MAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study NotesMAC2602 Summarised Study Notes
Study Guide One
Part 1 : Strategy and strategic planning
Topic 1 : Development of the organisation’s strategy
Study Unit 1 : Defining concepts – mission,core values,vision,strategy and strategic objectives
Mission - core purpose
Effective mission statement :
Inspire change ,but does not change
Long-term in nature
Easy to understand and easy to communicate
Core values - principles that guide the organisation
Vision - defines direction for the future
Strategy – choosing long-term strategies to achieve purpose set out in mission statement
Three generally accepted competitive strategies :
Cost leadership strategy
Pricing strategy :
Price skimming
Selective pricing
Market pricing
Predatory (penetration) pricing
Differentiation
Elements of strategy :
Choice of activities which provide a competitive advantage
Trade-offs made to choose specific actions
Activities chosen must fit one another
Major structural changes can change strategies,however cannot be constantly
reinvented
Formulation should display a broad conceptual knowledge of the operating
environment of the organisation
Core values are taken into account
Strategic objectives – measures to progress and targets to achieve in a specific time frame
Characteristics :
Precise formulation of goals to be achieved
Contains a measure of progress
Contains a target to be achieved
Contains a time frame for target to be achieved
SMART criteria :
Specific
Measurable
Attainable
Relevant
Time-bound
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Study Unit 2 : Key stakeholders : roles,conflict and influences
Stakeholders – those persons and organisations that are affected by the organisation's
activities and who have an interest in the strategy of the organisation.
Classification of stakeholders :
Primary Stakeholders (have a contractual relationship)
Internal Stakeholders
o Managers
o Employees
Connected Stakeholders
o Shareholders/owners
o Banks and lenders
o Suppliers
o Customers
Secondary Stakeholders (do not have a contractual relationship)
External Stakeholders
o Government
o Local authorities
o Professional bodies
o Pressure groups
o Community at large
Possible conflicts between the expectations of the different types of stakeholders -
shareholders/owners expect a specific return on their investment whilst employees expect
security of their jobs and job satisfaction.
Influence of different stakeholders on development of organisation strategy :
Dependency
Degrees of power
Level of interest
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Study Unit 3 : Factors that influence the development of an organisation’s strategy
Influence of Factors in the external environment :
Political (including legal) environment
Economic environment
Social environment (sustainability and ethics)
Technological environment
Competitive Environment (operating) :
Customer position
Purpose of a competitor analysis :
o Study the market,trends and patterns
o Predict and forecast an organisation’s demand and supply
o Formulate a strategy
o Increase the market share
o Develop a strategy for organisation growth
o Plan for diversification and expansion
o Study forthcoming trends in the industry
Customer base
Suppliers
Creditors
Labour market
Influence of factors in the internal environment :
Corporate culture (shared beliefs,values and symbols)
Organisation leadership (executives and managers)
Human resource policies (formal decisions)
Industrial relations (Labour relations)
Controls at organisation level (such as code of conduct)
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