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Strategic Business Analysis CA 2.6 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What is Strategy?

A

John et al (2005)
Strategy is the direction and SCOPE OF AN ORGANIZATION over the LONG TERM, which achieves ADVANTAGE IN A CHANGING ENVIRONMENT through its configuration of RESOURCES and competences with the aim of fulfilling STAKEHOLDER EXPECTATIONS.

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2
Q

What are the six areas for general decision-making in Strategy?

A

1) Long-term direction normally 5 years or more.
2) SCOPE OF AN ORGANIZATION’S ACTIVITIES: ie, overall roles and purposes for the whole organization.
3) Gaining ADVANTAGE IN COMPETITION.
4) Fitting in a changing business environment or acclimatizing products and services to meet changing customers requirements.
5) Exploiting company RESOURCES and Competences.
6) Values and expectations of the organization’s STAKEHOLDERS.

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3
Q

What is Strategy according to Michael Porter, 1990?

A

1) Do whatever everyone is doing but do it more efficiently.
Or
2) Do a unique business that no one else is doing

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4
Q

What are the six important characteristics of Strategic Decisions Johnson et al 2005?

A

1) Decisions about strategy are likely to be complex.
2) There is likely to be a high degree of uncertainty surrounding a Strategic decision.
3) Strategic Decisions have extensive impact on operational decision making.
4) An integrated approach is required.
5) Strategic Decisions are likely to lead to change, eg organizational culture.

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5
Q

What are the 4 points of Coming up with a Mission Statement, Ashridge College Model of Mission ?

A

1) PURPOSE - Why do you exist and for you do you exist?
2) VALUES. Ie beliefs.
3) STRATEGY
4) POLICIES and STANDARDS of BEHAVIOR.

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6
Q

3 things to consider when establishing a clear concept of the Mission and Values?

A

1) Customers ask not only WHAT do you sell, but WHAT do you stand for.

2) Employees are motivated by many things other than money.

3) There is a relationship between Corporate Values and Profitability.

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7
Q

Why are people suspicious of MISSION STATEMENTS?

A

1) They can be mere public relations exercises.

2) They can be full of generalizations

3) They may be ignored by the people that are responsible for implementing Strategy.

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8
Q

Give 3 points why the Mission Statement is important in the Strategic Planning Process.

A

1) Inspires and informs planning.

2) Screening.

3) It affects the Implementation of a planned Strategy.

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9
Q

How can Goals be related?

A

1) Hierarchically.
2) Functionally
3) Logistically - Sharing resources.
4) Wider Organizational Sense eg balancing between costs versus increased productivity.

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10
Q

Hierarchy of Objectives

A

Drucker’s Pyramid, MBO (Management by Objectives)
Vision, Mission, Strategic Goals and Objectives, Individual Work Targets

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11
Q

According to Peter Drucker 1989, Objectives should be what?

A

SMART

Specific
Measurable
Achievable or Attainable
Realistic or Result- Focused or Relevant
Time-related or Timeous

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12
Q

Functions of Objectives

A

1) Planning
2) Responsibility
3) Integration
4) Motivation
5) Evaluation

Accronomy - PRIME

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13
Q

Vocabulary of Strategy

A

Mission
Vision or Strategic Intent
Goal
Objectives
Strategic Capability
Business Model
Strategic Control

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14
Q

What is a Mission?

A

This is the Organization’s purpose, ie why does the Organization exist and for who.
It reflects the expectations of the stakeholders, John et al 2005.

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15
Q

What is Vision or Strategic Intent?

A

Is the future state desired by the organization’s strategists.

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16
Q

What is a Goal

A

It is a Statement of a general purpose or aim that supports the Mission.
It may be qualitative in nature.

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17
Q

What is an Objective?

A

It is a more Specific Aim or Purpose and will probably be quantified.

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18
Q

What is Strategic Capability

A

These are unique Resources and Core competences that create competitive advantage.

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19
Q

What is a Business Model?

A

Is the Structure of the Product, Service and information flows between the parties involved, John et al 2005.

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20
Q

What is Strategic Control?

A

It has two parts
a) Monitoring the effectiveness of strategies and actions.
b) Taking corrective actions when required, John et al 2005.

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21
Q

What are the 3 Levels of Strategy according to Hofer and Schendel 1986?

A

1) Corporate Level
2) Business Level
3) Functional or Operational Level

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22
Q

What is Corporate Strategy?

A

It is concerned with the overall purpose and scope of the organization and how value will be added to the different parts or business units of the organization, John at el 2005.

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23
Q

What are the aspects of Corporate Strategy?

A

1) Scope of activity
2) Expectations of Stakeholders
3) Resources

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24
Q

What is Business Level Strategy?

A

Is about how to compete successfully in particular markets.
John at el 2005.

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25
Q

What is Operational or Functional Strategy?

A

It is concerned with how the components parts of the organization deliver effectively the corporate and business level strategies. In terms of the resources processes and people. John at el 2005.

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26
Q

Give examples of Operational Strategy created by individual business units and their deliveries.

A

1) Marketing Dept - Pricing, Promotion and distribution of Products and Services.
2) Production Dept - Factory, Manufacturing Techniques etc.
3) Finance Dept- Ensures that there are enough Financial resources resources to fund strategies and finances are used effectively.
4) Human Resources Dept - Recruits personnel with the right skills and knowledge in order to promote overall goals of the firm.
5) Information Systems Dept - Sources and support the Company’s ERP and other Systems.
6) R & D Dept - New Products and Techniques.

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27
Q

3.
Which are the 3 Elements of Strategic Management according to Johnson et al 2005?

A

Defination: Strategic Management is the IDENTIFICATION, SELECTION and IMPLEMENTATION of an organization’s long term goals and objectives.

Johnson et al 2005 - 3 main elements are:
1) Strategic Position, which is IDENTIFICATION.
2) Strategic Choices, which is SELECTION.
3) Strategy into action, which is IMPLEMENTATION, from the definition.

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28
Q

3.1
What is Strategic Position or IDENTIFICATION?

A

3 main groups must be considered:

a) ENVIRONMENT: The business environment looks at PESTEL and part of SWOT Analysis’ external forces ie Opportunities and Threats.
b) STRATEGIC CAPABILITY - Analysis of Resources and Competences in terms of SWOT Analysis’ internal forces ie Strength and Weaknesses.
c) STAKEHOLDERS and STRATEGY- considers expectations of various stakeholders.

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29
Q

Define Stakeholder?

A

These are groups or individuals whose interests are directly affected by the activities of an organization.

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30
Q

Stakeholder Groups or Types and their members

A

a) INTERNAL STAKEHOLDERS - Employees and Management
b) CONNECTED STAKEHOLDERS- Shareholders, Customers, Suppliers and Lenders
c) EXTERNAL STAKEHOLDERS- Government, Local Government and the Public.

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31
Q

Stakeholders expectations will sometines confict. Give examples of Stakeholders and their objectives.

A

a) EMPLOYEES and MANAGERS
Job Security, Good conditions and High Salaries etc
b) CUSTOMERS- High Quality Products at affordable prices, Durability.
c) SUPPLIERS- Regular orders, timeous payments.
d) SHAREHOLDERS- Longterm Wealth
e) BANKS or LENDERS - Reliable loan repayments, and interests.
f) SOCIETY or The PUBLIC- Pollution Control, Community financial support.

Stakeholder power influences strategy.

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32
Q

3.2
What is Strategic Choices?

A

At Business Unit Level, these are about analyzing customers and Matkets so as to achieve competitive advantage.
At Corporate Level, the choices are about the overall Product or Business Portfolio, new markets and relationships between the Corporate and Business Units.

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33
Q

3.3
What is Strategy into Action or Implementation?

A

According to Johnson et al 2005, strategies must be made to work by putting them into practice.
3 major issues are considered here:
a) STRUCTURING- Organizational Structure, relationships etc.
b) ENABLING- Managing resources to support and create strategies.
c) CHANGE- Change management.

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34
Q

3.4
The Rational Model of Strategy

A

It is a Linear Model
a) POSITION Covers:
Position Audit, Mission and Objectives, Environmental Analysis that feeds into or forms part of Corporate Appraisal.

b) CHOICE:
This includes Strategic Control, Strategic Options and Strategic Choice.

c) ACTION:
This covers Implementation Strategy.

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35
Q

List Elements of Strategic Management as per Johnson et al 2005’s Venn Diagram Illustration.

A

a) First Circle - STRATEGIC POSITION/ ANALYSIS:
Environment, Culture, Capability and Purpose.

b) STRATEGIC CHOICE:
At Business Level, Corporate Level, International Level and Evaluation.

c) STRATEGY into ACTION or IMPLEMENTATION:
Organizational Structure, Processes, Resourcing, Strategy Development and Strategic Change.

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36
Q

3.5
What is an Emergent Strategy?

A

These are developed out of a pattern of behavior, their final objective is unclear from the outset, and they are survival-based theories.
As the environment changes, only the fittest survives!

Planned or Prescriptive Strategies are sometimes unrealized eg promising customers Excellent Customer Satisfaction but doing the opposite.

37
Q

What is the 3 part Structure for thinking about Strategy according to Johnson et al 2005?

A

a) Strategic Position
b) Strategic Choice
c) Strategy into Action

38
Q

4
ANALYSING THE EXTERNAL ENVIRONMENT

A

This can be analyzed into Six Segments using PESTEL Framework. Understanding the business environment and changed taking place is very important in business.

39
Q

4.1
What are the 3 Conentric Layers of the Business Environment according to Johnson et al 2005?

A

a) Macro-Environment: Analyzed using PESTEL, Key Drivers of Change and Scenarios.

b) INDUSTRY or SECTOR: Analysis based on Michael Porter’s Five Forces Model and Cycles of Competition.

c) COMPETITORS and MARKETS:
Strategic Groups, Market Segments and Critical Success Factors.

Thus the Organization is at the Centre of Layers Circles,And emmediately outside is the Competitors and Markets, followed by the Industry or Sector and Finally outside is the Macro-Environment Circle.

40
Q

4.2
What is Environmental Uncertainty and Complexity?

A

Environment uncertainty is where the Environment keeps changing and management must always be alert ,use intuition and scenario planning to deal with situations.

Complexity is caused by technological advances and diversity of operations.

41
Q

The Macro-Environment

A

PESTEL Model identifies six types of influence on the organization namely:

Political
Economic
Socio-Cultural
Technological
Environmental
Legal

The above are closely related and interlinked, eg Political, Social and Economic.

PESTEL is sometimes changed to:
STEEPLE, where the additional E stands for Ethics.

42
Q

4.4
Government responsibility or Political Environment

A

Government is responsible for Policy making which inturn affects the whole Economy positively or negatively.

43
Q

What does the Government Policy provides?

A

It provides 3 things:
a) Physical Infrastructure, eg Roads and Transport
b) Social Infrastructure eg Education, Law enforcement.
c) Market Infrastructure eg. Policing corruption.

However it is Political change which affects activities of many firms.

Political change affects Economic policies.
Likely Nature of Impact- Change in taxes and interest rates.
Consequences- Cashflow and availability of resources.
Coping Strategies - Cash flow planning.
Influence on decision making - Lobbying and publicity.

44
Q

What are Economies of scale?

A

When you buy in bulk you enjoy some discounts and this results in lower production costs.

45
Q

Advantages of a Monopoly

A

1) Enjoys economies of scale.
2) lack of competition.

46
Q

Disadvantages of a monopoly

A

1) might be inefficient when the firm fails to focus on profit objectives.
2) They can prevent other firms from entering the market.
3) Several firms can behave as monopolies by agreeing with each other not compete ie collusive oligopoly, which is illegal.

47
Q

4.5
The Economic Environment.
Factors of the Economic Environment affecting local and national level.

A

1) Overall growth or fall in GDP.
Increase or decrease of demand of goods or services.
2) Local Economic trends.
3) Inflation. ( Price increase or decrease)
4) Interest rates ( Interest on loans)
5) Tax levels (Invome Tax and Sales Tax)
6) Government Spending. Affects some businesses.
7) The business cycle. Growth and Decline of businesses.

48
Q

The Economic Environment
International factors affecting the Economic Environment

A

1) Exchange rates fluctuations.
2) Characteristics of overseas markets. - desirable overseas markets with cheap impots.
3) International Capital markets. - supply and demand set the value of currencies in developed countries.
4) MNCs - Multi National Companies - have huge turnovers.
5) Government policy on Trade and Protection. Trade barriers.

49
Q

4.6
Socio- Cultural Environment.
What is demography?

A

Is a study of human population and population trends.

50
Q

4.6
Socio- Cultural factors

A

1) Growth. Increase or decrease in pollution.
2) Age - Change in the Age distribution of the population. Eg the Boomers, Generation X.
3) Geographical Areas - population in Roma, Chelston etc.
4) Ethnicity - Different races or groups.
5) Household and family structure. - Number of persons in a house.
6) Social Structure - Groupings according to earnings.
7) Employment - Permanent, contracts and temporary employees.
8) Wealth - Rising standards of living attracts people.

51
Q

Effects of Demographic change

A

1) Changes in pattern of demands.
2) Location of demand.
3) Recruitment policies. Sometimes change retirement ages.
4) Wealth and Tax - Tax base may be changed to boost disposable income.

52
Q

Culture
Beliefs and Values

A

1) Are what we feel to be the case on the bases of objective and subjective information.

53
Q

Culture.
What are Values?

A

Schein 1985
Values are beliefs which are generally and widely accepted as a guide to culturally appropriate behavior.

54
Q

Culture.
Customs.

A

Modes of behavior which represents culturally accepted ways of behaving in response to given situations.

55
Q

Culture.
Artefacts

A

Physical tools designed by people for their Physical and psychological well being, Schein 1985.

56
Q

Culture
Rituals

A

A ritual is a type of activity which takes on symbolic meaning.

57
Q

Culture
3 Things why Knowledge of Culture is important

A

1) Culture influences tastes and lifestyle.

2) Marketers - they can adapt their marketing strategy to suit the culture.

3) Human Resource Manager - May need to tackle cultural differences in recruiting.

58
Q

Types of Sub Cultures in a Society

A

1) Class. Status.
2) Ethinic backgrounds- Tribes.Tongas, Bembas etc.
3) Religion- eg Christianity, Moslems.
4) Geography and Region.
5) Age - Generation gap.
6) Sex - Products for Men or women.
7) Work - Corporate culture per organization or industry.

59
Q

4.7
The Technological Environment

A

The word technology is used to mean 3 different things. ie,
a) Apparatus
b) Technic
c) Organization

60
Q

3 Ways in which Technology can increase total output in an economy

A

1) Gains in productivity. More output units.
2) Reduces costs eg transportation technology.
3) New types of products - when needed.

61
Q

Effects of technological change on organizations.

A

1) The type of products or services that are made and sold.
2) The way in which products are made.
3) The way in which goods are sold, eg online.
4) The way in which Markets are identified.
5) The way in which firms are managed.
6) The means and extent of communication with external clients. eg Call centres.

62
Q

Technological change social consequences

A

a) Homeworking- Cloud computing, working from home and not offices.
b) Knowledge Work - Computer processed data is more accurate and reliable than manual.
c) Services- Humans concentrate more on Services and technology on production.

63
Q

4.8
Environmental Protection

A

The physical environment is a source of resources.
a) Resource Inputs. Managing resources like mining companies.
b) Logistics. Good roads and rail links promotes businesses.
c) Government- Local Authority decisions in terms of structures.
Environmental regulations.
d) Disasters- Earthquakes.

64
Q

4.8.1
Environmental Protection Policy

A

Environmental Protection is a key aspect of Corporate social responsibility.
a) Green pressure groups. Want to conserve the vegetation.
b) Employees- Safety and company image.
c) Legislation- Land use planning, smoke emission, water pollution and destruction of animals laws.
d) Environmental risk screening- company activities Environmental impact.

65
Q

How Green issues impinge on business

A

a) Consumer demand for environmentally friendly products.
b) Demand for less pollution from industry.
c) Recycling targets set by Government.
d) Scarcity. Replacing scarce products.
e) Opportunities to develop environmentally friendly products.
f) Taxes introduced, eg Landfill Tax.

66
Q

4.8.3
Renewable and Non Renewable resources.
What is Sustainability?

A

Sustainability is a Strategy that allows consumed resources to be replaced in some way. Eg for every tree cut, another one is planted.
However some products are non- Renewable or replaced eg oil being mined, will eventually run out.
a) Metals can be recycled.
b) Altertives can be used eg using gas instead of electricity for cooking as a cheaper means.

67
Q

What is Tripple bottom line?

A
  • Economic Prosperity
  • Environmental Quality
  • Social Equity.
68
Q

What is Tripple bottom line?

A
  • Economic Prosperity
  • Environmental Quality
  • Social Equity.
69
Q

4.9
The Legal Environment

A

Laws come from common law, government and parliamentary legislation.

70
Q

Give Legal Factors that affect companies, giving examples.

A

a) General Legal Framework, Contract, Torts, Agency.
Example - Doing business, ownership, rights etc.
b) Criminal Law
Example- Theft and bribery laws.
c) Company Law
Example - Directors and their duties, reporting requirements, etc.
d) Employment Law
Examples - Trade union recognition, possible minimum wage and unfair dismissal.
e) Health and Safety Laws- Fire precautions and safety procedures.
f) Environment
Examples- Pollution Control
g) Tax Law
Examples- Corporation tax payments, PAYE etc.
h) Competition Law
Examples- Illegality of Cartels.

71
Q

4.10
What is the importance of Context in Strategic Business Analysis?

A

Context is very important because different sized organizations face different challenges from Resources to competition to politics.

SMALL BUSINESSES
a) Limited Range of Products.
Effects on strategy - Few problems of scope.
b) Significant pressure from competitors.
Effects - Exploitation of competences and Resources.
c) Limited Financisl Resources.
Effects - Constant relationships with Lenders or Banks.

MULTI-NATIONALS
a) Characteristic - Diverse Products and Markets.
Effects - Problems of relationships and Conttol.
b) Significant Resources of all kinds.
Effects - Allocation and co-ordination of Resources.
c) Multiple Markets and Facilities.
Effects - Logistics of Manufacturing and supplies.

72
Q

4.10.3
Characteristics of the Public Sector

A

a) Influence of Ideology on Strategy
b) External Influence and even control by Government.
c) Political constraints on funding and Strategic Choice.
d) Requirement to provide universal service
e) Competition for resource inputs within a Political arena.
f) Need to demonstrate best value in outputs.
g) Increasing need to demonstrate improvement in social outcomes.

73
Q

4.10.4
Characteristics of Not-for-profit organizations

A

a) Importance of underlying values and purposes.
b) Diverse sources of funds that may have to be competed for.
c) Potential conflict between stakeholders and need for transparency.

74
Q

4.10.5
Intangible Products

A

a) Product information
b) After sales service
c) Staff competences

75
Q

4.11
Industry and Sector

A

Industry is where they manufacture goods, while Sector is associated with public service and NGOs.

76
Q

4.11.
What is Task Environment?

A

It is the Industry, Sector, Competitors and Markets. (Day to day environment).

77
Q

What is Industry?

A

According to Rutherford 1995, an Industry is a group of firms producing the same product.

According to Porter 1980, an Industry is a group of firms that are producing products that are close substitutes for each other.

78
Q

Supply led Convergence.

A

This occurs when suppliers discover links with suppliers in other Industries and move together to corporate in building new markets.

79
Q

Demand led Convergence

A

This occurs when customers treat the products of different Industries as substitutable as in the case of Cellphones and fixed telephone lines.

80
Q

5.0
Competitive Forces
Porter’s 5 Forces

A

2 x Threats. ie
a) Threats of New Entrants on Top
b) Threats of Substitute Products or Services at the bottom.

2 x Bargaining Powers. ie
c) Bargaining Power of Customers on the right.
d) Bargaining Power of Suppliers on the left.

1 x Rivalry. ie
e) Rivalry amongst existing Firms or Competitors.

Michael Porter’s 1980 five Forces Model is one of the 4 most important models in the field of Strategy.

81
Q

5.1
The threat of new entrants and barriers to entry to keep them out.

A

Barriers to entry discourage new entrants.
a) Economies of Scale- High fixed costs imply a high breakeven point, which depends on large volume of sales.
b) Product differentiation - A few existing firms may promote a large number of brands to crowd out the competition.
c) Capital Requirements- High Capital investment discourage new entrants.
d) Knowledge Requirements- Specialist Knowledge and skills are barrier to entry.
e) Switching Costs - At times it costs money and time to move from one supplier to the other.
f) Access to distribution channels- New distribution channels are hard to get and existing ones difficult to access.

Cost Advantage of existing firms:
1) Patent rights
2) Experience and Know-how
3) Government and subsidies
4) Favored access to raw materials.

Entry barriers might be lowered by:
1) Changes in the Environment.
2) Technological changes.
3) New distribution channels including the Internet.

82
Q

5.2
The Threat of Substitute Produce

A

a) The Threat of a Substitute is high if a Product from a different Industry offers an attractive alternative to the existing industry’s product in terms of price and performance.

b) If the buyer’s switching costs to the Substitute are low.

83
Q

5.3
The Bargaining Power of Customers

A

Customers want quality products and services at a lower price and this can lower profitability for suppliers in the Industry.

Customers power depends on:
a) How much they buy, ie volume.
b) How many buyers they are. Where the clients are big and few they have more Bargaining Power.
c) How the critical the product is.
d) Switching costs.
e) Whether goods are Specialized.
f) Customer’s ability to bypass the supplier.
g) When the product’s quality is important to the Customer, the customer customer is less likely to be price sensitive.

84
Q

5.4
The Bargaining Power of Suppliers

A

Suppliers can exert pressure for higher prices. However the power depends on:
a) Whether there is one or just two dominant Suppliers.
b) The Threat of new entrants or substitute products.
c) Whether the Suppliers have other customers outside the Industry.
d) The importance of the Supplier’s product.
e) Differentiated products by the supplier.
f) High Customer Switching costs.

85
Q

5.5
The Rivalry amongst current competitors in the Industry

A

High competition within an industry reduces profitability of the industry as a whole.

Factors determing intensity of competition
a) Market Growth- When firms are competing for a greater market share.
b) Cost Structure- High fixed costs are a temptation to compete on price in order to make few sales.
c) Switching- Suppliers will compete if buyers can and do switch easily.
d) Capacity - Increase in output capacity in order to reduce unit costs.
e) Uncertainty- Unsure of what other firms are doing.
f) Strategic Importance- If success is a prime strategic objective.
g) Exit barriers - these make it difficult for an existing supplier to leave the Industry.
Exit barriers are:
- Government pressures not to shut down.
- Reluctance of managers to admit defeat.
- High cost of redundancy payments to employees.
- The effect of withdrawal on the other operations if a subsidiary.

86
Q

5.6
Government

A

Government has great influence and can be viewed as a sixth force.
Porter’s 1980 5 forces interrelate and they vary from time to time.
Government also encourage or restricts competition depending with policies.

87
Q

5.7
Opportunities and Threats

A

Opportunities may take the form of Strategic gaps not being exploited, eg according to Johnson et al 2005:
a) Substitutes for existing products might be created.
b) New markets in developing countries.
c) Targeting new Strategic customers say through the internet.
d) Creating and marketing complimentary products.

Threats are likely to emerge from within immediate Industry arena.

88
Q

Environmental Factors affecting organizations can be classified as either Opportunities or Threats, in a Diagram as follows:

A

EXTERNAL FORCES
a) The Environment
- Political
- Economic
- Social
- Technological
- Environmental
- Legal

b) The Industry
Porter’s Five forces
- Threats of New Entrants
- Threats of Substitutes.
- Bargaining Power of Customers
- Bargaining Power of Suppliers
- Rivalry amongst current competitors.

c) Product Lifecycles
- Inception
- Growth
- Maturity
- Decline

d) National Competitiviness
Demand Conditions
- Related industries
- Factor conditions
Porter’s Diamond
Firm strategy, Structure and Rivalry.

e) Customers
Understanding the customer
- Strategic groups
- Critical success factors
- Market segmentation
- Marketing mix.

89
Q

Chapter 1 Round up Summary

A

Johnson et sl 2005 says Strategy is the direction and SCOPE of an organization over the long term, which achieves ADVANTAGE IN A CHANGING ENVIRONMENT through its configuration of RESOURCES and competences with the aim of fulfilling STAKEHOLDER EXPECTATIONS.

  • Strategic Decisions are made under conditions of complexity and uncertainty; they have wide impact on organization and often lead to major change.
  • Strategies are developed in order to achieve desired outcomes. These are inherent in the organization’s mission or defining purpose. Mission guides Strategic Decisions and provides values and a sense of direction.
  • A structure of goals and objectives derives from mission and supports it. All the parts of this structure should be mutually supportive.
  • There are 3 levels of Strategy in an organization namely:
    a) Corporate: The general direction of the whole organization.
    b) Business: How the organization or its SBUs tackle particular markets.
    c) Operational or Functional: Specific strategies for different departments of the business.
  • Johnson et al 2005 a three part structure for thinking about Strategy:
    a) Strategic Position
    b) Strategic Choices
    c) Strategy into Action.
  • Johnson et al 2005 highlight that the Environment may be divided into three concentric layers ie.
    a) Macro-Environment
    b) Industry or Sector
    c) Competitors and Markets
    These layers interact with each other.
  • Environmental uncertainty depends on the degree of complexity.
  • The Macro-Environment may be analyzed into six segments using the PESTEL framework.
  • The context of Strategy is the organizational setting in which it is developed.
  • The competitive environment is structured by five forces according to Porter 1980:
    a) Threats of New Entrants
    b) Threats of Substitutes.
    c) Bargaining Power of Customers
    d) Bargaining Power of Suppliers
    e) Rivalry amongst current competitors.
  • The dtrategic influences present in the environment may be classified as Opportunities and Threats.

Strategic Business Analysis CA 2.6 (6 decks)

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