CHAPTER 2
Strategies in Action
"Strategies in Action" refers to the practical implementation of strategic plans within an
organization. It encompasses the processes, activities, and initiatives that organizations undertake
to translate their strategic vision into tangible results. This concept involves not only the
formulation of strategies but also their execution, monitoring, and adjustment in response to
changing circumstances.
Effective strategies in action require a clear understanding of organizational goals, market
dynamics, and internal capabilities. They involve aligning resources, managing change, and
ensuring that all stakeholders are engaged and informed throughout the process. Ultimately,
strategies in action aim to achieve competitive advantage, drive growth, and fulfill the
organization's mission and objectives.
2.1 Types of Strategies
In strategic management, various types of strategies are employed to achieve organizational
goals. Broadly, strategies can be classified into three categories: corporate, business, and
functional strategies. Corporate strategies focus on the overall scope and direction of the
organization, determining the mix of businesses and markets in which the company will operate.
Business strategies, on the other hand, are concerned with how to compete successfully in
particular markets. This involves decisions about product offerings, pricing, and marketing.
Functional strategies support these broader strategies by outlining how various departments, such
as marketing, finance, and operations, will contribute to the overall objectives.
In addition to these classifications, companies may also adopt growth, stability, or retrenchment
strategies depending on their current position and market conditions. Growth strategies are aimed
at increasing the organization's size and market share, possibly through mergers, acquisitions, or
new product development. Stability strategies are often employed when a company is satisfied
with its current position, focusing on maintaining performance without significant changes.
Conversely, retrenchment strategies become necessary when a company needs to cut back its
operations due to financial difficulties or market changes, often leading to downsizing or
divesting non-core activities.
Understanding the types of strategies enables organizations to tailor their approach to different
situations, ensuring that they remain competitive and responsive to changes in the marketplace.
By aligning their strategic choices with their internal capabilities and external environment,
companies can maximize their chances for success.
2.2 Guidelines for Pursuing Strategies
When pursuing strategies, organizations must follow several guidelines to ensure effective
implementation and success. First, it is crucial to conduct a thorough analysis of the internal and
external environments. This involves assessing strengths, weaknesses, opportunities, and threats
(SWOT analysis) to understand the organizational context and market dynamics. A clear
understanding of these factors allows firms to align their strategies with their capabilities and
market needs, enhancing the likelihood of successful outcomes.
Second, setting clear, measurable objectives is essential. These objectives should be specific,
attainable, relevant, and time-bound (SMART), providing a framework for evaluating progress
and performance. Establishing such objectives helps in mobilizing resources effectively and
measuring the success of strategic initiatives. Additionally, involving key stakeholders in the
strategizing process fosters buy-in and commitment, which is vital for overcoming resistance to
change and achieving strategic goals.
Finally, effective communication and continuous monitoring are crucial throughout strategy
implementation. Organizations should ensure that all employees understand the strategic
direction and their role in achieving it. Regularly reviewing progress against objectives allows
for timely adjustments to strategies as needed, ensuring that the organization remains agile and
responsive to emerging challenges and opportunities in the business environment.
2.3 Michael Porter’s Generic Strategies
Michael Porter introduced the concept of generic strategies, which outlines three primary
approaches to gaining competitive advantage: cost leadership, differentiation, and focus. Cost
leadership involves becoming the lowest-cost producer in an industry, allowing a company to
offer lower prices than competitors. This strategy requires efficient operations, economies of
scale, and tight cost control. By achieving cost leadership, a company can attract price-sensitive
customers and increase market share, ultimately leading to higher profitability.
Differentiation, on the other hand, focuses on offering unique products or services that stand out
in the marketplace. Companies employing this strategy aim to create a perception of value
among customers, justifying premium pricing. Successful differentiation can be achieved
through superior quality, innovative features, exceptional customer service, or strong branding.
This strategy requires continuous investment in research and development, marketing, and
customer engagement to maintain the perceived uniqueness of the offerings.
The third generic strategy, focus, involves targeting a specific market segment, either through
cost leadership or differentiation within that segment. By concentrating on a niche market,
companies can tailor their offerings to meet the unique needs of that audience more effectively
than competitors serving a broader market. While this strategy can lead to significant advantages
in specialized markets, it also requires a deep understanding of the target segment and the ability
to respond rapidly to its changing preferences
Chapter 3: The Business Vision, Mission, and Objectives
3.1 Defining Vision and Mission of an Organization
3.1.1 What is Vision?
A vision is a forward-looking statement that defines the desired future state of an organization. It
encapsulates management’s aspirations and strategic direction, serving as a source of inspiration
and motivation. A compelling vision provides clarity, aligns efforts, and fosters a shared purpose
among stakeholders.
3.1.2 What is Business Mission?
A business mission defines the fundamental purpose of an organization, articulating why it exists
and what it aims to achieve. It provides a broad statement about the organization’s core purpose,
guiding principles, and operational focus. A clear mission helps shape strategies and decision-
making processes.
3.2 How are Mission Statements Formulated?
Mission statements are formulated through collaboration among stakeholders, often led by top
management. They should reflect the organization's core values and purpose and be periodically
reviewed to ensure relevance as the organization evolves.
3.3 Organizational Objectives and Goals
Objectives and goals are essential for achieving the mission.
Goals: General, broad statements of desired outcomes.
Objectives: Specific, measurable actions to achieve those goals, ideally framed as
SMART (Specific, Measurable, Attainable, Relevant, Time-bound).
Characteristics of Effective Objectives:
Clear and Understandable: Easily grasped by all stakeholders.
Concrete and Specific: Clearly defined to guide actions.
Time-bound: Linked to a specific timeframe.
Challenging yet Achievable: Set at realistic levels to motivate.
Purpose of Setting Objectives:
Objectives convert the mission into actionable performance targets, guiding resource allocation
and strategic decision-making to fulfill the organization’s goals.
True/False Questions
1. Strategic management involves only the formulation of strategies, not their
implementation.
2. The stages of strategic management include environmental scanning, strategy
formulation, strategy implementation, and evaluation.
3. Corporate social responsibility (CSR) is unrelated to business ethics in strategic
management.
4. According to Michael Porter, there are three generic strategies for achieving competitive
advantage.
5. Guidelines for pursuing strategies are irrelevant once a strategy has been formulated.
Multiple Choice Questions
1. What is the primary focus of strategic management?
o A) Operational efficiency
o B) Long-term organizational goals
o C) Employee satisfaction
o D) Financial accounting
2. Which of the following is NOT a stage in the strategic management process?
o A) Environmental scanning
o B) Strategy formulation
o C) Strategy monitoring
o D) Strategy implementation
3. Which of the following is one of Michael Porter’s generic strategies?
o A) Market Segmentation
o B) Cost Leadership
o C) Customer Retention
o D) Product Diversification
4. What does CSR stand for in the context of strategic management?
o A) Corporate Social Reform
o B) Corporate Social Responsibility
o C) Corporate Strategic Review
o D) Corporate Stakeholder Relations
5. Which type of strategy focuses on becoming the lowest-cost producer in an industry?
o A) Differentiation
o B) Cost Leadership
o C) Focus
o D) Market Expansion
Essay Questions
1. Define strategic management and explain its importance in today’s business
environment. Include examples of how strategic management can influence
organizational success.
2. Describe the stages of strategic management. Discuss how each stage contributes to
the overall success of an organization.
3. Examine the key terms associated with strategic management. Select three key
terms and explain their significance in the strategic management process.
4. Discuss the strategic management approach and how it differs from traditional
management practices. What are the implications of adopting a strategic
management approach for leaders and organizations?
5. Analyze the relationship between business ethics, corporate social responsibility,
and strategic management. How can organizations balance profit motives with
ethical considerations in their strategic planning?
