A business strategy refers to the actions and decisions that a company takes to reach its business goals and be competitive in its industry. It defines what the business needs to do to reach its goals, which can help guide the decision-making process for hiring and resource allocation.
2. 8-2
Strategy Formulation
and Implementation
1. DISCUSS meaning, needs, benefits, approaches
of strategic planning process for MNCs
2. UNDERSTAND tension between pressures for
global integration and national responsiveness; 4
basic international strategy options
3. IDENTIFY basic steps in strategic planning
4. DESCRIBE how MNCs implement strategic plan
5. REVIEW three major functions of marketing,
production, finance used in strategic plan
implementation
6. EXPLAIN specialized strategies for emerging
markets and international new ventures
3. 8-3
Strategic Management
• Strategic Management: the process of determining
an organization’s basic mission and long-term
objectives, then implementing a plan of action for
pursuing the mission and attaining objectives
4. 8-4
Strategic Management
• Growing need for strategic management related to
increasingly diversified operations in continuously
changing international environment
5. 8-5
Benefits of Strategic Planning
• 70 percent of 56 A.U MNC subsidiaries had
comprehensive 5 to 10-year plans according to
one study
• Evidence for effectiveness of planning is mixed.
Strategic planning does not always result in higher
profitability
6. 8-6
Benefits of strategic management
• Establish the mission
• Formulate philosophy
• Establish policies
• Setting objectives
• Developing strategy
• Plan the organizational
structure
• Provide personnel
• Establish procedures
• Provide facilities
• Provide capital
• Set standards
• Establish programs
and plans
• Control information
• Activate people
7. 8-7
STRATEGIC MANAGEMENT
Types Of Strategies
• Strategy
– a comprehensive plan guiding resource
allocation to achieve long-term organization
goals.
• Strategic Intent
– focuses organizational energies on achieving a
compelling goal.
• Competitive Advantage
– operating in successful ways that are difficult to
duplicate
8. 8-8
TYPES OF STRATEGIES
Corporate Strategies
• Corporate Strategy
– Sets long-term direction for the total enterprise
• Business Strategy
– Identifies how a strategic business unit or
division will compete in its product or service
domain
• Functional Strategy
– Guides activities within one specific area of
operations
10. 8-10
TYPES OF STRATEGIES
Growth And Diversification Strategies
• Growth Strategy
– Expansion through current operations
• Concentration
– Expansion within an existing business area
• Diversification
– Expansion occurs by entering new business
areas
• Vertical Integration
– Expansion by acquiring existing suppliers or
distributors
11. 8-11
TYPES OF STRATEGIES
Restructuring and Retrenchment Strategies
• Retrenchment
– Changes operations to correct weaknesses
– Liquidation
•An extreme form of retrenchment wherein the
business closes and sells off its assets
• Restructuring
– Reduces the scale or mix of operations
• Downsizing
– Decreases the size of operations
• Divestiture
– Sells off part of the organization to focus on core
businesses
12. 8-12
Steps to strategic management
• Environmental analysis
• Establish organizational direction
• Strategy formulation
• Strategy implementation
• Strategic control
