Hassan II University of Casablanca - FSJES AC

Economics and Business Studies

BUSINESS ADMINISTRATION
Semester 6 - 2024/2025

COURSE MATERIAL

Strategic
Management

Prepared by: Prof. Khadija HAMDANI

CONTENTS

INTRODUCTION 3

INTRODUCTION TO STRATEGIC MANAGEMENT 4

A. TYPES OF DECISIONS: EMPHASIZING STRATEGIC DECISIONS 5

B. WHAT IS STRATEGIC MANAGEMENT ABOUT? 6
a. What is Strategy? 6
b. Strategy and the Quest for Competitive Advantage 6
c. The Strategy Questions 6
d. What is Strategic Management about? 7

FORMULATING STRATEGIC DECISIONS 8

A. STRATEGIC SEGMENTATION 9
e. Levels of Strategy 9
f. Strategic Segmentation vs. Marketing Segmentation 10
g. Strategic Business Units - SBUs 11
B. STRATEGIC ANALYSIS 11
a. SWOT 12
b. PESTEL 13
c. 5+1 Forces 14
d. Strategic Groups 15
e. Value Chain 16
f. BCG Matrix 17
g. Strategic Capability 19
C. STRATEGIC CHOICES 21
a. Corporate-Level (Domain) Strategies 21
(i) Diversification vs. Concentration 21
(ii) Vertical vs. Horizontal Integration 22
(iii) Internationalization 23
b. Business-Level (Generic) Strategies 24

IMPLEMENTING STRATEGIC DECISIONS 27

A. CONSIDERATIONS FOR IMPLEMENTING STRATEGIC DECISIONS 28

B. DEVELOPING THE OPERATIONAL STRATEGY 29

CONCLUSION 30

REFERENCES 31

pg. 2 of 32
Introduction

Strategic Management is about success and failure, about the ability to plan wars and
win them. Big mergers are perhaps the most visible sign of strategic management in
action. Effective strategic management can transform the performance of an
organization, make fortunes for shareholders, or change the structure of an industry.
Ineffective strategic management can bankrupt companies and ruin the careers of chief
executives.

Strategic management is both a skill and an art. It is a skill because there is a body of
knowledge that can be learnt and techniques that can be used with greater or lesser
competence. It is an art because it deals with the future that is unknowable and with
the hearts and minds of people that transcend reason. Good strategic management
requires both clear thought and sound judgment.

- Macmillan & Tampoe, 2001.

pg. 3 of 32
01

Introduction to
Strategic Management

pg. 4 of 32
A. Types of Decisions: Emphasizing Strategic Decisions
Manager’s decisional roles have been elaborated by Henry Minstzberg1 into 4 roles, namely,
Entrepreneur, Disturbance handler, Resource allocator, and Negotiator. This involves a set of
competencies and skills in managing decisions.

Decisions are made at different levels of a company’s management. When referring to strategic
management, the focus is on strategic decisions made by senior managers.

Strategic Tactical Operational

Long term Medium term Day-to-day
Complex Less complex Simple and routine
Made by senior managers Made by middle managers Made by junior managers
Achieving organizational
Acquiring resources and Day-to-day decisions to
goals deciding how they’ll be supplement tactical and
utilized strategic objectives
e.g. aiming to be a market e.g. launching new e.g. regular ordering of
leader, merge with other product/opening new supplies, creating staff rota,
companies, pursue a new branches, how to market new …
activity, … product, …

Strategic decisions are characterized by their infrequent recurrence, high risk, organization-
wide impact and long-term future. These decisions are the preserve of senior management.
They are about:

• The long-term direction of an organization.

• The scope of an organization’s activities.

• Gaining advantage over competitors.

• Addressing changes in the business environment.

• Building on resources and competences (capability).

• Values and expectations of stakeholders.

1
There are 10 managerial roles, divided into three main categories: Interpersonal roles include 1.
Figurehead, 2. Leader, 3. Liaison; Informational roles include 4. Monitor, 5. Disseminator, 6.
Spokesperson; and Decisional roles include 7. Entrepreneur, 8. Disturbance handler, 9. Resource
allocator, 10. Negotiator (Mintzberg, 1939).

pg. 5 of 32
B. What is Strategic Management about?

a. What is Strategy?

“Strategy is the direction and scope of an organization over the long-term, which achieves
advantage in a changing environment through its configuration of resources and
competences with the aim of fulfilling stakeholder expectations.” (Johnson et al., 2008).

In other words, strategy is how the company aims to realize its mission and vision which
engage the long-term direction of an organization and consists of competitive moves
and business approaches used by managers to run the company. The goal is to:

a. Grow the business,

b. Attract and please customers,
c. Compete successfully,
d. Conduct operations, &
e. Achieve target levels of organizational performance.

b. Strategy and the Quest for Competitive Advantage

The heart and soul of any strategy are the actions and moves in the marketplace that
a company makes to strengthen its competitive position and gain a competitive
advantage over rivals.

A creative distinctive strategy that sets a company apart from rivals and yields a
competitive advantage is a company’s most reliable ticket to above average
profitability.

• Competing with a competitive advantage is more profitable than competing

with no advantage.

• Competing with a competitive disadvantage nearly always results in below-

average profitability.

c. The Strategy Questions

1. What’s the company’s present situation? - Strategic Segmentation

and Analysis

2. Where does the company need to go from here? - Strategic Choices

• Business(es) to be in and market positions to stake out.

pg. 6 of 32
 • Buyer needs and groups to serve.
• Direction to head.
3. How should it get there? – Strategic Decisions implementation

d. What is Strategic Management about?

Strategic management is “the art and science of formulating, implementing, and

evaluating cross-functional decisions that enable an organization to achieve its
objectives.” (Fred & Forest, 2015).

“Strategic management includes understanding the strategic position of an

organization, making strategic choices for the future and managing strategy in action.”
(Johnson et al., 2008).

Simply put, strategic management is about how strategic decisions are made and
implemented with the goal to gain competitive advantage.

Strategic management

Strategic Thinking Strategic Action

The Strategy Formulation The Strategy Implementation
Process Process

What should our How do we execute a

strategy be? chosen strategy?

Strategic management is all about gaining and maintaining competitive advantage. this
term can be defined as “anything that a firm does especially well compared to rival
firms.” When a firm can do something that rival firms cannot do or owns something
that rival firms desire, that can represent a competitive advantage.

pg. 7 of 32
02

Formulating
Strategic Decisions

pg. 8 of 32
There are three main stages in the strategy formulation process2. The first
(segmentation) is crucial, as it defines the activity and/or level of the company on which
the focus will be placed. The formulation must ensure that the strategic decision is in
line with the requirements of the company's internal and external environment,
otherwise there is a risk of strategic drift, which constitutes the second stage
(targeting), that contributes to and aids strategic decision-making. The final stage
(positioning) focuses on choosing the strategy to pursue with among a range of
alternatives.

Segmentation Targeting Positioning

Strategic segmentation Strategic Analysis Strategic Choices

Levels of strategy External Environment Generic strategies

Strategic Business Units Internal Environment Domain strategies

A. Strategic Segmentation

e. Levels of Strategy

Prior to strategic segmentation, we distinguish the levels of strategy in a company,

namely:

• Corporate-level strategy is concerned with the overall purpose, scope and

management of an organization, the industries and markets in which the
company competes, and how value will be added to the different parts of the
organization. Strategic management focus on portfolio strategy, which defines
and manages the company’s strategic business units.
What business or businesses should we be in?
• Business-level strategy is about how to compete successfully in particular
markets.
How should we compete?

2
The process (STP) is similar to that used in marketing strategy. However, in strategic management, we
focus on corporate and business-level strategies rather than functional strategies such as marketing
strategy. The decision concerns the company's activities and business units rather than its
products/services.

pg. 9 of 32
 • Operational and functional strategy is concerned with how the component
parts of an organization deliver effectively the corporate and business-level
strategies in terms of resources, processes and people.
o Functional strategy is concerned with how the functions of an
organization effectively translate the corporate and business-level
strategies into functional strategies.
o Operational strategy outlines the tactical steps, actions or processes
needed to run the business and implement the corporate, business, and
functional strategies.
How can we achieve our objectives?

As mentioned above, strategic decisions focus on the corporate and business strategy
levels. In doing so, defining and/or dividing the company's activities into business units
through strategic segmentation is a crucial step in strategic management.

f. Strategic Segmentation vs. Marketing Segmentation

It is important to understand strategic segmentation before formulating a strategy,

fundamentally differentiating it from marketing segmentation which targets customers
and focuses on products/ services.

Strategic management is concerned with strategic segmentation, while marketing is

concerned with marketing segmentation.

Marketing segmentation Strategic segmentation

Applied to An entire business activity Company activities
Aim to Divide customers into groups Divide these activities into
with similar needs, habits and homogeneous groups that:
buying behaviors. - the same technology.
- the same markets.
- the same competitors.
Enable Adapt products to consumers, Reveals:
select preferred targets, define - opportunities for the creation or
the marketing mix. acquisition of new activities;
- the need to develop or
discontinue current activities.
Result Short and medium terms Medium and long terms
changes on

pg. 10 of 32
Strategic segmentation aims to classify the company’s activities into units with similar
characteristics, this refers to the concept of strategic business units - SBUs.

g. Strategic Business Units - SBUs

A strategic business unit is a part of an organization for which there is a distinct external
market for goods or services that is different from another SBU. Reasoning in terms of
SBUs helps the company to:

• Focus on a target market;

• Track revenues, costs and profits independently; &
• Quickly react to market change.

GROUP WORK 01: SRATEGIC SEGMENTATION

B. Strategic Analysis
The prerequisite for any strategic decision is a sound analysis of the environment to
define the strategic position of the company and how the external environment, an
organization’s strategic capability (resources and competences) and the expectations
and influence of stakeholders impact the strategy. Therefore, strategic analysis
provides a range of decision-making support tools of which the following.

EXTERNAL SWOT
INTERNAL
ENVIRONMENT ENVIRONMENT

PESTEL
Value Chain

5+1 FORCES

BCG matrix
STRATEGIC GROUPS

pg. 11 of 32
a. SWOT

The SWOT analysis focuses on both the external and internal environment, enabling
the company to:

• see areas where it could improve;

• where it can plan for future eventualities; &
• highlight opportunities for future developments.

are areas that the are areas that the

company is performing company is not doing well
well in or is good at. in or is performing more
Such as having a strong brand poorly.
image or a good corporate Such as lack of investment in
culture. new technology or a poorly
performing product.

are things that could are external factors that

happen outwith the could prevent a business
business to help them from meeting its goals.
grow or become more Such as a new competitor
profitable. opening or reducing their
Such as the chance to take prices or a recession.
over a competitor or a boom
in the economy.

SWOT analysis summarizes the key issues from the business environment and the
strategic capability of an organization that are most likely to impact on strategy
development.

pg. 12 of 32
 GROUP WORK 02: SWOT Analysis – IMACAB (INGELEC GROUP)

b. PESTEL

The PESTEL framework categorizes environmental influences into six main types:
political, economic, social, technological, environmental and legal. The PESTEL
framework can be used to identify how future trends in the different areas of the
macro-environment might impinge on organizations. This analysis provides the broad
‘data’ from which to identify key drivers of change.

Political Economic Social

• Fiscal Policy • GDP • Demographic Variables

• Government Activity • Employment Rate • Cultural Factors
• Conflicts/ Help • Exchange Rate • Religion
• Taxes • Inflation • Lifestyle
• Income Level • Educational Level

P E S

Technological Environmental Legal

• Technological Access • Environment Policies • Wages

• Infrastructure • Recycling • Rights
• Research • Consumption Trends • Job Security
• Technology Trends • Production Processes • Regulations
• Natural Risks • Controlled of Marketing

T E L

pg. 13 of 32
 GROUP WORK 03: PESTEL ANALYSIS

c. 5+1 Forces

The five forces framework is particularly useful in understanding the attractiveness of

particular industries or sectors3 and potential threats from outside the present set of
competitors. This is made up of organizations producing the same products or services.

A framework for analyzing a company’s competitive environment. The model helps

determine the forces that shape an industry structure and the level of competition in
that industry.4

(1) Competitive Rivalry: are organizations with similar products and services aimed
at the same customer group.

How intense is the competition in the industry?

(Number of companies, concentration of market shares, …).

3
To define the industry/sector to be analyzed, we need to refer to the concept of the relevant market,
which has two main dimensions characterizing the market on which competition takes place, and
enabling us to identify specific, homogeneous industries and define sub-sectors. The first dimension is
the relevant product market (substitutable products/services). The second is the relevant geographic
market (the company's supply area). The intersection between these two dimensions defines the
relevant market.
4
The 5+1 model cannot be applied to a non-competitive sector. The sector analyzed must not be a
monopolistic market, and there should be “viable” competition on the market. In addition, alternatives
must be available on the market in terms of demand and supply (substitute products, suppliers, buyers).
Finally, it must be an open market, and the focus has to be on a specific geographical area.

pg. 14 of 32
 (2) Bargaining Power of Buyers: Buyers are the organization’s immediate
customers, not necessarily the ultimate consumers. If buyers are powerful, then
they can demand low prices or costly product or service improvements.

What is the power of buyers on the industry?

(Sensitivity to price, ability to buy an undifferentiated product, the size of the customer base, …).

(3) Bargaining Power of Suppliers: Suppliers are those who supply the organization
with what it needs to produce the product or service. As well as fuel, raw
materials and equipment, this can include labor and sources of finance.

What is the power in the hand of suppliers?

(Ease to increase/decrease prices and quantity supplied, criticality of key (raw) materials, …).

(4) Threat of Substitutes: are products or services that offer a similar benefit to an
industry’s products or services, but by a different process. Substitutes can
reduce demand for a particular ‘class’ of products as customers switch to the
alternatives.

Are there substitute products/ services in other industries meeting identical

or similar needs for customers?

(Number of substitutes products, …).

(5) Threat of Entrants: depends on the extent and height of barriers to entry.
Barriers are the factors that need to be overcome by new entrants if they are to
compete successfully.

How easy it is for new players to enter an industry?

(Barriers to entry, costs involved to enter the market, …).

(+1) State Power5

(Government strategies, plans, and priorities at the national level, political role, controlling and
regulating agencies, …).

GROUP WORK 04: 5+1 FORCES ANALYSIS

d. Strategic Groups

5
State Power is included as a force for undoubtedly having the power to profoundly alter the ability of
organizations to generate profit, and more generally to intervene in the competitive game. By
considering it, the model is referred to as 5+1 forces.

pg. 15 of 32
Strategic groups are organizations within an industry with similar strategic
characteristics, following similar strategies or competing on similar bases. The concept
of strategic groups can help identify close and more remote competitors.

The analysis of strategic groups:

(1) emphasizes firms of the same group which are usually the closest rivals;
(2) highlight alternative paths to success;
(3) can reveal gaps in the industry that represent untapped opportunities.

The following are some of the characteristics that can be used to identify strategic
groups:

• Scope of activities • Resource commitment

• Extent of products (or service • Extent (number) of branding.

diversity). • Marketing effort (e.g. advertising
• Extent or geographical coverage. spread, size of salesforce).
• Number of market segments • Extent of vertical integration.
served. • Product or service quality.
• Distribution channels used. • Technological leadership (a leader
or follower).
• Size of organization.

GROUP WORK 05: STRATEGIC GROUPS ANALYSIS

CASE STUDY: STRATEGIC GROUPS IN DUTCH MBA EDUCATION (pg. 74)

e. Value Chain

A value chain describes the categories of activities within and around an organization,
which together create a product or service. The analysis helps to understand how each
step in the process adds value.

pg. 16 of 32
 Firm infrastructure
Support activities
Human resource management

Technology development

PROFIT
Procurement

Inbound Outbound Marketing

Operations Service
logistics logistics & sales

Primary activities

Primary activities include:

• Inbound logistics: arrival of raw materials.

• Operations: actual production process.

• Outbound logistics: tracks the movement of a finished product to customers

(distribution).

• Marketing & sales: Attracting potential customers and convincing them to make
purchases.

• Service: extent to which a firm provides assistance to their customers.

Support activities include:

• Firm infrastructure: how the firm is organized and led by executives.

• Human resource management: recruitment, training, and compensation of

employees.

• Technology development: use of computerization and telecommunications.

• Procurement: process of negotiating for and purchasing raw materials.

GROUP WORK 06: VALUE CHAIN ANALYSIS

f. BCG Matrix

The Growth-Share Matrix (BCG - Boston Consulting Group Matrix) is a portfolio

management framework that helps companies decide how to prioritize their different

pg. 17 of 32
businesses. It classifies a company’s business portfolio into four categories based on
industry attractiveness (growth rate of that industry) and competitive position (relative
market share).

A BCG portfolio analysis is a way to measure how well a company is performing by

looking at its various business units. By assigning each of the company’s businesses to
one of the above four categories, the BCG matrix helps decide where to focus
resources and capital to generate the most value, as well as where to cut losses. In
other words, it can help a company decide where to invest its money and which
business units to stop with.

There are four possible recommendations:

High Low
Relative Market Share Relative Market Share

High Question mark should be resolved

Growth Rate Stars should be funded and
by executives by deciding whether
encouraged to grow.
to foster or sell these units.

Low Cash cows should be “milked” to Pets (/ dogs) should be sold if

Growth Rate supply funds to more promising possible and abandoned if
businesses. necessary.

BCG matrix steps

(1) Choose SBUs

The first thing you need to identify is the specific item you want to analyze. That
is, the business units of the company.

(2) Define the market

Failure to accurately define the market can lead to misclassification of products.

To better understand the business portfolio’s position, prior research is essential
to define the market accordingly.

(3) Calculating relative market share: Competitive position

pg. 18 of 32
 The competitive position is assessed through the company's relative market
share (RMS) in each segment. RMS is the ratio between the firm's market share
and that of its main competitor (or competitors). It measures the firm's relative
size in the market segment.

𝑌𝑜𝑢𝑟 𝑓𝑖𝑟𝑚′ 𝑠 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 (𝑜𝑟 𝑟𝑒𝑣𝑒𝑛𝑢𝑒𝑠/ 𝑠𝑎𝑙𝑒𝑠)

𝑅𝑀𝑆 =
𝐿𝑎𝑟𝑔𝑒𝑠𝑡 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑜𝑟 ′ 𝑠 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 (𝑜𝑟 𝑟𝑒𝑣𝑒𝑛𝑢𝑒𝑠/ 𝑠𝑎𝑙𝑒𝑠)

(4) Identify the market growth rate: Industry attractiveness

The growth rate measures the pace at which business demand is evolving. It is
an average growth rate that reflects the structural evolution of demand.

𝐹𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 − 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒

𝐺𝑅% = × 100
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒

(5) Draw the marks on the BCG matrix

After all the calculations and evaluations, define an average for both variables
and map the SBUs on the matrix.

GROUP WORK 07: BCG ANALYSIS – VINCI GROUP

g. Strategic Capability

Strategic capability is concerned with the adequacy and suitability of resources

and competences required for an organization to survive and prosper. The resource-
based view of strategy posits that the competitive advantage and superior
performance of an organization is explained by the distinctiveness of its capabilities
(Johnson et al., 2008).

• If organizations are to achieve competitive advantage, they require resources

and competences which are both valuable to customers and difficult for
competitors to imitate (such competences are known as core competences).

Key term Definition

Strategic capability The ability to perform at the level required to survive and
prosper. It is underpinned by the resources and
competences of the organization
Threshold resources The resources needed to meet customers’ minimum
requirements and therefore to continue to exist
Threshold Activities and processes needed to meet customers’
competences minimum requirements and therefore to continue to exist

pg. 19 of 32
 Unique resources Resources that underpin competitive advantage and are
difficult for competitors to imitate or obtain
Core competences Activities that underpin competitive advantage and are
difficult for competitors to imitate or obtain
• The continual improvement of cost efficiency is a vital strategic capability if an
organization is to continue to prosper. The sources of cost efficiency are:
Economics of scale, Experience, Supply costs, Products/process design.
• The sustainability of competitive advantage is likely to depend on strategic
capabilities being of value to customers, rare, inimitable or non-substitutable.

Criterion Meaning
Value Does it enable the organization to exploit opportunities or
neutralize threats?
Rarity Is it possessed by few or no competitors?
Inimitability Is it difficult to imitate due to complexity, culture, or historical
circumstances?
Non- Are there no easy alternatives or substitutes for this resource or
substitutability competence?

• In dynamic conditions, it is unlikely that such strategic capabilities will remain

stable. In such circumstances dynamic capabilities are important, that is the
ability to change strategic capabilities continually.
• Ways of diagnosing organizational capabilities include:
– Analyzing an organization’s value chain and value network as a basis of
understanding how value to a customer is created and can be developed.
– Activity mapping as a means of identifying more detailed activities which
underpin strategic capabilities.
– Benchmarking as means of understanding the relative performance of
organizations and challenging the assumptions managers have about the
performance of their organization.
– SWOT analysis as a way of drawing together an understanding of
strengths, weaknesses, opportunities and threats an organization faces.

In other words, strategic capability is the ability of an organization to survive, compete,

and grow over time. It is based on the resources and competences that allow an
organization to meet the demands of its environment and create value, this capability
is essential for an organization’s long-term survival and success. It must be valuable,

pg. 20 of 32
rare, inimitable, and non-substitutable to provide a sustainable competitive advantage.
Ongoing diagnosis and continual improvement ensure that the organization remains
competitive in a dynamic environment.

C. Strategic Choices

a. Corporate-Level (Domain) Strategies

The domain strategies refer to choices in terms of business portfolio. In addition to the
corporate-level strategy dealing with which industries or markets the firm competes
through its strategic business units, it also focuses on pursuing the company’s growth
strategy that follows three broad methods: acquisitions, alliances and organic
development. Within these methods, a company might choose one (or more) of the
following strategies:

(i) Diversification vs. Concentration

A concentration strategy involves competing within a single industry.

• Market penetration: this strategy involves increasing efforts to grow sales

through greater marketing efforts without departing from the original product-
market strategy.

• Product development: in this strategy, a company remains in the same market

but develops products that have new and different characteristics.

• Market development: is about finding new markets for the same product or
with minimal adaptation.

Diversification strategies involve firmly stepping beyond its existing industries and
entering a new one.

• Related diversification: entering a new industry that has important similarities

with a firm’s existing industries.

• Unrelated diversification: entering a new industry that lacks such similarities.

The Ansoff product/market growth matrix provides a simple way of generating four
basic alternative directions for strategic development. It illustrates the strategic options
in terms of markets and products.

pg. 21 of 32
 Products

Existing New

Market Product
Existing
penetration development
Markets

Market
New Diversification
development

(ii) Vertical vs. Horizontal Integration

Vertical Integration refers to the firm taking over a function previously provided by a
supplier or a distributor. This strategy allows a company to reduce costs, gain control
over a scarce resource, guarantee quality of a key input, or obtain access to new
customers.

• A backward vertical integration strategy involves a firm moving back along the
value chain and entering a supplier’s business.
• A forward vertical integration strategy involves a firm moving further down the
value chain to enter a buyer’s business.

pg. 22 of 32
 Level of Integration
Value Chain
Forward Integration Backward Integration

Raw materials

Intermediate goods

Manufacturing

Marketing & Sales

After-sales Services

Horizontal integration goes through expanding the firm’s products into other
geographic locations and by increasing the range of products and services offered to
current markets by acquiring or merging with a rival. The reason behind choosing this
strategy is to acquire market share, production facilities, distribution outlets, or
specialized technology.

Merger A B A+B C
A+B
+C
Manufacturing

Acquisition A B A C A

(iii) Internationalization

Conquering the international market involves exploiting market opportunities outside

the domestic market. This is a form of market diversification or development, which
depends on the external environment characteristics and the organization capabilities
(competences and resources).

There are four main types of international strategy, varying according to extent of
coordination and geographical configuration: export strategy, multi-domestic strategy,

pg. 23 of 32
global strategy and transnational strategy. The illustration below lists the drivers of the
overall international strategy.

Market drivers
• Similar customer
needs
• Global customers
• Transferable
marketing

Government drivers Cost drivers

• Trade policies International • Scale economies
• Technical standards • Country-specific
• Host government
strategy differences
policies • Favorable logistics

Competitive drivers
• Interdependence
between countries
• Competitors' global
strategies

CASE STUDY: CORPORATE-LEVEL STRATEGIES: CHOOSING NEW DIRECTIONS AT

TESCO

b. Business-Level (Generic) Strategies

A business-level strategy examines how firms compete in a given industry. This refers
to the choices a company is making with regards competitors.

pg. 24 of 32
 High

Differentiation
4
Focused
Hybrid differentiation
3 5
product/service
Perceived

benefits

Cost 2 6
leadership
(/low price)

1 7
‘No frills’ Strategies
destined for
8 ultimate failure

Low

Low High
Price

The strategy clock: Competitive strategy options

Competitive strategy is concerned with the basis on which a business unit might
achieve competitive advantage in its market.

The ‘strategy clock’ represents different positions in a market where customers (or
potential customers) have different ‘requirements’ in terms of value for money.
Different strategic options are positioned with reference to a standard offer (round shape in the
center of the clock) in the market that provides products/ services with medium perceived
benefits and a medium price. Firms derive their business strategies about whether their
source of competitive advantage is based on price or differentiation and whether their
scope of operations targets a broad or narrow (focused) market.

CASE STUDY: BUSINESS-LEVEL STRATEGIES: UK GROCERY RETAILERS (pg. 226)

pg. 25 of 32
 2
1
A cost leadership (low-price) 3
A ‘no frills’ strategy
strategy seeks to achieve a A hybrid strategy seeks
combines a low price, low
lower price than competitors simultaneously to achieve
perceived product/service
Price-based whilst trying to maintain differentiation and a price
benefits and a focus on a
strategies similar perceived product or lower than that of
price-sensitive market
service benefits to those competitors.
segment.
offered by competitors.

Focused
strategies

5
4
A focused differentiation 6, 7, & 8
A differentiation strategy
strategy seeks to provide high A failure strategy is one that
Differentiation seeks to provide products or
perceived product/service does not provide perceived
services that offer benefits
strategies benefits justifying a value for money in terms of
that are different from those
substantial price premium, product features, price or
of competitors and that are
usually to a selected market both.
widely valued by buyers.
segment (niche).

pg. 26 of 32
03

Implementing
Strategic Decisions

pg. 27 of 32
 “A goal without a plan is just a wish.”

“Implementation refers to the translation of a chosen strategy into organizational action in

order to achieve strategic goals and objectives.” (Johnson et al., 2008).

Implementing strategic decisions refers to moving from the corporate and business
strategies levels (formulating) to operational strategy level (implementing), that is
translating corporate and business strategies (what do we want to achieve) into
operations (how do we want to achieve it).

Corporate
Vision,
Mission, strategy
Direction

Strategic Business Units

Business
strategy

Functional areas Operational

Production, Finance, IT, Marketing, HR, … strategy

A. Considerations for implementing strategic decisions

A sound strategy is of little value if implementation is weak. Implementation begins
with planning and scheduling. It involves decisions about such things as organization
structure, the allocation of resources and the level of risk that is acceptable. It also
involves leadership as well as managerial skills, particularly when, as is often the case,
the adoption of a particular strategy involves major organizational change. Managing
strategic change involves reorienting the organization in terms of its strategic goals and
thereby achieving a step change in its competitive position. This can be achieved
through significant changes in the underlying beliefs, values and established patterns
of behavior of the organization’s members – in other words, by bringing about a
fundamental shift in organizational culture that supports the new strategic direction.

pg. 28 of 32
The following are some of the most commonly used implementation techniques
(Sadler, 2003):

• Direct, face-to-face communication involving, where feasible, the entire

workforce, but in groups of manageable size so as to facilitate exchange of
viewpoints and provide opportunities for feedback.
• Role-modelling – here, again, leadership comes in, as top management sets an
example by behaving in ways that are consistent with the changed standards,
practices and behaviors that the new strategy calls for.
• Written communications – a whole arsenal of newsletters, posters, stickers,
badges etc., all carrying the messages associated with the reasons for change,
help to reinforce motivation to accept the need and act accordingly.
• Appropriate human resource policies, which support the desired changes such
as performance criteria and appraisal, remuneration and rewarding systems, and
training.

B. Developing the operational strategy

An operational strategy has to reflect corporate and business strategies through a set
of day-to-day actions. The implementation of strategic decisions in terms of the overall
organizational structure is elaborated through functional and operational strategies
that involves both tactical and operational decisions that are turned into a plan that
focuses on short-term objectives and on the immediate what, which culminates in a
series of action steps.

The focus is then on the planning stage of the strategy(ies) through developing the
action plan(s) and splitting up each action into a series of tasks in terms of resources
(financial, material, technology, human) and processes. This involves structuring
processes and relationships and allocating resources.

The operational plan should describe the business operations as accurately as possible
so that internal teams know how the company works and how they can help achieve
the larger strategic objectives. The implementation process should ensure that all
internal stakeholders are aligned, involved and committed around common goals. A
plan should be drawn about who is doing what, to achieve what, and when.

CASE STUDY: CUSTOMER RELATIONS AT KLM (pg. 479) & THE DIY CRAZE EXTENDS
TO LOANS (pg. 488)

pg. 29 of 32
Conclusion

The strategic management process may be summarized as distinct steps (Macmillan &
Tampoe, 2001).

(1) Understand the issues by studying the specific Context in which the business
operates and which gives rise to the opportunities for exploitation using the
capabilities of the organization.
(2) Evaluate all of the issues by relating them to the Strategic Intent (vision, mission,
goals/objectives) of the organization.
(3) Undertake a Strategic Assessment of the current status and the opportunities
available.
(4) Derive a set of Strategic Options than can be meaningfully and profitably
exploited.
(5) Make a Strategic Choice of a preferred option that is feasible for implementation
within the constraints of the context and has the commitment of those most
involved in making it happen.
(6) Put in place an appropriate Strategy Implementation Process to create the new
Organizational Capability to achieve the chosen strategy. This invariably
requires the alignment or realignment of the culture, processes, and structure
of the organization on the new strategy.
(7) Examine the Structure, Processes and Culture of the enterprise to see what can
be done to make it more Adaptable.

pg. 30 of 32
References
Fred, M., & Forest, J. (2015). Strategic management: Concepts and cases. XYZ Publisher.

Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy (8th ed.).
Pearson Education.

Macmillan, H., & Tampoe, M. (2001). Strategic management: Process, content, and
implementation (2nd ed.). Oxford University Press.

Mintzberg, H. (1973). The nature of managerial work. Harper & Row.

Sadler, P. (2003). Strategic management (2nd ed.). Kogan Page.

pg. 31 of 32
 The Strategic Management Process

External
Environment
Analysis

Develop Generate,
Establish Measure and
Vision and Evaluate, and Implement
Long-Term Evaluate
Mission Choose Strategies
Objectives Performance
Statements Strategies

Internal
Environment
Analysis

Strategy Formulation Strategy Strategy

Implementation Evaluation

This course only covers the basics and fundamental concepts of strategic management.

There are still things to learn, and there always will be.

All the best!

pg. 32 of 32