Business Strategy: Developing Business Strategy (Copy)

6.2 Business Strategy

6.2.1 Developing Business Strategy

Meaning And Purpose Of Business Strategy

• Definition: A business strategy is a long-term plan of action designed to achieve specific objectives, gain competitive advantage, and ensure survival and growth.
• Purpose:
  • Provide direction for the business.
  • Help allocate resources effectively.
  • Improve competitiveness.
  • Manage risks and uncertainty.
  • Align all departments with overall corporate objectives.
  • Respond to changes in external environment.

Meaning And Purpose Of Strategic Management

• Strategic Management: The ongoing process of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve long-term objectives.
• Key Components:
  • Analysis → Understanding environment, competitors, strengths, weaknesses.
  • Choice → Selecting the best strategic option (e.g., cost leadership, differentiation).
  • Implementation → Putting the chosen strategy into action (e.g., investment, staff training, marketing).
  • Review & Control → Monitoring performance, adjusting strategy when required.

Benefits:

• Provides long-term vision.
• Ensures consistency of decisions across departments.
• Helps anticipate external changes.
• Improves resource allocation and competitiveness.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

Approaches To Develop Business Strategy

1. Blue Ocean Strategy

• Definition: Creating a new, uncontested market space rather than competing in existing saturated markets.
• Key Idea: “Make competition irrelevant.”
• Benefits:
  • Less rivalry.
  • Higher profit margins.
  • Creates new demand.
• Risks:
  • High costs of innovation.
  • Market uncertainty.
• Example: Cirque du Soleil (combination of circus + theatre, creating a new market).

2. Scenario Planning

• Definition: Analysing possible future events and preparing strategies for different scenarios.
• Purpose: Reduces risk and prepares businesses for uncertainty.
• Benefits:
  • Helps businesses prepare for crises (e.g., economic downturns, natural disasters).
  • Improves decision-making under uncertainty.
• Risks:
  • Costly and time-consuming.
  • Scenarios may never occur.
• Example: Oil companies planning for fluctuating oil prices or geopolitical risks.

3. SWOT Analysis

Uses:

• Identifies internal & external factors.
• Helps in strategic planning and resource allocation.

Limitations:

• Provides information but no solutions.
• Can be subjective.

4. PEST Analysis

Use: Helps businesses anticipate external environmental changes and adjust strategies.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

5. Porter’s Five Forces

6. Core Competence Framework

• Definition: Unique capabilities/resources that give a business a competitive advantage.
• Purpose: Focus on what the business does best instead of spreading resources too thin.
• Examples of Core Competences:
  • Apple: design and brand loyalty.
  • Toyota: lean production & quality manufacturing.
  • Google: data analytics & search algorithms.

Strategic Use:

• Focus on differentiation.
• Build barriers to entry.
• Long-term growth through sustainable strengths.

7. Ansoff Matrix

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

8. Force Field Analysis

Meaning:

• A decision-making tool that identifies driving forces (supporting change) and restraining forces (opposing change).

Steps:

1. List driving forces (e.g., demand growth, cost savings).
2. List restraining forces (e.g., employee resistance, cost).
3. Score each force (1–5) based on strength.
4. Add up totals for each side.
5. If driving forces > restraining forces → change is more likely to succeed.

Advantages:

• Visual tool, easy to use.
• Helps managers understand barriers.
• Encourages discussion with stakeholders.

Disadvantages:

• Scoring is subjective.
• May oversimplify complex issues.
• Time-consuming to conduct properly.

Example:

• A business considering moving online:
  • Driving forces → lower costs, wider market reach.
  • Restraining forces → training staff, risk of cybercrime.

Impact Of Technological, Social, Political And Legal Factors On Business Strategy (Integration)

• Political Factors: Regulations, taxes, tariffs affect cost and market entry.
• Economic Factors: Exchange rates, inflation, interest rates shape pricing & investment.
• Social & Demographic Trends: Changing lifestyles, ageing population → new product development.
• Technological Factors: Automation, e-commerce, AI → efficiency, global competitiveness.

Strategic Implications:

• Businesses must adapt strategy to external changes.
• Long-term survival depends on monitoring environment (PEST, SWOT, scenario planning).
• Globalisation increases competition but also creates opportunities.
• Need for flexibility and innovation in decision-making.

Quick Revision Tables

Government And Business Strategy

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course

Exam Pointers

• Always define business strategy and strategic management clearly.
• Use frameworks (SWOT, PEST, Ansoff, Porter’s Five Forces, Force Field Analysis).
• Link theory to real-world examples (e.g., Tesla, Coca-Cola, Amazon, Unilever).
• Show advantages and disadvantages in evaluation questions.
• Balance short-term vs long-term impacts.
• Highlight impact on stakeholders (government, employees, customers, community).
• Use structured answers with application to specific business contexts.