3.10.4 Flashcards
What is the difference between planned and emergent strategy?
A planned strategy is the strategy managers intend to implement, while an emergent strategy is the strategy that actually develops over time, often due to unforeseen changes or challenges.
What is strategic drift?
Strategic drift occurs when a business’s strategy no longer aligns with its environment, often because the strategy has not adapted to changes in external conditions.
What causes strategic drift?
Strategic drift can be caused by failing to identify environmental changes, not reacting quickly enough due to internal resistance or resource limitations, and assuming the environment will revert to its previous state.
What is the divorce between ownership and control in business?
The divorce between ownership and control happens when business owners (shareholders) do not manage the day-to-day operations, leaving that to managers, which can lead to decisions that do not align with the owners’ interests.
How does corporate governance help prevent issues with ownership and control?
Corporate governance involves systems to monitor how a business is run, ensuring that managers act in the best interest of the owners. Non-executive directors may be included to provide outside oversight.
What is contingency planning in business?
Contingency planning involves preparing for unlikely but significant events, such as a key executive leaving or a supplier going out of business, to ensure a company can react effectively if those events occur.
What are strategic decisions?
Strategic decisions are major decisions involving high levels of risk and uncertainty, often involving new situations that have never been faced before.
Why are strategic decisions difficult?
Strategic decisions are difficult because they are unfamiliar, involve high risk, and require managers to interpret data and make decisions with long-term consequences, without clear points of reference.
What are the possible reasons for failure in strategic decision-making?
Reasons for failure include setting wrong objectives, poor data availability or analysis, flawed implementation, and misreading progress during the execution of the plan.
What is the role of corporate governance in strategic decision-making?
Corporate governance ensures that business operations are monitored and controlled in a way that aligns with shareholder interests, preventing management from pursuing personal agendas that might harm the business.
What does it mean to evaluate strategic performance?
Evaluating strategic performance means assessing whether the strategy achieved its intended goals, considering objectives, resources, and external conditions, while avoiding overly narrow indicators of success.
What are the merits of strategic planning?
Strategic planning uses data to avoid poor decisions, provides clear direction, unifies and motivates employees, and aligns business goals. However, it needs to be flexible to adapt to environmental changes.
What are the limitations of strategic planning?
The limitations include the need for regular reviews due to rapid environmental changes, the possibility that strategies evolve over time, and the need for the right level of detail in the plan.
What is the importance of contingency planning?
Contingency planning helps a business prepare for significant but unlikely events, ensuring quick and effective responses when those events occur. The key is focusing on the most likely and impactful scenarios.
How can strategic drift affect a business?
Strategic drift can leave a business vulnerable and unable to adapt to external changes, potentially leading to confusion and uncertainty among managers and the need for major transformational changes.
How can the divorce between ownership and control impact business strategy?
When managers control daily decisions but are not the owners, they might make decisions that benefit themselves rather than the owners, potentially harming the company’s long-term interests.
How does strategic drift relate to market change?
Strategic drift often occurs when a business fails to adapt quickly enough to rapidly changing environments, like technological advances or shifting market conditions, causing the business to fall behind competitors.
Why is it important for managers to review strategies continuously?
Continuous review helps ensure that strategies remain relevant and competitive, particularly in industries where rapid changes occur, helping avoid strategic drift.
