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Business Strategy

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Business Strategy Content Types of strategy SWOT Decision making to meet objectives Decision trees Corporate plans Contingency planning Strategy A strategy is the ... – PowerPoint PPT presentation

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Title: Business Strategy


1
Business Strategy
2
Content
  • Types of strategy
  • SWOT
  • Decision making to meet objectives
  • Decision trees
  • Corporate plans
  • Contingency planning

3
Strategy
  • A strategy is the businesses long term plan
  • Strategies help businesses achieve their aims and
    objectives

4
Devising strategies
  • Devising a strategy depends on a number of
    factors
  • The number of markets they will compete in
  • If it will be UK only or international
  • The products and services that the business
    offers

5
Types of Strategy
  • Niche strategy concentrate on a small segment
    of the market that might be specialist
  • Mass market strategy aim products at the entire
    market

6
SWOT
  • Businesses use SWOT analysis to assist them in
    choosing business strategies
  • SWOT
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
  • Strengths and Weaknesses are internal to a
    business
  • Opportunities and Threats are external factors

7
SWOT
  • Strengths are things a business is good at /
    areas of expertise
  • Weaknesses are things a business is poor at
  • Opportunities are areas that a firm could develop
  • Threats are factors that could damage the firm

8
SWOT
  • By conducting a SWOT analysis you are able to
    understand the firms position and the market
    position
  • By doing this you are helping the planning
    process
  • It allows a business to think about future
    strategies
  • To be effective businesses need to be honest when
    identifying both their strengths and weaknesses

9
Decision Making To Meet Objectives
  • Strategic decisions are linked to the achievement
    of business aims
  • Tactical decisions are linked to the future
    achievement of aims
  • Strategic decisions tend to be longer term

10
Making A Decision
  • Scientific decision making gathering data and
    analysing it to make a decision
  • This is a rational and logical approach
  • Managers may also make decisions based on
    experience, hunches, gut feeling and intuition
  • Effective decision making is often a combination
    of all of these methods

11
Decision Trees
  • These are mathematical models that can be used by
    managers to aid decision making
  • They allow the manager to answer a number of
    questions which will steer them towards an answer
  • Decision trees allocate probabilities and
    estimated benefits to each outcome

12
Decision trees and expected value
  • Each decision is then allocate an expected
    value
  • Expected value is calculated by taking a weighted
    average of the outcomes considering the
    probability of each one
  • Expected value (probability1 x outcome1)
    (probability2 x outcome2)

13
Advantages and Disadvantages of using decision
trees
  • Advantages
  • Allows management to consider all options and
    their probable outcomes
  • Makes managers quantify the impacts of all
    decisions
  • Allows for decisions to be compared
  • Disadvantages
  • Estimations are used for probabilities and
    financial consequences of outcomes these may be
    inaccurate
  • Only consider financial and quantifiable data

14
Corporate Plans
  • Corporate plans are documents that set out what a
    business is trying to achieve and how it will do
    this
  • Corporate plans include
  • Objectives
  • Strategy
  • From the overall objectives / strategy businesses
    are able to devise objectives / strategy for each
    functional area

15
Advantages and Disadvantages of Corporate Plans
  • Advantages
  • Planning provides focus for the organisation
  • It makes managers consider the businesses
    strengths and weaknesses
  • Disadvantages
  • The plan may become outdated, therefore a
    flexible approach to planning is better

16
Contingency Plans
  • These are preparations for unlikely events
  • Need to consider what events to prepare for and
    which resources to put into contingency planning
  • Managers need to look at
  • The likelihood of a specific event occurring
  • The potential damage if the event did occur
  • The higher the likelihood and potential damage
    the more likely a firm is to plan for it

17
Summary
  • Niche strategies are focused on a specific market
    segment
  • Mass market strategies are concerned with the
    entire market
  • SWOT analysis looks at internal factors
    (strengths and weaknesses) and external factors
    (opportunities and threats) to formulate future
    strategies
  • Scientific decision making is based on the
    rational analysis of evidence
  • Decisions are also made on experience, hunches
    and intuition
  • Decision trees are an aid to decision making
    using mathematical models
  • Decision trees give expected values to decisions
    to allow managers to make comparisons
  • Corporate plans quantify the corporate objectives
    and strategy for the business and objectives and
    strategy for the different function areas
  • Contingency planning looks at what will happen in
    a disaster
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