Chp 1: The strategy process Flashcards
To develop a strategy, an organisation needs to understand what six things?
- It’s fundamental goals
- Key stakeholders (and their expectations)
- The environment it operates in
- The ecosystem it operates in
- It’s resources
- It’s capabilities
What are the three horizons that need to be considered when formulating a strategy?
- Horizon 1 means defending and extending the current business
- Horizon 2 businesses are emerging activities that should provide new sources of profit
- Horizon 3 ventures are new and risky and might provide a return in several years
What are the five characetristics of strategic decisions?
- Complex
- Uncertain
- Impactful on operational decisions
- Integrated as they affect the whole business
- Lead to change which may impact culture
What are the three main steps to the rational (top-down) approach to strategy?
- Analysis - of current strategic position, understanding SWOT position.
- Choice - generating and evaluating strategic options, before agreeing a strategy
- Implementation and control - converting the overall strategic plan into detailed plans and targets; then monitoring effective progress
What is Emergent strategy?
Involves the formulation of a plan but includes the ability to flex the plan by crafting in new opportunities and crafting out unrealised strategies that have become redundant
What five essential activites did Mintzberg mention in strategic management?
- Manage stability - BAU during change
- Detect discontinuity - some changes are more important than others
- Know the business - awareness of operations
- Manage patterns - detect and help take shape, if appropriate
- Reconcile change and continuity - avoid concentrating on one or the other
What is logical incrementalism?
Using small scale (incremental) extensions of past policies.
Often doesn’t match the speed of change
Not suitable for new companies with no past performance
What is freewheeling opportunism?
Managers shouldn’t bother with strategic plans but should exploit opportunites as they arise
Allows for fast responses to emerging opportunities
May result in missed opportunities and constance reacting
How do simple, dynamic and complex environments favour different strategies?
- Simple - favours formal plannign and historical analysis
- Dynamic - requires a more flexible/emergent approach
- Complex - strategy may be devolved and decentralised
What are the four vectors in the certainty/agreement matrix?
- Rational - close to agreement and certainty
- Political - close to certainty but far from agreement; negotiation and compromise will be required
- Judgement - close to agreemtn but far from certain; a strong vision replaces a fromal plan
- Edge of chaos - far from agreement or certainty; traditional approaches are ineffective so it will require innovation and creativity
What are the four strategy lenses?
- Strategy as DESIGN - top-down, systematic; rational approach
- Strategy as EXPERIENCE - extension of what has worked in the past; logical incrementalism
- Strategy as VARIETY - sees strategy as emerging from within and around organisations
- Strategy as DISCOURSE - looks at the way managers use language to frame strategic problems, present options and communicate decisions
What are the three different approaches to strategic planning (ie. what the organisation focuses on when devising strategy)
- Accounting based approach
- Position based approach
- Resource based approach
What is bounded rationality?
The idea that it is not possible for decision makers to research and evaluate all the potential opportunities available to them. As a result they have to choose from a restricted range of options, and make decisions which ‘satisfice’ rather than ‘optimise’
What are the three levels that strategy can be categorised into?
- Corporate - affects the whole business (ie. what business/market should we be in, geographical decisions)
- Business Unit - how to approach a particular market or business unit (ie. how we compete within those markets)
- Operational - decisions of strategic importance at operational level (ie. investment in plant and machinery or key personnel)
