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Lecture 4

The document introduces key business concepts including objectives, strategy, and tactics, emphasizing the importance of measurable goals aligned with an organization's mission. It discusses analytical frameworks like PESTLE, SWOT, and Porter's Five Forces for assessing internal and external factors affecting businesses. Additionally, it outlines management by objectives (MBO) as a method for aligning employee performance with business goals.

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7 views

Lecture 4

The document introduces key business concepts including objectives, strategy, and tactics, emphasizing the importance of measurable goals aligned with an organization's mission. It discusses analytical frameworks like PESTLE, SWOT, and Porter's Five Forces for assessing internal and external factors affecting businesses. Additionally, it outlines management by objectives (MBO) as a method for aligning employee performance with business goals.

Uploaded by

sardormuminov3003
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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INTRODUCT

ION TO
BUSINESS
AND
MANAGEME
NT
MODULE

Week 4:
Business
Objectives
and Strategy
LEARNING
OUTCOMES
1.Understand the PESTLE,
SWOT and Porter’s Five
Forces analysis
frameworks for assessing
external and internal
business factors.
2.Develop strategic thinking
by translating analysis
results into actionable
business objectives.
3.Identify and explain
• In the business context, objectives are specific goals that a business
aims to achieve in order to fulfill its mission and vision. These goals should
be measurable, realistic, and aligned with the overall purpose of the
organization. Objectives also guide decision-making and resource
allocation.
• Example Objective:
Increase market share by 10% within the next year.

Strategy encompasses the overall approach and direction a


business takes to achieve its objectives. It involves making
choices and allocating resources effectively to maximize
long-term success. Strategies consider external factors such as
competition, market trends, and customer preferences.

Tactics are the specific actions and steps a business takes to implement its
strategy and achieve its objectives. Tactics are more short-term and focus
on the practical details of executing the strategy. They involve making day-
to-day decisions and utilizing various resources.
Introducti
•How do on
companies
prepare
themselves to
changes?
•Through analysis.
But what do they
analyse?
•They analyse both
the external
environment as
well as their own
External
Political Forces: Forces
•Outcomes of changes in laws
and regulations, such as the
deregulation of industries, the
privatization of organizations,
and increased emphasis on
environmental protection.
•Increases in laws and
regulations increase the costs Paren
ts
of resources and limit the Age
Gend

uses of resources that er

managers are responsible for


acquiring and using
External
Forces
Economic Forces:
Interest rates,
inflation, unemployment,
economic growth, and
other
factors that affect the
general
health and well-being of a
nation
or the regional
economy of an
organization.
•Managers usually cannot
External
Forces
Sociocultural Forces
•Pressures emanating from the
social structure of a country or
society or from the national
culture.
•Social structure: the
arrangement of relationships
between individuals and
groups in society.
•National culture: the set of
values that a society considers
important and the norms of Paren
ts
behavior that are approved or Age

sanctioned in that society. Gend


er

•Cultures and their


associated social
structures, values, and
External
Forces
Technological Forces:
•Outcomes of changes in
the
technology that managers
use to
design, produce, or
distribute goods and
services.
•Results in new
opportunities or threats
to managers
•Often makes products
Porter’s Five Forces
Porter’s Five Forces model – analyse firm’s
external microenvironment.

•Threat of New Entrants


When new firms enter an industry, they increase
competitive intensity. Greater barriers to entry
reduce this threat.
•Bargaining Power of Suppliers
Strong supplier power can force up prices, cutting
industry profits. Limited supplier power benefits
buyers.
•Bargaining Power of Consumers
Strong consumer bargaining power forces prices
down, reducing profitability. For example,
supermarkets can negotiate low prices from
suppliers.
•Threat of Substitutes
Substitute products, especially technological ones,
can cause a business to lose market share if it
doesn’t keep up with innovation.
•Degree of Competitive Rivalry
Porter’s Five Forces
Porter’s Five Forces model – Smartphone Industry

•Threat of New Entrants:


•Moderate: High capital investment and brand loyalty make entry
challenging. Established players like Apple and Samsung
dominate, but niche brands can still emerge.
Bargaining Power of Suppliers:
•Low to Moderate: While there are many suppliers for
components, key components (like processors and displays) are
controlled by a few major players, giving them some power.
Bargaining Power of Buyers:
•High: Consumers have numerous options and access to
information, making it easy to compare features and prices. Brand
loyalty exists but can be swayed by price and innovation.
Threat of Substitute Products:
•Moderate: Alternatives like tablets and smartwatches exist, but
smartphones are integral for many functions, limiting the threat.
Industry Rivalry:
•High: Intense competition among major brands leads to rapid
innovation, frequent marketing campaigns, and aggressive pricing
strategies.
Porter’s Generic
Porter’s generic strategies show how a company can achieve a competitive advantage in its industry:

•Cost leadership
Strategy
This strategy involves the aim of being the lowest cost producer in the field. To achieve
this, the firm will need to achieve economies of scale, particularly by reducing production
costs and passing those savings on to the consumer. Walmart offers low prices daily
•Differentiation
This will involve the firm in producing a range of goods that is either different, or
perceived as different from that of the competition. Apple provides unique tech
innovations and produce premium products

•Focus or niche
This involves producing for a particular sector of the market; usually consumers in such a
sector will be prepared to pay a premium for the status of being different. Can be cost
focus or differentiation focus. Aldi, the German discount network of
supermarkets targets budget-conscious shoppers.

•‘Stuck in the middle’


A business that tries to adopt all three strategies is unlikely to achieve success. It is
impossible to please all consumers and trying to achieve everything suggests that there
is no strategy at all.
Management by
objectives (MBO)
Management by objectives (MBO) is a system by which
managers and employees define and agree a series of objectives
for the business. Peter Drucker worked on the system and outlined
the term ‘management by objectives’. The process has to involve
measuring the employees’ performance against the standard set
and, ideally, it should include the employee from the outset,
particularly in setting targets.

Advantages of MBO: Improves motivation, enhances


communication, aligns goals, and increases goal acceptance.

Disadvantages of MBO: Can prioritize goals over planning,


requires a holistic view, and may result in poor quality output.
SUMMA
RY
1.Understand the PESTLE,
SWOT and Porter’s Five
Forces analysis frameworks
for assessing external and
internal business factors.
2.Develop strategic thinking
by translating analysis
results into actionable
business objectives.
3.Identify and explain
Porter's Generic
HOMEWO
RK

•CHATPERS 7
THANK
YOU FOR

ATTENTI
ON

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