IB Business & Management Topic 6 – Strategy HL ONLY

Understand the meaning of business strategy and strategic management Discuss the three key elements of the strategic framework – Strategic analysis, Strategic choice, Strategic implementation Recommend and evaluate business strategy in a variety of business contexts

Strategic Choice The centre of strategy formulation Strategic choice is concerned with the identification of different strategic options and deciding between them Strategic choice – identifying strategic options, evaluating them and then choosing between them

Strategic Choice Process is aided by a number of techniques: – Decision making tools (Fish bone etc) – Forecasting future market changes (Sales forecasting etc) – Future options available to a business (core competencies etc) – Target setting and benchmarking, especially against competitors' (Return on investment etc)

Typical corporate plan 1.The overall objectives of the organisation within a given time frame – perhaps 3-4 years. These could be….profit, sales growth, market share 2.The strategy \ strategies to be used to attempt to meet these objectives. EG Achieve sales growth business could consider choices as analysed by Ansoff’s Boston matrix 3.Main objectives for the key departments of the business derived from the overall objective

Corporate Plans Potential benefits Planning several years ahead, senior managers have a clear focus an sense of purpose, strategies should help them achieve this Can communicate this purpose and focus to all managers and staff below them to ensure effectiveness of plan ‘Control and review’ process Actual planning process, useful exercise – considering businesses strengths \ weaknesses Potential limitations Plans are great if nothing else changes Unexpected internal \ external changes Need to be flexible as inflexibility will be punished

“Organizational effectiveness does not lie in that narrow minded concept called rationality. It lies in the blend of clearheaded logic and powerful intuition.” Henry Mintzberg

Criticised the practice of traditional corporate planning as mechanical and repetitive Not at all suited to modern dynamic environments Maintained that strategy often emerges over time in response to events rather than being formally planned Do you agree? Why?

The value of corporate plans Despite Mintzberg’s criticisms, there are very few businesses without a formal planning process Plan is not just for senior management, its essential to share contents with – Potential investors when share sale is considered – Major lenders to the organisation – Other stakeholder groups – All staff

Main influences of a corporate plan Internal Financial resources Operating capacity Managerial skills and experinece Staff numbers and skills Culture of the organisation External Macro economic conditions Central bank and government economic policy changes Likely technological changes Competitors’ actions

Complete the question on the sheet Try and do this on your own without your notes, if you really struggle, use your notes but write on your paper NOTES USED Peer assessment