3.10.4 Problems with strategy and why strategies fail

Question 1

What is planned strategy?

Answer 1

A business strategy that is identified as part of a formal process of strategic business planning

Question 2

What is emergent strategy?

Answer 2

A pattern of action that develops overtime in an organisation in the absence of a specific mission and goals, based on experience and changes in the environment

Question 3

What are the benefits of strategic planning?

Answer 3

• Forces managers to think ahead
• Encourages a forward looking approach
• Forces Consistency

Question 4

What are the limitations of strategic planning?

Answer 4

• It is not possible to predict long term trends
• Costly
• Strategic plans are often ignored

Question 5

What is strategic drift?

Answer 5

Happens when the strategy of a business is no longer relevant to the external environment facing it

Question 6

What are the four phases of strategic drift? (1)

Answer 6

Phase 1 - Incremental Change:

• Little significant change in the external environment
• A series of small, incremental changes to strategy enable the business to remain in touch with the external environment

Phase 2 - Strategic Drift:

• The rate of change in the external environment is accelerating and small, incremental changes in strategy are not enough on their own to remain in touch
• The business will be losing its competitive advantage

Question 7

What are the four phases of strategic drift? (2)

Answer 7

Phase 3 - Flux:

• This phase is characterised by management indecision
• There is now a significant gap between what the market expects and what a business is delivering
• Management may have recognised this gap and begun to alter strategy, however there is no decisive improvement

Phase 4 - Transformational Change or Death:

• Either management recognise the need for a transformational change in strategic direction, or the business fails
• It often takes new, external leadership for this recognition to be made and the relevant strategic change programme implemented

Question 8

Why does strategic drift happen?

Answer 8

• Business failing to adapt to a changing external environment (for example social or technological change)
• A discovery that what worked before (in terms of competitiveness) doesn’t work anymore
• Complacency sets in, often built on previous success which management assume will continue
• Senior management deny there is a problem, even when faced with the evidence