FOCUS STRATEGY RISKS

FOCUS STRATEGY 1.​ Customer targeted in focus markets may find similar but
cheaper products in broad markets
2.​ Product Differentiation may diminish.
Focus Strategy is a strategic management approach that
3.​ Changes in Standard Product configuration among
allows a company to determine the niche market to target.
competitors
4.​ Fragmentation of the target market
This method requires a business to focus on options such as 5.​ Focus market may not follow the same growth pattern as
how to develop, which market to concentrate into, and how the overall industry market
to sell products in a niche market.
FOCUS STRATEGY FOR STARTUP
The approach helps companies identify which specific
product lines to market, which customer groups to target Digital marketing platforms can help a firm target a specific niche
and what geographical areas to cover. and efficiently address a fragmented target market.

Startups can also take advantage of lower investments and

Focus strategy is concentrating the company's marketing
break-even points compared to larger firms that have high-cost
resources to a narrow and specific segment of the market, to
structures. Because of this, firms may find a focus strategy feasible
develop, market, and sell a specific product to a specific group and find it easy to connect with customers who search the internet
of customers. before making any purchase.

Companies usually opt for the focus strategy alternative to A focus strategy is seen as a necessary condition for a successful
maximize their entry in a specific market segment. e-business competitive-strategy.

Focus strategy helps the business to establish a competitive Scalability and market scope flexibility (the ability to serve
advantage through effectiveness, starting with effectively simultaneously or in quick succession broad markets and very
understanding the specific needs and wants of a well-defined small market niches) are hallmarks of Internet technologies.
customer base. A company can create better and valuable products
when it is able to understand its potential market's needs and Cost focus caters to the price-sensitive market, while
wants. Not only are regular profits generated but customer trust is differentiation focus serves and fulfills the special needs of the
also established. buyers in certain segments.

Customer loyalty is strengthened through the affinity that is

STABILITY STRATEGY
established with the brand. A pleased customer acts as the brand's
ambassador and creates free marketing.
Businesses adopt stability strategies for three main reasons:
1.​ Satisfied with financial performance
FOCUS STRATEGY FOCUSES ON:
2.​ Unfavorable market conditions
1.​ Customer Group - millennials and executive
3.​ Following a long term plan
2.​ Product Range - gluten free or sugar free
3.​ Segment of a market - sports or cruiser bikes
Activities that Businesses should take:
4.​ Program Content - entertainment or documentary
1.​ Take a second look at the way the firm does things.
5.​ Geographical areas - city or provincial
2.​ Invest in talent.
6.​ Service line - consumer or commercial
3.​ Dare to be different
4.​ Don’t overspend.
TWO TYPES OF FOCUS STRATEGY ACCORDING TO
MICHAEL PORTER
Strategies do not need to change every time a firm conducts its
strategic planning sessions.
1.​ Cost Focus - caters the price sensitive market.
2.​ Differentiation Focus - serves and fulfills the special
Constant modifications to strategic directions reflect haphazard
needs of the buyers in certain segments.
planning, lack of focus, or a poor understanding of the market
and forces that affect the business.
FOCUS VS. DIFFERENTIATION STRATEGIES

A business should plan its next level of growth under stable

❖​ Focus Strategy - addressing the needs of one or few
conditions. It's easier to clarify a firm's perspective of its vision and
segments
mission during this period. It may not be immediate, but the ideas
❖​ Differentiation Strategy - standing out in the market
can slowly percolate in time for the firm's next strategic planning
and addressing the needs of one or few segments.
sessions.
 1.​ Achieves economies of scale
GROWTH STRATEGY 2.​ Buying an established and well known brand may be less
expensive
Growth strategy is a plan of action that allows a company to 3.​ Easier international expansion
achieve a higher level of market share than it currently has. 4.​ Reduces competition, increases market share and
customer base, greater control over pricing, increases
It is not necessarily focused on short-term earnings and operates barriers to entry for potential competitors
with the components of goal, people, product, and tactics.
DISADVANTAGES
A growth strategy should include all of the strategic 1.​ Aligning and merging business processes and technology
components and assets that will be required for growth. 2.​ Possible violation of anti-trust and/or monopolistic laws
3.​ Risk of diseconomies of scale
SUCCESS OF THIS STRATEGY DEPENDS ON: 4.​ Requires significant funding and access to capital
1.​ Access to Capital 5.​ Requires considerable financial capacity
2.​ Five Forces of Competition
3.​ External Factors (PESTEL)
TURNAROUND STRATEGIES

GROWTH IS ACHIEVED BY CHOOSING ANY OF THE The turnaround strategy is adopted by an organization when it
FOLLOWING: feels that an earlier made decision is erroneous and requires
immediate correction to avoid further damage to its profitability.
1.​ Market Penetration - This strategy persuades It is backing out from an earlier decision to transform from a
customers to try a product and if they enjoy it, use the loss-making organization to a profit-making entity.
firm's offering rather than that of direct competitors
Continuous losses, poor management, faulty corporate strategies,
2.​ Market Development - A second option is to introduce and persistent negative cash flow are best resolved with the use of
the product to new geographic markets or another turn-around strategies.
market that may benefit from customers other than its
intended use. Causes of Declining Financial Performance

3.​ Product Development - A third option is to cross-sell 1.​ External Factors

or introduce new products to existing customers. By -​ Technological Disruptions
taking advantage of the existing relationship or even -​ Environmental
brand equity, a firm can bundle a new product with -​ Competitive Forces
products that customers regularly purchase. -​ Failing Markets
2.​ Internal Factors
4.​ Diversification - A diversified company is a type of -​ Inefficient Operations
company that owns controlling stakes over several lines -​ Quality issues
of unrelated businesses that operate separately in -​ Productivity
different markets. Diversified companies enter a new -​ Wrong Management Decisions
business (and industry) either through mergers or
acquisitions. STRATEGIES
A.​ REVENUE INCREASING STRATEGIES
Two common types of diversified companies
-​ Market Penetration
1. Conglomerates
-​ Market Development
2. Holding Companies
-​ Product Development
Types of Diversification Strategy B.​ COST CUTTING STRATEGIES
1. Horizontal–diversification Requires decision to reduce or eliminate any or all of the
2. Concentric–diversification following:
3. Conglomerate–diversification ●​ Advertising or Marketing Expense
●​ Representation Expenses
5.​ Horizontal Integration - the acquisition of a firm's ●​ Electrical and Power Usage
direct competitor or the merger of two competitors. The ●​ Executive Salaries
result of the merger consolidates resources, market share, ●​ Equipment Purchases
diversification of products, and reduces competition. ●​ Regular Workweeks

ADVANTAGES
ASSET REDUCTION STRATEGIES 2. Failure to innovate.
When the firm decides to sell non performing assets, 3. Weak or dwindling market demand.
such as: 4. Weak leadership
●​ Idle Land or Buildings
●​ Artworks on Display SUPPLEMENTING THE CHOSEN
●​ Old Equipment
STRATEGIES
●​ Vehicles

STRATEGIC ALLIANCES - It happens when both parties,

DOWNSIZING STRATEGIES
independent of each other, enter a mutually advantageous
These are actions taken by a company to reduce its size, workforce,
partnership to offer new products, enter or expand into new
or operations to improve efficiency, cut costs, or respond to
markets to reach new client segments.
economic challenges.

Joint Venture is a special type of partnership arrangement

EXIT STRATEGIES between two independent business entities that intend to
undertake a particular project.
A business exit strategy is the organization's strategic plan to sell
the ownership in a company to an investor or to another company. Licensing is an agreement where a licensor grants a licensee the
right to use or gain access to its intellectual property rights such as
Divestiture - the sale or disposal of assets, product lines, manufacturing process, brand name, trademark, copyright,
intellectual property rights, or a company subsidiary or division in patent, and technology in exchange for a tee or royalties subject to
exchange for cash or securities (stock ownership in the acquiring specific conditions.
company).
Outsourcing is either the transfer or delegation of a company's
Divernture is clearly different from liquidation or closure. non core business processes to a service provider. Firms outsource
non core functions such as finance and accounting, IT and
Diventure makes the firm stronger while liquidation cashes out on software development, customer support, as well as back- office
the business’ salvageable value. functions.

Liquidation - painful and unpleasant strategy of shutting down a OUTSOURCING PRICING MODELS
company’s operations by selling its remaining assets and
distributing the proceeds to pay off debts. A firm undergoes Full-time equivalent (FTE) - The firm is charged a fixed fee by
liquidation if it becomes insolvent. the service provider for professionals necessary to complete or
augment a project. The firm directly supervises and closely
Insolvency - financial condition of a debtor that is generally unable monitors the project until completion.
to pay its or his liabilities.
Lump-sum price - The firm or project owner defines the project
A firm adopts this strategy for a variety of reasons: specifications while the service provider determines the cost of
labor and other resources necessary and adds a markup. A change
1.​ Sell a losing business to a company capable of order is negotiated if additional requirements are either requested
rehabilitating and strengthening its market position. or because of scope creep.
2.​ Exit its current market and pursue a new strategic
direction. Fixed price plus incentive - It is like a lump-sum price model
3.​ Raise working capital to fund existing or new projects. but the service provider receives an incentive or bonus for meeting
4.​ Refinance or pay off existing debts to strengthen the or exceeding agreed performance standards or early project
balance sheet completion.
5.​ The business no longer has synergies with its core
business. Transaction-based pricing - The service provider only charges
6.​ Focus on the company's core business. the firm's actual transactions.

Corporate Restructuring
IMPLEMENTING A BUSINESS STRATEGY
Corporate restructuring usually follows divestiture. The
STRATEGY - a plan of action designed to achieve a specific goal
remaining business units are aligned to the new strategy as fresh
or long- term objective.
funds are allocated for their intended use.

In a business context, it’s how a company decides to compete,

Reasons for business failure:
grow, and succeed—by making choices about where to focus, how
1.Unforeseen global and economic conditions.
to use resources, and how to respond to challenges or is created by top management, successful implementation requires
opportunities in the market. coordination across all departments, and the process may vary
depending on the industry or organizational culture.
STRATEGY FORMULATION
The value of strategy implementation lies in clearly defining
The process of choosing the best ways to achieve an organization’s policies and communicating them across the organization.
vision and mission. It uses analytical tools to guide how resources Adjustments are made to support employees, especially in
are used efficiently, helping create a business plan that fits the customer and supplier relations. Strategies must be realistic,
company’s financial and sustainability goals. practical, and tailored to available resources. They should be
doable at all levels—especially in key areas like marketing,
A key tool in this process is the SWOT analysis, which looks at a operations, HR, R&D, and IT—to ensure successful change.
company’s strengths, weaknesses, opportunities, and threats. It
helps assess the company’s situation and guides the development In the implementation process, strategies need to be monitored
and implementation of effective strategies. and adjusted to ensure accurate and efficient execution. Evaluation
and control systems are essential to make necessary changes.
Implementing a business strategy begins with understanding the
company’s big picture—its vision, goals, and overall direction. Senior management’s commitment is crucial for success. They
Strategy formulation is the process of choosing the best course of must actively support the process and recognize that lower-level
action to reach those goals. It involves analyzing options and managers may not have the same understanding or urgency.
deciding how the company should move forward. Strategy
formulation is achieved using the model: Middle managers play a key role; their knowledge and involvement
are vital for successful implementation. Including them early in
1.​ ANALYSIS is one of the first steps in strategic the strategy process boosts motivation and acceptance.
implementation. It involves identifying an organization’s
strengths, weaknesses, opportunities, and threats Effective communication is another key factor. A two-way
(SWOT) to guide effective planning and resource use. communication system helps address employee concerns and
ensures they understand new tasks or changes in their roles due to
❖​ INTERNAL ANALYSIS - looks at the organization’s the strategy.
operations—staff performance, client satisfaction, and
available resources. The main goal is to identify the Here are some steps that can help in the transition process as a
organization’s strengths and weaknesses. result of strategy implementation:
❖​ EXTERNAL ANALYSIS - examines outside ●​ Evaluate the strategic plan
factors—like political, economic, social, and ●​ Create a vision for implementing the strategic plan
technological trends—along with competitors and ●​ Select team members to help to implement the strategic
collaborators. This helps identify opportunities and plan Schedule meetings to talk about progress reports
threats that could impact the organization’s goals. ●​ Involve the upper management where appropriate

2.​ ALTERNATIVES - Identifying alternatives means Since SWOT Analysis is a common tool used in strategy
looking at the pros and cons of different strategies. These implementation, here are some strategies created when using
options can be combined or used to improve existing SWOT Analysis:
strategies, rather than starting from scratch. The goal is ❖​ Strength + Opportunities Strategies (SO Strategies)
to find the most effective way to move forward. - are used as attack strategies.
❖​ Strength + Threats Strategies (ST Strategies) - are
3.​ ACTION - Taking action means choosing the best used as defensive strategies.
option based on the current situation and the resources ❖​ Weakness + Opportunities Strategies (WO
available. After careful planning and analysis, the Strategies) - builds strengths for attack strategies.
organization moves forward by implementing strategies ❖​ Weakness + Threats Strategies (WT Strategies) -
through specific activities, tasks, and programs. builds strengths for defensive strategies.

4.​ ASSESSMENT - Assessment involves setting up a

review system to track progress, create controls, and PUTTING STRATEGIES IN ACTION
gather data. This helps guide future decisions and
improve strategies over time. The value of strategic planning is most apparent when analyzing a
company’s situation through management consulting. This
The purpose of Implementation is to put strategies into action to process helps build understanding of consulting and develop the
achieve the organization’s vision and goals. It involves sharing the skills needed to succeed in it.
plan across the organization so everyone is aligned. While strategy
The lesson focuses on the consulting profession, with a particular 3.​ CONDUCT STRATEGY REPORT MEETINGS
emphasis on organizational consulting. It covers the essential skills Strategy review meetings are crucial for assessing progress
needed for consulting careers, as well as for staff or line toward organizational goals. These meetings involve reviewing
management roles involving consultants. performance reports and discussing any adjustments needed to
stay on track with the strategic plan.
Students will become familiar with the phases of a consulting
project: selling the project, entering the client firm, gathering data, 4.​ ADJUST THE COURSE OF ACTION /
diagnosing issues, implementing solutions, and concluding the STRATEGY
engagement. The lesson also explores how consultants collaborate Adjusting the course of action involves making changes based on
with clients, highlighting both similarities and differences in their the current situation. If strategy implementation goes off-track or
approaches. performance measures prove ineffective, they need to be revised to
align better with the goals.
A successful strategy implementation starts with a well-grounded
strategic plan. The plan acts as the company’s roadmap, outlining The steps in strategy implementation are designed to achieve
how it will reach its vision. Typically, companies use a five-year strategic objectives.
window to plan major changes and set goals for the future. Strong
top-level leadership is essential to design the path forward and Leadership is important, as much as resource allocation is crucial.
ensure the necessary resources are available to achieve these goals. Strategy implementation requires an open mindset and a strong
drive to succeed.
Strategic implementation includes the following elements:

• Clear goals - a set of specific objectives that outline what the

organization wants to achieve within a defined time. These goals
should align to form a cohesive plan, with leadership in agreement.

• Key performance measures - metrics that determine whether

the objectives are being met. Effective measures should be
actionable, understandable, and clearly indicate progress.

• Major initiatives - key projects designed to improve

performance and achieve goals. These initiatives could focus on
areas like product/service improvement, staff development,
operational scaling, profitability, sustainability, or infrastructure.
Each initiative must be interconnected and support one another.

Once the strategic plan has been finalized, the next step is to
implement it. Steps are involved in the implementation phase, and
these are:

Determining roles and responsibilities is key to strategic

implementation. Employees must understand how their
individual contributions align with the organization’s goals. It’s
crucial to have the right people in the right roles and keep them
motivated to ensure success at this stage.

1.​ MONITOR PERFORMANCE

Monitoring performance is essential once the strategy is in
motion. It helps track progress and identify whether goals are
being met. Regular performance checks make it easier to take
corrective actions if needed.

2.​ REPORT ON PROGRESS

Reporting on progress involves analyzing the current situation
and documenting key outcomes. The report should highlight
successes and challenges, showing how these impact the
achievement of objectives.