2. Strategic plans and risk management Flashcards
What four factors is strategy concerned with?
- Long term direction
- Environment in which the business operates
- Resources at the business’s disposal
- Return the business makes to the stakeholders
What are Mintzberg’s 5 Ps of strategy?
- Plan
- Ploy
- Pattern
- Position
- Perspective
Define strategic plan
A statement of long-term goals along with a definition of the strategies and policies which will ensure the achievement of these goals
What is the difference between a positioning based view and a resource based view?
Positioning based view: identifying opportunities in the environment and developing strategic capability to take advantage of them
Resource based view: based on the unique capabilities of the business, and opportunities should be sought to allow the business to exploit these capabilities to achieve competitive advantage
What are the four key stages of a rational planning model?
- Strategic analysis
- Strategy choice
- Strategy implementation
- Review and control
How does the emergent approach differ from the rational planning model?
It allows the strategy to evolve and emerge, so is less structured
Define competitive strategies, product-market strategies and institutional strategies
Competitive strategies: generic strategies for competitive advantage a business will pursue
Product market strategies: these determine where it competes and direction of growth
Institutional strategies: these determine the method of growth
Give an example of a task environment
Competitors, customers, suppliers of resources
What four Ss can be used to describe a static environment?
- Static
- Single
- Simple
- Safe
What four Ds can be used to describe a dynamic environment?
- Dynamic
- Diverse
- Difficult
- Dangerous
What does PESTEL stand for?
Political factors Economic factors Social factors Technological factors Environmental factors Legal factors
What five aspects does Michael Porter identify in a competitive environment?
- Potential entrants
- Bargaining power of customers
- Threat of substitute products or services
- Bargaining power of suppliers
- Rivalry among existing firms
What four kinds of competitor does Kotler list?
- Brand competitors
- Industry competitors
- Generic competitors
- Form competitors
Define a posterior audit
Part of the planing process which examines the current state of the entity in respect of: a) resources of assets, b) products, brands and markets, c) operating systems, d) internal organisation, e) current results, f) returns to shareholders
Define a key factor
Anything which limits the activity of an entity
What is the difference between value drivers and cost drivers?
Value drivers: element of a product or service and activities that increase the amount of value consumers place on it
Cost drivers: any activity that affects the cost of a product or service
What are the five primary activities in the value chain?
- Inbound logistics (handling inputs)
- Operations (converting inputs)
- Outbound logistics (storing product)
- Marketing and sales (informing customers)
- Service (installing products, repairs etc.)
What four support activities are there in the value chain?
- Procurement
- Human resource management
- Technology development
- Firm infrastructure
Define supply chain management (SCM)
Optimising the activities of businesses working together to produce goods and services
What three aspects of a product do managers distinguish?
- Product class
- Product form
- Brand
A firm with high market share and high market growth should _____
Build
A firm with low market share and low market growth should _____ or _____
Divest or hold
A firm with high market share and low market growth should _____ or ______
Hold or harvest
A firm with low market share and high market growth should _____ or ______
Harvest or build
What is a SWOT analysis?
A critical assessment of strengths, weaknesses, opportunities and threats in relation to the internal and environmental factors affecting an entity in order to establish its condition prior to the preparation of the long term plan
Appraisal of the business’s strengths and weaknesses is from the ______ analysis
Appraisal of the business’s opportunities and threats facing the business is from the ______ analysis
Internal
External
Define gap analysis
A comparison between an entity’s desired future performance level and the expected performance of projects both planned and underway
The profit gap is the difference between the _____ profit and the profit _____
Target, forecast
What three generic competitive strategies does Porter believe there are?
- Cost leadership (competing with lowest costs)
- Differentiation
- Focus (restricting oneself to only part of a market)
What three criteria do Johnson and Scholes set for evaluating and choosing strategies?
- Suitability
- Acceptability
- Feasibility
What is the difference between upside and downside risks?
Upside risk- if it is likely that things will go right
Downside risk- the risk that something will go wrong
What is the difference between pure risk and speculative risk?
Pure risk- describes the possibility that something will go wrong
Speculative risk- describes the possibility that something could go better than expected
Per COSO’s ‘Enterprise Risk Management Framework’ 2004, what is the difference between risk and opportunity?
Risk: adverse effects
Opportunity: positive effects
Define the volatility of returns
The range of potential variation in returns
What two categories can risk be broadly put into?
- Business risk
2. Non-business risk
Define operational risk
The risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events, including legal risks
The scale of any risk for a business depends on which four key risk concepts?
- Exposure
- Volatility
- Impact
- Probability
Gross risk = ______ x ______
Gross risk = probability x impact
Cyber risk can materialise in what three ways?
- Deliberate and unauthorised breaches of security
- Unintentional breaches of security
- Operational IT risks due to poor systems integrity or other factors
What two key threats does the National Crime Agency identify?
- Hacking
2. Distributed denial of service (DDoS) attacks (prevention of use of services)
How can a firm counter the threat of synergy attacks through better cyber security?
- Report cyber attacks
- Cyber risk mitigation
- Manager cyber security
- Promote awareness
- Share knowledge and expertise
- Develop cyber skills and awareness
What are the four steps to a risk management process?
- Awareness and identification
- Analysis: assessment and measurement
- Response and control
- Monitoring and reporting
What are the four responses for a risk management process?
- Avoidance
- Reduction
- Sharing
- Acceptance
Give an example of a physical control
Locks
Speed limits
Protective clothing
Give an example of a financial control
Credit checks
Credit limits
Give an example of a system control
Procedural controls
Software controls in computer systems
Organisation controls on people
Give an example of management control
Organisational structure
Annual budget
What are the three parts to crisis management?
- Identify
- Plan response
- Confrontation and resolution of crisis
What are the three main types of crisis?
- Financial crisis
- Public relations crisis
- Strategic crisis (changes in business environment)
In the event of a public relations crisis, it is important to act ______
Immediately
What three areas will a long-term disaster recovery plan provide for?
- Standby procedures
- Recovery procedures
- Personnel management policies (ensuring 1. and 2. are properly implemented)
Define business resilience
A business’s ability to manage and survive against planned or unplanned shocks and disruptions to its operations
Define cyber resilience
An organisation’s ability to ensure that its data and information are reliable, available and have integrity as well as being adequately protected from unauthorised access
Define supply chain resilience
Minimising potential disruption caused by outsourcing or working with partners or by adopting a just-in-time approach to production and inventory management
