Chapter 7: Framework for generating strategic options Flashcards
What will an internal environmental analysis look at?
Strengths and weaknesses of the organisation
What will an external environmental analysis look at?
Opportunities and threats that the organisation needs to be aware of
What process does the SWOT analysis assist with?
Position audit process
What would the position audit seek to identify?
Threats focusing on weakness
Threats focusing on strength
Opportunity focusing on strength
Opportunity focusing on weakness
What would the position audit allow?
Identification of the current issues relating to the organisation concerned
Analysis and identification of the relevant problems facing the organisation
Consideration of the strategic capability of the company and its history
What are value drivers?
Anything that can be used to create additional value to a consumer in respect of the product or service
More value drivers organisation has the greater the competitive advantage
What are some examples of tangible value drivers?
State of the art production facilities
Distribution facilities that are strategically placed to enable rapid and efficient delivery to customers
Raw materials that are either better quality or cheaper than those used by rivals
What are some examples of intangible value drivers?
Brands
Intellectual property and patents
Relationship with customers and suppliers
Employees
Reputation
Know-how
What is a gap analysis?
comparison between an entity’s ultimate objective and the expected performance from projects, both planned and under way, identifying means by which any identified difference or gap might be filled
How do we do a gap analysis?
- Firm sets its key strategic objectives for some time in the future
- Firm forecasts its likely performance from current operations, after efficiency savings and after new strategic initiatives
- Identify and remaining ‘gap
How do we close an efficiency gap?
Undertake ‘efficiency drive’
Make costs savings and any other actions that will improve the output
Look at improving market penetration strategies
How do we close an expansion gap?
How the organisation can expand its sales.
Adopt a market development approach
Product development strategy
How do we close a diversification gap?
Organisation taking a riskier strategy where it looks to sell new products t new market.
Usually last strategy to adopt
What are the benefits of a gap analysis?
Simple starting point to initiate further debate and consideration
Easy to understand
Effective communication device
Highlights need to keep and eye on the long-term time horizon and draws attention away from short-term
Provides basic options that may be considered for closing the gap
Questioning of the realism of the objective
Stable environments will still provide a basis for effective gap analysis