Strategic Management
Lecture 5
Strategic Management
Strategies
• The decisions and actions that determine the long-run
performance of an organization.
• Business Model
– Is a strategic design for how a company intends to profit from
its strategies, work processes, and work activities.
– Focuses on two things:
• Whether customers will value what the company is providing.
• Whether the company can make any money doing that.
Why Strategic Management is
Important?
• it can make a difference in how well an
organization performs.
• Cope with continually changing situations
• organizations are complex and diverse. Each part
needs to work together toward achieving the
organization’s goals; strategic management helps
do this.
The Strategic Management Process
Case Study: “Cafe Brew Beats” – From One Outlet to a Local Chain
Scenario
Café Brew Beats started as a small coffee shop near a university in Lahore. Within
two years, it became popular for its ambiance and affordable prices. The owners
now want to expand to three more outlets in Lahore and Faisalabad. However,
competition is rising — brands like Gloria Jean’s, Second Cup, and local cafés are
targeting the same audience.
As the consultant, you are asked to guide the owners through the Strategic
Management Process to make this expansion successful.
Task for Students
Map Café Brew Beats’ next steps using the five stages of strategic management:
1. Goal Setting → 2. Analysis → 3. Strategy Formulation → 4. Implementation →
5. Evaluation
Stage Explanation Example for Cafe Brew Beats
Open 3 new outlets in Lahore and
Define clear, measurable, time-bound Faisalabad within 18 months, while
1. Goal Setting
objectives aligned with vision. maintaining customer satisfaction above
90%.
Strengths: brand loyalty near universities.
Weaknesses: limited funding.
Examine internal and external factors
2. Analysis Opportunities: growing café culture in
(SWOT, competitors, market trends).
Pakistan. Threats: inflation, large
competitors.
Use concentration growth strategy—
3. Strategy Choose the best plan of action (growth replicate current model near other
Formulation type, market entry, pricing). universities; focus on affordable pricing and
ambience.
Secure investors, hire local managers, train
Execute plans through structure,
4. Implementation baristas, launch promotional campaigns
resources, and communication.
with student discounts.
Track monthly sales, social media
Monitor performance and adapt engagement, and customer feedback;
5. Evaluation
strategy as needed. adjust menu or marketing if new outlets
underperform.
Porter’s Five Forces
Source: Based on M.E. Porter, Competitive Strategy: Techniques for Analyzing
Industries and Competitors (New York: The Free Press, 1980).
Porter’s Five Forces
Case Study: “TeleLink – Surviving Pakistan’s Telecom War”
Scenario:
TeleLink, a mid-size telecom operator, is facing intense competition
from Jazz, Zong, and Telenor. The company wants to enter the
mobile banking segment but is unsure how to stay profitable amid
price wars and changing customer preferences.
Task for Students:
Analyze TeleLink using Porter’s Five Forces. Suggest strategic
moves to improve competitiveness.
Force Observation Implication
High investment → TeleLink has some
New Entrants
low threat protection
Need diversification
WhatsApp, Zoom,
Substitutes (e.g., data-focused
etc.
bundles)
High – customers Improve loyalty
Buyer Power
easily switch programs
Moderate – tower Negotiate long-term
Supplier Power
vendors limited contracts
Focus on niche (youth,
students) or partner
Rivalry Very intense
with banks for mobile
wallet
Levels of Organizational Strategy
Types of Organizational Strategies
• Corporate Strategies
– Top management’s overall plan for the entire
organization and its strategic business units
• Types of Corporate Strategies
– Growth: expansion into new products and markets
– Stability: maintenance of the status quo
– Renewal: redirection of the firm into new markets
Corporate Strategies
• Growth Strategy
– Seeking to increase the organization’s business by
expansion into new products and markets.
• Types of Growth Strategies
– Concentration (focuses on its primary line of business)
– Vertical integration (either backward, forward, or both)
– Horizontal integration (a company grows by combining
with competitors)
– Diversification (either related or unrelated.)
Growth Strategies (cont’d)
• Stability Strategy
– Seeks to maintain the status quo
• to deal with the uncertainty of a dynamic environment
• when the industry is experiencing slow- or no-growth
conditions
• the owners of the firm elect not to grow for personal
reasons.
Growth Strategies (cont’d)
• Renewal Strategies
– Developing strategies to counter organization
weaknesses that are leading to performance declines.
• Retrenchment: focusing of eliminating non-critical
weaknesses and restoring strengths to overcome current
performance problems.
• Turnaround: addressing critical long-term performance
problems through the use of strong cost elimination
measures and large-scale organizational restructuring
solutions.
Business or Competitive Strategy
• Business (or Competitive) Strategy
– A strategy focused on how an organization should
compete in each of its SBUs (strategic business
units).
The Role of Competitive Advantage
• Competitive Advantage
– An organization’s distinctive competitive edge.
• Quality as a Competitive Advantage
– Differentiates the firm from its competitors.
– Can create a sustainable competitive advantage.
– Represents the company’s focus on quality
management to achieve continuous improvement
and meet customers’ demand for quality.
Porter’s Five Forces
1. Threat of new entrants. How likely is it that new competitors
will come into the industry?
2. Threat of substitutes. How likely is it that other industries’
products can be substituted for our industry’s products?
3. Bargaining power of buyers. How much bargaining power do
buyers (customers) have?
4. Bargaining power of suppliers. How much bargaining power
do suppliers have?
5. Current rivalry. How intense is the rivalry among current
industry competitors?
Analyze one Pakistani industry (e.g., telecom,
banking) using all 5 forces.
Example Industry: Telecom Sector of Pakistan (e.g., Jazz, Zong,
Telenor, Ufone)
• 1. Threat of New Entrants – LOW
• Explanation:
The telecom sector in Pakistan has very high entry barriers due to
huge infrastructure costs, spectrum licensing fees, and strict PTA
(Pakistan Telecommunication Authority) regulations.
• Example:
In 2021, new players like Virgin Mobile Pakistan struggled to enter
because of regulatory hurdles and capital intensity.
• Conclusion:
New entrants are discouraged because setting up towers, obtaining
licenses, and competing with established giants like Jazz or Zong
requires billions in investment.
• 2. Bargaining Power of Suppliers – MODERATE
• Explanation:
Telecom companies depend on network equipment suppliers (like
Huawei, Ericsson, and Nokia) and infrastructure providers.
• Example:
Since there are limited suppliers of advanced telecom hardware,
suppliers hold some bargaining power. However, large players like
Jazz can negotiate favorable contracts due to their scale.
• Conclusion:
Supplier power is moderate — not too high because of bulk
purchases, but not too low because technology suppliers are few.
• 3. Bargaining Power of Buyers (Customers) – HIGH
• Explanation:
Customers have many choices among Jazz, Zong, Ufone,
and Telenor, and switching costs are very low.
• Example:
Consumers often use multiple SIMs and change networks
for better packages or internet speed.
• Conclusion:
Buyers have strong power — they can easily switch if
dissatisfied with price or quality.
• 4. Threat of Substitutes – HIGH
• Explanation:
Substitutes like WhatsApp, Skype, Zoom, and social media
platforms have replaced traditional calling and SMS
services.
• Example:
The rise of WhatsApp voice and video calls has significantly
reduced traditional call revenues for telecoms.
• Conclusion:
Substitution threat is high as data-based apps continue to
dominate communication.
• 5. Competitive Rivalry – VERY HIGH
• Explanation:
The telecom market is saturated with price wars,
marketing battles, and customer poaching.
• Example:
Jazz and Zong compete aggressively on 4G coverage,
bundle offers, and digital wallets (e.g., JazzCash vs
Easypaisa).
• Conclusion:
Rivalry is intense as companies fight for market share and
customer loyalty in a slow-growth market.
Force Level Reason
High capital & regulation
Threat of New Entrants Low
barriers
Few but specialized
Supplier Power Moderate
suppliers
Low switching costs, many
Buyer Power High
options
Messaging apps replacing
Threat of Substitutes High
calls/SMS
Aggressive competition
Industry Rivalry Very High
among 4 major players
Types of Competitive Strategies
• Cost Leadership Strategy
– Seeking to attain the lowest total overall costs relative
to other industry competitors.
• Differentiation Strategy
– Attempting to create a unique and distinctive product
or service for which customers will pay a premium.
• Focus Strategy
– Using a cost or differentiation advantage to exploit a
particular market segment rather a larger market.
Innovation Strategies
• Possible Events
– Radical breakthroughs in products.
– Application of existing technology to new uses.
• Strategic Decisions about Innovation
– Basic research
– Product development
– Process innovation
• First Mover
– An organization that brings a product innovation to
market or use a new process innovations
Is being a first mover always an
advantage?
First-Mover Advantages–Disadvantages
• Advantages • Disadvantages
➢ Reputation for being ➢ Uncertainty over exact
innovative and industry leader direction technology and
➢ Cost and learning benefits market will go
➢ Control over scarce resources ➢ Risk of competitors imitating
and keeping competitors from innovations
having access to them ➢ Financial and strategic risks
➢ Opportunity to begin building ➢ High development costs
customer relationships and
customer loyalty
# Case Study Discussion Points
Engro Diversification –
What strategy type?
1 From fertilizer to food &
What are risks/benefits?
energy
What type of growth
2 Khaadi’s UAE Expansion
strategy?
Renewal or
3 PIA’s Turnaround Plan
retrenchment?
Business model and
4 Careem vs InDriver
competitive strategy?
First mover vs late
5 JazzCash vs Easypaisa
mover advantages?
Porter’s Five Forces
6 Airblue vs SereneAir
analysis
# Case Study Discussion Points Suggested Answer
Engro Diversification – What strategy type? Related diversification; spreads
1 From fertilizer to food & What are risk; builds brand but requires new
energy risks/benefits? expertise.
Concentration → international
Khaadi’s UAE What type of growth
2 expansion. Uses brand strength for
Expansion strategy?
new market.
Renewal strategy; focuses on
Renewal or
3 PIA’s Turnaround Plan restructuring, debt management,
retrenchment?
cost control.
Careem – differentiation (safety,
Business model and
4 Careem vs InDriver service); InDriver – cost focus
competitive strategy?
(price negotiation).
Easypaisa: brand recall, regulation
First mover vs late
5 JazzCash vs Easypaisa ease. JazzCash: faster tech, better
mover advantages?
UX.
Rivalry: high; substitutes:
Porter’s Five Forces moderate; buyer power: high;
6 Airblue vs SereneAir
analysis supplier power: high (fuel); new
entrants: low.
Thank you