknesses) that are within the organization itself and are not usually within the short-run control of top management. The Strategic Management Process ▪ Strategy Formulation. It is the development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses. ▪ It includes defining the corporate mission, specifying achievable objectives, developing strategies and setting policy guidelines. Strategy formulation is composed of three organizational levels: operational, competitive and corporate. ▪ Operational strategies are short-term and are associated with the various operational departments of the company. ▪ Competitive strategies are those related to the technique in competing in a certain industry. This strategy deals with establishing competitive strength against competitors and are discussed in succeeding chapters. ▪ Corporate strategy. The essence of this is to be able to improve both operational and competitive strategies. Corporate strategies are long term and are involved in providing direction for the organization The Strategic Management Process ▪ Competitive advantage. Competitive advantage looks at quality. It is tantamount to superior quality wherein a customer would pick out a particular brand that provides excellent performance. ▪ Competitive advantage is also achieved when the company always anticipates what the customers need and want. It responds to customers’ suggestions and attend, analyzes and monitors customer complaints. The Strategic Management Process ▪ Strategy Implementation. It is the process by which strategies and policies are put into action through the development of programs, budgets and procedures. ▪ This process might involve changes within the overall culture, structure and/or management system of the entire organization. The Strategic Management Process ▪ Strategy Evaluation and Control. It is the process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance. ▪ Although evaluation and control are the final major process of strategic management, it can also pinpoint weakness in previously implemented strategic plans and thus stimulate the entire process to begin again. ▪ Performance is the end result of activities. It includes the actual outcomes of the strategic management process. The practice of strategic management is justified in terms of its ability to improve an organization’s performance, typically measured in terms of profits and return on investment. ▪ The evaluation and control performance completes the strategic management model. The Strategic Management Planning Phases As managers attempts to better deal with their changing world, a firm generally evolves through the following four phases of strategic management: ► Phase 1: Planning Financial Aspects ► Phase 2. Forecast-based Planning ► Phase 3. Externally oriented planning (strategic planning) ► Phase 4. Strategic Management Benefits of Strategic Management ▪ Clearer sense of strategic vision for the firm ▪ Sharper focus on what is strategically important ▪ Improved understanding of a rapidly changing environment  Globalization refers to the shift towards a more integrated and independent world economy. Globalization has several facets, including the globalization of markets and the globalization of production. PRACTICAL EXAMPLES OF GLOBALIZATION Jollibee in Manhattan Starbucks in Japan Taylor Swift Eras Tour TYPES OF GLOBALIZATION Trade Transportation? Exchange of goods and services between nations. Immigration Knowledge? Live, Work or Study in another place other the place of origin. Travel & Tourism Law? Experiencing other countries and culture. Communication International systems of communications. Media and Entertainment Movies and print media are distributed globally. FACETS OF GLOBALIZATION The Globalization of Markets The Globalization of Production Refers to the merging of historically distinct and Sourcing goods to take advantage of differences in cost separate national markets into one huge global and quality of factors of production. marketplace. Reasons: Reasons: Falling barriers to cross-border trade and Factors of production include labor, energy, land, investment. capital. Global tastes. Early outsourcing was confined to manufacturing. Benefits small and large companies. Modern communications technology has advanced Significant differences between national outsourcing today for service activities. markets. Products that serve universal needs are global: oil. Competitors may not change among nations. Place Your Footer Here 20 COMPANIES ADOPTING MARKET GLOBALIZATION American–icon One-brand strategy Share-a-Coke Campaign Globalization Strategy based on “3 Golden Pillars” Cloud Data Engagement ”Glocal” – think globally, act local. localizing its solutions due to differing legal requirements and user needs in different markets. Famous in more than 90 countries worldwide Prioritizes localized menu options ADOPTING PRODUCTION GLOBALIZATION CHINA ADOPTING GLOBALIZATION OF PRODUCTION GLOBAL COMPANIES GLOCALIZATION (thinking Global, acting local) An amalgamation or a two-level system linguistic hybrid of globalization and localization. Popularized by sociologist Roland Robertson Coined by the Japanese to explain the Japanese global marketing strategies. Refer to marketing strategies and business methodologies of companies in a foreign market. It is the creation of products or services for the global market by adapting them to local cultures and environment. McItaly Burger Maharaja Mac McLobster Ebi Filet-o Seaweed Shaker Fries  GLOCALIZATION (thinking Global, acting local) Car manufacturers glocalization strategy by producing cars in accordance to right-hand driving or left-hand driving. Asian Countries practicing Right-hand drive Thailand Malaysia New Zealand Indonesia Singapore Impact of Globalization and Electronic Commerce ▪ Today, everything has changed. Globalization, the internalization of markets and corporations, has changed the way modern corporation do business. ▪ Since the market is now a vast area where there are various brands competing with each other, companies now have to sell their brands in every continent around the world. ▪ Electronic Commerce refers to the use of the Internet to conduct business transactions. The following are the identified seven trends due to the rise of the internet. 1. Internet is forcing companies to transform themselves 2. Distribution channels have changed drastically through the years. 3. Customers have more power than ever because of their unlimited access to information through the internet 4. Firms are now exploring endless possibilities to innovate using the internet 5. Business pacing is increasing. This reality paves the way for the urgency of using the internet to get information on customer need and expectations, innovations, among others. 6. The internet is pushing corporations out of their traditional boundaries. 7. Knowledge is a very important assets. Companies have a competitive advantage if they are well-informed Theories of Organizational Adaptation ▪ Globalization and electronic commerce. ▪ Population Ecology. Proposes that once an organization is successfully established in a particular environment niche, it is a unable to adapt to changing conditions. ▪ Institution Theory. Proposes that organization can and do adapt to changing conditions by imitating other successful organization ▪ Strategic Choice Perspective. Proposing that not only do organizations adapt to a changing environment but also have the opportunity and power to reshape their environment ▪ Organizational Learning theory. Organizations adjust defensively to a changing environment and use knowledge offensively to improve the fit between the organization and its environment. Creating a Learning Organization A learning organization is an entity that fosters a culture of continuous learning and knowledge creation at all levels. It is an organizational paradigm that recognizes the importance of adapting to change, acquiring new knowledge, and leveraging insights to improve performance and achieve strategic objectives. Four main activities on learning organizations: ► Solving problems systematically ► Experimenting with new approaches ► Learning from their own experiences and past history as well as from the experiences of others ► Transferring knowledge quickly and efficiently throughout the organization