Summary MNG3701 UNIT7

MNG 3701 MANUAL


1ST SEMESTER 2018


LECTURER: Lynne Addison


UNIT 7



SELECTING OPTIMAL BUSINESS LEVEL STRATEGIES.




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,LEARNING UNIT 7: SELECTING OPTIMAL BUSINESS LEVEL
STRATEGIES.

7.1 LEARNING OUTCOMES
On completion of this learning unit, you should be able to examine, analyse and
evaluate the various generic competitive business level strategies available to
organisations and explain their appropriateness in specific situations. More
specifically, you should be able to
 explain the importance of choosing appropriate competitive business level
strategies
 assess the strategic importance of levels of strategy in an organisation
 distinguish between the different types of competitive business level strategies
 critically assess the bases on which business level strategies are chosen
 compare the advantages and disadvantages of each type of business level
strategy
 identify situations in which business level strategies need to be combined
 explain how business level strategies are evaluated
 analyse the business level strategies of an existing organisation
 evaluate the role and importance of internal growth strategies
 identify and justify alternative strategic options that organisations could pursue
in addition to their chosen business level strategies

7.3 INTRODUCTION (STUDY GUIDE PAGE 171/VENTER 2014:176)
 According to Venter (2014) the primary objective of business strategy is to
achieve sustainable competitive advantage that leads to above average returns
 In order to achieve this Venter points out that employees and managers need to
make decisions on three levels:




Top Management
 Top management must translate the vast scope of mission and vision into concrete
achievements over time. In other words, top management needs a strategic plan.
Decisions related to strategy involve companywide matters enacted over the long
term. the goals are what the company hopes to accomplish at least a year -- more
often five years -- into the future. Management then chooses a grand strategy, such as
growth or diversification, to reach strategic goals. Of all management levels, top

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, managers spend the most time making decisions involving plans. They also have
decisional power over middle management.
Middle Management
 Once top management decides the overall direction of the company, it’s up to middle
management to choose smaller tactical objectives that, put together, accomplish
strategic goals. Middle managers create tactical plans, which have more detail than
strategic plans. The tactics often are geared toward some function or department such
as production, where a possible objective could involve some measurable efficiency
or quality improvement. Middle management’s choices and plans see fruition in a
year or less. Managers in this tier oversee other middle managers or operational
managers.
Operational Management
 Also called first-line management, operational management is the level directly
responsible for employees. By choosing their own goals on a daily, weekly or
monthly basis, first-line management accomplishes the objectives of middle
management. The scope of operational management covers departments, sections or
teams. Inventory, scheduling and budgeting are examples of plans and decisions that
operational managers adopt. Goals might include a certain number of sales for the
day.
http://smallbusiness.chron.com/levels-management-decision-making-58222.html
(accessed 17/03/2017)

(i) Decisions are taken about the overall purpose, scope range and diversity
of the organisation:
 These decisions come from the CEO or MD, the board of directors
and other senior executives.
 The outcome of these decisions is corporate strategies
 The purpose of corporate strategy should be to maximise
shareholder value in the long term by managing a portfolio of
businesses.
(ii) General Managers of each line of business or strategic business unit
(subsidiary) determine which business (or competitive) strategies would
be most suitable to achieve sustainable competitive advantage. These
decisions are business level strategies.
(iii) Managers lower down in the organisation (heads of functional or
operational sections) make decisions about how to best support business
– level strategies by performing strategy – critical activities. (Venter,
2014)

9.1 STRATEGIC GOALS AND STRATEGIC CHOICES (page 176)
 The primary objective of business strategy is to achieve a sustainable
competitive advantage that leads to above average returns.
 To achieve this objective, strategic managers and key employees need to make
decisions at three levels:
(i) Decisions are taken about the overall purpose, scope, range and diversity
of the organisation. These decisions are done by the top management

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