BUSINESS STRATEGY
DAW HLA MYINT
Professor (Retired), Yangon Institute of Economic
20 Jan. 2007, Saturday 1
“Management’s job is not to see the company
as it is….but as it can become.”
John W. Teets
“A strategy is a commitment to
undertake one set of actions rather “Quote”
than another.”
Sharon M. Oster
2
Three Control Questions for
Managers
Q1: Where are we now?
Q2: Where do we want to go?
Q3: How will we get there?
Q1 is concerned with present situation of the
company.
Q2 deals with the direction which the company is
leading.
Q3 concerns with formulating and implementing a
strategy to get the company from where it is to
where it wants to go.
3
What is Strategy?
A company's strategy is management's
game plan for
growing the business
establishing a market position
attracting customers
competing successfully
conducting operations
achieving targeted objectives
4
Powerful Strategy
Distinctive
Produce sustainable competitive advantage
Four most common strategic approaches
Low cost provider
Differentiating features
Focus on narrow market niche
Resource strengths that rivals cannot imitate
easily
5
Strategic Management Principle
Effective strategy-
making begins with a
vision of where the
organization needs to
head! 6
Developing a Strategic Vision
First Direction-Setting Task
Entails management efforts to
create a future-oriented
roadmap for a company that
spells out “where we are
headed”
Buyer needs we are moving to
satisfy
Buyer groups and markets we
are going to target
Kind of company we are trying
to become
7
Three Elements of a Strategic Vision
Use the mission statement as a
starting point
Develop a strategic vision that
spells out a course to pursue
Communicate the vision in a
clear and exciting manner
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Characteristics of a Mission
Statement
Defines current business activities
Highlights boundaries of current business
Conveys
Who we are,
What we do, and
Where we are now
Company specific, not generic —
so as to give a company its own identity
A company’s mission is not to make a profit !
The real mission is always—“What will we do to make
a profit?” 9
Defining a Company’s
Business
A good business definition
incorporates three factors
Customer needs -- What is
being satisfied
Customer groups -- Who is
being satisfied
Technologies and
competencies employed --
How value is delivered to
customers to satisfy their needs 10
Characteristics of a Strategic
Vision
Charts a company’s future
strategic course
Defines the business makeup
for 5 years (or more)
Specifies future technology-
product-customer focus
Indicates capabilities to be
developed
Requires managers to
exercise foresight
11
Questions to Address in
Developing a Strategic Vision
1. What changes are occurring in the market arena(s) where
we operate and what implications do these changes have
for our future direction?
2. What new or different customer needs should we be
moving to satisfy?
3. What new or different buyer segments should we be
concentrating on?
4. What new geographic or product markets should we be
pursuing?
5. What should the company’s business makeup look like in
5 years?
6. What kind of company should we be trying to become?
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Communicating the Vision
An exciting, inspirational vision
Challenges and motivates workforce
Arouses strong sense of organizational purpose
Induces employee buy-in
Galvanizes people to live the business
13
Managerial Value of a Well-Conceived
Strategic Vision and Mission
Crystallizes long-term direction
Reduces risk of rudderless
decision-making
Conveys organizational
purpose and identity
Keeps direction-related actions of
lower-level managers on
common path
Helps organization prepare for
the future 14
Establishing Objectives
Second Direction-Setting Task
Represent commitment to achieve
specific performance targets
by a certain time
Should be stated in quantifiable
terms and contain a deadline for
achievement
Spell-out how much of what
kind of performance by when
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Purpose of Objective-Setting
Substitutes results-
oriented decision-
making for aimlessness
over what to accomplish
Provides a set of
benchmarks for judging
organizational performance
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Two Types of Objectives Are
Required
Financial Objectives Strategic Objectives
Outcomes that Outcomes that
improve a firm’s strengthen a firm’s
financial performance competitiveness and
long-term market
position
$
17
Short-Range Versus
Long-Range Objectives
Short-Range objectives
Targets to be achieved soon
Serve as stair steps for reaching
long-range performance
Long-Range objectives
Targets to be achieved within 3 to 5
years
Prompt actions now that will
permit reaching targeted
long-range performance later
18
Objectives Are Needed at
All Levels
Objective-setting process is top-down,
not bottom-up!
1. First, establish organization-wide objectives
and performance targets
2. Next, set business and product line objectives
3. Then, establish functional and departmental
objectives
4. Individual objectives are established last
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Characteristics of Strategy-Making
Strategy is action-
oriented
Strategy evolves
over time
Strategy-making is a
never-ending, ongoing
task
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Figure 2.1: Levels of Strategy-Making
in a Diversified Company
Corporate-Level Corporate
Managers Strategy
Two-Way Influence
Business-Level
Managers Business Strategies
Two-Way Influence
Functional
Managers Functional Strategies
Two-Way Influence
Operating
Managers Operating Strategies
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What Business Strategy
Involves
Forming responses to changes in industry
and competitive conditions, buyer needs and
preferences, economy, regulations, etc.
Crafting competitive moves to produce
sustainable competitive advantage
Building competitively valuable
competencies and capabilities
Uniting strategic initiatives of functional areas
Addressing strategic issues facing the
company
22
Functional Strategies
Game plan for a strategically-relevant
function, activity, or business process
Details how key activities
will be managed
Provide support for business
strategy
Specify how functional objectives
are to be achieved 23
Operating Strategies
Concern narrower
strategies for managing
grassroots activities and
strategically-relevant
operating units
Add detail to business
and functional strategies
24
Uniting the Company’s Strategy-
Making Effort
A company’s strategy is a collection of
strategies and initiatives being acted on by
managers at various organizational levels
Separate levels of strategy must be unified
into a cohesive, company-wide action
plan
Pieces of strategy should fit together like
the pieces of a puzzle
25
Figure 2.5: Factors Shaping the
Choice of Company Strategy
Social,
Company
political, Competitive
regulatory conditions
opportunities External Factors
and threats to
and and industry
company’s
community attractiveness
well-being
factors
Determine
relevance Identify
Craft
of internal and
Company’s Strategic Situation and evaluate
the
strategy
external alternatives
factors
Resource
strengths, Influences of Shared values
capabilities, key and company
and
weaknesses
executives culture
Internal Factors
26
Competitive Conditions and
Industry Attractiveness
A company’s strategy has to be responsive
to
Fresh moves of rival competitors
Changes in industry’s
price-cost-profit economics
Shifting buyer needs and expectations
New technological developments
Pace of market growth
27
Company Opportunities and Threats
For strategy to be
successful, it has to
Be well matched to
capturing a company’s best
opportunities
And help counteract
threats to the company’s
well-being
28
Strategic Management
Principle
A company’s strategy ought to be
grounded in its resource strengths and in
what it is good at doing (its competencies
and competitive capabilities); it is perilous
to discount the competitive liabilities of
company’s resource deficiencies and skills
gaps!
29
Tests of a Winning
Strategy
GOODNESS OF FIT TEST
How well is strategy matched to firm’s
situation?
COMPETITIVE ADVANTAGE TEST
Does strategy lead to sustainable
competitive advantage?
PERFORMANCE TEST
Does strategy boost firm
performance? 30
Strategic Management
Principle
To be a real winner, a strategy must
1. Fit the enterprise’s internal and
external situation
2. Build sustainable competitive
advantage
3. Improve company performance
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