Chapter 1 Strategic analysis, choice and implementation Flashcards
1.1 Strategic analysis
Focuses on the gap between where the company is currently and where they want to be. This should include analysis of ESG. It may be beneficial to use models such as PESTEL and SWOT. When reviewing large, complex scenarios you should be able to:
- Analyse and evaluate the external environment that a firm faces.
- Evaluate the industry environment in which a firm operates.
- Analyse the current position of a firm, from both a financial and non-financial perspective.
1.2 Strategic choice
A typical exam requirement is to evaluate/analyse the strategy proposals/options given in the question. This should cover:
- Methods of development
- Overseas expansion
- Generic strategies
- Growth strategies from Ansoff
- Digital strategy
2.1 Risk management
Instead of evaluating a new strategy, we could be asked to:
- Identify or evaluate risks arising in the scenario.
- Make recommendations on how to mitigate the risks identified.
To identify or evaluate risks use PESTEL, explain the factor of risk and use the factor/explain/likelihood approach.
Recommendations to mitigate risks include explaining how to address the risk (transfer, accept, reduce and avoid), give practical advice and a good culture of risk management should be promoted from the senior staff.
2.2 Enterprise risk management
ERM is a process, effected by an entity’s board and management applied in strategy setting and across the enterprise, designed to identify and manage risks. The components are:
- Objective setting.
- Event identification
- Risk assessment
- Risk response
- Internal environment and control environment
- Control activities or procedures
- Information and communication
- Monitoring
3.1 Strategic implementation
Once a decision has been taken the company will need to implement it. This may affect a number of areas of the business and you could be advised on the impact of the specific area.
- Generic pros and cons of organic growth, acquisition, and joint development strategies
- Change management: including the management of climate change and the transition to net zero.
- Generic pros and cons of different organisational structures
- Marketing (marketing mix is most useful)
5.1 Supply chain management
The planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities. Thus, a key element of supply chain management is knowledge sharing and collaboration with suppliers and distributors to ensure customer needs are met.
5.2 Drivers of supply chain performance
All the processes in a supply chain can be classified into the following categories:
- Push processes: where demand is forecast from historical sales.
- Pull processes: where demand is driven by the customer.
The majority of companies have a mixture of both and the company needs a balance between efficiency and responsiveness to support the competitive strategy. When discussing the supply chain management, the following is helpful:
- Facilities: location, flexibility and capacity of facilities for production
- Inventory: key decision is whether to carry a buffer to meet customer demand or to minimise inventory and thus holding costs
- Transportation: there is a speed/time trade off
- Knowledge sharing: information shared across the supply chain can significantly improve efficiency through better planning and utilisation. However, this can increase risk to cyber security. This required business trust between the two companies.
- Number of suppliers: more suppliers, the more time taken up to manage them.
- Sourcing: choosing supply chain partners
- Pricing: the prices charged at each stage of the supply chain
- Collaboration: companies choose to collaborate as an enterprise which can gain competitive advantage in the supply chain
6.1 Customer relationship management
CRM is the use of database technology and ICT systems to help an organisation develop, maintain and optimise long-term, mutually valuable relationships between the organisation and its customers. Database marketing builds a database of all communications with customers and then use individually addressable marketing media to contact them further. The benefits include:
- Global reach
- Lower cost
- Ability to track and measure results.
- 24-hour marketing
- Personalisation
- Better conversion rates
- Accessible from any point, to ensure consistent messages given to the customer.
- Support the branding message.
- Ability to focus on larger spenders to obtain a greater impact on sales.
Web 2.0 technologies: new generation of web software. Can be used by companies to strengthen their brands and their relationships with customers. They allow both positive and negative feedback from customers generating better customer relationships and brand reinforcement.
E-marketing: application of interest and related digital technologies to achieve marketing objectives. Although the GDPR has provided a challenge for organisations, in collecting data from customers.
Big data analytics refers to the ability to analyse larger quantities of data, or more unstructured data. This is a tool for a company to be able to identify potential customers and market their products to the correct demographic.
6.2 The three phases of CRM
- Customer acquisition: attracting customers to make their first purchases.
- Customer retention: encouraging customers to become repeat purchasers.
- Customer extension: encouraging existing customers to make additional supplementary purchases.
6.3 CRM strategies
- Develop appropriate staff incentive schemes to encourage staff to retain customers.
- Provide consistent standards to provide customer expectations.
- Obtain senior management buy-in
- Monitor customer relationships by gathering detailed information and developing specific loyalty-focused rewards.
- Implement systems that can support the process.
7.1 Business process re-engineering
BPR is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in measures such as cost, quality, service and speed. BPR is similar to zero based budgeting as it involves looking at a process from first principles.
8.1 Human resource management
Includes all the activities management engage in to attract and retain employees and ensure that they perform at a high level and contribute to achieving organisational goals. The workplace has changed with the development of technology and HRM needs to understand the changes in order to benefit from them.
- Big data analytics: as well as requiring analysts this can also apply to new jobs being created.
- Flexible workforce management: to help with costs and work/life balance, more companies are choosing to adopt flexible work places for their employees. This is facilitated by the advances in technology such as cloud computing software and easier ways to communicate.
8.2 Impact from ESG
Areas in which HR can improve ESG goals include:
- Executive remuneration linked to ESG targets.
- Closing the gender pay gap.
- Paying a living wage
- Diversity and inclusion
- Reduce the ratio between CEO’s pay and average worker.
- Identify, prevent and remedy any issues around modern slavery.
- Health and safety
- Training
9.1 Digital strategy
Digital disruption relates to the impact that new technologies have on business as usual and digital transformation refers to the way those impacts can be proactively managed. Key barriers when implementing a digital strategy:
- Lack of understanding
- Resistance to change.
- Lack of resources
- Technology choices
- Evolving customer needs
- Cybersecurity
Potential solutions include:
- Understand the current position and corporate strategy.
- Assess ability / readiness to implement change.
- Define the change you are trying to achieve.
- Have a good change management process.
- Measure success
9.2 Technology developments
- Digital assets: these are assets in digital form. These need to be held and managed securely.
- Internet of things: interconnection of computing devices, via the internet, embedded in everyday objects.
- Intelligent systems: computer-based system that can represent, reason and interpret data.
- Automation: robotic process automation is particularly useful in rules-based, repetitive processes
- Chatbot: service, powered by rules and AI which people interact with
- Distributed ledger technology: database that exist across different locations with multiple participants. Records are only stores with the consensus amongst all parties.
- Blockchain: provides effective control mechanism for recording data. It is a chain of blocks of data accessible by everyone. When a change to data occurs, once verified by all parties, the records are updated simultaneously.
- Cryptocurrency: digital currency and uses cryptography to secure and verify transactions.
- Platform economy: use of digital platforms to connect sellers and customers. These companies focus on maximising the number of providers and customers rather than the provision of goods/services. Having access to a large number of buyers/sellers not only makes the platform more attractive but provides access to high volumes of data. This data provides market intelligence and can be key to achieving a competitive advantage.
- Software selection: digital transformation makes organisations faster and more adaptable. Companies require software to be integrated within the whole system and meets the demands of the digital strategy. Selection criteria includes product specifications, price and value for money, quality and reliability and vendor viability.
