Business Management

3A
COBMA3-11 (2025)
Strategies in Action
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 Eduvos and the Flipped Classroom
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What will be covered in today’s session?

STRATEGIES in ACTION
• Analyse Different Types of Strategies
• Use Porter's Five Generic Strategies
• Apply Strategies to Real Life Examples
David & David Chapter 5
Case
Studies

Click the link below to see the above cases on strategy.

Wright, T. 2023. The 7 Best Business Strategy Examples I've Ever Seen. Cascade, 10 April 2023. [Online]
Available at:

https://www.cascade.app/blog/the-5-best-business-strategies-ive-ever-seen [Accessed 01 October 2023].

Activity
What are Long-term Objectives?

Discuss Why Long-term Objectives are a Vital

Part of Strategy

What Long-Term Strategies Pursued by the

BIDVEST Group?

What Strategic Goals Should the BIDVEST

Group Consider Next?
 Preparing for this Lesson
Let us recap the myLMS learning activities that helped you prepare for this lecture
Learning Outcome:
4. Apply and discuss types of strategies.
Assessment Criteria:
4.1 Discuss and understand the nature of long-term objectives.
4.2 Identify, discuss, and give an example of the eleven types of strategies (these
are divided into four categories: integration, intensive, diversification, and defensive
strategies). The guidelines for all of these strategies must not be ignored.
4.3 Analyse and discuss Porter’s Five Generic Strategies and means for achieving
strategies. The guidelines for all these strategies must not be ignored.
4.4 Identify and discuss the tactics for facilitating strategies.
 Questions for Discussion
Identify and discuss 5 characteristics and ten benefits of clear
1 objectives

2 Define and give exammples of 11 types of strategies

3 Identify and discuss the 3 types of "Integration Strategies"

Give guidelines for market penetration, market development and

4 product development strategies

5 Explain when diversification is an effective strategy

 The Nature of Long-Term Objectives, 2-5 Yrs

• Provide direction
• Allow synergy
• Assist in evaluation
• Establish priorities
• Reduce uncertainty
• Minimise conflicts
• Stimulate exertion
• Aid in both the allocation of resources and the design of jobs
 Five Characteristics of Objectives
Table 5.1
1. Quantitative - measurable
2. Understandable - clear
3. Challenging - but achievable
4. Compatible - consistent vertically and
horizontally in a chain of command
5. Obtainable - realistic
 Financial versus Strategic Objectives
Financial objectives include -
• Growth in revenues,
• Growth in earnings,
• Higher dividends,
• Larger profit margins,
• Greater return on investment,
• Higher earnings per share,
• A rising share price,
• Improved cash flows, and so on.
 Financial versus Strategic Objectives
Strategic objectives include
• A larger market share,
• Quicker on-time delivery than rivals,
• Shorter design-to-market times than rivals,
• Lower costs than rivals,
• Higher product quality than rivals,
• Wider geographic coverage than rivals,
• Achieving technological leadership,
• Consistently getting new or improved products to market ahead of rivals,
and so on.
 Integration Strategies
Forward Integration
• Involves gaining ownership or increased control
over distributors or retailers
Backward Integration
• Strategy of seeking ownership or increased control of
a firm's suppliers

Horizontal Integration
• A strategy of seeking ownership of, or increased
control over a firm's competitors
 Integrative Strategies - Examples

Gaining ownership or Amazon began rapid

Forward increased control over delivery services in some
Integration distributors or retailers U.S. cities.
Seeking ownership or Starbucks purchased a
Backward increased control of a firm’s coffee farm.
Integration suppliers
Seeking ownership or AT&T acquired
Horizontal increased control over Susquehanna Bancshares.
Integration competitors
 Intensive (Growth) Strategies
Market Penetration Strategy
• Seeks to increase market share for present products or
services in present markets through greater marketing efforts

Market Development
• Involves introducing present products or services into new
geographic areas

Product Development Strategy

• Seeks increased sales by improving or modifying present
products or services
 Intensive Strategies - Examples

Seeking increased market share Under Armour signed tennis

for present products or services in champion Andy Murray to a 4-
Market present markets through greater year, $23 million marketing
Penetration marketing efforts deal.

Introducing present products or Gap opened its first five stores

Market services into new geographic in China.
Development area
Seeking increased sales by Amazon just began offering its
Product improving present products or own line of baby diapers and
Development services or developing new ones wipes.
 Diversification Strategies

Related Diversification
• Value chains possess competitively
valuable cross-business strategic fits

Unrelated Diversification
• Value chains are so dissimilar that no
competitively valuable cross-business
relationships exist
 Diversification Strategies - Examples

Adding new but related products Facebook acquired the text-

Related
or services messaging firm WhatsApp for
Diversification $19 billion.
Adding new, unrelated products Kroger and Whole Foods
Unrelated
or services Market are cooking meals,
Diversification becoming restaurants.
 Defensive Strategies
Retrenchment
• Regroups through cost and asset reduction to
reverse declining sales and profits
Divestiture
• Selling a division or part of an organisation
• Often used to raise capital for further strategic acquisitions or
investments
Liquidation
• Selling all of a company’s assets, in parts, for their
tangible worth
 Defensive Strategies - Examples

Regrouping through cost and Staples closed 250 stores and

Retrenchment asset reduction to reverse reduced by 50% the size of
declining sales and profit other stores.
Selling a division or part of an Sears Holdings divested its
Divestiture organization Lands’ End division to Sears’
shareholders.
Selling all of a company’s assets, The Trump Taj Mahal in Atlantic
Liquidation in parts, for their City, New Jersey, faces
tangible worth liquidation.
Levels of Strategy – Persons Responsible
 Value Chain Analysis
Value chain analysis
• The process whereby a firm determines the
value (price minus cost) of each and all
activities that went into producing and
marketing a product, from purchasing
raw materials to manufacturing, distributing,
and marketing those products.
Value Chain Analysis
 Benchmarking

Benchmarking
• Entails examination of value chain
activities across an industry to
determine “best practices” among
competing firms; firms engage in
benchmarking for the purpose
of duplicating or improving on those
best practices.
 Six Reasons Mergers & Acquisitions Fail

1. Integration difficulties up and down the two value chains

2. Taking on too much new debt the target firm owes, or to buy
the target
3. Inability to achieve synergy
4. Too much diversification
5. Difficult to integrate different organisational cultures
6. Reduced employee morale owing to layoffs and relocations
 Benefits of Being a First Mover
1. Secure access and commitments to rare resources.
2. Gain new knowledge of critical success factors and
issues.
3. Gain market share and position in the best locations.
4. Establish and secure long-term relationships with
customers, suppliers, distributors, and investors.
5. Gain customer loyalty and commitments.
6. Gain patent protection early.
 Strategic Management in NPOs & SMMEs

Two main differences between nonprofit and

for profit organisations:

• Nonprofits do not pay taxes

• Nonprofits do not have shareholders to provide capital,
and rely on donations and grants
 What Happens Next?

Week 4

• The Internal Assessment - David &

David Chapter 4

• The External Assessment – Chapter 5

Bibliography
David, F. R. and David, F. R. 2023. Strategic Management: A
Competitive Advantage Approach: Concepts and Cases. 17th ed.
Pearson.

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