CHAPTER 9: Managing strategy
9.1+9.2: strategic management
9.1: Strategic management and its benefits
Strategic management is planned use of a company's resources to reach its goals
and objectives.
So, Why is strategic management so important?
It brings 5 benefits to companies.
Competitive Advantage
Achieving goals
Sustainable growth
Cohesive organization
Increased managerial awareness
SCRIPT: Strategic management keeps businesses ahead by adapting to market
changes.
2. Achieving goals: SM helps keep goals achievable by using a clear and dynamic
process for formulating steps and implementation.
SCRIPT: Achieving Goals: It provides a clear, dynamic process to meet
organizational goals.
3. Sustainable Growth: SM has been shown to lead to more efficient organizational
performance which leads to manageable growth.
SCRIPT: Sustainable Growth: It improves efficiency, leading to sustainable growth.
4. Cohesive Organization: SM necessitates communication and goal implementation
company wide an organization that is working in unison towards a goal is more likely
to achieve that goal.
SCRIPT: Cohesive Organization: It ensures all departments work together towards
common goals.
5. Increased managerial awareness: SM means looking toward the company's future
if managers do this consistently they will be more aware of industry trends and
challenges.
SCRIPT: Increased Awareness: It helps managers stay aware of industry trends and
challenges.
9.2 The strategic management process.
Step 1: Identify direction
Step 2: Analyzing resources
Step 3: Framing strategies
Step 4: Implementing strategies
Step 5: Evaluating effectiveness
Script: In the first step, it's crucial for the organization to establish a clear
vision and direction before developing any plans. In Step 2, while creating
these plans, conducting a SWOT analysis is essential to leverage external
opportunities and strengths, mitigate threats, and address critical
weaknesses. Step 3 involves crafting corporate, competitive, and functional
strategies to achieve the set objectives. Step 4 focuses on executing these
strategies with full comprehension and collaboration from both employees and
top management. Lastly, Step 5 highlights the importance of recognizing
individual contributions through regular performance reviews and evaluations
of overall impact.
Take Mr Beast for example, he wants to expand into the snack combo market,
featuring his already top selling product, the Feastable chocolate bar to compete with
the already well known brand lunchable.
Step 1: Identifying Direction where he wants to go: He intends to make his product a
similar but better version of Lunchable to directly compete with it, also featuring a salty
snack, a sweet snack and a drink.
Step 2: Analyzing Resources A SWOT analysis reveal:
● Strengths: Mr Beast himself is already the biggest youtuber ever and he also has
experience on the field via Feastable.
● Weaknesses: Until now, he has yet worked on a product like the Lunchable pizza or
any types of drink.
● Opportunities: The lot of his subscribers are kids, the target demographic.
● Threats: High competition from established brands like Lunchable and recent
backlashes of Mr Beast and his teams.
Mr Beast's strongest point is his fame, being the biggest youtuber on the planet while also
having some experience on the field with his Feastable bars. His shortcoming however also
ties with knowledge and experience since he has yet worked on a product like the Lunchable
Pizza or any types of drink at all. Despite his shortcomings, Mr Beast also has a lot of
opportunities because his target demographic, kids make up the most of his subscribers.
Though, he has to also be aware of major threats like competition from established brands
like Lunchable and some of his recent backlashes regarding him and his teams.
Step 3: Framing Strategies
Mr Beast’s plan is that his product will focus on flavors and emphasize health benefits by
being low in calories and high in protein. He also plans to launch social media campaigns on
his channels, in-store promotions and collaborate with other influencers.
Step 4: Implementing Strategies, this is basically what Mr Beast has actually done in
real life: He partners with influencers namely KSI and Logan Paul for their famous Prime
energy drink, fixing one his weaknesses. With the already available Feastable bar and Prime
energy drink, the three of them only need to work on the salty snack. The end product
contains a Mini pizza with real mozzarella cheese, a Feastable chocolate bar and a bottle of
Prime Energy drink. Mr Beast then also pays other influencers to say good things about his
product.
Step 5: Evaluating Effectiveness Post-launch, since this is a new product, we cannot
make any conclusion about sales yet. However, we can at least make some predictions
about it since there are already a lot of backlashes aimed at the product and its producers.
-KSI and Logan Paul are controversial influencers with a lot of backlash prior to the launch of
Lunchly, and combined with Mr Beast’s existing drama, things just get worse for the three of
them. And allegedly, some lead was found in Prime, their energy drink.
-Secondly, Consumer’s Report pointed out that they are unhealthy despite marketing
towards health benefits. “They're highly processed and some packages had potentially
concerning heavy metal and phthalate levels. And they're too high in sodium, especially for
kids, their target demographic.
9.3+9.4: corporate and competitive strategies
9.3 Describe the four types of corporate strategies.
-Corporate strategies
Corporate strategies are strategies used to figure out the business structure and how
the business is going to allocate resources like money, time, inventory to support
each aspect of the business. And there are 4 types of corporate strategies.
+Growth strategy
The growth strategy focus on achieving considerable growth for the business like
when a company expand the number of market served or products offered
+Stability
Instead of trying to grow by developing breakthroughs, the business makes profit on
what they already have, big non tech companies like Coca Cola tend to adopt this
type of strategy as they make profit from just staying original
+Retrenchment
used when dramatic changes need to be made to save the business or when you
need to get rid of parts of the business that are causing problems
+Reinvention:
Changing the core of the business
Here is an example
Example: Let’s say You are a fruit seller, if you stop stocking apples because you see
that they don’t sell, that would be a retrenchment strategy. However, if you decide to
not sell fruits anymore and sell shoes instead, that would be a reinvention strategy
because you are selling something completely different.
Questions:
Why are we changing?
Where are we heading?
How do we do this?
Key aspects of reinvention include:
Innovation: Introducing new ideas, products, or processes to change the way a
company operates or delivers value to customers.
Adaptation: Adjusting to external factors like technological advancements, consumer
behavior shifts, or economic pressures.
Transformation: Overhauling business models, leadership, and culture to meet new
goals or align with future trends.
How Are Corporate Strategies Managed?
You use this thing called the BCG Matrix to help guide decisions to allocate
resources better. The matrix consists of four symbols:
Stars: High market share in high growth markets.
Cash cows: Have high market share in low-growth markets
Question marks: Have low market share in high-growth markets.
Dogs: Have low market share in low-growth markets.
9.4 Describe competitive strategies and the competitive
advantages organizations use to get it.
Competitive strategies
Definition: How a company create and maintain a competitive advantage over others
in the same market
However, we are all aware that things are easier said than done, and even after you
have gained yourself some competitive advantages, maintaining and expanding your
lead is usually the hardest part. And I’ll give you the quote of the day: to think ahead
is to stay ahead. And that’s the end of our presentation