This document provides an overview of key concepts in business strategy and strategic planning. It discusses frameworks for analyzing the external business environment, such as the PESTEL and Five Forces frameworks. It also covers internal organizational analysis and stakeholder analysis. Key strategic planning concepts summarized include the Ansoff Matrix, the Boston Consulting Group matrix for classifying business units, and the importance of understanding stakeholders' needs, priorities, and sources of power within an organization.

1. Business Strategy
Session 4

2. Review
• The Process of Strategic Planning-Wk.1-3
• How to formulate a Strategy-Wk.4-6
– Stakeholders
– Environmental Analysis
– Organisational Analysis/Audit
– Strategic Positioning

4. PESTEL Framework
Political Economic
Social Technological
Environmental Legal
2-4

5. The PESTEL Framework
2-5

6. Exhibit 2.2 The Five Forces Framework
Potential
entrants
Competitive
Suppliers Buyers
rivalry
Substitutes
2-6

7. The Threat of Entry: Barriers to Entry
Scale and experience
Access to supply and distribution channels
Expected retaliation
Legislation or government action
Differentiation
2-7

8. Why Are Substitutes a Threat?
Substitutes can reduce demand for a
particular class of products as
customers switch to alternatives.
• Price/performance ratio
• Extra-industry effects
2-8

9. The Power of Buyers
Are buyers concentrated?
What are the costs of switching?
Does backward vertical integration exist?
2-9

10. The Power of Suppliers
Are suppliers concentrated?
What are the costs of switching?
Does forward vertical integration exist?
2-10

11. Degree of Competitive Rivalry
• Competitor balance
• Industry growth rate
• High fixed costs
• High exit barriers
• Low differentiation
2-11

13. Exhibit 4.7 Stakeholders of a
Large Organisation
4-13

15. Exhibit 4.9 The Power/Interest Matrix
4-15

16. Questions Addressed with Stakeholder Mapping
• In determining purpose and strategy, which stakeholder
expectations need to be most considered?
• Do the actual levels of interest and power reflect the
corporate governance framework?
• Who are the key blockers and facilitators of strategy?
• Is it desirable to reposition certain stakeholders?
• Can level of interest or power of key stakeholders be
maintained?
4-16

17. What is Power?
Power is the ability of individuals or
groups to persuade, induce, or coerce
others into following certain courses of
action.
4-17

18. Sources of Power
Within Organisations
Hierarchy
Involvement Influence
Control of Control of
human strategic
resources Knowledge
resources
possession
4-18

20. Stakeholders
• A stakeholder is a group or an
individual who has an interest in
what the organization does or an
expectation of the organization

21. Stakeholders’ Needs
• It is important that an organization
understands the needs of the
different stakeholders

22. Categories of Stakeholder
• Internal, Connected and External
Internal stakeholder
They are immediately connected with the
organization and their objectives are
likely to have a strong influence on how
it is run
They include employees, managers and
directors

23. Categories of Stakeholders
Connected stakeholder
Viewed as having contractual
relationship with the firm
They include shareholders, customers,
suppliers and finance providers

24. Categories of Stakeholder
External stakeholder
Includes the government, local
authorities, pressure groups and
community at large.
This group will have quite diverse
objectives and have varying abilities
ensure that organization meets their
objectives

25. Stakeholder Priorities
•Key players: strategy must be
acceptable to them.
These are the people
you must fully engage with,
and make the greatest efforts
to
•Keep satisfied: They must be
treated with care. They are
capable of being key players.
e.g. Large institutional
shareholders

26. Stakeholder Priorities
• Keep informed: don’t have great ability to influence strategy
but their views can influence powerful stakeholders. Keep
these people adequately informed, and talk to them to ensure
that no major issues are arising. These people can often be
very helpful with the detail of your project. Example could be
community representative or charities
• Minimal effort: keep these people adequately informed, and
talk to them to ensure that no major issues are arising. These
people can often be very helpful with the detail of your
project.

27. Understanding Stakeholders
• What financial or emotional interest do they have in
the outcome of your work? Is it positive or negative?
• Who influences their opinions generally, and who
influences their opinion of you
• What motivates them most of all?
• What information do they want from you?
• How do they want to receive information from you?
What is the best way of communicating your message
to them?
• What is their current opinion of your work?

28. Understanding Stakeholders
• A very good way of answering these
questions is to talk to your
stakeholders directly – people are
often quite open about their views,
and asking people's opinions is often
the first step in building a successful
relationship with them.

30. Recap- Core competence
• Stick to what your good at
• It will give you the best competitive advantage
• Core Competencies are not seen as being
fixed. Core Competencies should change in
response to changes in the company's
environment. They are flexible and evolve
over time. As a business evolves and adapts to
new circumstances and opportunities, so its
Core Competencies will have to adapt and
change.

31. Recap- What is Strategic intent?
• This is simply the companies vision which we
have already looked at.
• What is the purpose:
– The logic, uniqueness and discovery that make
your strategic intent come to life are vitally
important for employees.
– They have to understand, believe and live
according to it.

32. Recap- What is strategic planning?
• Definition- is the process of designing a series
of steps, or actions, which will be taken in
order to achieve a particular objective. Looks
at things needed including people.

33. Recap-The Ansoff Matrix
1. Market penetration is?
existing markets, existing products: Market
penetration occurs when a company enters a
market with current products.
1. The best way to achieve this is by gaining
competitors' customers
2. attracting non-users of your product
3. convincing current clients to use more of your
product/service through advertising or other
promotions.
Market penetration is the least risky way for a
company to grow.

34. Recap- The Ansoff Matrix
• Diversification is…?
• new markets, new products: Companies that
dominant in one specific market can branch
out into new markets to provide a new line of
products that differ from their existing stock.
This results in a company entering new
markets where it had no presence before.

36. Recap- what is this?

37. • RECAP- A Stars is.....................................
• Stars may turn into cash cows, but only if the
market for the product stabilises at a high
market share. The classic example of a recent
product that was a Star and has become a
Cash Cow is the Apple IPod, along with ITunes.
Other examples of Stars include the Toyota
Prius, in the hybrid car category, and most 3G
mobile phone services.

38. • RECAP- A Question marks/problem child is...
• In the mid 80's jeans were out of fashion, but
the market for teenage clothes was growing
fast. Levis re-launched their jeans, led by
advertising for 501s, which had never been a
style of jean worn for fashion. Within a few
months sales has increased by a factor of 10,
the product was a star. The TV adverts used
pop songs as soundtrack, starting a trend
which is still popular in marketing 25 years
later