- strategy = a broad program that describes an organization¶s intentions. A business strategy is
outline HOW the firm will meet its goals and include the firm¶s responsiveness to new challenges
- strategy formulation is the creation of a strategy. 4 steps:
1) set strategic goals - these are long term goals derived directly from a firm¶s mission statement.
After strategic goals have been established, organizations go through a process called SWOT
analysis, which is the identification and analysis of organizational strengths and weaknesses and
environmental opportunities and threats. The involves assessing: S (strengths) & W (weaknesses)
within the company and O (opportunities) & T (threats) which are external to the company.
2) analyze the organization and the environment - this involves environmental analysis which is
the process of
scanning the environment for OT - opportunities and threats. IE changes in consumer taste, new
competition (= threats) and areas that the company can expand (= opportunity). The
environmental analysis is of external factors. Organizational analysis is of internal factors, which
is the process of analyzing a firm¶s strengths and weaknesses - SW.
3) match the organization and environment - here the firm needs to match environmental threats
and opportunities with corporate strengths and weaknesses. This is the core part of strategy
formation, it lays the foundation for successfully planning and conducting business.
4) formulate strategy
A HIERARCHY OF PLANS: there are 3 levels of plans: Strategic, tactical and operational.
- strategic plans = plans that reflect decisions about resource allocations, company priorities and
steps needed to meet strategic goals. usually people in top management set these plans
- tactical plans = short range plans concerned with implementing specific aspects of a company¶s
strategic plans. For example, the firm¶s decision to increase sales is a tactical plan, usually
decided upon by uppermid management
- operational plans = plans with short term targets for daily, weekly, or monthly performance,
usually carried out by middle and lower managers. For example, when McDonald¶s decides how
the burgers will be cooked.
Levels of Strategies
1) corporate level strategies - these identify the businesses that a company will be in and how
businesses will relate to each other.
2) business level (competitive) strategy - this identifies the ways a business will compete in its
chosen line of
3) functional strategies identify the basic course of action that each department in the firm will
pursue so that
it contributes to the attainment of the business¶s overall goals.
CORPORATE LEVEL STRATEGIES: a company pursues corporate level strategies such as:
- concentration: strategy that involves focussing the company on one product. The company can
strengths on the one business it knows well and focuses solely on that one product
- growth: growth strategies are internal to the company. Example of strategies, market
penetration which includes boosting sales of present products by more aggressive selling in the
firm¶s current marke; product development (improving your product); geographic expansion
(expanding in other countries)