Chapter 2

Question 1

2.1: Identify the four methods suggested by Ansoff that can be used to identify the success or failure of a strategy.

Answer 1

• Economic: have resources been used effectively to create the planned outputs of the organisation, has the strategy
  delivered the required economic profitability, or other numeric measure?
• Non-economic: have the expectations of the differing stakeholders been satisfied?
• Self-renewal: has the strategy contributed to the ongoing life and sustainability of the organisation?
• Flexibility: has the strategy allowed sufficient latitude to enable real-world change?

Question 2

2.2: Briefly define what is meant by ‘rational strategy’ and give an example.

Answer 2

A rational strategy will contain conscious choices that have been made concerning the length of the strategic plan, the
levels of risk, and the perceived opportunities and threats.

For example, when Nintendo launched the ‘Nintendo GameCube’ the company had determined its strategy to build upon its earlier games consoles, it laid an upgrade path for customers illustrating the advances offered by the new technology, and had fixed a higher price point based on its perception of what the customer would be willing to pay.

Question 3

2.3: Briefly define what is meant by ‘emergent strategy’ and give an example.

Answer 3

An emergent strategy will occur when an intended rational strategy comes under the influence of unexpected external (or
internal) forces, and the strategic plan requires change to enable the achievement of the strategic objectives.

To return to the example in Test yourself 2.2, within a few weeks of Nintendo having launched its ‘Nintendo GameCube’, Sony released its new PlayStation. Sony picked a price point below that of the newly released Nintendo games console. To preserve its marketplace and continue to attract its customers, the original Nintendo strategy had
to change – the company reduced their price point to just below that of the Sony machine, and gave software discount
vouchers to anyone who had already purchased the GameCube at the original higher price. This was emergent
strategy, as it diverged from the original rational plan

Question 4

2.4: Suggest the relationship that exists between complexity and chaos in strategic planning.

Answer 4

Complexity is based around the understanding that any organisation exists on a day-to-day basis due to the interaction
of the many different aspects of the systems that are operating within that organisation. Systems theory suggests that
complexity is not usually due to the different attributes that exist within a structure, but linked to the relationships between those attributes.

Chaos recognises that while an organisation can be structured and defined, the irrationality of human behaviour can
always introduce the risk of chaos. Lorenz talked about the ‘butterfly effect’ – the recognition that a small move or change in one part of a system can have a much larger impact elsewhere.