Chapter 3 Flashcards
What is strategy
Provides a foundation for an organisation to succeed through aligning execution with the contexts of its internal and external environment
Effective strategy
Provides a foundation for health and performance of the organisation over the long term
Ineffective strategy
Damages the long-term health of the organisation and can cause a multitude of different problems
Strategic analysis and definition
Perform environmental analysis of current strategies (external+internal)
Determine effectiveness of current strategies
Formulate plans
Recommend and implement the most viable strategy
Adaptive strategy development
Some organisation develop strategy based upon market and stakeholder feedback
many new start-up organisations develop strategy this way. Aim is to deploy at low cost. Through this they aim to learn quickly through feedback what it is they market wants. This leads to product evolving aligning with feedback
Adaptive strategy development is often associated with non-hiearachal organisations - employee ownership. Traits with this approach- acceptance of feedback, object cue decision-making, continuous improvement and valuing of knowledge.
Drawbacks of adaptive strategic development
Major consequences can lead to failure being culturally unacceptable.
Adaptive strategic development may not be appropriate If market feedback is perceived to be unhelpful- such s government department
Linear strategy development
Common with large, successful organisations.
Occurs when environmental conditions are stable and immediate market feedback is not valuable.
Provides an advantage of an unchanging strategy that can be communicated with the organisation’s stakeholders.
What is linear strategy development associated with
Organisations that are hierarchical and low employee ownership
Drawbacks of linear strategy development
Slower reactions by organisation to changes in the environment.
If consumer preferences change, the organisation may jot respond quickly enough. Can lead to loss of market shares to competitors
Hybrid strategy development
Organisations blend approaches
Different departments will try different approaches
Those focused on new products and services may use the adaptive strategic development
Understanding the strategic context
To understand need to know the answers to these questions
What is the organisations current state?
what is the organisations desired ‘target state’
What is the plan to move between the current state and target state (aka strategy execution)
Understanding the strategic context
Analysis of current state of internal/external environment
Definition of target state
Measurement of progress towards the target state
- feedback loop between current and target state
Understanding strategic context
Internal state
Strengths+weaknesses
Internal environment analysis
VMOST analysis
Resource audit
Balanced scorecard
Performance measurement
Growth share matrix
what is PESTLE
A framework used to access factors in the macro strategic environment that are beyond immediate control, but can influence the organisation
What does PESTLE stand for
Political- generally election changes
Economic- what are costs? Interest rates
Socio-cultural- changes to characteristics of a population such as race, ethnicity etc. can also mean change in preference
Technology- Ai? Self-driving cars?
Legal- like political
Environmental- impact of plastic, carbon emissions
What is VMOST
Vision, mission, objectives, strategy, tactics
Provides an approach for the development and assessment of strategy
VMOST definitions
Vision- defines the target state for the organisation without regard to how this will be achieved, target state is realised through the completion of the mission
Mission- describes what the organisation will do
Objectives- specific outcomes that organisation will achieve
Strategy- long term approach that organisation will take to achieve the vision,mission and goal
Tactics- specific and detailed means by which the strategy should be executed. Tactics are often adapted when feedback of the strategy is received
VMOST questions
IS THERE a VMOST in place
Are the elements of the VMOST defined?
Is the VMOST communicated and understood by leadership, management and employees?
Are the vision and mission elements aligned?
Do the objectives align to and amplify vision and mission
are the objectives SMART
Are objectives balanced
Does strategy align to vision mission and objectives
Do the tactics align to the strategy
Performance measurement
Objectives- specific outcomes that organisation wants to achieve
CSFs- qualitative descriptions of critical factors
CSFs are ideally balance and should align with he vision and mission of organisation
KPI- key performance indicators
Quantitative measurement of performance that track achievements of CSFS
Multiple KPIs can be used to measure a single CSF
KPIs can be used to measure multiple different CSFs
SWOT analysis
Summarises the results of internal and external environment analysis and highlights key factors identified.
Essential that SWOT is developed using the techniques described for internal and external environment analysis as this ensures that it accurately reflects the organisation’s strategic position
Strategy execution
Several techniques that may be used to uniform strategy development and execution such as
Business model Canvas - BMC
Business capability model- BCM
Value stream modelling
Target operating model- TOM
Business model canvas
Customer segments- who is the audience/customer base?
Value proposition- what value is the organisation offering i.e what problem is your product solving
Channels- how does the organisation communicate with customers? How do customers want to be contacted?- chatbox?
Customer relationships- possible ways to enhance customer experience
Revenue streams- how profitable are each revnue streams
Key resources- what does the buisness require?
Key activities
Key partners- who are the organisations partners?
Cost structure- is the cost sustainable? How much do you pay suppliers
POPIT
TOM is used to describe how a business needs to be established to support the execution of strategy
Basically looking at where the company wants to be in the future
INTERNAL
Processes- are they well defined and communicated? Is there good IT support? Is there potential delays for errors?
What is POPIT
People- how well are they trained, are they incentivised? Is there ongoing training?
Organisation- how well is the management? Linear/adaptive strategy?
Processes- are they up to date?
IT- what technology does the business need to adopt to compete with competitors? Ai?
Strategic analysis
Identify and evaluate data relevant to the company’s strategy
Define internal and external environments to be analysed
Develop strategies for a business by researching the business and environment in which it operates
IT systems analysis
System analysts are responsible for identifying and specifying the IT systems requirements in sufficient detail to provide a basis for evaluation of software package of the development of a bespoke IT system
The work involves the use of techniques such as a data modelling and process of function modelling. The work involves around describing the software requirements
What is external environment analysis called
PESTLE
What is internal environment analysis called
VMOST
Internal environment analysis
Resource audit
Resource audit helps identify core competences or may highlight lack of competence that could undermine competitive moves.
First area relates to physical resources- buildings, plans and equipment.
Second is financial resources- determines financial stability, capacity to invest in new resources
Then Human Resources and their expertise, adaptability and commitment
Intangible resources- know-how do organisation can include trademarks
Another intangible resource is the reputation of the organisation - brand recognition and belief of quality about brand
Internal envrionment analysis
Portfolio analysis BOSTON box
This is when organisations review their portfolio on a regular basis in order to take decisions about the resources to be invested into each buisness unit
