Business Strategy Essentials You Always Wanted To Know

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Business Strategy Essentials You Always Wanted To Know prepares new managers and leaders with building blocks of strategy. You will learn how to define strategy and how strategy differs at different levels of an organization. Identifying your company’s current strategy and then being able to execute possible appropriate strategies is a key thing you will learn reading this book. You are given tools to assist you with some of the more challenging aspects of strategy such as environmental scanning, SWOT analysis, and strategy analysis.After you have learned how to execute some of these strategies, you will learn what organization structures fit best with specific strategies. These timeless elements of strategy will provide you the fundamentals with a 21st century point of view.
Business Strategy Essentials You Always Wanted To Know gives you a look into the world of strategic management and some of its key elements.  When you have completed reading this book you should be able to:
  • Define strategic statements in an organization, understand its functions and elements
  • Understand industry life cycles and industry structures
  • Understand Porter’s Five Forces and its effect on strategic analysis and development
  • Understand strategy formulation and strategy levels
  • Understand strategy execution do’s and don’ts
  • Read case studies and identify salient points
This Self-Learning Management Series intends to give a jump start to working professionals, whose job roles demand to have the knowledge imparted in a B-school but haven’t got a chance to visit one. This series is designed to address every aspect of business from HR to Finance to Marketing to Operations, be it any industry. Each book includes basic fundamentals, important concepts, standard and well-known principles as well as practical ways of application of the subject matter. The distinctiveness of the series lies in that all the relevant information is bundled in a compact form that is very easy to interpret.
Table of Contents
1. Introduction to Business Strategy
    Definition and Features
    Strategic Statement
    Strategic Management Influences
    Who’s Who of Strategic Management
2. Understanding Industry
    Industry Life Cycle
    Industry Structure (Porter’s Five Forces)
    Case Study
3. Processes and Phases in Strategy Management
    Environmental Scanning
    Case Study
4. External Analysis
    Environments - General
    Environments – Competitive
    Case Study
5. Formulation of Strategy
    Strategy Levels
6. Corporate Level Strategy
    Diversification Levels
    Creating Value with Diversification
    Value Neutral Diversification
    Value Reducing Diversification
7. Mergers and Acquisitions
    Increasing Market Power
    Barriers to Entry
    Cross Border Acquisitions
    Producing New Goods and Speediness to Market
    New Products are Higher Risk
    Reforming Scope
    New Capabilities
    What Makes an Acquisition Successful?
    Case Study
8. Execution of Strategy
    Structure of Organization
    Vertical Growth
    Horizontal Growth
    Alternative Structural Forms
    Evaluating Organizational Structure
    Executing Strategic Change
Bisac code
BUS063000 BUSINESS & ECONOMICS / Strategic Planning
BUS107000 BUSINESS & ECONOMICS / Personal Success
BUSINESS & ECONOMICS / Planning see Strategic Planning
Sample from the book
Threat of New Entrants
What level of threat do new competitors present to existing organizations in the industry? This is the question we ask when we are considering the threat of entry of new competitors. If it is easy for new competitors to enter the market, the threat to existing organizations is high. Increased production capacity without an increase in consumer demand translates to less profit for organizations. New competitors can affect market share, product quality, and price levels detrimentally. If there is a high threat, the industry can become more competitive and decrease potential profit with organizations existing in the industry. The reverse is also true. A low threat can reduce competitiveness of an industry and increase potential profit. To reduce the threat of new organizations entering the industry, barriers to entry into the industry must increase.
Increased economies of scale can increase the barriers to entry. This means that the costs savings gained by an increased level of production is disproportionate. Industry leaders that have highly specialized products or high brand loyalty can increase the barriers to entry as well. Another barrier is large upfront capital investments needed to enter into the industry. When the switching costs for consumers is high, the threat of a new organization entering the market is low. Other barriers include impeded access to desired locations and patented technology or production material inputs.
Again, the reverse of all of the items listed above will decrease barriers and result in a high level of threat of entry of new organizations. These include:
a) No economies of scale
b) Standardized products
c) Low upfront capital investment
d) Consumer switching costs are low
e) Distribution channels are easily accessible
f) No advantage to a specific locale
g) No advantage to proprietary assets
Another factor that can affect entry into an industry is governmental regulations and policies. For some industries, the government actually polices the number of new entrants and existing organizations using regulations and licensing requirements. A great example of this would be the creation of a new hospital, skilled nursing facility, or outpatient surgery center. The government requires certain licensing and approval to build any of these facilities.
Substitute Products
When a product is available that a buyer can purchase instead of the industry’s product, there is a threat of a substitute product. Substitute products are from another industry and they offer comparable advantages to the industry’s offering. If a consumer buys a substitute product, they are influencing the organizations as well as the industry’s ability to profitable. This can also cause the industry to become more competitive and there for reduce the potential for profit. The inverse is also true. If there are not any close substitute products, the industry becomes less competitive and more profitable.
There is a high-level threat from substitute products when:
a) Low consumer costs for switching
b) Substitute product costs the consumer less
c) Substitute product is equal or higher quality
d) Substitute product’s utilities, qualities, or performance are equal or higher quality
When any of these items are occurring, profitability in the industry reduces as well as profitability at the individual organization. Consumers have switched their buying to another industry all together, so the alternative industry and organization are seeing the profits.
As with the other threats, the opposite is also true. There is a low-level threat from substitute products when:
a) Consumer costs for switching are high
b) Substitute product costs the consumer more
c) Substitute product is lesser quality
d) Substitute product’s utilities, qualities, or performance are lesser quality
When this is occurring in an industry, profits can remain with the individual organizations and inside the industry because consumers are not buying the alternative.
Buyer Bargaining Power
The bargaining power of a buyer refers to the influence consumers have on businesses to require them to provide higher quality solutions, better customer service, and lower prices. Buyers exert this influence by playing one organization against the other. The competitive environment and profitability in the industry is affected by the power of buyer bargaining. Sellers are pressured to reduce prices, increase quality, and offer more and improved services. To meet these demands, there are costs to the seller. Therefore, if the buyer is strong, they can reduce the potential profit for the seller and increase competition in the industry. If the buyer is weak, the opposite is true. The industry competition reduces and profit potential increases.
What factors determine the buyer’s bargaining power? First, if there are more sellers than buyers, the buyer has the upper hand and therefore the bargaining power. If the switching costs for a buyer are low, the buyer has more bargaining power. If the consumer can somehow make the product themselves, their bargaining power is increased. Other factors affecting bargaining power include buyer price sensitivity, product education, large volume purchases, and substitute products can be purchased.
On the other hand, the opposite of these items reduces the buyer’s bargaining power. So, the buyer’s bargaining power is low when:
a) More buyers than sellers
b) Switching costs are high
c) Buyers cannot produce the product themselves
d) Little price sensitivity
e) Buyers are uneducated
f) Consumers buy specialized products
g) No substitute products
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