Core Activity A - Develop business strategy Flashcards
What is the definition of strategy?
‘Strategy is the direction and scope of an organisation over the long term which achieves advantage for the organisation through its configuration of resources within challenging environments, to meet the needs of markets and fulfil stakeholder expectations’.
What are Druckers 5 fundamental questions ?
What is our mission?
Who is our customer?
What does our customer value?
What results do we seek?
What is our plan?
What does a vision statement answer?
Where do we want to be ?
Designed to inspire
What question does a mission statement answer?
What do we do? What’s our purpose?
For larger and more complex organisations, what levels should a strategy be broken down into?
Corporate - (The group)
Business - (Product / service level)
Functional - (Opperational)
Corporate level - sets strategic intent (Growth, stability, recovery) corporate lifecycle?
Business level - must align with corporate strategy but segmented to different markets and customer types
Functional level - operational strategy driven by implementation of business strategy. Determines how the business should operate ie value chain etc.
It should be inclusive and contain bottom up and top down flows
What are the types of corporate level strategy?
Growth - Organic / M&A
Stability - Mature/ consolidated
Recovery/ Retrenchment - restructuring
What might a growth strategy across the organisation departments look like?
Corporate growth strategy
Business level growth
Departmental level strategy
Finance - raising funds
Sales and marketing - building campaign
Integration of IT systems etc etc
HR - recruitment strategy
What’s the preferred model for overall company strategy ?
Strategic control
Autonomy overseen by centre to steer them back on track where required
(Berkshire)
A strategic plan can be accomplished by answering what following questions?
Where are we right now? Strategic analysis of ecosystem
Where would we like to go? Define objectives
How do we get there ? The Strategic plan
What steps are involved as part of the strategic management process?
Vision, mission & objectives (SMART)
- Analysis (environmental SWOT internal) ie corporate appraisal
- Formulation (option generation, Evaluation and choice)
- lmplementation of strategy (balanced score card) CSF & KPI’s
- Review and control
What are the common stages of strategic management?
Sense of direction and purpose
Strategic goals and plans
Implementing plans
Monitoring and evaluating
Describe the elements of the Boston consulting group Matrix (BCG Matrix)
STAR
QUESTION MARK
CASH COW
DOG
What is a corporate appraisal ?
SWOT analysis for the group
Environmental / external
Internal
Is there a gap? Can we close the gap?
The strategic evaluation should ….
Build on strengths
Address weaknesses
Grasp opportunities
Avoid or minimise threats
What are the four main elements of the strategic formulation process?
Analysis - SWOT
Formulation - Evaluate options
Implementation
Review and control
Describe alternative approaches to formal corporate strategy?
Incrementalism - small changes in the right direction
Emergent approach - tried and tested as you go along allowing the strategy to evolve or emerge. Constantly evolving
Freewheeling opportunism - no real plan but can adapt quickly to opportunities
What are the 2 complimentary approaches to strategic development?
Inside out view - internal capabilities and competencies
Drive change, development and innovations (9ms)
Outside in view - create customer value and a seamless experience
Market orientated approach using customer demand and preferences
SWOT analysis useful to consider both
What’s the key difference between ‘vision’ and
‘mision’
Time frame
How might objectives be set once the mission and visions ?
Financial
Grow market share
Customer
NPS
CSAT
CES
Operational
Efficiency gains
People
Retention rates
360 degree staff appraisals twice a year
How could PESTEL help to analyse a company ?
Link change drivers to key risk factors
Generate ideas for how to strategically position the company
How might the analyse part of the strategy process look?
SWOT analysis as the base
SW - Internal / corporate lifecycle analysis
OT - external using PESTAL / industry lifecycle
What’s the formula for churn rate ? Ie customer turnover rate
% of customers that left = Number of customers that left / total number of customers
Describe the customer value management cycle?
- Manage customer segmentation
- Measure customer margins
- Measure customer lifetime value
- Measure customer impact
- Manage customer profitability
How can the BCG matrix be used as a visual tool to determine portfolio weightings?
Circles implemented based on sales for product
or weighing of portfolio for company
What’s the customer lifetime value (CLV) formula ?
CLV = (Profit x retention rate x discount rate) cont’d for each time period
What are the components of the customer portfolio management matrix ?
Demanders
Champions
Losers
Acquaintances
What’s the formula for relative market share? (BCG)
% = 100 x product or brands market share / nearest competitors market share
What is the formula for market growth rate? (BCG)
Growth rate = Total sales current year / total sales previous year
What are key useful terms in lifecycle costing?
Cradle to grave
Cradle to cradle
Cradle to factory
Cradle to user
Describe the competencies in internal capability analysis ?
Core / distinctive - create competitive advantage
Threshold - minimum requirements and don’t create competitive advantage
What is a CSF?
A Critical success factor is an element of organisational activity which is central to its future success. CSFs may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility and brand awareness.
What are the 9 M’s in a resource audit ?
Make up - structure & culture
Management
Management information
Manpower
Markets
Materials
Methods
Money
Machinery
What key things should be identified during value chain analysis ?
Cost Drivers
Value Drivers
What steps could be used in value chain analysis ?
- Identify sets of value activities
- Asses activity costs internally
- Asses the importance of activities
- Identify where and how cost can be reduced
What style of value chain analysis would be better suited for a service company?
value shop model
Describe the 5 steps of the value shop model ?
Finding the problem
Problem solving
Choice of solution
Solution implementation
Control and feedback
Whats the main theory behind porters value chain / value system?
- Finding new or better ways to perform activities
- Combining activities in new or better ways
- Managing linkages in ones own value chain
- Managing linkages externally in the value system
What are the six main areas of strategic decision making set out by Johnson, Scholes and Whittington ?
- Long term direction
- Scope of activities
- Determining competitive advantage
- Adapting to changes in the environment
- Exploiting unique resources or competences
- Stakeholder values or expectations
Describe the combination of capability ?
Competence
Capacity
Culture (doing it in the right way)
Descrive asnoffs growth matrix ?
Product development
Market development
Market penetration
Diversification
Describe visionary thinking?
Backwards from perfect (working backwards to achieve milestones & goals)
How can a company avoid fade ?
Incorporate second curve thinking
What’s better than if ain’t broke model ?
Don’t wait until it’s broken … moving on from success is much harder than moving on from failure
Eg Klopp etc
How might a growth strategy develop?
SWOT & GAP analysis - use ansoff matrix to close gap.
What should senior management beware of ?
- Relying on experience thats out of date?
- Selective perception and Information use
- unchallenged assumptions and acceptance of the status quo
- Strategic herding (flavour of the month)
- Attachments and emotional ties
What characteristics would greatly assist strategy creation ?
- Long term view
- Respect all evidence
- Tolerance of other points of view
- Openminded
- Future focussed
- Ability to see interconnected factors
- Critical thinker
What types of decision maker style exist?
Decisive
Flexible
Hierarchic
Integrative
Systematic
Describe 2 key strategic choices for businesses ?
How do we compete?
Where and how do we grow?
How might we assess if diversification is an effective growth strategy?
- Attractiveness test (is the industry attractive?
- cost of entry test?
- better off test?
What methods for growth exists?
Organic
non organic
joint venture
What model may be better suited to business units than the BCG matrix?
GE McKinsey matrix
What is the General electric McKinsey matrix particularly useful for?
- Maps strategic business units
- Goes beyond existing portfolio
- Assesses strategic options
How might we determine market or industry attractiveness?
- Long run growth rate
- Market size
- Industry competition and profits (porters 5 forces)
- Product lifecycle
- Changes in demand
- Trend in prices
- Availability of resources
- Market segmentation
How might we determine Business unit strength?
Total market share
Brand strength
Profits / earnings
Customer loyalty
VROIO resources
Strength of Value chain
- Level of product differentiation.
Production Flexibility
What are the stages in the process of a merger and acquisition ?
strategy
principles
target company
Pre lim Valuation
Valuation
Letter of intent
confidentiality
Initial meeting
Due diligence
Definitive agreement
recording Needs
Rapid Integration
What are the four foreign growth and market strategies (business models)
International
Multinational
Global
Transnational
Describe an International company ?
An international company is an importer or exporter and has no or limited investment outside of its home market.
Describe a Multinational company
A multinational (or multi-domestic) company has investments in other countries but does not have coordinated product offerings in each country. It is more focussed on adapting its products and services to each individual local market.
Describe a Global company?
A global company is invested and present in many countries. A global company markets its products using the same coordinated product brand in all markets and generally, has one corporate office that is responsible for global strategy. The emphasis is on gaining global economies of scale and efficiency.
Describe a transnational company ?
A transnational company is a more complex organisation that seeks to achieve potentially conflicting objectives (for example, global efficiency versus local responsiveness). It is invested in foreign operations and has a central corporate facility, but it gives decision-making, R&D, and marketing powers to each individual foreign market.
How could you analyse Growth strategies ?
Porters diamond theory of national advantage
What re the pillars of porters diamond ?
Firm strategy, structure & rivalry
Demand conditions
Factor conditions
Related and supported industries
What is a comparative advantage ?
an economic theory that describes when a country, individual, or business can produce a good or service at a lower cost than others
Ie high in labour market
high in land /resources farming
Whats an example of factor conditions? (porter diamond)
Land
Labour
Capital
Whats an example of Advanced factor conditions?
Education
Infrastructure
Technology
Why tools can be used to predict future probabilities?
Monte Carlo style simulations
What types of statistical analysis exist and useful for forecasting?
Time series
Correlation
Regression
Econometric
What’s the moto for game theory?
Think forwards and reason backwards
How can real options aid strategy ?
Positive NPV
Strategy can be evaluated
Room for development
Allows for discretion
What are the key points in decision tree analysis ?
Square = decision point
Circle = potential outcome
Draw from left to right / evaluate from right to left
How can decision tree analysis be useful ?
Present complex data into a diagram of decision making
What are the 5 c’s that relate to foresight?
Communication
Concentration
Coordination
Consensus
Commitment
How can scenario planning be effective beyond the results of the exercise ?
Encourage collaborative thinking and learning / decision process in different environments
What are the steps involved in scenario planning ?
Define scope, issues and horizon
Define key drivers
Collect and analyse data
Develop scenarios
Apply scenarios
Maintain and update
What is strategic optimisation with SFA
Suitability
Feasibility
Acceptability
What are blue ocean strategies
In a sea of your own league with no competition/ constantly looking foreword and innovating
Solid growth and high margins
What’s a red ocean strategy ?
Constantly fighting with competitors ?
Ie bloody ocean
What’s a red ocean strategy ?
Constantly fighting with competitors ?
Ie bloody ocean
Describe the components of mendalows matrix ?
Stakeholder matrix
Minimal effort
Keep informed
Keep satisfied
Key players
What’s the pyramid of CSR ?
Philanthropy
Ethical
Legal
Economic
What’s the format for documenting strategic plans ?
Vision, missions and objectives
Strategic direction, goals & objectives
Basis of competitive advantage
Product and market portfolio
Revenue and profit model
Capabilities and resources
Strategic risk management
What are the 8 steps for making strategy happen at business unit level ?
Involved the team and create a sense of urgency
List actions and assign responsibilities
Set a timeframe and deadlines
Identify resources
Establish how actions will be measured
Establish a review process
Ensure everyone is aware of the action plan
Keep the plan alive
What’s the process for defining KPI’s ?
Determine mission, vision and objectives (what we want to achieve)
Determine strategic objectives
(How we’re going to do it)
Determine critical success factors that link to objectives
Measure the performance by determining balanced KPI’ that link to CSF
How can KPIs be better utilised ?
Split into leasing and lagging (building block model)
Ie business drivers (leading)
Actual results (lagging)
What tool can be used to implement vision and strategy ?
Balanced scorecard with strategic approach
Objectives
Measures
Targets
Initiatives
What are the scopes of change and the afire of change in the ‘Types of change model’ ?
Nature of change
Incremental
Big bang
Scope of change
Realignment
Transformational
What are the key three C’s when managing change ?
Communication
Consultation
Counsel
What leadership styles exist in change management?
Coercion
Education
Collaboration
Direction
Describe an integrated model useful for managing the change process ?
Scoping change
Strategic alignment
Change planning
Transition
Review
Describe an integrated model useful for managing the change process ?
Scoping change
Strategic alignment
Change planning
Transition
Review
Describe the 8 step change model
Create sense of urgency
Create powerful coalition
Set the vision for change
Communicate the need for buy in
Empower employees for broad based action
Generate short term wins
Consolidate gains
Anchor new approaches in culture
Describe the cultural Web/ paradigm
Stories
Rituals and routines
Symbols
Organisation structures
Control systems
Power structures
Describe McKinsey 7 s model
Hard elements
Strategy
Structure
Systems
Soft elements
Shared value
Skills
Staff
Style
Describe the SAFeR framework useful for choosing how to grow ?
Suitability
Acceptability
Feasibility
Risk
Describe the key elements of strategy formulation - target setting
Goals
Objectives
CSF
KPI’s
What are the types of big data analytics
Descriptive - what’s happened so far?
Diagnostic - why did it happen? (Drivers)
Predictive - what do we expect to happen?
Prescriptive - what should we do ?
What are the types of big data analytics
Descriptive - what’s happened so far?
Diagnostic - why did it happen? (Drivers)
Predictive - what do we expect to happen?
Prescriptive - what should we do ?
What are the 12 distrusting technologies as part of the AI Industrial Revolution?
X
Describe McKinseys two by two digital disruption strategy matrix ?
X degree of change
Y pace of change
Low risk moves
Live in two worlds
Build agility
Take bold action
Describe McKinseys two by two digital disruption strategy matrix ?
X degree of change
Y pace of change
Low risk moves
Live in two worlds
Build agility
Take bold action
How do the WEF four pillars fit into CGMA strategy model
Pillar 1 - vision
Pillar 2 - business models (environmental analysis)
Pillar 3 - enablers (internal analysis)
Pillar 4 orchestration (implementation)
What’s the overriding purpose of the strategy development process ?
Use of information collected via external and internal analysis to generate strategic options or choices and evaluate new business models
Define
Create
Deliver
Capture
What are the 5 strategic options generated by the WEF?
Scenario based
Epicentre-driven
Unorthodox
Customer-centric
Mirrored
What are the key elements of an intelligent operating model ?
Human
Liquid
Enhanced
Living
Modular
What 4 successful digital operating models are described by the WEF?
Customer centric
Process oriented
Data powered
Ecosystem
Give an example of a digital transformation programme governance structure?
Sponsor
Programme board
Business change manager
Program office
Describe the change s curve ?
Awareness
Understanding
Acceptance
Experimentation
Adoption
Embedded
Describe the change s curve ?
Awareness
Understanding
Acceptance
Experimentation
Adoption
Embedded
What are the three elements of digital traction ?
Scale
Active usage
Engagement
What financial metrics are useful as well as digital traction?
CAC
LTV
LTV / CAC ration = 3
Payback CAC / MRR
What are porters three main strategies with reference to the Options generation phase of the strategy process
Cost leadership - to attract customers through price
Differentiation - to provide competative advantage
Focus - Not separate to the above. What market should the business focus on ?
What key framework can be used when developing strategy ?
SAF
Suitability - does it align with mission and objectives, values etc
Acceptability- align with stakeholders ? ROIC etc
Feasibility- do we have resources.. financial and internal 9ms etc
What are the 5 stages of the strategy process and what framework wan be used for strategic decision making?
Mission / vission
SWOT / Gap analysis
Options generation
Implementation
Evaluate & review
SAF
Suitably acceptability feasibility
What are the 5 stages of the strategy process and what framework wan be used for strategic decision making?
Mission / vission
SWOT / Gap analysis
Options generation
Implementation
Evaluate & review
SAF
Suitably acceptability feasibility
