Business Strategies

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Business Strategies by Mind Map: Business Strategies

1. Purpose of Strategic planning

1.1. -distribute skills and resources equally throughout the business

1.2. -focus on the long term

1.3. -enablle the business to adapt to changes in the business environment

2. Strategic Management Process

2.1. Stage 1: Set a clear vision,mission statement and realistic goals

2.2. Stage 2: Identify weak points/strong points/opportunities/threats by doing an environmental exploration and environmental analysis of the 3 business environments. Make use of a SWOT analysis/PESTLE analy/Porter's Five Forces model.

2.2.1. This stage involves identifying challenges from the business's environments

2.2.2. SWOT - Strengths - weaknesses - opportunities - threats

2.2.3. PESTLE (macro) political impact -economic impact -social impact -technological impact -legal impact -environmental impact

2.2.4. Porter's Five Forces model - power of competitors - bargaining power of suppliers - bargaining power of buyers - threat of substitute goods or services - threats of new entrants to the market

2.3. Stage 3: Formulate a strategy to react to the exploration results-develop a plan of action

2.3.1. it is essential that this strategy takes account of both of the current challenges and the possible future challenges, so that current challenges can be overcome and the business can prepare for future In the formulation of the strategy, a business must include: - Who is going to manage and implement the strategy? - when, and for how long, will it be implement?

2.3.2. Types of Business Strategies I ➡️ Integration Strategies D➡️ Diversification Strategies I➡️ Intensive strategies D➡️ Defensive strategies O➡️ other strategies INTEGRATION STRATEGIES Vertical integration: refers to a businesstaking on a role that was previously performed by another business in its supply chain 1. Backward vertical integration: involve the business buying a supplier 2. Forward vertical integration involves the business buying another business, further down the supply chain 3. Horizontal integration refers to a business acquiring a competitor or a business that produces complementary goods or services INTENSIVE STRATEGIES Intensive Strategies focus on improving the market share of existing products and of new proyfor the same marki 1. Market penetration is when a business increases the market share of products in existing markets 2. Market development is when a business is closed or find new markets for existing products 3. Product development is when a business develops new products for its existing markets DIVERSIFICATION STRATEGIES a diversification strategy entails at business entering a new market or a new industry or somehow extending itself beyond its core business 1. Concentric diversification is when a business uses the same technology to produce a new product that is related to its core business 2. horizontal diversification is when a business enters a new industry or creating new products using new technology to create new products that will appeal to its existing customers 3. Conglomerate diversification is when a business starts to produce a new and totally different products for a new market DEFENSIVE STRATEGIES a defensive strategy is one that is implemented by businesses when they want to reconstruct and/or rationalise, because of economic reasons 1.retrenchment is when a business stops employing some of its employees. It is usually done to reduce cost during tough financial times. 2. Divestiture is when the owners of a business sell a parts of the business or some of its assets. It is usually done to obtain more financial security. 3. Liquidation occurs when a business that cannot pay its debts closes down and sells its assets to pay its debts.

2.4. Stage 4: Implement the strategy-communicate to all the stakeholders

2.4.1. At this stage a business puts its plan into action Aims of strategy implementation -To solve strategic questions/challenges -To unite all employees around the strategy -To build a strong and sustainable business

2.4.2. Steps in the implementation process 1. Draw up budgets to convert plans into actual figures 2. Apply resources way it can be used most effectively 3. Create an organisational structure that actively supports the new strategies 4. Motivates employees to achieve the goals of the new strategy 5. communicate the new strategy to all the relevant people in the business 6. create and implement a policy that will support the new strategy

2.4.3. Who is responsible for implementing the strategy? 🔻The chief executive officer (CEO) and different department heads are mainly respyfor the implementation of new Strategies. 🔻top management plans the implementation that rely on middle and lower-level managers to execute the plans and get things done.

2.4.4. factors that can hamper strategy implementation 🔺 Mobility of the workforce- workers who can change jobs 🔺 Attitude of the workforce- many employees tend to resist change 🔺pace at which change happens -change sometimes happens faster than the pace at which strategies can be developed 🔺 Regular technological change

2.5. Stage 5: continuously evaluate and monitor the strategy to take corrective steps, if necessary

2.5.1. this evaluation stage allows the business to critically assess how well is strategy is working in terms of the original mission statements and objectives, and to make the necessary changes weather strategy is not working recommendations must be made to improve the anomalies.

2.5.2. Steps in the evaluation of a business strategy: 🔻 Examine the underlying basis of their business strategy 🔻 Define parametres/limitations that can be measured 🔻 Define target values for the parameters 🔻 Perform measurements 🔻 Compare actual business performance against expected performance and the original mission statement and objectives 🔻 Take corrective action where necessary