SBL Lectures Notes
Syllabus Areas:
1. Strategy
2. Tech and data analysis
3. Innovation and Performance management
4. Finance planning and decision making
5. Leadership
6. Governance
7. Risk Management
8. Org Controls and audit
Professional Skills:
1. Analysis
2. Evaluation
3. Communication
4. Scepticism
5. Commercial Acumen
Chapter 1- Strategy
Few basic terminologies:
Mission: means long term aim or long term target. It also means your purpose of existence.
Standard mission of the commercial organization is to maximize profit
Goals: Goals are open ended ways in order to achieve your mission.
Objectives: when you quantify your goals they are known as objectives. i.e increase revenue
by 10% this year. Objectives should be SMART.
The above three often used interchangeably. All of three collectively means your long term aim or
long term aim.
Strategy: Plans to achieve your mission or goals or objectives or plans to achieve your aims
or targets .
First you set your goal and then you make strategy of how to achievs those goals and objectives. In
case the goals and objectives are changes then the strategy also changes.
Strategic management: How you manage your strategies. It means making strategies ,
implementing those strategies, monitoring those strategies .
So there are more than one thousands models or theories for the strategic management . but the most
common and rational model is JSW model.
SBL Lectures Notes
SBL Lectures Notes
Rational model of strategic management by the Jhonson, Scholes
and Wattington( JS&W):
As per JS&W, if any company want to manage their strategies, they just need to do three things:
1) Strategic Position:
In this we look at two things
A. Current position:
We look into external environment ( Country and Industry) &
Internal Environment ( internal resources such HR, IT, finance etc)
B. Mission / target
i.e you want to go from Spain to Germany :
2) Strategic Choice:
In strategic choice we do three things:
i) Generate all possible options
ii) Pros and cons of each option
iii) Select the one which suits us the best
3) Strategic into action:
Here you put the selected strategy into implementation and then you monitor the progress of that
selected strategy . whether the strategy is achieving the objective or not . if the strategy is not
achieving the objectives then AMEND.
Implement
Monitor
Amend
In the exam, most of the time the examiner has given very small question where he asked the
strategic position of the ABC company . when you are expected to analyse the stragic position then
the first option should be used to i.e strategic position of the company .
SBL Lectures Notes
Strategic Position - External Environment
External environment is one of the most important topic of SBL.
Under external environment there are five thing to discuss:
1. Definition:
The factors which are outside the business are the external environment. External factors effecting or
surrounding the business. Such as
DIRECTLY EFFECT THE BUSINESS (MICRO)- Customers, competitors, suppliers
INDIRECTLY EFFECTS THE BUSINESS (MACRO)- economy, laws and regulations,
technology, internet, social or cultural aspects , government policies, inflation or exchange rates, taxes
etc.
2. Types of the external environment
Basically, there are two types of environments:
i. Macro / country / general Environment
ii. Micro / industry/ specific/ competitive environment
3. Uncertainty
The problem with external environment is it never constant it is dynamic as it always changes. That’s
why we say external environment is uncertain. in stable the uncertainty might be low and in volatile
countries the uncertainty is high.
4. Prediction
In order to deal with the uncertainty, we have to predict the future. we try and foresee and based on
that we make our strategies hoping that our predictions are correct.
Most used prediction tools are:
Forecasting: trying to forecast the future based on historical trends.
Scenario building: as the name says you will built the multiple scenarios. i.e. Oil business
example
5. Analysis
All business regular analyse their external environment . when we say analys the external
environment we use several models. Below are the most commonly used models to analyse the
environmental factors:
i) PESTEL – for macro environment
ii) Porters Five Forces Model – for micro environment
SBL Lectures Notes
PESTEL – For MACRO Environment
Political:
- Government policies, the political stability of the country, taxes, government approvals etc
- Political Situation
- Government Grants
- Government approvals
- Government implemented additional taxes
Economy
- Economic growth / recession
- Disposable income – means how much amount a person has in its pockets to spend on luxury
items
- Inflation
- Exchange rates – more applicable in those scenarios where the organizations are doing
international businesses
Social
- Standard of living of the people – the higher the standard the better for the business
- Prosperous developed nation
- Well educated population
- Unemployment
- Demographics -Study of the population
- Culture
Technology
- All the technological aspect in the country
- IT
- Internet / online / websites
- Plant and machinery
- Roads
- Telecommunication
- Infrastructure of the company
- Availability of the skilled labour
Ecological
Kind of new factors . this talk more about the earth such as natural resources , carbon emission
- Eco friendly
- Corban emission
- Pollution
- Green
- Natural resources
- Disposal of waste material ( recycling)
SBL Lectures Notes
Legal
- All the regulations
- Patents
- Trademarks
- Licenses
- Health and safety laws
- Minimal wages
- Maximum work hours
- Customer rights
- Customer privacy
- Data protection acts
For exam:
First of all identify all the PESTEL factors
For each of the factors – you are expected to say whether the factor is favourable or unfavourable to
the business
i.e govt is giving grants to the business obviously the political factors are favourable
if the disposable factors shrinking the economy factors are not favourable
SBL Lectures Notes
Porters Five Forces Model – for Micro
Environment
Why is it called fiver foces model? Due the following five factors:
1. Bargaining power of customers
Bargaining power means the power to negotiate. Whoever has the more bargaining power his
terms and conditions will be accepted.
Its kind of ‘’the thug of war’’.
What are the factors which decide the bargaining power?
i. How critical is the product to the customer
ii. Size of the customer e.g the customer wants to buy the large volume his bargaining
power would be more
iii. Standard/unique/branded product or the customized products
iv. No of sellers in the market
v. Switching cost – ( the cost of switching , how easily a customer can switch or change
vendor )
2. Bargaining power of suppliers
The bargaining power of suppliers if you are not wearing the hat of the customer:
What are the factors which decide the bargaining power?
i. How critical is the product to the customer
ii.Size of the customer e.g the customer wants to buy the large volume his bargaining
power would be more
iii. Standard/unique/branded product or the customized products
iv. No of sellers in the market
v. Switching cost – ( the cost of switching , how easily a customer can switch or change
vendor )
3. Threats of new entrants
How do we protect our self from the threat of new entrants?
I) Barriers to entry i.e in case of pizza wo close the door. The most common way to create
barrier is:
a. Patent/copyrights ,
b. Government approvals ,
c. High capital requirements – if you are operating in an industry where the capital
requirement is high i.e banks
4. Competition
- No of competitors
- Market share
SBL Lectures Notes
5. Threats of substitute products
Substitute product is a product from another industry but satisfying the same need. If there are the
alternatives in the market then the threat is high.
