BACHELOR OF ACCOUNTING AND FINANCE -

BUSINESS SECTOR (BAF-BS)

ACC 324: Governance and professional ethics

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DELIVERY AND EVALUATION MODE
Lectures and Seminar presentations
Test 2 15%
Individual Assignment 10%
Group Assignment 10%
End of semester Examination 50%
Total 100%

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 TOPIC 1:
BUSINESS PURPOSE AND OBJECTIVES
1. Strategic Management and analysis

2. Strategic choice

3. Strategic implementation

4. Strategic Evaluation
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WHAT IS STRATEGY
Strategy is a master plan that helps an organization achieve its
mission and objectives. It includes decisions and actions that enable
a business to succeed in a competitive environment.

Example: Consider Azam Group in Tanzania. Their strategy

involves diversifying their business into multiple sectors, including
food production, beverages, and logistics, to maintain market
dominance.
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STRATEGIC MANAGEMENT
Strategic management is the process of formulating, implementing,
and evaluating decisions that help an organization achieve long-term
success.
Key Functions:
•Integrating different business functions (finance, marketing, operations,
etc.).
•Adapting to changes in the business environment.
•Making informed decisions for growth.

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 LEVELS OF STRATEGY
Strategies exist at a number of levels in an organization. These levels are;
Corporate-level strategy

Business-level strategy

Strategic business unit.

Corporate-level strategy, concerned with the overall scope of an

organization and how value will be added to the different parts (business
units) of the organization. This is the top level in the organization.

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LEVELS OF STRATEGY

This could include issues of geographical coverage, diversity of

products/services or business units, and how resources are to be allocated
between the different parts of the organization. In general, corporate-level
strategy is also likely to be concerned with the expectations of owners, the
shareholders and the stock market.

Therefore, Focuses on the overall purpose of an organization

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LEVELS OF STRATEGY
Business-level strategy examine how firms compete in a given industry.
Firms derive such strategies by executives making decisions about whether
their source of competitive advantage is based on price or differentiation
and whether their scope of operations targets a broad or narrow market.

Business-level strategy are considered the middle level in the overall

strategy hierarchy. This is sometimes called competitive strategy

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LEVELS OF STRATEGY
Strategic business level is at the operating end of an
organization. Operational strategies are concerned with how the
component parts of an organization deliver effectively the
corporate and business-level strategies in terms of resources,
processes and people

So these are day-to-day activities that support business strategies

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STAGES OF STRATEGIC MANAGEMENENT

The strategic-management process consists of four stages:

Environmental Scanning/ Strategy Analysis

Strategy Formulation

Strategy Implementation

Strategy Evaluation and control

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ENVIRONMENTAL SCANNING/ STRATEGY ANALYSIS

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STRATEGIC ANALYSIS
Strategic analysis refers to an evaluation of an organization's
work environment. This work environment generally defines how the
organization operates its business.

Strategic analysis is essential to formulate strategic planning for

decisions making and smooth working of that organization.

Therefore, strategic analysis is a process that can help businesses

and individual to better understand their goals.
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TYPES OF STRATEGIC ANALYSIS

Assessing the internal environment of the firm

Analyzing the external environment of the firm

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INTERNAL ANALYSIS
Internal analysis focuses on evaluating the organization's internal
environment, including its resources, capabilities, and core competencies.
The goal is to identify strengths and weaknesses.

Tools for Internal Analysis:

1. SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats):

While SWOT covers both internal and external factors, the "Strengths"
and "Weaknesses" components focus on internal aspects.

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INTERNAL ANALYSIS
2. Value Chain Analysis: Examines the activities within the organization
that create value for customers (e.g., operations, marketing, logistics).

3. Resource-Based View (RBV): Assesses the firm’s tangible and

intangible resources (e.g., human capital, brand reputation, technology) to
determine competitive advantage.

4. Core Competency Analysis: Identifies unique capabilities that give the

organization a competitive edge.

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 EXTERNAL ANALYSIS
Every business operates within a changing environment that affects its
success. Since these external factors keep evolving, companies must regularly
analyze them to stay competitive.

Therefore, external analysis evaluates factors outside the organization that

could impact its performance. This helps identify opportunities and threats in
the market or industry.

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 EXTERNAL ANALYSIS
Tools for External Analysis

1. PESTLE Analysis. Examines macro-environmental factors:

Political Factors: Government regulations, taxation, trade policies.

•Example: Tanzania’s tax laws affecting imports and exports.

Economic Factors: Inflation, exchange rates, economic growth.

•Example: The effect of the currency fluctuation on import businesses.

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 Social Factors: Demographics, cultural trends, consumer behavior.

•Example: Increased mobile money usage in Tanzania due to

changing consumer habits.

Technological Factors: Innovation, R&D, and technological

advancement.

•Example: The rise of mobile banking with services like M-Pesa and
Tigo Pesa.

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 Legal Factors: Employment laws, competition laws, regulatory
requirements.

•Example: Businesses must register for VAT if their annual turnover

exceeds a specified threshold.

Environmental Factors: Sustainability, climate impact, waste

management.

•Example: Plastic ban regulations affecting businesses.

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2. Porter’s Five Forces

Firms can use techniques such as Porter's Five Forces to analyze their position in
terms of their competitive strategy and current markets.

Therefore, porter’s five forces analyzes the competitive forces within an industry

Michael Porter of Harvard University and the author of “ Competitive Strategy

(1980) developed the Strategic Management Model known as the five forces of
competition which explains the five key factors which must be analyzed when
evaluating a business's profitability in the future.
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There are five main factors that influence the level of competitiveness
in an industry or sector.
Threat of potential entrants

Existence of substitutes

Bargaining power of buyers

Bargaining power of suppliers

Intensity of rivalry among existing firms

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THREAT OF POTENTIAL ENTRANTS
One of the biggest worries for the organisations of any industry
is the possibility that other firms will enter their industry. The more
firms that enter an industry, the more competitive the industry is
likely to become. The more competitive the industry, the lower the
level of profits likely to be earned by its organisations. Naturally it
is easier to enter some industries than others.

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THREAT OF POTENTIAL ENTRANTS
Entry barriers are obstacles that make it difficult for new companies to
enter an industry, and they are as follows:
Economies of Scale – Large firms produce at a lower cost per unit,
making it hard for new entrants to compete.
Example: Coca-Cola benefits from mass production, lowering costs
compared to new soda brands.
Product Differentiation – Established brands have unique products or
strong reputations, making it hard for new firms to attract customers.
Example: Apple’s brand loyalty and unique iPhones make it tough for new
smartphone brands.

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Capital Requirements – Some industries require a huge investment to
start, discouraging new competitors.

Example: Setting up a new airline requires buying aircraft, which is very

expensive.

Access to Distribution Channels – New firms may struggle to get their

products into stores or reach customers.

Example: A new soft drink brand may find it hard to get shelf space in
supermarkets dominated by Coca-Cola and Pepsi.
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Customer Loyalty – Customers stick to trusted brands, making it tough for
new businesses to win them over.

Example: People loyal to M-Pesa may not easily switch to a new mobile
money service.

Government Policy – Regulations, licenses, or restrictions can prevent or

limit new entrants.

Example: The banking sector in Tanzania requires strict licensing from the
central bank, making it hard for new banks to enter.
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EXISTENCE OF SUBSTITUTES
The threat of substitutes depends upon the ease at which a
customer can switch to an alternative product.

What is a substitute?

A substitute is a product from one industry that can perform the

same function required in another industry. Examples include tea
and coffee; and ferries and low cost airlines.

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EXISTENCE OF SUBSTITUTES
It is important to note that there are different forms of substitution and
organization need to consider when analyzing their competitive
landscape. These include:

Product for product substitution: Refers to a situation where a

consumer can choose between different products that offer the same
benefits or features. For example, Public Transport vs. Ride-Hailing
Services. Consumers can choose between public buses, motorcycles, or
ride-hailing services (Uber, Bolt, Little Ride) for their daily commute.
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EXISTENCE OF SUBSTITUTES

Substitution of need: Refers to a situation where a consumer has

a particular need of problem to solve and can choose between
different products or services that offer a solution to that need. For
example, a consumer who is hungry may choose between food
options such as fast food, restaurants, or home cooked meals.

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EXISTENCE OF SUBSTITUTES
Generic substitution: Refers to situation where a customer can choose
between a branded product and generic or unbranded product that
offers similar benefits. For example, Branded Phones (e.g., Samsung,
Apple) vs. Generic Phones (e.g., Tecno, Itel). Both products fulfill the same
need, making calls, texting, and accessing the internet but branded
phones are often priced higher due to their reputation, while generic
phones offer similar functionality at a lower cost.
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BARGAINING POWER OF BUYERS
The bargaining power of buyers refers to the ability of customers or
buyers to negotiate better deals or prices from companies.

Buyers have bargaining power when they are able to influence

factors such as price, quality, delivery, and availability of products or
services. This can occur when buyers are concentrated or have a
significant purchasing volume, making them an important source of
revenue for companies.
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 BARGAINING POWER OF BUYERS
Factors that can increase the bargaining power of buyers include:

Concentration of buyers: When a small number of buyers make up a

significant proportion of the market demand, they can have a higher bargaining
power by leveraging their buying power to negotiate better deals with
suppliers. For example, Large agricultural buyers, such as Tanzania Breweries
(for malting barley) or Kilombero Sugar (for sugarcane), have bargaining power
over local farmers because they buy in bulk. Farmers often have limited
alternatives to sell their crops, so these large buyers can negotiate lower prices.

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BARGAINING POWER OF BUYERS

Availability of substitutes: When there are many substitute

products or services available in the market, buyers can choose to
switch to alternative options if they are not satisfied with the terms
offered by a particular supplier. For example, consumers can
easily switch between different brands of laundry detergent if one
brand becomes too expensive.
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BARGAINING POWER OF BUYERS
Price sensitivity: Buyers who are sensitive to price changes can
have more bargaining power by pressuring suppliers to lower their
prices or risk losing their business. For example, buyers of
commodity products like oil or steel may be highly price sensitive
and demand lower prices from suppliers.

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BARGAINING POWER OF BUYERS

Information availability: Buyers who have access to a lot of

information about the market and the products they purchase can
have more bargaining power by being able to compare prices and
quality more effectively. For example, consumers who research
products online can make more informed purchasing decisions and
demand better prices from suppliers.
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BARGAINING POWER OF BUYERS
Forward integration: Buyers who have the ability to produce the
products or services themselves can have more bargaining power by
bypassing suppliers altogether and producing the products in-house. For
example, Some Tanzanian flower exporters have integrated forward by
setting up their own florists and retail outlets abroad, reducing their
reliance on middlemen and direct suppliers in foreign markets. This
allows them to capture higher margins and expand their reach.
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BARGAINING POWER OF BUYERS

Overall, companies need to understand the bargaining power of

buyers in their industry and develop strategies to address this
factor. This can include developing strong relationships with buyers,
differentiating products or services to reduce price sensitivity, and
improving supply chain efficiency to reduce costs.

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BARGAINING POWER OF SUPPLIERS
The bargaining power of suppliers refers to the ability of suppliers to
influence the price, quality, and availability of products or services they
provide to companies. For example, farmers supplying coffee beans to
Tanzanian coffee processing firms.

Suppliers have bargaining power when they can control or influence

factors such as prices, quality, and delivery times. This can occur when
suppliers are concentrated, have unique products or services, or are
essential to a company's operations.
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 BARGAINING POWER OF SUPPLIERS
Factors that can increase the bargaining power of suppliers include:

Concentration of suppliers: When there are only a few suppliers in a

particular market, they may have significant bargaining power over
buyers by controlling the supply of products or services. A good example
in Tanzania is the cement industry. The supply of key raw materials such
as clinker (used in cement production) is controlled by a few major
suppliers, both locally and internationally.

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BARGAINING POWER OF SUPPLIERS
Uniqueness of products or services: When suppliers provide unique
or highly specialized products or services that cannot be easily
replicated, they can have more bargaining power by charging premium
prices for their products or services. For example, Serengeti &
Ngorongoro Safari Tourism. Tanzania offers unique wildlife experiences,
including the Great Migration, which cannot be easily replicated
elsewhere. Tour operators and luxury lodges in these areas can charge
premium prices for their services.
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BARGAINING POWER OF SUPPLIERS
Switching costs: When it is difficult or expensive for buyers to switch
suppliers, suppliers can have more bargaining power by charging
higher prices or offering lower quality products or services. For
example, Internet Service Providers (ISP). Businesses that sign contracts
with providers like Vodacom, TTCL, or Smile Communications may find it
expensive and disruptive to switch providers due to installation costs
and contract termination fees.
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BARGAINING POWER OF SUPPLIERS

Availability of substitutes: When there are few substitutes

available for the products or services provided by suppliers, they
can have more bargaining power by charging higher prices. For
example, there are few alternatives to oil as a source of fuel for
transportation, which gives oil suppliers more bargaining power.

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BARGAINING POWER OF SUPPLIERS
Forward integration: Suppliers who have the ability to produce the
products or services themselves can have more bargaining power by
bypassing buyers altogether and selling their products or services
directly to consumers. For example, Dangote Cement Tanzania.
Dangote not only produces cement but has also established its own
distribution network to sell directly to contractors and construction
companies.
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BARGAINING POWER OF SUPPLIERS

Overall, companies need to understand the bargaining power of

suppliers in their industry and develop strategies to address this
factor. This can include developing multiple sources of supply,
negotiating favorable terms with suppliers, and developing
alternative products or services to reduce dependence on suppliers.

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INTENSITY OF RIVALRY AMONG EXISTING FIRMS
This factor refers to the degree of competition among existing
firms in an industry and is influenced by factors such as industry
growth, number of competitors, and product differentiation.

When the intensity of rivalry among existing firms is high,

companies in the industry may compete aggressively on price,
quality, and innovation to gain market share. This can result in
lower profit margins for all companies in the industry.
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INTENSITY OF RIVALRY AMONG EXISTING FIRMS
Factors that can increase the intensity of rivalry among existing
firms include:

Large number of competitors: When there are many competitors in an

industry, each company may feel pressure to compete aggressively to
gain market share. For example, the mobile network industry in Tanzania
has a large number of competitors, including Vodacom, Tigo, Airtel, and
Halotel. To gain market share, these companies aggressively compete on
pricing, data packages, customer service, and mobile money services.

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INTENSITY OF RIVALRY AMONG EXISTING FIRMS
Slow industry growth: When industry growth is slow, companies
may compete more fiercely to gain a larger share of the existing
market. For example, the print media sector in Tanzania has seen
slow growth due to the rise of online news platforms and social
media. Newspapers like The Citizen, Tanzania Daima, and Daily
News are facing fierce competition for readership. To adapt, they
have increasingly focused on digital subscriptions and online
content.
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 INTENSITY OF RIVALRY AMONG EXISTING FIRMS
Lack of product differentiation: When products or services in an industry
are similar and there are no clear differences between them, companies
may need to compete on price or marketing to attract customers. For
example, The soft drink industry in Tanzania has several similar products,
with major brands like Coca-Cola, Pepsi, and Fanta competing for market
share. Since the product (carbonated drink) is essentially the same, the
companies differentiate based on price, marketing campaigns, and
promotional offers.
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INTENSITY OF RIVALRY AMONG EXISTING FIRMS

Low switching costs: When it is easy for customers to switch

between products or services, companies may need to compete
more aggressively to retain their customers. For example, the
smartphone industry has many competitors, and customers can
easily switch between products based on their preferences or
needs, leading to increased competition.
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INTENSITY OF RIVALRY AMONG EXISTING FIRMS

High fixed costs: When fixed costs are high, companies may
need to sell a large volume of products to cover their costs, leading
to increased competition. For example, the airline industry has high
fixed costs, such as purchasing and maintaining planes, which can
lead to intense competition for a limited number of customers.

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INTENSITY OF RIVALRY AMONG EXISTING FIRMS

Overall, these factors can contribute to increased competition

among existing firms, making it more difficult for companies to
differentiate.

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 THANK YOU!!

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