IB Business & Management

1. IB Business & Management Topic 6 – Strategy HL ONLY

2. Learning Objectives • 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

3. The essence of strategy is choosing what not to do Michael Porter

4. 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

5. 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)

6. Key Term • Corporate Plan – A methodical plan containing details of the organisations central objectives and the strategies to be followed to achieve them

7. Typical corporate plan • The overall objectives of the organisation within a given time frame – perhaps 3-4 years. These could be….profit, sales growth, market share • 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 • Main objectives for the key departments of the business derived from the overall objective

8. Corporate Plans Potential benefits Potential limitations Plans are great if nothing else changes Unexpected internal \ external changes Need to be flexible as inflexibility will be punished • 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

9. “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

10. 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?

11. 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 • Potentialinvestorswhen share sale isconsidered • Majorlenderstotheorganisation • Otherstakeholdergroups • Allstaff

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

13. Task • Complete thequestiononthesheet • Try and do thisonyourownwithoutyour notes, ifyoureallystruggle, use your notes butwriteonyourpaperNOTES USED • Peer assessment