Transcript Devise/Formulate strategies of how a business can respond

Devise/Formulate strategies of
how a business can respond to the
challenges of the Macro Business
environment
By Amanda Juries and Ross Mileham
Session 2
27 March
Strategic
management
Overview
Business
strategies
Intensive
Integration
Tools
Diversification
Business
strategies
Defensive
SWOT
PORTER 5 Forces
PESTLE
Advantages and
disadvantages
Strategic management process
Goal Setting
Analysis
•Short or long
term goals?
•Identify and
customize
process for
you
•Gather
information
•Understand
the needs.
Strategy
Formulation
•Review
information
•Determine
resources
Continued
Implementation
Monitoring
Evaluation
• Action stage
• Make sure
everyone is ready
• Review internal
and external issues
• Control action
• Performance
measurement
• Define what is
success?
• Compare actual vs
actual plan
Formulate the strategy
Set
objectives
• What must be done?
Evaluate
• Use tools to evaluate the M.M.M
Set targets
• Set the target s to be reached
Use contexts
• think about each department in
turn.
Analyse
performance
• Mind the Gap?
Choose
strategy
Implement the strategy
Allocate resources
Adapt
Ensure The
structure of the
organisation
Solve any on
going problems
Management
must be involved
Motivate stuff
Organisational
polices
Evaluate the strategy
 Process of monitoring business
activities and performance results.
 Actual performance can be compared
with the desired performance.
 Evaluation and feedback provides the
foundation for successful future
strategy formulation.
Steps in strategy evaluation:
1) Identify goals and measure achievement
against the goals
2) Compare expected results with the actual
results
3) Determine the deviations and reasons
therefore
4) Develop actions that can be implemented
to prevent similar deviations
5) Implement the actions to correct the
deviations
Industrial tools
Strength Weakness Opportunities Threats
Strength [Internal].
Weakness[Internal]
Skilled workers.
Not enough Money ?
SWOT
Opportunities[External]
Threats[External]
New markets
Lots of competition
Porters FIVE forces
Threat of
substitute
Power of
suppliers
Rivalry
New
entrants
Power of
consumers
Example
Can we use
other energy
sources?
Will Coal
increase? Or
run out?
Any other
energy
suppliers?
Can any
other
business
start in our
market?
Do
consumers
have any
other
options?
A.A
Inflation
Crime
New
Tech
L
Labour
laws
Environmental
T
Legal
S
Technological
E
Social
P
Economic
Political
PESTLE
E
Pollution
Business Strategies
Integration
Intensive
Diversification
Defensive
Integration(bring together)
Vertical
Forward And
backward
Supplier of
parts
B
a F
c o
k r
w w
a a
Horizontal
r
r
d d
s
V
e
r
t
i
c
a
l
Your business
the factory
Shop that
sells your
goods
competitor
Horizontal
Intensive build up
Micro (the business)
Market(consumers etc.)
Macro
Intensive(aims to increase sales)
Market
Same
Product
and same
market
Old
market
Same
product.
New
market
Market development(same
product ,new market
New
product
same
market
Product development(new
product , new market)
Market penetration(same
product , same market)
Diversification
Add
Chip's
Car sales
Fried
chicken
Add on
Original
product
Finance
Customer
Cars For
sale
Customer
Customer
Defensive
People
+$
+$
-$
Defensive Continued
Advantages and disadvantages
Strategy
Advantages(good)
Disadvantage (Bad)
Integration
Reduce cost
Increase growth
Legal process of
franchising is time
consuming.
Can be expensive
Intensive
Lots of options to
implement
Large impact on limited
capital
Research and
development can be
expensive.
Labour intensive
Diversification
Exciting and
motivating for staff.
Requires skilled staff.
Can distract from main
business objective.
Defensive
Can reduce cost
Demotivating
Increase profit selling
Time consuming
non profit departments
Developing new performance
incentives.
• The more motivated the staff,
the more productive they will be,
thereby increasing productivity
and profit levels of the business
The company repositions itself by
replacing one or more individuals
 Business must ensure that the correct
individuals are employed in the right
positions
 • Replacing an employee takes
place when they don't fit in; cannot
cope; resign; retire or are promoted
Revising a business mission
 As the business grows it will be
necessary to revise its mission so it
can adapt to the changing
environment
 • As trends changes, the business
must be aware of it and adapt its
mission to the latest trends
Issuing stock to raise capital
Additional shares could be
made available to the public
to ensure that the business
has sufficient capital to
finance any expansion or
growth of the business.
Adding additional salespersons
Additional staff could be
employed to increase sales
figures and to service any
new customers
that the business may have
acquired
Short questions:
1. Identify the type of strategy
that is being implemented by
Charlie's Pizza Den from those
given below:
1.1 Frozen pizzas are to be exported
to Namibia and Botswana.
Answer: Market development
(2)
.
1.2.The sales manager decides to
reduce the mark-up on all l
large pizzas.
Answer: Market penetration
1.3. Management decides to buy
a cheese factory.
Answer: Reverse vertical
integration
1.4. A decision is taken to stop the
delivery service and sell the
motorbike delivery fleet.
Answer: Divesture
1.5. The restaurant adds strawberries
and ice-cream as a
to its menu.
new product
Answer: Product development
Long Questions
Business can use different types of strategies to respond to
the challenges of the macro environment.
Describe the steps to be followed is the formulation of
strategies.
Discuss using examples the various types of integration and
Intensive strategies that a business can use to increase turn
over.
Outline the steps to be followed
in the evaluation and control process of implementation.
 (40)
ESSAYS QUESTIONS
Introduction - Strategies is
how a
business can
respond to
the
challenges of
the Macro
Business
environment
2 Facts
STEPS
MARKS
1
2
Set objectives
Evaluate the
environments
6X2
3
4
5
Set targets
Use contexts
Analyse
performance
Choose
strategy
BODY
6
One mark to name
and one mark to
explain
BODY INTEGRATION
Horizontal
The same two type of
business integrate
Vertical
The same industry
Mr Price and
Milady
Foschini , Sterns,
Sport Scene, Total
Sports fashion
Reverse-Backwards
Simba chips with
Integrate with your supplier the potatoes
farmer
Forward Integration
Zoom shoes
Integrate with your
integrate with
distributor
Foschini
BODY
INTENSIVE
EXAMPLE
Market
Development
New customers in
new areas
Product
development
Better products
Market
penetration
Sell at a cheaper
price to attract
customers
A new branch
Samsung S6
3 packets Lays for
R20
CONCLUSION
 Business should be continuously
scanning the market.
 Redefine its goals, mission and
vision to remain competitively.
 Remember 2 single facts (2x1)
Thank You
BODY: STRATEGY EVALUATION
MEASURE
ACHIEVEMENTS
AGAINST GOALS
CARRY OUT
ACTIONS TO
CORRECT
DEVIATIONS
ANALYSE NEW
STRATEGY
COMPARE
EXPECTED RESULTS
TO ACTUAL
PERFORMANCE
DETERMINE
DEVIATIONS
AND IDENTIFY
THE REASONS