HNC/HND BUSINESS
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Transcript HNC/HND BUSINESS
LESSON OBJECTIVE
Undertake
a range of planning techniques
Understand a range of strategic planning
models
Understand significance of Stakeholder Analysis
Identify a number of Stakeholder Analysis tools
PLANNING TECHNIQUES
BCG Growth Share Matrix – Boston Cow
SPACE – Strategic Position and Action
Evaluation
Directional Policy Matrices
PIMS – Profit Impact of Market Share
DIRECTIONAL POLICY MATRICES
Two main ones:
General Electric Business Screen (GEBS)
Shell Directional Policy Matrix
Both are more complex versions of Boston Matrix
GENERAL ELECTRIC’S BUSINESS SCREEN
Also known as GE/McKinsey Matrix
Portfolio analysis that assess business in terms
of:
1. Attractiveness of the industry/market
concerned
2. The strength of the business
CRITERIA WHICH MAKES A MARKET ATTRACTIVE
Market size
Growth rate
Overall returns
Industry profitability
Intensity of competition
Profit margins
Differentiation
Industry fluctuations
Customer / supplier
relations
Variability of demand
Rate of technological
change
Volatility
Availability of market
intelligence
Availability of workforce
Global opportunities
PEST
Government regulation
ASSESSING INTERNAL STRENGTHS
Production capability
Production flexibility
Unit costs
R&D capabilities
Quality
Reliability
Company image
Product uniqueness
Cost & profitability
Profit margins
Organisational skills
Market share
Marketing capabilities
Management
competence
Workforce skills
Distribution network
Service quality
Customer loyalty
Brand recognition
GE BUSINESS SCREEN DIAGRAM
PIMS – PROFIT IMPACT OF MARKET SHARE
Developed by General Electric in 1960’s
The PIMS database provides evidence of the
impact of various marketing strategies on
business success
Companies that have high market share tend to
have high profits
MINTZBERG’S 5 P’S
Suggest 5 ways in which the term ‘Strategy’ can
be used
Plan
Ploy
Pattern
Position
Perspective
NEW STRATEGY MODELS
Emergent strategies:
1. Deliberate & emergent strategies
2. Implicit or explicit strategies
3. Crafting emerging strategies
Behavioural Approach
Incrementalism
Competition
MINTZBERG’S 8 STYLES OF STRATEGIC MANAGEMENT
Planned Strategies
Entrepreneurial Strategies
Ideological Strategies
Umbrella Strategies
Process Strategies
Disconnected Strategies
Consensus Strategies
Imposed Strategies
CRAFTING EMERGING STRATEGIES
Henry Mintzberg
Based on the believe that strategies are shaped
as they develop – both reactive and proactive
Why bother crafting?
Direction – emergent strategies maybe
inappropriate for the long term
Resources – implications for resource
competition
BEHAVIOURAL APPROACH
Johnson & Scholes (2002)
“Strategy needs to be understood as an outcome
of the social, political and cultural process of
management in organisations”.
4 step strategic decision making process
INCREMENTALISM APPROACH TO STRATEGY
Involves small scale extensions of past practices – in
increments
Positives
It avoids major errors in strategy
More likely to be acceptable, as consultation, compromise
and accommodation built in
Negatives
Doesn’t work if radical new approach needed
Ignores the influence of corporate culture
Only applicable to a stable environment
COMPETITION AS STRATEGY PLANNING
“A good business strategy is one by which a firm
can gain significant ground on its competitors at
an acceptable costs”
Ohmae (1982)
Customers
Competitors
Ohmae’s Strategic Triangle
Competition
STAKEHOLDER THEORY
Theory of management and business ethics
Growing importance of Corporate Social
Responsibility (CRS)
R. Edward Freeman 1963
“ those groups without whose support the
organisation would cease to exist”
Based on the principle of who or what really counts
SHAREHOLDER V STAKEHOLDER THEORY
SHAREHOLDER APPROACH
Traditional business
approach
Business ( management)
acts in the best interests of
shareholders / owners
Principal aim is to maximise
shareholder returns
Main focus on growth &
profit
STAKEHOLDER APPROACH
Increasingly popular
Business takes much more
account of wider stakeholder
interests
Approach based on
consultation, agreement, cooperation
E.g. social and environmental
concerns become more
important
STAKEHOLDER CLASSIFICATION
CLASSIFICATION
Primary v Secondary
Active v Passive
INTERESTS, POWER & INFLUENCE
Activity
For each of the stakeholders below identify:
Their main interests in the organisation
How they can exercise power & influence over the organisation
Shareholders
Banks & other lenders
Directors & managers
Employees
Suppliers
Customers
Community
Government
10 mins