IB Business & Management Topic 6 – Strategy HL ONLY

Learning Objectives Understand the meaning of business strategy and strategic management

Business Strategy Getting from where we are now to where we want to be in the future Business Strategy – A long term plan of action for the whole organisation Strategic Management – The role of management when setting long term goals and implementing cross functional decisions that should enable a business to reach these goals Tactic – Short term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy

Elements of the strategic framework Mission and objectives Assessing the current position – Where are we now and where do we want to be? Strategic analysis Three key stages Setting the company’s mission, vision and obj’s – New direction for the business requires key decisions Strategic choice Integrating, coordinating, allocating resources, evaluating success – Outcome should be measured against original obj’s Strategic implementation Control and evaluation

Watch the following Coca Cola clips (part 1 and part 2) and see if you can identify the three key stages of the strategic framework Youtube the coca cola clipq

Strategy hierarchy Strategic management is the highest level of managerial activity Corporate Strategy The overall strategy development for the whole corporation Business Strategy Separate business divisions of a large corporation – product or geographical market business units – form strategies to achieve and sustain competitive advantage. If successful, the corporate strategy is also likely to succeed Functional Strategies These plans are limited to the department's own functional responsibilities such as product development strategies, marketing strategies and HR strategies

Tactical Decisions Tactics Concerned with making smaller scale decisions aimed at reaching more limited and measurable goals, which are part of the longer term strategic aim Tactical Decisions To sell products in different sized packaging Short – medium term Taken by less senior mangers Impact is often only on one department

Business Strategy & Competitive Advantage Because of globalisation, business’s now need to compete with not just domestic competitors but with competitors across the globe These competitors will have either Lower costs Differentiated products Michael Porter – argues that these are the two main factors that can lead to competitive advantage We saw this in Unit 1

Core Competencies Hamel and Prahalad – developing core competencies can gain competitive advantage over other firms in the same industry Core competence – an important business capability Core product – product made from a business’s core competencies, but not for final consumer / end user

Core Competencies A core competence should: Provide recognisable benefits to consumers Not be easy for other firms to copy Be applicable to a range of different products and markets