Business Strategic Management: Test One Study Notes

Core Definition of Strategy

Strategy is a long-term plan developed by an organization to achieve its goals
and gain a competitive advantage. It is essentially the roadmap for how a
business intends to succeed.
Successful strategy implementation involves:
 Attracting customers and meeting their specific needs.
 Creating differentiation from rivals to stand out in the market.
 Creating value for customers so they choose you over others.
 Achieving performance targets by ensuring the strategy is executed
effectively.

The Strategic Management Process

All organizations require strategies to reach their objectives. When thinking
strategically about a business model, the process must address four critical
questions:
1. Where are we now? (Assessing the current situation and environment)
2. Where do we want to go? (Setting the vision and future goals)
3. How will we get there? (Developing the specific action plan)
4. How are we doing? (Evaluating performance and mak
The Nature and Role of Strategy (The 5Ps)
Strategy can be understood through five distinct lenses, often referred to as the
nature and role of strategy:
 Plan: An intended course of action designed to achieve a specific
objective.
 Ploy: A specific tactic used to "trick" a competitor.
 Pattern: A consistent behaviour or stream of decisions made over a
period of time.
 Position: How an organization sits within the market relative to its
competitors.
 Perspective: The shared mindset, culture, and internal identity that
guides the organization.
The nature of strategy is that it provides long-term direction for an organisation,
guiding how it competes and achieves sustainable success. It links internal
strengths with external opportunities to create value and maintain a competitive
advantage.
The role of strategy is to align resources, decisions, and actions with the
organisation’s vision and stakeholder expectations, ensuring effective
performance and adaptability in a changing environment.

Descriptions of Strategy Perspectives

 Planning Perspective: Focuses on long-term formal planning as the
primary way to achieve organizational goals.
 Positioning Perspective: Emphasizes finding the best market "spot" to
maximize competitive advantage and outperform rivals.
 Emergent Perspective: Views strategy as flexible, focusing on the ability
to adapt to change and "emerge" as circumstances shift.
 Fit Perspective: Focuses on the alignment between the organization's
internal environment (strengths/weaknesses) and its external environment
(opportunities/threats).
 Resource Perspective: Prioritizes identifying, utilizing, and developing
internal resources and dynamic capabilities to stay ahead.
 Stakeholders Perspective: Focuses on balancing, considering, and
protecting the interests of all stakeholders, not just shareholders.

Strategic management
Strategic planning
Sustainable stakeholder context
Analysing the external and internal organisational environments, supported by
strategic
decision-making
[is about deciding what to do. It’s the stage where managers look at the
environment, set goals, and design strategies.]
Developing and formulating effective strategies that balance the organisation’s
internal and
external environments.
Strategy implementation
• Supported by strategic decision-making, risk management and strategic
leadership.
• Integrating sustainability
Strategic implementation is about making it happen. It’s the stage where
those plans are put into action through structures, processes, budgets, and
people.

Explain the development of the strategy in the twentieth and twenty-

first centuries
In the 20th century, strategy focused on planning, budgeting, and gaining a
competitive advantage through industry and resource analysis. In the 21st
century, it shifted toward innovation, flexibility, digital transformation, and
sustainability — aiming for long-term growth through collaboration and shared
value.

Levels of strategy
Corporate strategy
Focus on the overall purpose and scope of the whole organisation. The purpose
is to achieve a sustainable competitive advantage (SCA) for multiple business
units (BU) within an organisation that considers both individual unit needs and
synergies across the organisation
Business strategy
Building a competitive advantage and improving return on investment for a
single line of business – business, product, or service
Functional strategy
Source of competitive advantage in a particular activity or line of business –
functional level activities, processes, practices, and resources

key considerations for the future of strategic management

Technological advancement → Businesses must keep up with new tech (like AI,
automation, and data analytics) to stay competitive.
Agile and flexible business models → Companies should be able to change
direction quickly when markets or customer needs shift.
Sustainability and corporate social responsibility → Firms must care about the
environment and society, not just profits, to build long-term trust.
Collaboration and ecosystems thinking → Success often comes from working with
partners, suppliers, and even competitors to create shared value.
Risk management and resilience → Organisations need to prepare for shocks (like
pandemics or climate events) and bounce back stronger.
Human-centric strategies → People remain at the centre, whether employees or
customers—so strategies should focus on wellbeing, skills, and experiences.

Compare the two perspectives on managing strategically.

Inside-out perspective: Focuses on leveraging the organisation’s
internal resources, capabilities, and strengths to develop strategy and
achieve exceptional returns.
Outside-in perspective: Focuses on analysing the external environment,
customers, competitors, and market trends to shape a strategy that
responds to external opportunities and threats.
Summarise the concept of strategic link
The strategic link refers to the connection between an organisation’s internal
environment and its external environment. It ensures that internal strengths
are aligned with external opportunities and challenges, allowing the organisation
to achieve sustainable performance and competitive advantage.
Explain the concept of strategic management
Strategic management is the process of planning, developing, implementing,
and evaluating strategies to achieve long-term goals and a sustainable
competitive advantage. It aligns internal resources with external opportunities to
guide the organisation’s direction and performance.
Explanation of what makes a winning strategy:
1. Goodness of fit test – Does the strategy match? The goodness-of-fit test
assesses whether the strategy aligns with the internal and external
environment
2. Competitive Advantage test – Does the strategy give the company an
edge over competitors?
3. Performance Test – Does the strategy produce good results? The
performance test evaluates whether the strategy leads to improved
organisational results
4. Social impact test - Does the strategy meet stakeholders' expectations?
The social impact test considers whether the strategy meets stakeholder
expectations
5. Environment system test - Does the strategy align with environmental
sustainability? The environmental system test examines whether the
strategy is sustainable and environmentally responsible

Learning Unit Two

LO1: Explain the importance of an organisation making and
implementing strategy
 Strategy defines purpose — the fundamental reason for existence.
 It aligns objectives and ensures long-term viability by balancing profit with
sustainability.
 Managers must pursue profits responsibly, caring for employees,
customers, communities, and the environment to secure enduring
success.
(From “Purpose” section of Chapter 2.)

LO2: Discuss the role of short- and long-term strategic thinking in

developing a sustainable organisation
 Short-term focus may harm both economic and social-ecological
performance.
 Long-term strategising integrates environmental and social trends,
ensuring resilience and sustainability.
 Sustainable organisations think beyond quarterly results to maintain
viability over years.
(From “From short- to long-term strategising.”)

LO3: Assess the differences and influence of shareholders and

stakeholders on overall strategy
 Shareholders: owners seeking financial returns.
 Stakeholders: broader groups (employees, communities, civil society)
whose support sustains the organisation.
 A stakeholder-inclusive approach (King IV) gives parity to all sources of
value creation — financial, social, and relationship capital — ensuring
long-term success.
(From “From shareholders to stakeholders” and “A stakeholder-inclusive
approach.”)

LO4: Analyse important social-ecological trends and corresponding risks

 The Anthropocene era shows human destabilisation of Earth systems.
 Nine planetary boundaries define a safe operating space (e.g., climate
change, biosphere integrity, freshwater use).
 Organisations face social-ecological risks from these changes and must
proactively address them to protect resources and reputation.
(From “The dynamic business context and evolving risks.”)
LO5: Discuss shared value and inclusive business in creating
opportunities
 Shared value (Porter & Kramer): combines economic and social goals
through
1. Redefining productivity in the value chain
2. Enabling local cluster development
3. Reconceiving products and markets.
 Inclusive business (Prahalad, Hart, WBCSD): targets the base of the
pyramid by meeting needs of low-income populations, linking business
growth to SDGs.
(From “Context as opportunity: Shared value and inclusive business.”)

LO6: Explain the process of embedding context into strategy

 Recognise dependence on social and environmental systems, not just
markets.
 Integrate systems value perspective — moving beyond shareholder
and shared value.
 Use Integrated Reporting to monitor progress, applying principles like
strategic focus, connectivity, and stakeholder inclusiveness.
(From “Embedding context in strategy” and “Measuring and reporting on
progress.”)
Discuss the approach to monitor and report on embedding purpose and context
in strategy implementation.
Monitoring and reporting through Integrated Reporting, which allows
organisations to demonstrate how their purpose and social-ecological context are
actively shaping strategic implementation, turning sustainability from a
statement into measurable practice.

LO1: Importance of Making and Implementing Strategy

Strategy defines organisational purpose and aligns objectives. Managers must
ensure profits responsibly, caring for employees, customers, communities, and
the environment to secure long-term viability.
LO2: Short- vs Long-Term Strategic Thinking
Short-term focus can harm economic and social-ecological performance.
Long-term strategising integrates environmental and social trends, ensuring
resilience and sustainability.
LO3: Shareholders vs Stakeholders
 Shareholders: owners seeking financial returns.
  Stakeholders: broader groups (employees, communities, civil society). A
stakeholder-inclusive approach (King IV) balances financial, social, and
relationship capital for long-term success.
LO4: Social-Ecological Trends and Risks
The Anthropocene shows human destabilisation of Earth systems. Nine
planetary boundaries (e.g., climate change, biosphere integrity, freshwater
use) define a safe operating space. Organisations face risks and must proactively
respond.
LO5: Shared Value and Inclusive Business
 Shared value (Porter & Kramer): combines economic and social goals by
redefining productivity, enabling local clusters, and reconceiving
products/markets.
 Inclusive business (Prahalad, Hart, WBCSD): targets the base of the
pyramid, linking business growth to SDGs by meeting needs of low-income
populations.
LO6: Embedding Context into Strategy
Organisations depend on social and environmental systems as well as
markets. Embedding a systems value perspective ensures long-term
sustainability. Integrated Reporting tracks progress with principles like
strategic focus, connectivity, and stakeholder inclusiveness.
LO7: Monitoring and Reporting on Strategy Implementation
Monitoring and reporting are achieved through Integrated Reporting (IR). IR
combines information on strategy, governance, performance, and
prospects to show how purpose and context are embedded.
Key principles: strategic focus, connectivity, future orientation, stakeholder
inclusiveness, conciseness, reliability, and materiality. Purpose: promotes
transparency, helps managers track progress, and shows contribution to SDGs.
Learning unit 3
1. Importance, Benefits & Challenges
Strategic direction unites people under a shared purpose and guides decisions.
Benefits: clarity, motivation, better performance, stakeholder confidence.
Challenges: poor communication, lack of leadership alignment, and statements
without action.

2. Strategic Intent, Vision, Mission & Values

 Strategic Intent: long-term ambition shaping decisions and sustaining
purpose.
 Vision: ideal future state that inspires and guides operations.
 Mission: explains why the organisation exists and how it serves
stakeholders.
  Values: beliefs and norms guiding employee behaviour and culture.

3. Effectiveness
Effective direction depends on clear communication and leadership that models
the vision. Ineffective when vague or disconnected from daily practice.

4. Translating into Operations

Use strategic objectives and the balanced scorecard to turn vision into
measurable goals:
1. Financial 2. Customer 3. Internal Processes 4. Learning & Growth.
This ensures alignment between vision, strategy, and operations.

O1: Explain the importance, benefits, challenges, and make-up of

strategic direction.
Answer: Strategic direction gives an organisation a clear sense of purpose and
unity. It guides behaviour, shapes relationships, and improves performance by
aligning decisions with long-term goals. It also serves as a benchmark for
resource allocation and inspires confidence among stakeholders. However,
challenges arise when vision and mission statements are poorly communicated
or unsupported by management behaviour, making them seem superficial. The
make-up of strategic direction includes strategic intent, vision, mission, and
values, which together define where the organisation is going and how it will get
there.
💡 Theme 2: Effectiveness of an organisation’s strategic intent
LO2: Discuss strategic intent, vision, mission, and value statements.
Answer:
 Strategic intent is the organisation’s long-term ambition (10–20 years)
that drives decisions and defines its unique advantage.
 Vision statement portrays the ideal future and motivates members to go
beyond the status quo.
 Mission statement explains why the organisation exists, who it serves,
and what makes it unique.
 Value statement expresses the organisation’s beliefs and principles that
guide employee behaviour. Together, these elements ensure coherence
between purpose, direction, and daily operations.
LO3: Evaluate the effectiveness of a vision, mission, and value
statement.
Answer: Effective statements are clear, inspiring, and actionable. A vision is
effective when it aligns all levels of the organisation and guides long-term
decisions. A mission is effective when it defines identity, sets the organisation
apart, and aligns with customer expectations. A value statement is effective
when it influences employee behaviour and supports the vision and mission.
Ineffective statements fail when they are vague, not communicated, or
unsupported by leadership conduct.
⚙️Theme 3: Translating strategy into operations
LO4: Explain the rationale for translating strategic direction into
operational terms.
Answer: Translating strategic direction into operations ensures that high-level
goals become measurable actions. It connects long-term vision to daily tasks,
enabling managers to align resources and performance with strategic objectives.
This process turns abstract ambitions into practical outcomes that drive
organisational success.
LO5: Discuss how strategic direction can be translated into operational
terms using the balanced scorecard.
Answer: The balanced scorecard translates vision into strategy through four
perspectives:
 Financial – measures profitability and growth.
 Customer – tracks satisfaction and loyalty.
 Internal processes – improves efficiency and innovation.
 Learning and growth – develops employee skills and organisational
capacity. It helps communicate objectives, align initiatives, and provide
feedback for continuous improvement.