Chapter 6- Business Strategy
The work of all managers involves developing strategic and tactical plans. They must
also analyze their competitive environments and plan, organize, direct, and control day
to day operations.
Strategy is the determination of the basic long term goals and objectives of an
enterprise, and the courses of action necessary for carrying out those goals.
Strategic Management is a process; it is a series of activities of ten called “The Strategic
Establish Goals analyze Industry environment Analyze the organization
Choose Scope of Organization Choose means of competition
Leader is a person who rules or guides or inspires others. “Leadership is ultimately about
creating a way for people to contribute to making something happen.
Clearly articulated mission and goals;
o Provides direction and guidance
o Helps business allocate resources
o Helps to define corporate culture
o Helps managers assess performance.
There are 3 specific types of goals that most firms spend time setting;
o Long Term goals are related to extended period of time (typically five years of
o Intermediate Goals are set for a period of one to five years into the future.
o Short Term goals which are set for one year or less.
Plans must have basis in reality. Organization must be aware of what’s going on in the
world around it. Businesses use a variety of analytical models and tools to assess:
“Where are we now?”
SWOT Analysis, is the identification and analysis of organizational strengths and
weaknesses and environmental opportunities and threats as a part of strategy
formulation. Note that strengths and weaknesses are internal to the company, while
opportunities and threats are external.
o Strengths and Weaknesses (the S and the W)
o Environmental Opportunities and Threats (the O and T).
There are 3 main levels of strategy in a business firm; A corporate-level strategy
identifies the various businesses that a company will be in. and how these businesses
will relate to each other. A Business-level strategy identifies the ways a business will
compete in its chosen line of products or services. Functional strategies identify the
basic courses of action that each department in the firm will pursue so that it
contributes to the attainment of the businesses over all goals. o There are several different corporate level strategies that a company might
pursue, including concentration, growth, integration, diversification and
Concentration strategy involves focusing the company on one product or
Growth, companies have several growth strategies available to them, all
of which focus on internal activities that will result in growth.
Integration- Horizontal integration means acquiring control of
competitors in the same or similar markets with the same or similar
products. Vertical integration means owning or controlling the inputs to
the firm’s processes and/or the channels through which the products or
services are distributed.
Diversification means expanding into related or unrelated products or
market segments. Diversification helps the firm avoid the problem of
having all of its eggs in one basket by spreading risk among several
products or markets.
Investment Reduction means reducing the company’s investment in one
or more of its lines of business.
o Business- Level (Competitive Strategies) is a plan to establish a profitable and
sustainable competitive position against the forces that determine industry
competition. The 3 competitive Strategies are; cost leadership, differentiation, and
Cost leadership means becoming the low cost leader in an industry.
Differentiation strategy is when a firm seeks to be unique in its
industry along some dimension that is valued by buyers.
Focus strategy means selecting a market segment and serving the
customers in that market niche better than competitors.
o Functional Strategies are those that are transformed from business choice of
competitive strategies. A functional is the basic course of action that each
department follows so that the business accomplishes its overall goals. Chapter 7- Managers and Managing
Managing has 4 key activities involved with it;
Planning is determining what needs to be done, and the best way to achieve it.
Organizing is mobilizing the resources necessary to complete the task.
Leading is guiding and motivating others to meet the organizations objectives.
“Teaching and leading by example”.
Controlling is monitoring performance and, if necessary, acting to bring them in line
with the organization’s goals.
There are 3 basic levels of management they are; Senior, Middle, and First Line
Management. More middle than senior and more first-line than middle.
o Senior Managers are those managers responsible for a firms overall performance
and effectiveness and for developing long-range plans for the company
o Middle managers are those managers responsible for implementing the
decisions made by top managers.
o First- Line are those managers responsible for supervising the work of
Within any large company the top,