BMNG7312 Presentation

BMNG7312PresentationGroup Members:Nsovo MashabaMumsy BaloyiJason BoschKeshav MaharajDorothy MatlhokoStuart Konig

The Strategic Management Process:An organisation chooses its strategy in the development and formulation phase of the Strategic Management Process. This step utilizes the information gathered in the first two phases of the process in order to develop and formulate the most appropriate and best-suited strategy for the organisation.Sustainable Organisation&Strategic DirectionStrategic AnalysisStrategic Development&FormulationStrategy Implementation

Utilizing Business Level Strategies:Kulula Airlines is an example of a South African organisation that uses a cost leadership strategy. This organisation aims to provide its consumers with quality service, while reducing its costs to create a competitive advantage against its competitors by becoming the cost leader in the industry.MiWay Insurance is an organisation that aims at creating a competitive advantage by providing a service that is unique and different from anything its competitors are offering. This is an example of a differentiation strategy.

EasyGroup Hotels utilize the focus strategy in order to create a competitive advantage by focusing their efforts on a smaller but specific niche market. This strategy is used in order to provide a product or service to a very specific type of consumer.

McDonalds is a fast-food organisation that has successfully created a competitive advantage by lowering its costs to become the cost leader in the industry. A clear example of a successful cost leadership strategy.TsogoSun is a successful organisation with many brand names under it. The strategy that has been utilized by the organisation is a combination between a cost leadership strategy and a differentiation strategy. By providing an affordable, best value for money experience while lowering costs, this shows their cost leadership strategy. However, it is also evident that TsogoSun aims to provide a unique experience for its guests, which is the utilization of the differentiation strategy. This is what gives this organisation its competitive advantage.

The Test for a Winning Strategy:Step 1: Goodness of Fit TestSimply looks at how the strategy fits the situation of the organisation.Step 2: Competitive Advantage TestThis test asks the question of whether the strategy helps the organisation to achieve and maintain a competitive advantage or not.Step 3: Performance TestDoes the strategy result in an above-average organisational performance by adding value?

The Next Two Steps Apply To Developing Countries:Step 4: Social Impact TestThis step reviews if the strategy is contributing towards the expectations of stakeholders.Step 5: Environmental Systems TestDoes the selected strategy contribute towards the protection and sustainability of natural resources and ecological systems?

Business Level Strategies:Cost Leadership Strategy:Organisations that choose this strategy aim towards reducing its costs, or keeping them lower than its competitors in order to achieve and sustain a competitive advantage. This type of strategy works best in larger, more standardised industries that have little differentiation between competitors. Where the competitive advantage is achieved by the organisation that most effectively utilizes this strategy of becoming the cost leader in the industry.

Business Level Strategies:Differentiation Strategy:This strategy is utilized by organisations with the intention of producing products or services that are unique across the industry. This is an effective strategy in conditions where the market is in demand for premium products or services, where price variation has little impact on the demand for a product or service and the main focus is on the quality and uniqueness of the product or service.

Business Level Strategies:Focus Strategy:A focus strategy is used by an organisation with the desire of satisfying a specific niche market. This strategy is used when an organisation has a very market specific product or service. This is a very important factor to consider when choosing a business level strategy.

The Disadvantages of Business Level Strategies:Cost Leadership Strategy:Competitors may out-compete the organisation, lowering their prices below those of the cost leader and taking the competitive advantage.Organisations may turn to sacrificing quality in order to further reduce costs.Organisation may lose sight of consumer tastes.

The Disadvantages of Business Level Strategies:Differentiation Strategy:Organisation must review their long-term ability to sustain product or service uniqueness.Imitation is easy for competitors.Unique offering can become commodity-like.

The Disadvantages of Business Level Strategies:Focus Strategy:Higher production costs.Reduced Profitability.Competition against larger organisations in the market.Niche market can disappear as technology or consumer tastes change.

Combination Strategies:It is in fact possible for an organisation to combine a Cost Leadership Strategy and a Differentiation Strategy. An example of this phenomenon is TsogoSun. This organisation aims at providing a low-cost, best value for money service for its consumers. Making use of a cost leadership strategy. At the same time, the organisation aims at providing an experience that is unique from services provided by competitors in the industry. Giving the organisation a competitive advantage over its competitors.