Nexus Business Academy

Online MBA

Module 9:
Strategic Management
Strategic management
What is strategy?
"Strategy is the determination of the basic long-term goals of an
enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out these goals."
(Alfred Chandler)

1 creating a "unique and valuable [market] position“

making trade-offs by choosing "what not to do“

2
creating "fit" by aligning company activities with
one another to support the chosen strategy
3
(Michael Porter)
Strategic management
What is strategy?

Vision (‘Why’)
External Environment (e.g.
Strategy Market, Customers,
(‘How’) Competition)
Mission/Objectives
(‘What’)
Strategic management
Strategy as a dynamic process

Nature of strategy
(Earl-Chaffee)

Linear
Planning
Strategy

Adaptive Biological
Strategy Organism ‘Butterfly effect’

The flapping of a butterfly’s wings in

Texas can cause a hurricane in Brazil.
Interpretive Relationships
Strategy
Small changes (in the initial conditions)
can cause significant changes in the
outcome.

Static Strategy Strategy as a highly

dynamic and chaotic
process (‘chaos theory’)
The Strategic Management Process

Environmental Strategy Strategy Evaluation

Goal Setting Implementation
Analysis Formulation and Control

External Analysis Vision Corporate-level Resource Performance

(Statement) Strategy Allocation Measurement

Organizational
Structure Reviews

Mission Business-level
Internal Analysis
(Statement) Strategy Leadership and
Communication
Feedback
Mechanisms
Employee
Engagement
(Strategic) Functional-level
Objectives Strategy Corrective
Change Actions
Management
 Analyzing the External
Environment

1. The Value Stick

2. PESTEL analysis

3. Porter’s Five Forces

4. Four Corners Model

5. Blue/Red Ocean Strategy & The Strategy Canvas

The Value Stick
Increase Willingness to Pay
Willingness to Pay
Quality of products and services
(the most a customer would pay Introduce Complements
for a product or service)
Customer Delight
Network Effects

Price Firm Margin

Employee Satisfaction
Decrease Willingness to Sell
Cost
Improve Employee Satisfaction
Supplier Surplus Lower Supply Cost
Firm Productivity

Willingness to Sell
(least amount of compensation
an employee would accept)
PESTEL analysis (I) Political Factors

01 Tax policies

Trade restrictions

Regulatory changes

Economic Factors

02 Interest rates

Inflation

Economic growth

Social Factors
03 Changing demographics

Cultural trends

Education levels
PESTEL analysis (II) Technological Factors

04 Automation

Digital transformation

R&D

Environmental Factors

05 Climate change

Sustainability

Resource scarcity

Legal Factors
06 Labor laws

Consumer protection laws

Intellectual Property (IP) laws

Porter’s Five Forces Threat of New Entrants

Capital Requirements

Economies of scale

Brand loyalty

Regulation
Threat of Substitute
Bargaining Power of
Products/Services
Suppliers

Availability of Alternatives
Concentration of Suppliers Industrial
Switching Costs
Uniqueness of Products Rivalry
Price-performance trade-offs
Switching Costs

Availability of Substitutes

Bargaining Power of Buyers

Buyer Concentration

Price Sensitivity

Availability of Substitutes

Switching Costs
Porter’s Five Forces Threat of New Entrants
Strategic Implications
Low entry barriers: continuous innovation
and strengthening customer loyalty to
defend against potential new competitors

High entry barriers: more protection from

new entrants, allowing established firms to
focus on maintaining competitive advantage
Threat of Substitute
Bargaining Power of
Products/Services
Suppliers

Reduce supplier power by diversifying Counter threat of substitutes:

Industrial
supplier base, develop alternative sources of product differentation, quality
supply, vertical integration to control inputs Rivalry improvements, lower prices

Innovation or offering new

Forming strong, collaborative
features/services that competitors do
partnerships with suppliers
not offer

Bargaining Power of Buyers

Reduce buyer power: product differentiation, increase

customer loyalty, reduce availability of comparable
alternatives

Offer superior value through unique features, customer

service, branding
Assessing Competition Motivation (Drivers)
The Four Corners Model
E.g. management incentives, competitors goals,
ambitions, market pressures
What are the competitor’s short-term and long-term goals?

Is the competitor driven by market leadership,

profitability, or expansion into new markets?
Are there external pressures, such as shareholders or
regulatory requirements, influencing the competitor’s
behavior? Assumptions
Current Strategy

Beliefs or perceptions a competitor holds about the

Actions a competitor is currently taking (e.g. Product industry or market, which influences their decision-
offerings, pricing strategies, marketing) making process
What is the competitor’s current market positioning How does the competitor view the market and its position
(e.g., low-cost provider, premium brand)? within it?
What are the competitor’s key product or service offerings? Does the competitor believe it is the market leader, or does it
see itself as a challenger?
How is the competitor approaching pricing, marketing, and
distribution?
Capabilities

Ability to execute its strategy effectively (e.g. Resources,

skills, technologies, operational efficiency)
What are the competitor’s core competencies and areas of expertise?

How efficient is the competitor’s supply chain and operational processes?

Does the competitor have access to superior technology, talent, or

capital?
The Four Corners Model
Application

Predicting Competitors Moves

01

Identifying Competitive Gaps

02

Building Proactive Strategies

03

Fine-tuning Competitive Advantage

04
Blue/Red Ocean Strategy
“Too many companies let competition drive their strategies. What blue ocean strategy bring
to life, however, is that this focus on the competition all too often keeps companies anchored in
the red ocean. It puts the competition, not the customer, at the core of strategy. As a result,
companies’ time and attention get focused on benchmarking rivals and responding to their
strategic moves, rather than on understanding how to deliver a leap in value to buyers – which
is not the same thing.”

Red Ocean Blue Ocean

Existing Market Space New Market Space

Competition-Focused Innovation-driven

Cuthroat Competition Value Innovation First Mover Advantage

Limited Growth Potential
Price Sensitivity No Competition Higher Profit Margins
Price Wars
Lack of Differentiation Innovation & Growth
Blue/Red Ocean Strategy
Value Innovation

Eliminate

Eliminate Raise
01 Which factors which the company has long
competed on should be eliminated?

Removed expensive and Elevated the level of artistic

declining elements like expression, including high-
animal acts and quality music, customers, and
sophisticated choreography.
Raise
traditional star
performers.
02 Which factors should be raised well above
the industry standard?

Reduce Create
Introduced a completely new Reduce
Lowered the focus on

03
form of entertainment that
multiple shows under the
blended theatre, dance, and Which factors should be reduced well below the
same tent and reduced the
acrobatics, attracting a new
reliance on traditional circus industry standard?
audience beyond traditional
themes.
circus-goers.

Create
04 Which factors should be created that the
industry has never offered?
Blue/Red Ocean Strategy
Strategy Canvas

Strategy Canvas for Cars

12

10

0
Reliability Speed Luxury Aesthetics

Toyota Audi Maserati

Key Question: What are the features of a product/industry valued

by customers, and what are the differences across competitors?
 Analyzing the Internal
Environment

1. Key analytical frameworks: VRIO Framework, Value

Chain

2. Product Portfolio Analysis

3. Product Portfolio Analytical Tools: BCG Matrix, ADL

Matrix, GE-McKinsey Matrix, Ansoff Matrix

4. Identifying Core Competencies

5. Combining the external and internal analysis:

SWOT analysis
The VRIO framework Value

Resources or capabilities that allow a business to

exploit opportunities or neutralize threats
Does this resource enable the company to exploit market opportunities?

Does it help the company to defend against competitive

threats?

Rarity
Organization

Competitive A resource is rare if competitors do not (widely) own it.

Having the right structures in place to fully exploit
Advantage Rare resources offer competitive advantage.
valuable, rare and inimitable resources.
Is this resource unique or possessed by only a few
Is the company structured and managed in a way competitors?
that allows it to capitalize on its resources?
Does the rarity of the resource create a market edge?
Does the company have the necessary systems, processes
and culture to fully utilize its competitive advantage?

Imitability

The degree to which a resource can be substituted or replicated. A low

degree of imitability offers competitive advantage.

How easily can competitors replicate this resource?

Are there any barriers to imitation (e.g. intellectual property)

 The Value Chain
Firm Infrastructure
E.g. organizational structures, management systems, legal and financial controls

Human Resource Management

Supporting
Activities

Recruiting, training and developing the workforce

Technology Development

Margin
Use of technology to improve products, services or processes

Procurement
Process of acquiring sources for their production (e.g. raw materials)

Inbound Operations Outbound Marketing Services

logistics transforming inputs into logistics and Sales providing after-sales
support to customers,
Activities

processes related to the final product or activities involved in

Primary

promoting the product including installation,

receiving, storing, and service. This stage distributing the finished and persuading training, maintenance,
managing the inputs or includes manufacturing, product to customers, customers to purchase it. and repair services.
raw materials required assembly, and packaging. such as warehousing, By effectively targeting Excellent customer
for production. Efficient Improving operational order fulfillment, and customers and service can enhance the
inbound logistics can processes can lead to transportation. Effective communicating the value product’s value by
reduce costs and better product quality, outbound logistics of the product, improving customer
improve production faster production times, ensure that products are businesses can increase satisfaction and
efficiency by ensuring and cost savings. delivered quickly and sales and market share. encouraging repeat
materials are available efficiently, reducing costs
purchases.
when needed. and improving customer
satisfaction.
Using the Value Chain

Cost Advantage

01

Differentiation Advantage

02
 Resource Allocation
Product Portfolio Analysis 01
Product Lifecycle Management

02
Strategic Focus

03
Risk Management

04
Competitive Focus

05
Innovation and Development Focus

06
 Relative
BCG Matrix High Market Share Low

High
Stars Question Marks
Products that have a dominant Products that exist in high-
position in a fast-growing growth markets but have a
market. relatively low market share.

Invest in Stars to maintain or grow their Evaluate whether to invest in Question

market leadership. As the market matures Marks based on their potential to grow
and growth slows, Stars can transition into into Stars. If the potential is there,
Cash Cows, becoming major profit companies should invest heavily in
Market generators. marketing, R&D, and customer
Growth Rate acquisition. If not, divest or phase out the
product to avoid wasting resources.

Cash Cows Dogs

Products that have a dominant Products with low market share
position in a mature or slow- in low-growth or declining
growing market. markets.

Maximize the profitability of Cash Cows Companies should typically divest or

Low while minimizing investment. The goal is to discontinue Dogs to free up resources that
“milk” these products to generate cash flow could be better used in higher-potential
to support other areas of the business. areas of the business. However, in some
cases, Dogs may be kept for strategic
reasons, such as to maintain relationships
with key customers or as part of a larger
product portfolio.
 Industry Lifecycle Stage
ADL Matrix
Embryonic Growth Mature Declining

All out push for Hold position. Hold position.

Dominant shore. Hold Grow with Hold position.
Hold shore.
position. industry.

Attempts to Attempts to Hold position.

improve improve Hold position or
Strong Grow with
position. All out position. Push harvest.
industry.
push for shore. for shore.
Competitive
Position

Selectively Attempt to Custodial

Phased out
Favourable attempt to improve position. maintenance.
withdrawal or
improve Selective push for Find niche and
harvest.
position. shore. protect it.

Phased out.
Selectively push Find niche and Phased out
Tenable Withdraw or find
for position. protect it. withdrawal or
niche and hang
abandon.
on.

Turnaround
Up or out. Turnaround or orphaned out Abandon.
Weak
abandon. withdrawal.
GE-McKinsey Matrix
High Selectivity
Invest & Grow Invest & Grow
(expand market (expand market Earnings
share, increase share, increase (maintain market
marketing efforts, marketing efforts, position, improve
product innovation) product innovation) efficiency, ensure
steady returns)
Industry
Attractiveness
Invest & Grow Selectivity
Medium (expand market Earnings Harvest
share, increase (maintain market Or Divest
marketing efforts, position, improve
product innovation) efficiency, ensure
steady returns)

Selectivity
Earnings
Low (maintain market Harvest Harvest
position, improve Or Divest Or Divest
efficiency, ensure
steady returns)

Low Medium High

Business Unit Strength

 GE-McKinsey Matrix
Assess Industry
High Selectivity
Invest & Grow Invest & Grow
Earnings
01 Attractiveness
(expand market (expand market
share, increase share, increase (maintain market
marketing efforts, marketing efforts, position, improve E.g. Market size, competition,
Industry product innovation) product innovation) efficiency, ensure profitability, regulatory constraints
steady returns)
Competitiveness Evaluate Business Unit
02 Strength
Invest & Grow Selectivity
Medium e.g. Unit’s relative market share,
(expand market Earnings Harvest
share, increase (maintain market product quality, cost structure
Or Divest
marketing efforts, position, improve
product innovation) efficiency, ensure
steady returns)
Plot on the Matrix
03

Selectivity
Develop Strategic
Earnings
Low (maintain market Harvest Harvest 04 Recommendations
position, improve Or Divest Or Divest
efficiency, ensure
steady returns)

Low Medium High

Competitive Strength
Ansoff Matrix
Product
Existing New

Market Product
Penetration Development
Existing

Works well in industries with Effective for companies that

high customer loyalty and need to stay competitive through
limited competition. innovation. Particularly useful in
industries where technology and
Markets

customer preferences change

rapidly.

Market Diversification
Development
New

Most appropriate for companies

with strong finances and a
Success depends on desire to enter new markets.
understanding the (local) market, Ensure the right expertise and
regulatory environment and competencies to successfully
customer preferences. enter new markets.
Comparison of Product
Portfolio Tools
Purpose Strengths Weaknesses Application Context
BCG Matrix Focus on portfolio analysis and Simple and easy to Oversimplifies complex market Best for companies with a variety of
resource allocation among understand. dynamics. products in different market
business units or products. conditions.
Helps prioritize resources. Ignores potential synergies
between units.

Assumes market growth and

market share are the only factors.

ADL Matrix Emphasizes strategic planning Incorporates industry life Requires detailed industry and Applicable where industry life cycle
based on industry life cycle and cycle. competitive analysis. significantly impacts strategy.
competitive position.
Offers nuanced strategies. May be complex to implement.

GE-McKinsey Focus on portfolio analysis and Considers multiple factors for Requires extensive data collection. Suitable for complex organizations
Matrix resource allocation among each dimension. needing detailed analysis.
business units or products. More complex and time-
Provides a more consuming.
comprehensive analysis than
BCG.

Ansoff Matrix Centers on identifying growth Simple and strategic. Doesn't consider competitive Universal application for companies
strategies and directions. position or industry exploring growth opportunities.
Highlights growth attractiveness.
opportunities.
Lacks quantitative measures.
Core Competencies Valuable to Customers
Key characteristics
01 Enables a company to meet or exceed customer needs
in ways that competitors cannot easily replicate
Unique strengths and capabilities of a business

E.g. Apple

Difficult to Imitate

02 Core competencies are difficult for competitors to copy

(i.e. Very specific resources, skills, knowledge, etc)

E.g. Toyota

Broadly Applicable

03 Can be applied across products or markets

E.g. Google

Foundation for Innovation

04 Core competencies provides the foundation for

(continuous) innovation and development

E.g. 3M
Core Competencies

Core Competencies & Competitive Advantage

Differentiation

Cost leadership

Agility and innovation

Developing and nurturing core competencies

Continuous learning and development

Invest in R&D

Cross-functional collaboration

Strategies alliances
Core Competencies
(Un)related Diversification

Related Diversification

01 Using core competencies to enter industries

closely related to their current industries

Unrelated Diversification

02 Move into industries unrelated or not directly

connected to its current industry
Combining Internal and
External Analysis
The SWOT framework

Strengths Weaknesses
Internal attributes that give an Internal limitations where the
organization an advantage (e.g. business underperforms
unique capabilities, assets, skills)

Strong Brand Outdated Technology

Efficient Supply Chain Weak Marketing

Innovative Products High Operational Costs

Skilled Workforce Limited Financial Resources

Threats Opportunities
External factors that could External factors that an
negatively impact the organization can put to its
organization (e.g. market advantage (e.g. technology,
changes, regulations, technology) consumer trends)

Increased Competition Emerging Markets

Regulatory Pressures Technological Advancements

Economic Downturns Changing Consumer Trends

Supply Chain Disruptions Government Incentives

SWOT framework
Example: Netflix

Strengths Weaknesses
Internal attributes that give an Internal limitations where the
organization an advantage (e.g. business underperforms
unique capabilities, assets, skills)

Strong Brand Recognition Increasing Operational Costs

Massive Content Library Relatively High Subscription Price

Robust Technological Infrastructure

Data Analytics Capabilities

Threats Opportunities
External factors that could External factors that an
negatively impact the organization can put to its
organization (e.g. market advantage (e.g. technology,
changes, regulations, technology) consumer trends)

Intense Competition (Disney+, HBO, Expanding Into Emerging Markets

Prime)
Investing Into Original Content
Potential Regulatory Pressures
Using AI to streamline services
 Strategic Planning

1. Forecasting & Backcasting

2. Scenario planning

3. Establishing a Vision & Mission

4. OGSM framework
Strategic Planning
Looking into the Future
“Prediction is very difficult, especially if it’s
about the future."
Niels Bohr

“You can't connect the dots looking

forward; you can only connect them looking
backwards. So you have to trust that the
dots will somehow connect in your future.
You have to trust in something – your gut,
destiny, life, whatever." Steve Jobs "What we need to do is always lean into the
future; when the world changes around you
and when it changes against you - what
used to be a tail wind is now a head wind -
you have to lean into that and figure out
what to do because complaining isn't a
strategy."
Jeff Bezos
Strategic Planning
Backcasting
Forecasting & Backcasting
Starts with defining the desired future and works backward to
Forecasting identify steps and strategies needed to achieve that future

Forward-looking, based on historical data Begins with a clear vision

Heavily reliant on quantitative & qualitiative analysis to Useful when aiming for long-term goals or transfomative
extrapolate trends into the future changes

Data collection, trend identification, scenario development, Vision creation, gap analysis, strategic pathway development,
decision-making implementation

Proactive strategy development, resource allocation, risk Sustainability planning, disruptive innovation, long-term
mitigation strategy

Uncertainty, short-term bias, dependence on trends Long-term focus, flexibility, innovative thinking

Uncertainty in execution, complexity

Example (Tech Product Launch) Example (Product Innovation)

A smartphone company analyzes previous An electric vehicle manufacturer envisions a future
launches and current market demand to forecast where all their vehicles are fully autonomous by
sales for its new model. By using market data on 2040. They backcast by first identifying the required
consumer preferences, competitor actions, and technological milestones (e.g., advanced AI
technological advancements, the company systems, improved sensors) and regulatory
estimates that it will sell 1.5 million units in the first approvals, then plan their R&D efforts and strategic
quarter after launch, guiding production and partnerships starting in the present to achieve that
marketing efforts. vision.
Strategic Planning
Combining Forecasting and Backcasting

Synthesizing Forecasting & Backcasting: Example

A renewable energy company uses forecasting to predict short-term solar
panel demand by analyzing factors like sales data, government policies, and Backcasting
Forecasting market trends. For example, they might forecast a 20% increase in solar
installations over two years due to rising energy costs and climate awareness.
This allows the company to adjust resource allocation, scale production, and
manage supplies to meet immediate market demands efficiently.
Simultaneously, the company employs backcasting to plan for carbon
neutrality by 2050. Starting with this goal, they work backward to outline steps
like transitioning to renewable energy for manufacturing, enhancing energy
efficiency, and sourcing sustainable materials. This long-term strategy involves
key investments and innovations to close the gap between their current
operations and future sustainability objectives. Combining forecasting and
backcasting ensures they meet short-term needs while progressing toward
long-term environmental goals.

1 Use forecasting for immediate decisions

2 Backcasting from long-term goals

3
Combine both findings
Strategic Planning
Scenario Planning

“Plans are worthless, but planning is everything.”

- Gen. Dwight Eisenhower

Scenario planning allows businesses to

imagine a variety of futures. By envisioning
different futures, companies are better
prepared to adapt to unforeseen changes,
identify risks and opportunities, and build
flexible, resilient strategies.
 Strategic Planning Define the Central Issue/Challenge

1
The Scenario Planning Process (I)
01 E.g. Long-term growth challenges, market expansions,
technological disruption, regulatory shifts, political instability
A retail company exploring the future of e-commerce and
brick-and-mortar stores. Frame the issue clearly: also consider broader challenges that
affects the organization’s strategy
An energy company considering the transition to renewable
energy and how future regulations could impact business.

2 Identify Key Drivers of Change

Technological innovations like AI,
automation, and blockchain.
02 External factors how the future may unfold

Political shifts such as changes in E.g. Economic conditions, consumer trends, political/regulatory
trade policies, tariffs, or new developments, technological advancements, social shifts
regulations.
Prioritize the most critical drivers – don’t list every possible factor
Economic factors, including inflation,
market growth, and interest rates.

3 Explore Critical Uncertainties

03
Speed of regulatory changes in data privacy laws.
Consider factors with high uncertainty
The pace of technological innovation in renewable energy.

Consumer response to climate change in shaping purchasing

Critical uncertainties: the most significant variables that can
habits. evolve in various directions

Future economic recovery after a global financial crisis. Focus on 2 or 3 critical uncertainties
Strategic Planning Scenario Development
The Scenario Planning Process (II)
04 Scenarios: not predictions, but plausible futures built around
combinations of critical uncertainties

Create a small set of distinct scenarios (highly optimistic >

highly pessimistic)

Usually 3-5 scenarios (best-case, worst-case, intermediate

4 options)
Scenario 1: Governments worldwide rapidly implement strong
environmental regulations, leading to massive investment in Analyze Implications of Each Scenario

05
green technologies.
Assessing how the current strategy would far under each
Scenario 2: Technological innovations in renewable energy scenario
slow down, and fossil fuels remain dominant for longer than
anticipated. E.g.: What risks and opportunities emerge? Are current resources
and capabilities sufficient, or new investments needed?
Scenario 3: Global consumer demand shifts rapidly toward
sustainable energy, but regulatory support remains Assess how current competitive advantage holds up under
inconsistent across regions. different scenarios

Develop Strategic Options and Contingency Plans

06 Develop strategic options that fit across multiple potential futures

Develop contingency (risk management) plans

Scenario planning as an ongoing process (PDCA-cycle)

Strategic Planning
Establishing a Vision and Mission

Vision Mission

Inspirational Purpose-driven

Future-oriented Customer-focused

Clear and concise Values-based

Ambitious yet realistic Action-oriented

Google
Tesla
“To organize the world’s information and make it
“To accelerate the world’s transition to sustainable universally accessible.”
energy.”
Strategic Planning
OGSM framework

Objective GreenGro Co. aims to become the leading provider of organic, sustainable produce in the
Midwest by 2027.

Goals Strategy Dashboard Action Plan

1 Achieve a 25% Choices Progress What, Who, When
market share in the Expand product offerings The Sales and Marketing team will
Midwest organic to include organic fruits, Quarterly sales
launch a regional campaign and
vegetables, and herbs. growth of 5%.
produce market expand partnerships by Q1,
within three years. reviewing sales growth quarterly.

2 Increase annual
Yearly customer The Customer Service department
revenue to $50 Partner with local grocery
satisfaction surveys will conduct annual customer
million by 2027. chains and farmer's markets
showing consistent satisfaction surveys in Q3, with action
to increase distribution.
improvement. plans implemented by Q4.
3 Attain a 95%
customer Invest in eco-friendly Operational efficiency The Operations and Sustainability
satisfaction rating farming technology to metrics, such as reduced teams will implement eco-friendly
for product quality improve sustainability and water and energy technologies by Q2 and monitor
and delivery. reduce costs. consumption, tracked efficiency monthly.
annually.
 Strategy Formulation

1. Corporate-level strategies

2. Business-level strategies

3. Functional-level strategies

4. International strategies
Corporate-Level Strategy Growth
Types of Corporate-level Strategies (I)
01 Organic growth (internal development) or inorganic
growth (mergers and acquisitons)

E.g. market expansion, product development,

diversification

E.g. Amazon’s expansion into cloud computing

Stability

02 Focus on maintaining current position (if stable)

E.g. a manufacturing company

Diversification

03 Expanding into new (different) industries

Related vs Unrelated diversification

E.g. Virgin (music, airlines, telecom)

Corporate-Level Strategy Retrenchment
Types of Corporate-level Strategies (II)
04 Reduce operations or withdrawal from certain markets

e.g. to cut costs, refocus on core activities

General Motors dicontinuing some models in 2008

Vertical Integration

05 Expanding a company’s operations into different stages

of the supply chain

Backward integration (acquiring or controlling

suppliers) vs forward integration (acquiring or
controlling distributors or retailers)

E.g. Tesla producing its own batteries in Gigafactories

(backward integration)

Horizontal Integration

06 Expanding by merging with a company in the

same industry

Consolidate market share, reduce competition,

achieve economies of scale
Facebook’s acquisiton of Instagram
 Business Strategy
Types of Business-level Strategies (Generic Strategies)

Cost Leadership Differentiation Focus

Focus on becoming the lowest- Focus on offering a unique or Targeting a very specific
cost producer in the industry, for high quality product, e.g. through customer segment, offering
example through economies of innovation, brand image, etc. specialized services or goods for
scale, optimizing the supply that particular group. Either cost
chain, improve efficiency. focus (lowest-cost good in that
specific segment) or
differentiation (high-quality good
within that specific segment).

Requires continuous Builds customer loyalty Limited growth Allows companies to cater to
Vulnerability Attracts price-
innovation and potential outside specific customer needs
to price wars sensitive customers Allows for premium pricing
investment the niche
Reduces direct competition
Potential sacrifice Creates a competitive Reduces price sensitivity
Imitation by competitors Vulnerable to in larger markets
of product quality advantage through pricing
can erode the unique value larger competitors
Builds strong customer loyalty
Increases market share entering the niche
within the niche
due to lower prices
Functional Strategies
and Key Considerations

Board

Strategy

Marketing & Operations Human Finance R&D Sales

Communications Resources

Alignment with Overall Strategy

Specialization

Resource Optimization

Performance Improvement

Agility and Adaptability

International Strategy
Types of International Strategies (I)

Global Strategy Multidomestic

A global strategy involves Strategy
standardizing products and services
across international markets with A multidomestic strategy involves tailoring
minimal adaptation to local products, services, and marketing efforts to
preferences. Companies pursuing a suit the unique needs of each country or
global strategy treat the world as a region. Companies adopting this approach
single, unified market and focus on recognize the importance of cultural, political,
efficiency and cost reduction and economic differences and customize their
through economies of scale. offerings accordingly.

Cost efficiency due Limited flexibility to adapt Strong alignment with Higher costs due to
to economies of scale to local consumer local market needs localized operations and
preferences marketing efforts
Consistent brand image Increased customer
globally Vulnerable to differences in satisfaction through Difficulty in achieving
local regulations, tastes, customization economies of scale
Streamlined operations
cultures
and product processes Ability to build local Complexity in managing
relationships and decentralized operations
market presence
International Strategy
Types of International Strategies (II)

Transnational Strategy Multidomestic Strategy

A transnational strategy combines elements of
both global and multidomestic strategies. An international strategy involves exporting a
Companies pursuing this strategy seek to company’s products and services from the home
achieve both global efficiency and local country to foreign markets with little to no
responsiveness. The goal is to standardize modification. This strategy is often used by
certain elements of the business where companies that are looking to expand
possible (such as core technologies or internationally but do not have the resources or
branding) while allowing for local adaptation in desire to deeply customize their offerings for
areas that require customization. different markets.

Ability to leverage both High complexity in balancing Low cost of entry into Limited ability to address
economies of scale and local standardization with customization international markets local needs and preferences
market responsiveness
More demanding in terms of Simplified operations Vulnerable to local
Increased competition in resources, management, and with minimal competition that better
both global and local markets coordination localization understands the market

Flexibility to respond to Requires sophisticated Easier to control May face difficulties

market changes and organizational structures to share quality and complying with local
innovation knowledge across borders consistency from the regulations and market
home base conditions
Strategy
Implementation
Strategy Implementation
Resource
Allocation

Organizational
Structure

Leadership &
Communication

Employee
Engagement

Change
Management
 Resource Allocation
Strategy Implementation 01

Initial Step:
Example GreenTech’s leadership team allocates $5 million in additional funds
specifically for the R&D required to develop the new solar battery
GreenTech Solar, a mid-sized solar panel manufacturer, has developed a strategy technology. This budget covers prototyping, testing, and production setup
to diversify into energy storage solutions. Their primary goal is to introduce a costs. The company also assigns 20% of its workforce, including engineers,
new solar battery product within 12 months to capture a growing segment of the designers, and project managers, to focus on this project full-time.
renewable energy market, which is increasingly demanding energy storage Supporting Operations:
options. Alongside this product launch, GreenTech aims to increase its market In addition to R&D, GreenTech allocates resources to marketing and sales,
share by 15% and improve operational sustainability. earmarking $1 million for promotional activities targeted at both new and
existing customers. Another $1 million is reserved for upgrading production
To successfully implement this strategy, GreenTech needs to focus on several facilities to handle the manufacturing of energy storage solutions, ensuring
critical components, including resource allocation, restructuring its organization GreenTech can scale production quickly once the product launches.
to support the new initiative, providing strong leadership and communication,
engaging employees, and managing the necessary changes across the Objective:
company. These investments are made to ensure that all necessary resources—
financial, technological, and human—are aligned with the strategy, allowing
GreenTech to bring the new product to market efficiently without
disrupting existing operations.
Organizational Structure
02
Cross-functional Teams:
GreenTech recognizes that collaboration across departments is essential for the success of
this new product. Therefore, it forms cross-functional teams comprised of members from Organizational Structure
the R&D, production, marketing, and sales departments. These teams are responsible for 02
ensuring that insights and innovations from one area are quickly shared and integrated
into other parts of the business. For example, the R&D team works closely with the Reorganizing for Efficiency:
marketing team to ensure that product specifications and customer feedback are aligned. To better support the new strategic direction, GreenTech reconfigures its
organizational structure. A new Energy Storage Division is created, tasked
Decentralized Decision-making: with managing the entire lifecycle of the solar battery project, from R&D to
To expedite the decision-making process and prevent bottlenecks, GreenTech sales. This division is led by a newly appointed project manager who reports
decentralizes some decision-making authority to the new project team. This allows the directly to the senior leadership team.
Energy Storage Division to make faster adjustments related to product design, supplier
negotiations, and marketing campaigns without waiting for senior management approval.
 Leadership & Communication
Strategy Implementation 03

Role of Leadership:
Example (II) The leadership team plays a critical role in the success of the strategy
Employee Engagement implementation. From the outset, senior management emphasizes the
04
importance of the new energy storage product to GreenTech’s future. They
Motivation and Incentives: consistently communicate the long-term vision and the value this product
GreenTech recognizes that employee engagement is crucial for successful strategy will bring to both the company and its customers. Leadership provides clear
implementation. To motivate employees to fully embrace the new strategy, the company and consistent messaging through company-wide meetings, where
introduces performance-based incentives. Employees involved in the Energy Storage employees at all levels are briefed on the progress of the new strategy and
Division are offered bonuses tied to specific milestones, such as hitting production targets its impact on the overall mission of GreenTech.
or securing the first large contract. This ensures that employees are not only engaged but
Open Communication Channels:
also driven to deliver results on time.
GreenTech implements multiple communication channels to keep all
Training and Development: employees informed. Weekly update meetings are held, involving cross-
Recognizing the need for employees to develop new skills, GreenTech invests in training departmental teams to ensure there is full transparency about the project’s
programs to upskill employees who will be involved in the development and production of status. Additionally, a dedicated internal communication platform is set up,
the new energy storage products. Engineers, for example, receive training in the latest where team members can share updates, raise concerns, and propose new
battery technologies, while sales teams are educated on the technical aspects of energy ideas.
storage to better inform potential customers.
Leadership Involvement:
Inclusive Culture: Top executives regularly visit the Energy Storage Division to assess progress
GreenTech encourages employees from all departments to provide input on the new and provide guidance. This hands-on approach fosters trust and ensures
strategy, ensuring they feel part of the decision-making process. This inclusive culture that the project team feels supported. By making leadership accessible,
helps prevent resistance to change and fosters a sense of ownership across the entire GreenTech’s top management helps maintain momentum and motivation.
company. Town hall meetings are held to gather employee feedback on the new product
line and address any concerns that arise.
 Change Management
Strategy Implementation 05

Managing Organizational Change:

Example (III) Because introducing a new product line involves significant changes in how
the company operates, GreenTech implements a structured change
management plan. This plan includes clear timelines for each phase of the
product development, from R&D to market launch, with regular check-ins to
assess progress. The company appoints a change management team to
guide employees through the transition, ensuring that everyone
understands the reasons for the change and how it aligns with GreenTech’s
overall mission.

Addressing Resistance:
To minimize resistance, GreenTech uses internal ambassadors—influential
employees from various departments—who help promote the new strategy
internally. These ambassadors act as liaisons between leadership and
employees, advocating for the new initiative and addressing concerns in a
timely and empathetic manner. This helps alleviate fears of job changes or
additional workload.

Adapting Company Culture:

GreenTech’s management emphasizes that the new strategy does not
replace its core mission of sustainability but enhances it. They integrate the
new product into the company’s culture by highlighting its role in reducing
carbon footprints, ensuring that sustainability remains central to the
company’s identity.
 Strategy Monitoring
and Control

1. Balanced Scorecard (Recap)

2. Establishing Strategic KPIs

 Balanced Scorecards (BCS)
Financial Data
01
Tracking performance against financial targets

Question: “How do we look to our shareholders?”

Common metrics: e.g. Revenue growth, Profit margins, ROI, EPS

Financial Business
Business Processes Data Processes
02
Internal processes that drive the organization

Question: “What must we excel at?”

Common metrics: e.g. Product Cycle time, Defect rates, Process efficiency

Customer Perspectives
03
Customer satisfaction and retention
Customer Learning
Question: “How we customers perceive us?”
Perspectives and Growth
Common metrics: Customer satisfaction index, customer retention rate,
market share

Learning and Growth

04
Ability to innovate, improve, and learn.

Question: “How can we continue to improve and create value?”

Common metrics: Employee training hours, Employee satisfaction, Innovation rate

Developing and
Implementing
Strategy

An Example