Organizations can be divided into:
Business firms – a privately owned that serves its customers in order to earn a profit
Non-profit organizations – a nongovernmental organization that services its customers but does
not have profit as an organizational goal.
Levels in Organizations:
1. Corporate level – Level at which top management directs overall strategy for the entire
organization. This level creates value for shareholders of the firm, as measured by the
performance and profitability.
2. Business Unit Level – Level at which business unit managers set the direction for their products
3. Functional Level – Level at which group of specialists actually create value for the organization.
Cross-functional teams: a small number of people from different departments in an organization who
are mutually accountable to a common set of performance goals.
Internal stakeholders: employees, officers, and board members
External stakeholders: customers, suppliers, distributors, governments, union, local communities, and
the general public.
Strategy Issues in organizations:
The business definition – at birth, most organizations have a clear idea about “what” something
and “someone” mean. But as the organization grows over time, often its purpose gets fuzzy or
unclear. This is when the organization repeatedly asks some of its most difficult questions: what
is our business? Who are our customers? What offerings should we provide to give these
customers value? Organizations must be careful not to define their business too narrowly or too
broadly. If they do, they may lose sight of who their customers are and how to best serve them.
The mission: After defining its business an organization can take steps to define its mission. A
mission is a statement of an organization’s scope that often identifies its customers, markets,
products, technology, and values.
Organizational Culture: Whether it’s corporate, business, or functional level, organizational
culture exists in the unit, which is a set of values, ideas, and attitudes that is learned and shared
among the members of the organization.
Goals: Goals exist at the corporate, business and functional levels. All lower-level goals must
contribute to achieving the goals at the next, higher level. Firms can pursue several different
types of goals such as profit, sales revenue, market share, unit sales, quality, customer
satisfaction, employee welfare, and social responsibility.
Where are we now? Asking an organization where it is at the present time involves identifying its
customers, competencies, and competitors. Competencies: Organizations special capabilities include skills, technologies, and resources that
distinguish it from other organizations.
Competitive Advantage: A unique strength relative to competitors, often based on, quality, time, cost,
innovation, customer intimacy, or customer experience management.
Benchmarking: Discovering how others do something better than your own firm so that you can imitate
or leapfrog competition.
Where do we want to go? 2 techniques to aid in these decisions are Business portfolio analysis and
market product analysis.
Business Portfolio Analysis:
Used to analyze a firm’s business units
Used in the business unit level