Strategic Audit Sequence

II. Introduction
Stakeholders Analysis
Vision and Mission
Corporate Social Responsibility Initiatives
III. Strategic Position
1. Macroeconomic Analysis (PEST)
2. Industry Analysis
Porter’s Model
Strategic Group Mapping
Competitive Profile Matrix
3. Resources and Capabilities
Resources and Capabilities
Analysis Resources and Capabilities Using VRIO Approach
Value Chain Analysis
IV. Strategic Choices
Generating Strategies
SWOT and TOWS Analysis
Formulating Strategies
Strategy Formulation
Strategic Options
Means for Achieving the Selected Strategies
Formulating Business Level Strategies
BCG Matrix
Developing Competitive Strategy
V. Strategy in Action
What is a strategy?

It’s the determination of the long run goals and objectives of an enterprise and the adoption of
courses of action and the allocation of resources necessary for carrying out these goals. In other
words, it’s a firms theory on how to develop its competitive advantage.

Levels of a strategy are:

Corporate-level strategy is concerned with the overall scope of an organisation and how value is
added to the constituent business units. Its Diversifying from the organisation’s original activities
into other activities

e.g. Tesla selling batteries for home use.

Business-level strategy is concerned with the way a business seeks to compete successfully in its
particular market. In other words, marketing and product improvement strategies

e.g. Developing a lower cost, volume car for Tesla.

Functional strategy is concerned with how different parts of the organisation deliver the strategy
effectively in terms of managing resources, processes and people.

e.g. Tesla’s functional strategies are geared to meeting its investment needs and raising finance.
Stakeholders analysis

Stakeholders are those individuals or groups that depend on an organisation to fulfil their own
goals and on whom, in turn, the organisation depends. It is conducted to outline the key
stakeholders and their needs for the project.

They can be divided into 5 types:

- Economic (e.g. suppliers, shareholders, banks)

- Social/political (e.g. government agencies)
- Technological (e.g. standards agencies)
- Community (e.g. local residents)
- Internal (e.g. employees, local offices)

Application:

- Pfizer include its over 10,000 employees

- As for Pfizers external stakeholders, Pfizer’s partners include SpringWorks, PostEra,
LianBio, and Homology

Vision and Mission

A vision statement is a short, futuristic statement that highlights the company’s long-term
ambitions.

It asks 2 questions:

‘What do we want to achieve?’ and ‘If we were here in twenty years what do we want to have
created or achieved?’
A mission statement is one that features the company’s competitive advantage while also
mentioning its values, and its made for the firms employees and stakeholders.

It asks:

What business are we in?’ ‘What would be lost if the organisation did not exist?’ and ‘How do
we make a difference?’

There are 9 components to a perfect mission statement, they are:

- Customers: highlighting who are the firms’ customers

- Markets: market geographical competition
- Concern for survival, growth and profitability: firms level of commitment to growth
and financial stability
- Philosophy: the firms basic beliefs, values and ethical priorities
- Concern for public image: shows how responsive is the firm is to societal and
environmental concerns
- Products and services: presents the firms major products and services
- Technology: shows if theyre technologically advanced
- Self-concept: highlights the firms major competitive advs and core competencies
- Concern for employees: expresses that employees are a valuable asset to the firm

Application:

Old: “At Pfizer, we innovate every day to make the world a healthier place. It was the vision of
Charles Pfizer at the very beginning and it holds true today in everything we do. From scientific
discovery to breakthrough products to our essential partnerships around the world, we’re
committed to quality healthcare for everyone. Because every individual matters”

New: “At Pfizer, our main ambition is to reach and help as many people around the world through
our high quality medical products and services, because every life matters. Since we highly trust
that living a healthy life begins with the environment in which we survive, we do everything in
our power to boost green production. With the help of our latest and innovative technology, up-to-
date research and developments, our treasure of employees, and science, we continue to seek new
opportunities to expand our production across the globe to be accessible to everyone.”
CSR

- Corporate social responsibility (CSR) is the commitment by organisations to ‘behave

ethically and contribute to economic development while improving the quality of life of
the workforce and their families as well as the local community and society at large’.
- CSR is an organization’s commitment to work towards strategies, make decisions, and
pursue activities that align with the community’s expectations and values.
- Even though it is costly and its benefits are not realized on the short run, CSR has many
advantages, including:
- cost and risk reduction
- profit maximization
- competitive advantage attainment
- favorable reputation
- legitimacy
- collective value creation.
- allows firms to easily evaluate possible risks and improve profitability

Application:

- Due to the innovation of sustainable medicines and the reduction of wastes through
medicines’ product lifecycle, Pfizer was able to reduce its greenhouse gas emissions by
over 30% and their waste disposal by 15%, and its water consumption by 19% in 2020.
- The company also paid over $2 billion for the vaccine production
- And, theyre working on having a more inclusive workplace by 2025.
STRATEGIC POSITION

Macro-economic analysis – General analysis

- This is the first analysis conducted for external analysis, it is done to determine whether or
not expanding production will be welcomed by the market.
- The main tool used to conduct this analysis is PEST/PESTLE.
- Its main purpose is to act as a framework that would facilitate the processes of analysis and
strategic planning.
- It allows organizations to assess their micro and macroenvironments in which they operate
and develop strategic thinking.
- The factors encompassed in the PEST framework stand for political, economic, social, and
technological.

Advs:

- easy to use and interpret

- aiding in gaining a better understanding of the business environment
- reducing the effects of prospective business threats
- allows firms to anticipate threats and therefore take actions that would help eliminate them
as well as uncover new opportunities that organizations can capitalize on

Disadvs:

- oversimplification of data; high probability of missing important information

- the need of constant updating in order to be effective
- the extensive requirement of data access which might be expensive and time consuming
- the chance of managers getting “paralysis by analysis”
- the anticipation of environment development is becoming increasingly more difficult as
business environments are changing rapidly
Application:

Political

- Pharmaceutical firms are highly regulated that often operate globally, which sometimes
leads to complexities when operating in some countries due to the ongoing global political
uncertainties. The government of each country places policies and regulations for
pharmaceutical products. As such, the Egyptian Health and Population Ministry restricted
the vaccination of students under the age of 16.
- Pfizer has a strong financial position, which makes resources available to the company for
new projects and expansions. Additionally, their financial resources allow them to access
new markets, which is further facilitated by governments’ agreement of free trade.
However, the laws are different from one country to another, which could expose Pfizer to
liabilities

Economic

- The structural and macroeconomic reforms passed by Egypt helped stabilize its economy.
the economy was able to grow and decrease its unemployment rate to over 7% after the
initial spike post the hit of COVID-19. The inflation rate has also dropped to 4.5% during
the first half of the year 2020/2021. It is expected that the Egyptian economy will start
growing at its pre-COVID-19 growth rate during this year and the two that will follow

Social

- The percent of older people (who are 60 years of age and more) is projected to be 9.2% in
2021, and it is expected to reach 20.8% in 2050. This means that around 20 million
Egyptians will be categorized as elderly by that time, this is a big number that resembles a
full nation in some parts of the world.
- An increasing number of people are becoming obese, they are dealing with health issues
such as diabetes, thyroid disease, and hypertension.
Technological

- With the help of biotechnology, the industry is able to get better insight on the human body,
such as its genetic composition, to produce more innovative products for its customers
- Robotic manufacturing can present organizations within the industry with larger economies
of scale as it produces better consistent quality, reduces risks and defaults, promotes
maximum productivity, and reduces costs.
- Through digital marketing, they can keep their stakeholders updated on all their details.
Whether it is an announcement of any source or a new launch, they can easily spread the
word through social media digital marketing.
Industry analysis

- Industry analysis is a tool used by businesses to assess and examine a market in order to
determine the competitive fluctuation of a given industry
- In other words, it is a method by which an institution can recognize its competitive position
with respect to other competitors within the industry
- This analysis is of high importance in the creation of an effective strategic plan. In addition,
it helps the company in identifying its opportunities and threats, which can lead to the
development of a competitive advantage.

Industry types include:

• Monopoly industries – an industry with one firm and therefore no competitive rivalry. A
firm has ‘monopoly power’ if it has a dominant position in the market. For example,
Google in the US search engine market.

• Oligopoly industries – an industry dominated by a few firms with limited rivalry and in
which firms have power over buyers and suppliers. For example, Boeing and Airbus
dominate the market for civil aircraft.

• Perfectly competitive industries – where barriers to entry are low, there are many equal
rivals each with very similar products, and information about competitors is freely
available. Few markets are ‘perfect’ but many may have features of highly competitive
markets, for example, mini-cabs in London.

• Hypercompetitive industries – where the frequency, boldness and aggression of

competitor interactions accelerate to create a condition of constant disequilibrium and
change (e.g. mobile phones).
The industry lifecycle:

There are 3 tools included in conducting an industry analysis:

Porters Model:

- Porter’s model is formed based on the idea that an organizational strategy should consider
the opportunities and threats in the organizations external setting.
- The model aims to recognize and control a competitive environment by directly facing
competitors, or to examine a wider outlook that competes against the organization.
- It consists of the five forces:
- The threat of entry: Barriers to entry are the factors that need to be overcome by new
entrants if they are to compete. The threat of entry is low when the barriers to entry are
high and vice versa.
- The main barriers to entry are:
- Economies of scale/Experience/Network effects.
- Access to supply and distribution channels.
- Differentiation and market penetration costs.
- Legislation or government restrictions (e.g. licensing).
- Expected retaliation.
- Incumbency advantages.
Application:

- The pharmaceutical industry in which Pfizer exists has low chances of new entry due to its
high barriers of entry. the pharmaceutical industry is one of the top ten industries with the
highest barriers of entry.
- The barriers include factors such as the intensive costs for Research and Developments
(R&D), challenging regulatory approval processes, intellectual property, and one of the
most challenging barriers of entry for such an industry is the Food and Drugs
Administration (FDA) approval.

- The threat of substitutes: Substitutes are products or services that offer a similar benefit
to an industry’s products or services, but have a different nature, that is, they are from
outside the industry. People may swap for substitutes due to prices, quality, beliefs, product
innovation, etc.

Application:

There is high substitute possibility in the industry. The Alternative Medicine, otherwise known as
integrative or complementary medicine, (CAM) is a clear and highly accessible substitute for any
of the traditional treatments that the companies in the industry offer. There are numerous types of
CAM such as herbal medicine, energy therapy, and chairopractic medicine.

- The power of buyers: Buyers are the organisation’s immediate customers, not necessarily
the ultimate consumers.
- If buyers are powerful, then they can demand cheap prices or product/service
improvements to reduce profits. Buyer power is likely to be high when:
- Buyers are concentrated.
- Buyers have low switching costs.
- Buyers can supply their own inputs (backward vertical integration).
- Low buyer profits
Application:

The power of buyers is related to what extend the buyer has influence on the price (Bruijl, 2018).
The pharmaceutical industry is unique in that sense, since its buyers have absolutely low power
over price. That is due to the fact that their purchases are completely based on the influencers,
doctors, prescriptions.

- The power of suppliers: Suppliers are those who supply what organisations need to
produce the product or service. Powerful suppliers can reduce an organisation’s profits.
- Supplier power is likely to be high when:
- The suppliers are concentrated (few of them).
- Suppliers provide a specialist or rare input.
- Switching costs are high (it is disruptive or expensive to change suppliers).
- Suppliers can integrate forwards

Application:

Suppliers have little power in the pharmaceutical industry (Investopedia, 2021; Porter Analysis,
2017). The raw materials used in the production of medicine is one of the major elements that
require the supplier. However, they are provided by the chemical industry of which various sources
can supply.

- Rivalry between existing competitors: Competitive rivals are organisations in the same
industry/market with similar products or services aimed at the same customer group.
- The degree of rivalry depends on:
- Competitor concentration and balance.
- Industry growth rate.
- High fixed costs.
- High exit barriers.
- Low differentiation.
Application:

The competition is high in the pharmaceutical industry in which Pfizer exists. As per Burke (2021),
Pfizer competes with five main international competitors: Roche, Novartis, AbbVie, Johnson &
Johnson, Merck & Co., and Pfizer being in sixth place.

- Government: some consider this a sixth factor as well.

Strategic Group Mapping

- Strategic groups are organisations within an industry or sector with similar strategic
characteristics, following similar strategies or competing on similar bases.
- SGM is defined as "a group of firms within the industry that are highly symmetric with
respect to cost structure, the degree of vertical integration, and the degree of product
differentiation, formal organization, control systems, management rewards/punishments,
and the personal views and preferences for various possible outcomes”.
 - Its beneficial in:
- Understanding competition – enables focus on direct competitors within a strategic
group, rather than the whole industry. (For example, Tesco will focus on Sainsburys
and Asda.)
- Analysis of strategic opportunities – helps identify attractive ‘strategic spaces’
within an industry.
- Analysis of ‘mobility barriers’ – that is, obstacles to movement from one strategic
group to another. These barriers can be overcome to enter more attractive groups.
Barriers can be built to defend an attractive position in a strategic group.

- The map is made by choosing the two most important critical factors of the industry on
each of the axes, and mapping accordingly.

Application:

R&D is an extremely important factor in the pharmaceutical industry as it improves the public
health, product quality as well as cuts down production costs. Moreover, product availability is
also highly important, since without proper distribution, sales will not be made, and brand
awareness and equity will suffer
Competitive Profile Matrix

- A Competitive Profile Matrix (CPM) is an analytical tool that provides necessary

information of competitive advantage based on critical success factors and serves as the
basis for an organization’s strategy.
- Thus, it is used to identify the organization’s main competitors and compares them using
the critical factors identified
- That is, those factors that are either particularly valued by customers or which provide a
significant advantage in terms of cost.
- The matrix also helps in acknowledging the organization’s strengths and weaknesses. This
gives the company a clear idea of what they should work more intensively for, and what
they should maintain and protect

Application:
Resouce and Capabilities analysis

- The resources-based perspective has proven useful in understanding how a firm's resources
and capabilities act as sources of long-term competitive advantage.
- The resource-based view (RBV) is a firm-specific approach that emphasizes the relevance
of a firm's distinctive tangible and intangible resources as a source of sustainable
competitive advantage
- The resources and capabilities of an organisation contribute to its long-term survival and
potentially to competitive advantage.
- Resources are the assets that organisations have or can call upon (e.g. from partners or
suppliers), that is ‘what we have’ (nouns).
- Capabilities (AKA competences) are the ways those assets are used or deployed, that is
‘what we do’ (verbs). Two types of capabilities:
- Threshold capabilities are those needed for an organisation to meet the necessary
requirements to compete in a given market and achieve parity with competitors in
that market – ‘qualifiers’
- Distinctive capabilities are those that are required to achieve competitive
advantage. Distinctive or unique capabilities that are of value to customers and
which competitors find difficult to imitate – ‘winners’
The four key criteria by which capabilities can be assessed in terms of providing a basis for
achieving sustainable competitive advantage are:

(i) valuable: Value simply is that the resource allows the company to take advantage of
opportunity and defend against threat or not

(ii) rare: Rarity means is it difficult or challenging for your competitors to acquire or it is
easy to apply.

(iii) inimitable: Inimitability means that the resource is difficult or expensive for
competitors to imitate or it is common recourse.

(iv) organizational support: does the company exploits the resources or not.

A VRIO analysis helps to evaluate if, how and to what extent an organisation or company has
resources and capabilities that are the items listed above.

VRIO analysis examines each of its internal resources individually and assesses whether they offer
a sustainable competitive advantage or not.

VRIO states for each dimension whether these resources can be developed to gain sustained
competitive advantage or will remain the same.

Finally, the analyzed resources identify the type of competitive advantage that the resource
provides.

Application:

Capabilities provides Pfizer a chance to gain a sustainable competitive advantage over competitors.

This long-term competitive advantage may enable Pfizer to achieve above-average revenues while
avoiding competition challenges.

So, one of Pfizer’s resources should be valuable, rare, inimitable and organized in order to have
sustained competitive advantage.
Value

• Pfizer is valued internationally for its distribution systems as its products are available all over
the world and accessible

• Pizer’s partnerships is valuable resource as it helps Pfizer to develop new inventions.

• Good reputation of Pfizer of course is a valuable resource as it has impact on customers’ attitude
towards Pfizer’s products.

Rarity

• All the resources mentioned above are rare cause it not easily available or possessed by
competitors except for partnerships is can easily done by competitors.

Inimitability

• All resources mentioned above are costly to imitate except human and financial resources as
competitors also can train their employees well and provide them benefits and friendly work
environment, satisfy patients and make good relationships with suppliers. Regarding the financial
resources it is not difficult for other pharmaceutical company to manage it well that’s why it is not
imitable.

Organizational support

• Distribution networks of Pfizer are well-organized and it provides Pfizer with a sustained
competitive advantage as, Pfizer uses these networks to be in connection with its consumers by
ensuring that products are available across different locations.

• Pfizer’s natural resources are well-organized providing Pfizer a sustained competitive advantage.

In a nutshell, Pizer’s VRIO analysis revealed that there are two resources provides sustainable
competitive advantage, natural resources and distribution networks.
Value Chain Analysis

- This is a model for thinking strategically about business operations (value activities) in
terms of costs and benefits; it is also valuable for figuring out how companies may produce,
sustain, and optimize value for their customers.
- In other words, The value chain describes the categories of activities within an
organisation, which, together, create a product or service.
- Uses:
- A generic description of activities – understanding how the discrete activities (or
clusters of linked activities) contribute to consumer benefit.
- Identifying activities where the organisation has particular strengths or weaknesses.
- Analysing the competitive position of the organisation using the VRIO criteria –
thus identifying sources of sustainable competitive advantage.
- Looking for ways to enhance value or decrease cost in value activities (e.g.
outsourcing).

Each business contains physical and process components, which are grouped into two categories
of Value Chain activities:

• Five primary activities

• Four support activities.

The primary activities in the above diagram are ones that the company needs to function, such
as marketing and accounting.

Whereas supporting activities are ones that are there to support the main functioms, such as
HRM and technology development.

In addition, the value system comprises the set of inter-organisational links and relationships that
are necessary to create a product or service. Competitive advantage can be derived from linkages
within the value system.

Uses:

- The ‘make or buy’ decision – which activities to do ‘in-house’ and which to outsource.
- Understanding cost/price structures across the value system – analysing the best area of
focus and the best business model.
- Identifying ‘profit pools’ (i.e. the levels of profit in different parts of the system) – seeking
ways to use existing capabilities in order to exploit these.
- Partnering – deciding who to work with and the nature of these relationships.
How does a VCA relate to a competitive advantage?

A value chain analysis helps decision-makers understand which activities are most valuable and
which ones could be optimized (perhaps even eliminated through technology and automation) to
give the business a competitive advantage.

By doing so, the firm can optimize primary activities that account for the greatest share of
production costs and increase profit margins. Conversely, the analysis can also reveal support
activities that could use more spending to generate better value.

In other words, it sheds the light at the company’s competitive advantage.

It can be used to formulate competitive strategies, understand the source(s) of competitive

advantage, and identify and/or develop the linkages and interrelationships between activities that
create value.
STRATEGIC CHOICES

Generating strategies

To do so, SWOT and TOWS analysis shall be put to use.

(if asked about the TOWS analysis only, SWOT must still be mentioned in details)

- SWOT provides a general summary of the Strengths and Weaknesses explored in an

analysis of strategic capabilities, and the Opportunities and Threats explored in an analysis
of the environment. Internal analysis helped in identying strengths and weaknesses, while
external analysis identify threats and opportunities.
- SWOT stands for (strengths, weaknesses, opportunities, threats), simply it is an analysis
used to assess a organization's competitiveness which helps the organization to design
strategic plans by mainly assessing internal and external factors, current & future actions
as well.
- SWOT analysis should enable a fact-based view of data of an organization’s strengths and
weaknesses in order to maintain the strengths and improve the weaknesses. Organizations
need to keep their analysis accurate as much as they can by avoiding damage.

Advs:

- Guides this business for which strategy will be successful and which should get away from.
- important for competitors and investors not only for the business as it provides them with
information about the company whether the organization is strong or not and reasons
behind

Disadvs:

- Long lists with no attempt at prioritisation.

- Over generalisation – sweeping statements often based on biased and unsupported
opinions.
- SWOT is used as a substitute for analysis – it should result from detailed analysis using the
frameworks in Chapters 2 and 3.
- SWOT is not used to guide strategy – it is seen as an end in itself.
 - TOWS analysis is an expansion of SWOT analysis as it also identifying the company’s
strengths, weaknesses, opportunities and threats.
- However, TOWS analysis goes a step further than SWOT analysis by linking up
company’s weaknesses whit opportunities/Threats and strengths with opportunities/threats
in order to help a company to apply the right/ suitable strategy for it.
- The TOWS analysis is a useful matrix as it helps the business to take an action by helping
in reducing threats and weaknesses, take advantage of the opportunities and utilize the
strengths.
- Matching up as follows:
- Weaknesses to threats (W-T): Focus on how the weaknesses could enhance the
threats
- Weaknesses to Opportunities (W-O): Focus on how the opportunities can
eliminate company’s weaknesses.
- Strengths to Threat (S-T): Tests how company’s strengths could be used to
remove the external threats
- Strengths to Opportunities (S-O): Focus on how a company uses its strengths to
meet opportunities

Application:

Strengths Weaknesses
S1: High investment on W1: Poor financial stability.
human capital.
W2: Relatively low investment
S2: Holds great reputation. in R&D.
S3: Active response on Covid- W3: Poor forecasting of future
19 updates. demands.
S4: Large distribution W4: Expiring patents.
channels.
W5: Their vaccine is not
S5: Has reliable suppliers. compatible to everyone.
S6: Advanced in
biotechnology.
Opportunities Intensive strategy in product Horizontal integration strategy
development. (S2, S5 + O3, with one of Pfizer’s vaccine
O1: Low threat of new entry.
O4, O5) competitors such as Oxford.
O2: Low bargaining power (W5 + O5)
Intensive strategy in market
of consumers.
penetration. (S4 + O1) Intensive growth strategy,
O3: Low bargaining power specifically market penetration.
of suppliers.
(W1 + O1)
O4: Potential for strategic
agreements with
pharmaceutical companies.
O5: An increase in the
elderly population, thus more
drugs needed.

Threats Diversification strategy, Defensive strategy by

unrelated diversification. (S1 retrenching through reducing the
T1: High rivalry among
+ T1) number of factories. (W2 + W3
competitors.
+ T2)
Intensive market development
T2: Availability of various
strategy. (S2 + S3 + S4 + T5) Defensive strategy by divesting
substitutes.
product lines whose patents are
Intensive strategy, market
T3: Exchange rate expiring. (W1 + W4 + T3)
penetration (S2 + S4 + T2)
fluctuation.
T4: The instability in fuel
prices may affect the
distribution network.
T5: Excessive government
regulations.
Strategy Formulation

- The process of strategy formulation involves data collection and information exchange.
Formulating effective strategies is a prerequisite to enhancing the performance of the
organization.
- This process provides executives with information regarding the industry in which they are
in, their organization’s goals, and how said goals are to be achieved.
- Strategy formulation helps firms better allocate their resources and technology for the sake
of providing innovative services and products to their customers, enabling them to achieve
a sustainable competitive advantage.
- The process of strategy formulation is composed of identifying key objectives and
organizational directions, identifying alternatives, evaluating them, and consequently
deciding on the one that is deemed most appropriate
- strategy formulation is the responsibility of a firm’s employees at the corporate, business,
and functional levels of management.
- It is proposed that organizations take a resource-based approach when formulating
strategies. Said approach calls for pinpointing a firm’s strengths, weaknesses, resources,
and capabilities relative to its competition.
- Hence, formulated strategies aid in achieving and sustaining competitive advantage in
dynamic environments and in addition to improving the firm’s profitability and efficiency

Corporate strategies

- corporate strategy is a process that is analytical in nature and is centred around decision
making in corporations.
- A cross-functional and continuous practice that aims to match the entire corporation to its
environment.
- Research proved that a well established strategic plan could aid the company better allocate
its resources to create a realistic and distinguished position in the market, and therefore
developing a competitive edge on the basis of the organization’s internal limitations and
advantages, competition, and expected changes in the business environment
- Hence, it could be concluded that a corporate strategy is critical and helps an organization
set its direction and is the result of analyzing the firm’s internal and external environment
Process of determining a corporate strategy:

- When a firm is selecting its corporate strategy, it must decide whether it will be oriented
towards growing.
- Questions that help organizations know whether they are or not include:
- whether they should continue their current operations, cut back, or expand, whether they
should diversify their operations into some other industries or remain in their current one.
- In case the direction of growth was chosen, another question asks if the company should
expand globally and if so, should it be done through foreign direct investment or through
strategic alliances, mergers, and acquisitions.
- The answers of the previously mentioned questions help the organization pick one of three
directional or business strategies; growth, stability, and retrenchment

Growth business strategies expand an organization’s current activities by aiming to realize

growth in profits, sales, or assets. An organization must select a growth strategy if it operates in a
growing industry. Otherwise, it will not survive. This type of direction is attractive for two main
reasons. The first is, when growth is a strategy selected to meet increased market demand, flaws
or weaknesses of the organization are overlooked. The other reason is because it provides more
opportunities for interesting jobs, advancements, and promotion

The second directional strategy is stability, which keeps a firm’s current operations as is. They
are mainly used by small, manageable businesses where a niche has been found. Although it is
considered a good strategy in the short term, this strategy could turn disadvantageous if undertaken
for a long time span.

The third strategy is retrenchment, where the organization’s activities are reduced. Such strategy
is followed when the firm is bearing losses or sales are low, meaning its position in the market is
weak in particular or all of the available product lines
The following diagram could aid companies in their growth direction

Under the growth direction comes:

a. Integration strategies:

Horizontal strategies: Horizontal integration is the process of a company increasing production

of goods or services at the same part of the supply chain.

Vertical integration describes entering activities where the organisation is its own supplier or
customer. Can either be:

- Backward integration refers to development into activities concerned with the inputs into
the company’s current business.
- Forward integration refers to development into activities concerned with the outputs of a
company’s current business.
 b. Intensive strategies:

Market penetration implies increasing share of current markets with the current product range.

This strategy:

- builds on established strategic capabilities

- means the organisation’s scope is unchanged
- leads to greater market share and increased power vis-à-vis buyers and supplier
- provides greater economies of scale and experience curve benefits.

Product development is where an organisation delivers modified or new products (or services) to
existing markets.

This strategy:

- involves varying degrees of related diversification (in terms of products)

- can be expensive and high risk
- may require new resources and strategic capabilities
- typically involves project management risks.

Market development involves offering existing products to new markets.

This strategy involves:

- new users (e.g. extending the use of aluminium to the automobile industry)
- new geographies (e.g. extending the market to new areas – international markets being the
most important)
- meeting the critical success factors of the market
- new strategic capabilities (e.g. in marketing).
 c. Diversification strategies:

Diversification involves increasing the range of products or markets served by an organisation.

Related diversification involves expanding into products or services with relationships to the
existing business.

Some firms that engage in related diversification aim to develop and exploit a core competency to
become more successful.

Ex: Although Honda is best known for its cars and trucks, the company started out in the
motorcycle business.

Unrelated diversification involves diversifying into products or services with no relationships to

existing businesses.

it takes the organisation beyond both its existing markets and its existing products and radically
increases the organisation’s scope.

Ex: Mansour Chevrolet being the franchisee of Mcdonalds in Egypt.

Conglomerate diversification is an extreme version with no operational or strategic linkages

between businesses.

Potential benefits to an acquired business is that it gains from the reputation of the group and
potentially lowers financing costs.

Potential costs arise because there are no obvious ways to generate additional value.
Why would a company choose to diversify?

- Exploiting economies of scope – efficiency gains through applying the organisation’s

existing resources or competences to new markets or services.
- Stretching corporate management competences (‘dominant logics’) that is, applying these
competences across a portfolio of businesses.
- Exploiting superior internal processes.
- Increasing market power via mutual forbearance or cross subsidisation.
Under defensive (retention) strategies comes:

Retrenchment refers to a strategy of withdrawal from marginal activities in order to concentrate

on the most valuable segments and products within their existing business.

Divestment strategy

Divestment occurs when an organisation decides to pull out of one or more of its businesses.

Reasons: poor performance; investor pressure; value of unit is more than value generated.

Two types:

- Sell-off: SBU sold to another company.

- Spin-off: SBU shares distributed to parent company shareholders.

Equity carve out: parent company sells a portion of shares to the public and retains a significant
portion to retain control of the business. This is generally a temporary arrangement.

Liquidation: the most unpleasant strategy adopted by the organization that includes selling off its
assets and the final closure or winding up of the business operations. Liquidation in finance and
economics is the process of bringing a business to an end and distributing its assets to claimants.

Application:

- Pfizer will be taking on a single orientation, which is a growth.

- Pfizer’s strengths of investing exorbitant amounts on human capital and having reliable
suppliers matched with the industrial opportunities of suppliers having low bargaining
power as well as an increase in elderly population meaning more drugs are needed and the
potential for strategic agreements with competitors result in the recommendation of
adopting an intensive strategy, particularly product development.
- Additionally, Pfizer’s strengths of having a large distribution network and a good
reputation could be used to overcome the threats of the availability of various substitutes
and high industry rivalry.
- This strategy also helps overcome Pfizer’s weakness of having a poor financial position
and utilize the opportunity of the industry having low threat of entry.
- Hence, a market penetration directional strategy could be applied in Egypt, therefore
internationalizing.
- It is suggested that Pfizer take on a market development strategy as well which puts its
strengths of having a great reputation, an active response to COVID-19 updates, and a large
distribution network to overcome the threat of excessive governmental regulations in
different countries.
- Another growth strategy that Pfizer is recommended to take is unrelated diversification,
utilizing Pfizer’s strength of having a great reputation and threat of high industry rivalry.
Means of entry:

- Companies must acquire the resources that will enable it to do so, which include human
and financial capital.
- The firm could use the greenfield investment, also known as a foreign direct investment,
mode of entry for its market penetration intensive strategy.
- Foreign direct investments (FDI) are substantial investments made by a company into a
foreign concern.
- The investment may involve acquiring a source of materials, expanding a company's
footprint, or developing a multinational presence.
- The reason this mode of entry is suggested is because even though it requires high initial
resource commitment, it is highly rewarding and offers the firm full control of its activities
and operations

Application + other modes of entry:

- In regards to Pfizer’s product development intensive strategy, the firm could use the
horizontal integration in order to create an innovative new pharmaceutical product.

Horizontal integration is a business strategy in which one company acquires or merges with
another that operates at the same level in an industry; its competitors.

- An example could be a strategic alliance with Oxford, one of Pfizer’s competitors, where
both companies pool resources to create a vaccine that is elderly-friendly, with reduced
side effects and is compatible with people who suffer from chronic diseases.

A strategic alliance is an arrangement between two companies to undertake a mutually

beneficial project while each retains its independence. The agreement is less complex and
less binding than a joint venture, in which two businesses pool resources to create a
separate business entity.
- Pfizer’s market development strategy could be done using mergers in new geographical
markets where Pfizer’s products will be introduced.

- Finally, for Pfizer’s unrelated differentiation growth strategy, it could use the organic
development strategic method.
Organic development is the means by which a company follows a strategy by using and
developing its very own capabilities. This is best used with FDI.
In other words, a business utilizes all of its resources – without the need to borrow – to
expand its operations and grow the company. Organic growth is typically marked by an
increase in output, greater efficiency and speed with production, higher revenue.

Advantages of an organic growth strategy, otherwise known as internal growth, is that

this strategy has a positive effect on shareholder value in addition to higher return on the
invested capital when compared with acquisitions.
Other modes of entry include:
Formulating business level strategies

Portfolio matrices/analysis

Models which can determine financial investment and divestment within portfolios of business.
Each model uses three criteria:

the ‘balance’ of the portfolio

the ‘attractiveness’ of the business units

the ‘fit’ that the business units.

All organizations must have a portfolio analysis that consists of quantitative data to support the
organization in minimizing any risk and maximizes the returns creating the right balance between
them moreover, monitoring the organizations performance on an absolute and relative basis with
the risks that it will face.
BCG Matrix

- Boston consulting group pioneered a matrix to provide new and bold approaches to a
company to help in evaluating their diversification and to support their acquisition
decisions and investment
- however, every firm unit is known as independent that has their own mission and strategic
vision to mark out a competitive position in the market
- the BCG Matrix guides how every business unit contributes to profitability and growth
- It is a portfolio model planning made to help firms to analyze the products in the business
according to their relative and growth market share
- The matrix contains of four categories that depend on two dimensions that are industry
growth and relative market share
- Products are broken down into four groups: question mark, star, dog and cash cow

Cash Cow

- Is known for the products that have low market growth however relatively high market
share in other words, these products provide high returns than the market growth rate which
sustains its curtain status with the cash flow
- the company takes advantages of these products as long as possible until they could enter
the star stage
- These products consume less cash than the cash they bring in the company
- usually, these products lack innovation yet still have a steady position in the market
- these products can be used a leverage to have future expansion

Star

- They are the leader products that have high market growth and market share as they bring
in the most cash to the company also can be used to increase future cash inflow
- as time passes theses stars can turn in to cash cow that have high market share yet low or
steady market growth, which occurs when the market overall growth rate declines
- Although the star stage generates very high income yet it consumes high amount of cash
from the company
Dog

- This stage holds low growth rate and low market share as they do not generate cash or need
huge cash
- products in this stage is not worth investing in as they have low cash returns and could
require a huge amount of money to support or produce them which leave the company with
no chose except to liquidate the products or reposition the offering to save the company
from having low cash flow or selling regarding these products
- This stage could be a cash trap by tying the company funds for a long time period in this
case the company should divestiture these products

Question Mark

- This stage has low market share yet has a high market growth
- the products grow fast in the market thus, uses large amount of resources of the company
- Has an uncertain future of the products and will require a huge fortune to gain a large
market share
- These products could be a new develop products entering the market
Problems with the BCG matrix:

- Definitional vagueness
- Capital market assumptions
- Motivation problems (in ‘dogs’)
- Self-fulfilling prophecies
- Ignores commercial linkages
Competitive strategies – Porters competitive strategies matrix !!

Cost-leadership strategy involves becoming the lowest-cost organisation in a domain of activity.

Four key cost drivers that can help deliver cost leadership:

- Lower input costs.

- Economies of scale.
- Experience.
- Product/process design.

Differentiation involves uniqueness along some dimension that is sufficiently valued by

customers to allow a price premium. Within each market businesses may differentiate along
different dimensions.

Two key issues to consider:

- The strategic customer on whose needs the differentiation is based.

- Key competitors – who are the rivals and who may become a rival.

The key drivers of differentiation are:

 - Product and service attributes – providing better or unique features (e.g. Apple or Dyson).
- Customer relationships – customer service and responsiveness (e.g. Zalando);
customisation (e.g. SAP) or marketing and reputation (e.g. Coca Cola).
- Complements – building on linkages with other products/services (Apple and iTunes).

A focus strategy targets a narrow segment or domain of activity and tailors its products or services
to the needs of that specific segment to the exclusion of others.

Two types of focus strategy:

- Cost-focus strategy (e.g. Ryanair).

- Differentiation focus strategy (e.g. Ecover for ecological cleaning products)

Successful focus strategies depend on at least one of three key factors:

- Distinct segment needs.

- Distinct segment value chains.
- Viable segment economics.

Application:

- Pfizer will be using a differentiated competitive strategy which is a marketing strategy

- it allows the company to produce services and goods better than other companies in the
market that allows more sales than other companies generate that includes intellectual
property, better branding, quality of products offered and customer service
- Pfizer uses the differentiated strategy as they provide unique products.
- they also tend to be distinct and different from their competitor’s products and service.
- The main purpose of implementing the differentiated strategy is to have a highly
competitive advantage, one of Pfizer's innovated and unique drug is the oral Covid-19
medication that is known for Paxlovid. Also, Pfizer was the first company to release Covid-
19 vaccine.
STRATEGY IN ACTION

- Strategy in action is about how strategies are formed and how they are implemented. The
emphasis is on the practicalities of managing.
- An organizational structure can be defined as a framework of how jobs, systems,
individuals, and operating processes work together to achieve organizational goals. It is a
way in which tasks are divided to determine responsibilities and coordinate them
accordingly.
- There are several types of organizational structures, namely simple, functional,
multidivisional, matrix, hybrid, network, and bureaucracy structures

Types of structures and Application:

The organizational structure used by Pfizer is the multidivisional structure,

- where different functional divisions report to a single central manager. Separate functional
structures are responsible for managing daily operations.
- The central staff is responsible for managing the organization in relation to its environment
as well as its set strategy

Advs:

- More detached head office control

- Divisions develop specialised expertise
- Strategic flexibility in entering and exiting business areas

Disavds:

- Functional duplication
- Risk excessive autonomy
- Fragmentation and low cooperation
The divisional structure is built up of separate divisions on the basis of products, services or
geographical areas. Divisionalisation often comes about as an attempt to overcome the problems
that functional structures have in dealing with diversity.

Advs:

- provides access to the organization to easily add new product lines and accessibility of
opening in new regions
- gives high importance to customer and products by paying attention and controlling

Disadvs:

- expensive to implement
- facing unnecessary duplication of the resources that could overlap
- the need of having a well experienced manager to be able to use this structure
- the need of a complex system to be able to control electronic and mechanical devices to
help in managing and directing.
- limitation to employees to resources and ideas with each other
- some customer, products regions could face discrimination
functional structures are where similar work functions or activities are grouped together. This
type of organizational structure is created to maximize efficiency and specialization while
minimizing costs

Advs:

- Direct top management

- involvement
- Clarity of roles and tasks
- Concentration of expertise

Disadvs:

- Poor at handling diversity and scale

- Narrow focus on functional responsibilities

Pfizer is recommended The matrix structure, which combines different structural dimensions
simultaneously, for example, product divisions and geographical territories or product divisions
and functional specialisms. Staff typically report to two managers rather than one

Advs:

- Allows specialization
- Responsive to different needs.

Disadvs:

- Conflict between structural dimensions

- Slow decision making
STRATEGY MONITORING

BSC – evaluative strategies tool

- The Balanced Scorecard (BSC) is a tool that was created as a measurement system to help
firms extend their focus beyond financial cycles or years.
- The BSC is a framework that helps direct organizational resources on its strategic goals.
This framework is applied on a multitude of industries and business types, however, what
remains constant are the foundations on which the BSC is built.
- Those are a measurement framework that turns strategy into initiatives, targets, and
measures and a management system that results in leadership, alignment, and focus.
- The execution of the strategy is managed by executing the strategic initiatives identified in
the four perspectives of the BSC
- In other words, the balanced scorecard is a strategy evaluation and control technique. There
is a wide variation in how the balanced scorecard is used.
- The technique is based on the need to “balance” financial measures with nonfinancial ones.

This framework uses four perspectives to describe the value creation process.

- The first perspective is the financial, which typically involves three areas; profitability,
shareholder value, and growth. This perspective is replaced with mission perspective when
used by governmental or nongovernmental organizations.
- The second perspective is the customer or stakeholder perspective, where the value
proposition is emphasized.
- The third perspective is internal processes, which entail the business processes the firm
must excel at in order to gain shareholder and customer satisfaction. In this perspective,
the most critical processes, as in those with the greatest impact on the previously stated two
perspectives, are highlighted.
- The fourth and final perspective is learning and growth. This perspective involves the
means by which the organization’s ability to adapt and improve is sustained, which
typically involves technology and people. These assets are intangible and are the source of
real competitive advantage
Application:
Measuring Organizational Performance

Strategists use common quantitative criteria to make three critical comparisons:

- Comparing the firm’s performance over different time periods

- Comparing the firm’s performance to competitors’
- Comparing the firm’s performance to industry averages

Organizational life cycle

The organizational life cycle is a theoretical model based on the changes organizations experience
as they grow and mature. It describes how organizations grow, develop, and decline.

Importance:

- Since most of today’s industry disruptions are in technologies, life cycles and the
conditions that shape them are even more critical because of the speed of change. Cycles
that once lasted years or decades can now pass in months.
- if a business fails to take a proactive stance toward organizational life cycle changes, it is
likely to fall into crisis and decline.
- Organizational life cycles are the product of human behavior. In organizations, that
behavior has predictable patterns that result in foreseeable crises. Preparing for those crises
can determine whether an organization moves to the next stage of development or fails.
- For example, in a stable, mature organization, people fall prey to the misconception that
the “way we do things” is the way it will always be.
- If leaders and the people understand the issues that can arise before they happen, the change
to the next phase need not be a crisis.
- Thus, organization can prepare for moving from one stage to another.
- For example, when people hold on to policies and procedures to protect their specialty, you
have a sure sign that recession is taking hold and can take preventative measures by
transitioning management before the crisis.
- You can also take a proactive stance by seeking to constantly renew, with parts of the
company experimenting with new ideas without disrupting the entire organization.
International strategies

International strategy refers to a range of options for operating outside an organisation’s country
of origin.

What drives the internalization decision?

Market drivers

- Similar customer needs (e.g. credit cards).

- Global customers (e.g. car components).
- Transferable marketing (e.g. Coca-Cola).

Cost drivers

- Scale economies (e.g. R&D in aircraft manufacturing).

- Country-specific differences (e.g. clothing: manufacturing in Bangladesh/ design in Paris).
- Favourable logistics (e.g. low cost of transporting microchips).
Government drivers

- Trade policies (e.g. reduction of trade barriers in the EU; WTO policies).
- The liberalisation and adoption of free markets.
- Technical standardisation (e.g. in electronics).

Competitive drivers

- Interdependence (e.g. global coordination between subsidiaries in different countries).

- Global competitors (e.g. rivals may use profits to cross subsidise aggressive moves).

Porter’s Diamond – explains why some locations tend to produce firms with competitive
advantages in some industries more than others.

The four drivers in Porter’s Diamond arise from:

- local factor conditions

- local demand conditions
- local related and supporting industries
- local firm strategy, industry structure and rivalry.
International strategies – modes of entry - strategy generation !!

(could ask you to compare between them)

Export strategy

- Also know as the national, or international business strategy, this is usually the first
approach that appeal to companies.
- This strategy mainly drives upon imports and exports, where the company maintains its
operations in its mother company, and uses the country of origin as a competitive advantage
- Despite its common use, it is not considered the most effective or beneficial to the
company.
- Out of all the other strategies that are yet to be discussed, the export strategy is considered
to be the lowest ranking in terms of global integration as well as local responsiveness.
- That is due to the fact that this strategy is technically just an extension of the company’s
local strategy. Thus, it does not suit all other markets
- The main types under this strategy is licensing along with exporting.
 - Simply put, exports is when a company sends its products to other global countries for sale.
This technique makes it significantly easier to enter new markets yet has its consequences.
- Licensing, on the other hand, is transferring the rights and intellectual property from a
company to the other, involving a local producer to produce and distribute the company’s
products. The major disadvantage that comes with licensing is the lack of control over
quality.
- Ex: Red Bull, Victorias Secret

Advs:

- Due to its standardization, it makes the brand more globally known which becomes
beneficial in terms of brand name and recognition.
- it allows for more efficient use and management of economies if scale.
- Due to the lack of product specialization, the national strategy also reduces the company’s
total costs

Disadvs:

- Imports and exports issue extremely high tariff and tax rates, increasing costs.
- Customer service becomes an issue due to language barriers and time zones, which could
lead to poor customer satisfaction.
- Lastly, managing the international supply chain from the domestic country also creates an
issue as it gets complicated the more global the company grows

Multi-domestic strategy

- The multidomestic strategy is when a business implements different sales, marketing and
production strategies based on the market in which they perform.
- Rather than a single large, international firm, there is a few small companies that are
tailored to the country and customers it serves
- In other words, it is a strategy where there is a collection of relevant individualistic
subsidiaries and each of them is focused on a well determined market
 - In this strategy, a pure “local-first” approach is followed, which is why at generates high
local responsiveness.
- Organizations that implement the multidomestic strategy tend to focus more on the
complete customization of their products or services in terms of marketing, production
process, etc. to make it more appealing to the local marketing. This is to say they do not
value global standardization as much as they do fully please the local market
- This strategy can perform in the forms of joint ventures, and mergers and acquisitions.
- Joint ventures are simply creating a partnership that builds a new company that would
operate in the new market.
- As for mergers and acquisitions, it may be considered a more tough type. It is where either
two companies join their forces to create one company, or it refers to when a company buys
another company to fully take over in the new market
- Ex: 7-eleven

Advs:

- Firstly, developing a more locally demanded product creates a major competitive

advantage for the producer which can easily help to penetrate the market.
- producing locally allows the organization to make use out of the low-cost factors of
production, such as the labor and land, which simultaneously reduces the total costs.
- Not only does this increase the company’s profits, but it also provides it with another
competitive advantage; cost-leadership

Disadvs:

- Due to its complexity, the multinational strategy requires a huge money investment along
with extreme time and effort to be implemented correctly
- Researching a new country, market, and gaining full insight to reach level of such
sophisticated products this strategy aims to produce, needs an excessive amount of time
and effort.
- Due to its main aim being meeting the local needs, sometimes creating a new product from
scratch is required, and in this case, R&D costs noticeably rise
Global strategy

- The global strategy presents as the exact opposite of the multidomestic strategy.
- In this strategy, the organization focusses on maintaining its brand image; making it easily
recognizable in any country across the world, yet some minor differences between global
and domestic production still exists
- One of the main reasons why this strategy stresses the offering of almost the same products
globally is to fully exploit the economies of scale.
- In other words, this strategy aims to sacrifice national responsiveness for greater efficiency.
- Greenfield investments is the most challenging form of entry yet the most rewarding on
the long run. This strategy basically restarts the company in new markets rather that
working with outsources
- Ex: starbucks, uber.

Advs:

- improvement in brand recognition due to the standardization of the product. This offers the
company a better brand image

Disadvs:

- The challenges this strategy presents is, without a doubt, financial risks as the strategy needs
major financial aids in order to be properly and fairly implemented

Transnational strategy

- Transnational strategies are believed to be the most complicated form of internalization of

all. In this strategy, a head office manages and operates all the local divisions that come
under it.
- In other words, there is a single branch of the company that takes unified decisions
regarding all business operations such as the supply chain and production for the rest of
the international branches
- Due to this strategy’s complexity, it is considered the most effective in terms of both, global
integration and local responsiveness.
 - Utilizing the power of economies of scale along with the generation of high local
responsiveness instantly makes the brand more differentiated in the customer’s minds.
- Making the company’s offerings more customized to the local market’s preferences is what
continuous to make this strategy extremely effective and successful. This can be done
through changing the product features such as packaging and design, colors, translating the
labels, localizing the marketing strategy, or even by hiring local field marketers.
- Franchising is considered the only form of transnational strategies today. Franchising
refers to asking an outsider company to operate the business in more locations for an agreed
upon fee. It is one of the most successful and fastest modes of entry to date.
- Ex: McDonalds

Advs:

- provides all the benefits which businesses that implement the national strategy receive in
exchange.
- it also allows companies to gain extremely strong competitive advantage in the local
market.
- Market penetration and brand awareness is also made simpler through the implementation
of this strategy.
- Finally, it allows companies to make use out of all the factors of production in other local
markets

Disavds:

- A major challenge is balancing the local decision s with the corporate decisions. That is
significantly due to the global workforce

Application:

Pfizer could use a global international strategy for their market penetration strategy in Egypt.