BUS 320

Strategic Management

Compiled Study Guide — Organised from Lecture Notes for CBE

Exam Revision

Course Outline
1. Concept of Strategy — Meaning, Strategic Intent
2. Organizational Strategy — Vision, Mission, Goals & Objectives
3. Formulation & Implementation of Strategy
4. Business Environment — External & Internal
5. Stakeholders in Business
6. Corporate Social Responsibility (CSR)
7. Corporate Governance

1. Concept of Strategy
1.1 Meaning of Strategy
The word “strategy” is a Greek word meaning “generalship.” It is
originally a military word, referring to the big plan a general uses to
win a war.
In business, strategy refers to a future plan that an organization
makes to match its environment. It is a plan of action designed to
enable an organization accomplish its objectives.
Strategy is also a mediating force between an organization and its
environment. It is the determination of the basic long-term goals of
an organization, and the adoption of courses of action and the
allocation of resources necessary to achieve these goals.
1.2 The Three Schools of Strategy
• Planning School: views strategy as a continuous, deliberate
process of planning.
• Positioning School: focuses on how a firm presents its business to
customers and positions itself in the market.
• Resource-Based School: believes that the resources a firm
possesses will enable it to secure a strong position in the market.
1.3 Elements of Strategy
 • Arena — the field/scope in which the organization competes.
• Vehicle — the means used to get into that arena.
• Differentiator — what makes the organization's offering distinct.
• Staging — at what stage/pace the organization is providing the
service.
• Economic Logic — how the strategy will earn returns
(longevity/profitability).
2. Organizational Strategy Intent
Intent means “intention.” Intention means “purpose.”
Strategic Intent refers to the purpose which an organization ought to
achieve — captured in its Vision, Mission and Goals.
2.1 Vision
Vision is a broad intention. It is all-inclusive; it is what an
organization wishes to become — like a dream/direction to pursue.
Benefits of Having a Vision
• It is inspiring.
• It is exhilarating.
• It represents discontinuity (a break from the past / a leap forward).
• It represents a common identity for the organization.
2.2 Mission
Mission deals with what an organization is, and why it exists. It is
divided into two components:
• Core Values — beliefs and principles the organization holds.
• Core Purpose — the reason(s) it exists / how it makes money.
A mission is a statement that describes what an organizational goal
is. Mission is externally focused; it makes an organization unique.
Attributes of a Good Mission Statement
• It must be feasible/possible.
• Preciseness — it must be precise.
• It must achieve some level of clarity.
• It should not be too narrow.
• It must be motivating.
• It must be distinctive.
• It must reflect long-term thinking.
• It must represent integrity.
2.3 Goals
Goals provide a basis for achieving the organization's mission. Goals
specify what routes/direction the organization wants to take to
achieve its mission.
2.4 Objectives
Objectives are ends that specify or state how specifically the goals
will be achieved. Objectives are set to achieve your goal(s);
objectives are targets set against the goal.
Roles of Objectives
• Objectives define the relationship between the organization and its
environment.
• Objectives help the organization pursue its mission and vision.
• Objectives provide a basis for strategic decision making.
• Objectives form a standard for performance and appraisal.
Characteristics of Good Objectives
• Objectives should be understandable by those who have to achieve
them.
• They must be congruent and specific, so that they will motivate
everybody.
• They must be related to a time frame.
• They should be challenging — i.e. not too high nor too low.

3. Formulation & Implementation of Strategy

3.1 Benefits of Strategy
• It is a tool to deal with uncertainty.
• It helps to reduce ambiguity.
• It allows an organization to structure its various behaviours in a
manner that operates within the organizational culture/behaviour.
• Strategies also help managers/thinkers formulate their thoughts.
3.2 Factors / Requirements of a Good Strategy
• Strategy must be clear.
• Strategy must also permit freedom of action.
• Strategy must also concentrate superior power at the point of
attack/effort.
• Strategy must achieve a level of flexibility.
• Strategy must also bring surprises.
• It must enable the organization to secure resources.
3.3 Levels of Strategy
• Corporate-Level Strategy — the overall, ranking action plan;
covers the scope, direction, growth, etc., of the whole
organization.
 • Business-Level Strategy — refers to the plans and actions adopted
by a business unit to gain a competitive advantage and improve its
position within a specific market. Also called Strategic Business
Unit (SBU) strategy.
• Functional-Level Strategy — the restricted plan of a specific
functional department of an organization, aimed at efficiently
utilising resources and supporting the achievement of business-
and corporate-level objectives.
3.3.1 Porter's Generic (Business-Level) Strategies

According to Michael Porter, models developed for business-level

strategy can be categorised into 3 strategies (spanning 5 areas):
• Cost Leadership Strategy — methods used by a firm/organization
to reduce the cost of production, in order to sell at a lower cost.
This helps introduce a cost structure that allows the firm to sell its
product at a lower price.
• Differentiation Strategy — the strategy of offering a product or
service which the market perceives as being distinctive from
others.
• Focus Strategy (also called Niche Strategy) — a type of strategy
which a firm or organization develops for the purpose of meeting
a narrow/specific market, creating a unique market position.
3.3.2 Miles & Snow Typology (Business-Level Strategy)

Miles and Snow developed a typology for business-level strategy.

They identified that organizations develop a strategy according to
one of the following:
• Prospector Strategy — a major strategy used to continuously
innovate ideas; the organization seeks out any available
opportunity.
• Defender Strategy — indicates that the organization defends the
market it already has, rather than through new ventures; also
involves focusing on stability.
• Reactor Strategy — a strategy that has no clear, consistent
strategic thrust; the organization reacts to events rather than
planning ahead.
• Analyser Strategy — a strategy which the organization deploys to
bring efficiency to the organization/market it competes in.
3.3.3 Types (Grand) Strategy

Broad types of strategy used at corporate/business level:

• Integration Strategy
• Intensive Strategy
• Diversification Strategy
(a) Integration Strategy
These are strategies that integrate/combine activities — where an
organization combines a variety of activities that are related to its
current business. It can be of 3 types:
• Forward Integration — gaining ownership or control over
distributors/outlets.
• Backward Integration — happens when a firm produces the
material/input it needs by itself, rather than buying from a supplier
(taking control of its own supply).
• Horizontal Integration — involves a firm increasing its control
over its competitors (e.g., by acquiring them) in order to increase
its control/market share.
(b) Intensive Strategy
Also known as Expansion Strategy. It is a strategy that makes an
effort to improve an organization's position with regard to its current
products/markets. It is divided into 3:
• Market Penetration — the effort an organization puts in place to
increase its market share with existing products in existing
markets.
• Market Development — involves introducing existing products
into new locations/markets.
• Product Development — involves introducing new products into
the present/existing market.
(c) Diversification Strategy
A type of strategy that involves the number of different strategies
(products/markets) an organization engages in, at the extent to which
the business operates. It is categorised into 3:
• Concentric Diversification — occurs when an organization
introduces new products that are similar to its existing products.
• Horizontal Diversification — involves new products that are
unrelated to existing products but are targeted at the organization's
existing/current customers.
• Conglomerate Diversification — focuses on entirely different
products, unrelated to the organization's existing products or
markets.

4. Business Environment
Business environment refers to all internal and external factors that
can affect an organization's performance, operations and survival.
Business environment is divided into two broad categories:
4.1 Internal Environment
These are factors that the organization has control over. They
include:
• Ownership
• Resources
• Employees
• Mission & Vision
• Physical work environment
• Organizational structure
4.2 External Environment
These are factors that affect the operations, performance and survival
of the business, which the organization does NOT have control over.
It is divided into two:
4.2.1 Task (Micro) Environment

This refers to the immediate factors that directly affect business

activity in order to serve the customer, such as: suppliers,
distributors, customers, competitors, and investors/shareholders.
4.2.2 Macro (General) Environment (PESTLE)

• Political — government policy, trade regulation, and taxation

laws.
• Economic — such as inflation rate, consumer income level, and
economic growth.
• Legal — legal factors/regulations affecting business.
• Technological — technology-related factors.
• Environmental/Ecological — climate change concerns,
sustainability requirements, and access to natural resources.
• Social/Socio-Cultural — societal and cultural factors.
• Ethics — ethical considerations.
4.3 Features of the Business Environment
• It is dynamic (constantly changing).
• Uncertainty — it is usually difficult to predict.
• Relativity — it differs from one organization/place to another.
• Interdependent components — the different factors interact with
and affect one another.
4.4 Importance of Studying the Business Environment
• Identifying opportunities and threats.
• Determining strengths and weaknesses.
• To formulate strategy.
4.5 Strategic Analysis (Strategic Management Concept)
Strategic Management is the level of strategy at the micro unit. It is
the starting point of management, and it stands on what is called
Strategic Analysis. It deals with the formulating, implementing and
organizing of the major goals and objectives of the organization. It is
also seen as a sense of action or decision which organizational
managers use to formulate and implement strategies that will enable
them to have a competitive position in the market.
Components of Strategic Analysis
• Goals & Objectives / Internal Environmental Analysis
• External Environmental Analysis
Ways of Developing Environmental Analysis (Process)
• Scan the environment.
• Environmental monitoring.
• Competitive intelligence.
• SWOT Analysis.
• Build internal environmental analysis — this helps you understand
who you are and your capacity.
• Carry out evaluation.
• Formulate strategy.
• Implement your strategy.

5. Stakeholders in Business
A stakeholder is any person, group, or organization that can affect or
be affected by a company's objectives, policies, or actions.
Stakeholders are individuals, groups, or organizations that have an
interest in, or are affected by, the activities and decisions of a
business organization. They can influence the success or failure of
the business.
Stakeholders are divided into two broad categories:
• Internal Stakeholders
• External Stakeholders
5.1 Internal Stakeholders
These are people within the organization who are directly involved in
the running/operation of the business.
(a) Owners / Shareholders

They provide capital to start/run the business. Their expectations:

• Profitability
• Share value
• Dividend — a part of profit/income shared to them.
 • Business growth.
(b) Employees / Staff

These are people that work in the business, carrying out its activities.
They exchange their labour for income, and rely on the business for
their livelihood. Their expectations:
• Fair compensation.
• Job security.
• Safe working conditions.
• Career development.
(c) Managers

They are also employees, but their role is different. They are
responsible for making key operational and strategic decisions. They
plan, organize, direct and control business activities. Their
expectations:
• Operational efficiency.
• Career advancement.
• Performance bonuses.
5.2 External Stakeholders
These are individuals or groups outside the organization who are
affected by the business. They do not work inside the business, but
they are indirectly or directly impacted by the company's decisions
— e.g. customers.
(a) Customers

They purchase and use the goods and services the business provides
— they are the end users. Their expectations:
• High product quality.
• Value for money.
• Fair pricing.
• Good customer service.
(b) Suppliers

They provide the necessary raw materials, goods and services

required to run a business. Their expectations:
• Regular orders.
• Long-term contracts.
• Prompt / on-time payment.
• Good business relationship.
(c) The Government

They regulate business to ensure legal compliance and safety

standards. Their expectations:
 • Tax revenue.
• Job creation.
• Adherence to labour and environmental laws.
(d) Creditors / Lenders

These are entities, such as banks, that provide loans and financial
capital to the company. Their expectations:
• Financial stability.
• Timely repayment of the principal loan amount plus interest.
(e) Competitors

These are rival firms operating in the same industry. Expectation of

this relationship:
• Encourages businesses to improve quality and efficiency.
(f) Local Community

These are the neighbourhood or society impacted by the business's

location and operations. Their expectations:
• Job opportunities.
• Minimal pollution — pollution can be in the form of noise, air, or
waste.
• Social responsibility.
5.3 Importance of Stakeholders in Business
• They provide resources needed for business operation.
• They influence business decisions and policies.
• They contribute to the growth and survival of the business.
• They help businesses identify opportunities and challenges.
• They promote accountability and corporate responsibility.

6. Business & Government

This refers to the range of internal and external factors that can affect
an organization's performance, operations and survival — essentially
revisiting the Internal/External Environment split (see Section 4) in
the specific context of how government and other external actors
relate to the business.
6.1 Internal Factors

These are factors that you have control over: ownership, resources,
employees, mission & vision, physical work environment, and
organizational structure.
6.2 External Factors
These are factors that affect the operations, performance and survival
of the business, which you do NOT have control over — divided into
Task (Micro) Environment and Macro Environment (see Section 4.2
above for full PESTLE breakdown).

7. Corporate Social Responsibility (CSR)

Note: Your uploaded notebook pages end at the Business–
Government section, so this topic and the next (Corporate
Governance) were not in your photos. The explanations below are
added so your notes are complete — read them alongside everything
above, since CSR and Governance both build directly on the
Stakeholders section (Section 5).
7.1 What CSR Means
Corporate Social Responsibility (CSR) is the idea that a business
does not exist only to make profit for its owners — it also has a duty
to behave responsibly towards the people and environment it affects:
its employees, customers, the local community, and the wider
society. In simple terms: CSR is a business voluntarily “giving back”
and acting ethically, beyond what the law strictly demands.
Think back to Section 5.2(f) — Local Community stakeholders
expect “social responsibility” from the business. CSR is how a
company delivers on that expectation.
7.2 Carroll's Pyramid of CSR (the easiest way to remember CSR)
A simple way to understand the layers of CSR is Archie Carroll's
Pyramid. Picture it as four levels stacked on top of one another, like a
building — you cannot skip a lower level and expect the top ones to
matter:
• 1. Economic Responsibility (the foundation): Be profitable. A
business must first make money, pay its workers, and stay alive —
this is the base every other responsibility is built on.
• 2. Legal Responsibility: Obey the law. Pay your taxes, follow
labour laws, don't break regulations.
• 3. Ethical Responsibility: Do what is right, fair and just — even
where the law is silent. E.g., not exploiting workers even if no law
explicitly forbids it.
• 4. Philanthropic Responsibility (the top): Be a good corporate
citizen — give back voluntarily, e.g. donations, scholarships,
community projects, environmental initiatives.
Exam tip: if you're asked to “list the dimensions/types of CSR,” these
four (Economic, Legal, Ethical, Philanthropic) are the standard
answer.
7.3 Arguments For CSR
 • It builds a good public image and brand reputation.
• It builds long-term trust and loyalty with customers and
communities.
• It helps a business avoid government regulation by “self-policing”
responsibly.
• Businesses have the resources to solve social problems, so it
makes sense for them to help.
• It improves employee morale and can attract better talent.
7.4 Arguments Against CSR
• The main purpose of a business is to maximise profit for
shareholders — money spent on CSR is money taken from
owners.
• Managers are trained in business, not in solving social problems
— that is government's job.
• It can raise costs, which may be passed on to customers as higher
prices.
• Some firms use CSR only as a marketing tool (“greenwashing”)
rather than genuine responsibility.
7.5 Benefits of CSR to the Business
• Improved brand image and customer loyalty.
• Better relationship with the local community and government.
• Reduced risk of conflict, protest, or regulatory penalties.
• Easier to attract investors who care about ethical/sustainable
business (ESG-conscious investors).
• Higher employee satisfaction and retention.

8. Corporate Governance
8.1 What Corporate Governance Means

Corporate Governance is the system of rules, practices, and processes

by which a company is directed and controlled. In plain terms: it
answers the question “Who is in charge, who watches them, and how
do we make sure the company is run honestly and in the interest of
everyone who depends on it — not just a few powerful people?”
It exists mainly to manage the relationship between three groups: the
Shareholders (owners), the Board of Directors (who set direction and
oversee), and Management (who run daily operations). Good
governance makes sure no one group abuses its position at the
expense of the others — or at the expense of other stakeholders like
employees and the public.
8.2 Core Principles of Corporate Governance
Four principles are usually tested in exams. A simple way to
remember them is the word “FATR” — Fairness, Accountability,
Transparency, Responsibility:
• Fairness: Treating all shareholders (majority and minority) and
stakeholders equitably.
• Accountability: The Board and Management must be answerable
for their decisions and actions — to shareholders and to the wider
stakeholder group.
• Transparency: The company must disclose accurate, timely
information about its finances and performance — no hidden
dealings.
• Responsibility: The Board must act in the best interest of the
company as a whole, ensuring compliance with laws and ethical
standards.
8.3 Key Structures / Mechanisms of Corporate Governance
• Board of Directors — the body elected by shareholders to oversee
management and set strategic direction; usually includes
independent (non-executive) directors to reduce bias.
• General Meeting of Shareholders (AGM) — where owners vote
on major decisions and hold the Board accountable.
• Internal Audit — checks the company's internal controls and
processes.
• External Audit — an independent, outside firm verifies the
company's financial statements are accurate.
• Regulatory Bodies — government agencies (e.g. Securities &
Exchange Commission-type bodies, Corporate Affairs
Commission) that enforce compliance with company law.
• Codes of Conduct / Ethics Policies — internal rules guiding
acceptable behaviour by directors, managers, and employees.
8.4 Why Corporate Governance Matters
• It protects shareholders' investments from mismanagement or
fraud.
• It builds investor confidence, making it easier to raise capital.
• It reduces the risk of corporate scandals and collapse (e.g., due to
fraud or poor oversight).
• It ensures the company is run in a sustainable, ethical, and legally
compliant way.
• It balances the interests of all stakeholders discussed in Section 5
— not just owners.
8.5 CSR vs Corporate Governance — Don't Confuse Them
A common exam trap is mixing these two up. Here is the simple
distinction:
• CSR asks: “Is the company behaving responsibly towards society
and the environment?” — it is about the company's relationship
with the outside world.
• Corporate Governance asks: “Is the company being run properly,
honestly, and in the right people's interest internally?” — it is
about the company's internal system of control and accountability.
In short: Governance is about how a company is directed and
controlled from the inside; CSR is about how a company behaves
and gives back to the outside.

Quick-Revision Summary Table

Topic Key Points
Strategy Greek word (generalship); a plan of action to match environment
& achieve long-term goals; 3 schools: Planning, Positioning,
Resource-Based.
Elements of Strategy Arena, Vehicle, Differentiator, Staging, Economic Logic.
Vision Broad intention; inspiring, exhilarating, discontinuous, common
identity.
Mission What & why org exists; Core Values + Core Purpose; must be
feasible, precise, clear, not narrow, motivating, distinctive.
Goals vs Objectives Goals = routes to mission; Objectives = specific measurable
targets against goals.
Levels of Strategy Corporate, Business (SBU), Functional.
Porter's Generic Strategies Cost Leadership, Differentiation, Focus/Niche.
Miles & Snow Prospector, Defender, Reactor, Analyser.
Types of (Grand) Strategy Integration (Forward/Backward/Horizontal); Intensive (Market
Penetration/Development, Product Development);
Diversification (Concentric/Horizontal/Conglomerate).
Business Environment Internal (controllable) vs External — Task/Micro (customers,
suppliers, competitors) & Macro/PESTLE (uncontrollable).
Features of Bus. Env. Dynamic, Uncertain, Relative, Interdependent.
Stakeholders Internal (Owners, Employees, Managers) & External
(Customers, Suppliers, Government, Creditors, Competitors,
Local Community).
CSR Business's duty to society beyond profit. Carroll's Pyramid:
Economic → Legal → Ethical → Philanthropic.
Corporate Governance System for directing & controlling a company. Principles:
Fairness, Accountability, Transparency, Responsibility. Key
organs: Board, AGM, Internal/External Audit, Regulators.