Business Strategy and Management: Analysis, Choice and Execution
Strategic analysis
Strategy is about long-run direction and scope, achieving advantage in a competitive environment. Use frameworks as thinking tools, not answers: PESTLE for the macro environment, Porter's five forces for industry attractiveness, and value chain and resource-based views (VRIN: valuable, rare, inimitable, non-substitutable) for internal capability. SWOT synthesises these, but exam questions reward the reasoning behind the labels, not the labels themselves.
Choice and competitive strategy
Porter's generic strategies - cost leadership, differentiation and focus - must be pursued consistently; being stuck in the middle is a classic trap. Understand Ansoff's growth matrix (market penetration, development, product development, diversification) and the risk gradient across it. Consider build, buy or ally as methods of development, and portfolio tools such as the BCG matrix as descriptive aids.
Execution and control
Strategy fails in implementation. Know the levers: structure, systems, culture, leadership and incentives. The balanced scorecard links financial, customer, internal process and learning perspectives. Performance measurement should align managers with strategy and avoid dysfunctional behaviour caused by narrow metrics.
Traps and rule of thumb
- Confusing corporate-level strategy (what businesses to be in) with business-level strategy (how to compete).
- Assuming diversification reduces risk automatically; unrelated diversification often destroys value.
- Treating SWOT as analysis when it is only a summary - the marks come from the evidence.
Rule of thumb: for any case, state the strategic issue, apply one framework with case evidence, then recommend a specific action with a rationale and a risk. Worked example: a niche bakery facing supermarket price competition should not chase cost leadership; differentiation (artisan quality, local sourcing) or focused differentiation is coherent with its resources.