mac2602Topic 1 - Development of strategy.pdf - LECTURE NOTES LECTURER Nizaam Baker MODULE MAC2602 NOTES Shop U21 Stoneridge Centre 1 Stoneridge Drive

mac2602Topic 1 - Development of strategy.pdf - LECTURE...

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LECTURE NOTES LECTURER: Nizaam Baker MODULE: MAC2602 NOTES Shop U21, Stoneridge Centre, 1 Stoneridge Drive, Greenstone Park, Edenvale, Johannesburg, 1610 Postnet Suite #448, Private Bag x10010, Edenvale, 1610 • • Company Registration 2012/018470/0
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2 MAC2602 Russell Jude TOPIC 1: Development of the organisation’s strategy Study unit 1 - Defining concepts Mission The Mission statement defines the core purpose, by broadly stating the reasons why the organisation exists. (Responsibility of the top management) Characteristics : Benefits : Inspires change Describes what the organisation is about Long term Reveals the area in which they operating Easy to understand Provides direction Enables communication of common culture Core values The principles that guides an organisation by describing how every employee is expected to behave.
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3 MAC2602 Russell Jude Characteristics : Guides behaviour Leaders should lead by example The core values don’t change over time Vision statement Defines where the organisation wants to go in the future. Characteristics : Ideal picture of the future Strategy It is about choosing long term activities to achieve the purpose set out in the mission statement and ultimately moving towards realising the vision. Elements : Choice of activities should provide a competitive advantage Trade-offs are made when choosing specific actions as opposed to other actions There can be a change in strategies due to major structural changes in the industry Should display a broad conceptual knowledge of the operating environment Three generally accepted competitive strategies: Cost leadership strategy •Aims to supply standard, no frills, high volume products or services at better prices than competitors. •Stresses that facilities are efficient for their purpose and engage in cost reductions in the manufacturing process. Minimises expenses (eg research and development, selling and advertising). An example is Shoprite Differentiation strategy •Aims to create products or ser vices perceived as uniquely attractive, creative and well-designed. •Aim to gain a reputation for the excellent quality of their products/services, good corporate image, and first- rate marketing channels. Emphasises strong market abilities. An example is Woolworths Pricing strategies •Price skimming: By setting high selling prices for unique products, thereby maximising short-term profits. •Selective pricing: By setting different selling prices for the same product or service in different markets. •Marketing pricing: By setting the selling price for a product or service on the perceived value to the customer •Predatory (penetration) pricing: By setting a low selling price for a product or service in order to gain market share
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4 MAC2602 Russell Jude Strategic objectives Strategic objectives clearly formulate measures of progress and targets to be achieved in a specific time frame Characteristics: Criteria (SMART): Precise formulation of goals Specific Contains measures for progress Measurable Contains a target Attainable Contains a time-frame Relevant Time bound
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