In A Level Business, Paper 4 of Cambridge Examinations the widely tested concepts are of the business strategies like Ansoff Matrix, Force Field Analysis, Decision Trees, Porter’s Five Forces Models, SWOT and PESTLE Analysis. These concepts are the building blocks for analyzing the current business situation and developing the strategy based on the scenarios. The Topic, Introduction to Business Strategy at A2 Business is one of the most important areas which a student can’t afford to skip. Let’s dive into the basics;
Table of Contents
Topic Key Objectives for Learners
- Define Business Strategy and explain its purpose as the long-term plan for achieving corporate objectives.
- Define Strategic Management as the process of developing and implementing a strategy.
- Analyze the three key stages of strategic management: analysis, choice, and implementation.
- Explain the importance of objectives as the starting point for strategic decision-making.
Topic Definitions
| Term | Definition |
| Strategy | A long-term plan to achieve the objective of a business. It involves asking “big questions” like, “Which markets and products do we want to be in?”. |
| Strategic Management | The process of developing and implementing a strategy. It is the highest level of managerial activity. |
| Strategic Analysis | The first stage of strategic management, involving the assessment of the current position of the company in relation to its market, competitors, and the external environment. |
| Strategic Choice | The stage where managers take important long-term decisions to push the business toward its objectives. It involves analyzing benefits and limitations of different options. |
| Strategic Implementation | The stage of allocating sufficient resources to put strategic decisions into effect. Without this, there can be no effective change. |
| Tactics | Short-term actions needed to implement the strategy. They are concerned with smaller-scale decisions aimed at reaching limited, measurable goals. |
Introduction to Business Strategy
1. Meaning and Purpose of Business Strategy
A business strategy is the long-term plan developed to help a business achieve its objectives. It is a clear plan and set of policies that helps a business focus on achieving its aims.
- Role: Strategies ask the big questions and make the big decisions, such as deciding whether to expand operations into retailing. They are necessary to provide integration, direction, and focus across the entire organization.
- Key Features of Strategic Decisions: They are long-term (lasting several years), involve high levels of resources (e.g., finance), are high risk, and are difficult to reverse once resources are committed.
- Influence: Strategy must be influenced by the business’s objectives, available resources, and internal/external analysis. If a business aims for the Triple Bottom Line (TBL), it will pursue different strategies than a business focusing solely on shareholder returns.
2. The Strategic Management Process
Strategic management is the process used by senior management to develop, implement, and review the long-term plan. The entire process is integrated and focuses on achieving pre-set SMART objectives. Without clear objectives, effective decision-making and strategies are impossible. While giving the Introduction to Business Strategy we must be able to understand the differences between all these aspects given below;
| Stages of Business Strategy | Purpose/Focus | Key Questions Answered (Strategic Analysis) |
|---|---|---|
| 1. Strategic Analysis | Assessing the current internal position (strengths/weaknesses) and external environment (opportunities/threats). This stage provides the necessary knowledge before decision-making. | Where is the business now? How might the business be affected by what is happening? |
| 2. Strategic Choice | Taking important long-term decisions that push the business toward its objectives. Managers analyze the benefits, limitations, cost, risk, and potential profit of different options. | Which products should we offer? Which markets should we cater for? |
| 3. Strategic Implementation | Allocating sufficient resources to effectively put the chosen strategy into action. This requires clear communication, motivated staff, effective leadership, and resource provision. | How can we put the strategy into effect? Are resources allocated correctly? |
Key Question!
Introduction to Business Strategy
Imagine a new business, Eco-Bikes, which manufactures electric bicycles. Their primary corporate objective is to achieve 5% market share within three years.
Based on the three stages of strategic management (Analysis, Choice, Implementation), what do you think would be the first crucial piece of information Eco-Bikes needs to gather during the Strategic Analysis stage before deciding on their growth strategy?
You can brainstorm on this question before heading to the next topic. If you are unable to respond to it and need help in answering, feel free to contact Sir Afzal Shad, A Level Business Teacher at BASEL Education Handles of WhatsApp | Instagram | Facebook
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