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CGMA Strategic level case study > Core Activity A - Develop business strategy > Flashcards

Core Activity A - Develop business strategy Flashcards

1
Q

What is the definition of strategy?

A

‘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’.

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2
Q

What are Druckers 5 fundamental questions ?

A

What is our mission?
Who is our customer?
What does our customer value?
What results do we seek?
What is our plan?

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3
Q

What does a vision statement answer?

A

Where do we want to be ?
Designed to inspire

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4
Q

What question does a mission statement answer?

A

What do we do? What’s our purpose?

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5
Q

For larger and more complex organisations, what levels should a strategy be broken down into?

A

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

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6
Q

What are the types of corporate level strategy?

A

Growth - Organic / M&A

Stability - Mature/ consolidated

Recovery/ Retrenchment - restructuring

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7
Q

What might a growth strategy look like?

A

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

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8
Q

What’s the preferred model for overall company strategy ?

A

Strategic control

Autonomy overseen by centre to steer them back on track where required

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9
Q

A strategic plan can be accomplished by answering what following questions?

A

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

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10
Q

What steps are involved as part of the strategic management process?

A

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
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11
Q

What are the common elements of strategic management?

A

Sense of direction and purpose
Strategic goals and plans
Implementing plans
Monitoring and evaluating

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12
Q

Describe the elements of the Boston consulting group Matrix (BCG Matrix)

A

STAR
QUESTION MARK
CASH COW
DOG

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13
Q

What is a corporate appraisal ?

A

SWOT analysis for the group

Environmental / external

Internal

Is there a gap? Can we close the gap?

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14
Q

The strategic evaluation should ….

A

Build on strengths
Address weaknesses
Grasp opportunities
Avoid or minimise threats

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15
Q

What are the four main elements of the strategic formulation process?

A

Analysis - SWOT
Formulation - Evaluate options
Implementation
Review and control

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16
Q

Describe alternative approaches to formal corporate strategy?

A

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

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17
Q

What are the 2 complimentary approaches to strategic development?

A

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

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18
Q

What’s the key difference between ‘vision’ and
‘mision’

A

Time frame

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19
Q

How might objectives be set once the mission and visions ?

A

Financial
Grow market share

Customer
NPS
CSAT
CES

Operational
Efficiency gains

People
Retention rates
360 degree staff appraisals twice a year

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20
Q

How could PESTEL help to analyse a company ?

A

Link change drivers to key risk factors

Generate ideas for how to strategically position the company

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21
Q

How might the analyse part of the strategy process look?

A

SWOT analysis as the base

SW - Internal / corporate lifecycle analysis

OT - external using PESTAL / industry lifecycle

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22
Q

What are the different levels of the external environment?

A

Global
National
Regional
Local

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23
Q

What tool helps to determine the profitability of an industry?

A

Porters 5 forces model

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24
Q

Describe porters five forces?

A
  • Threat of new entrants / barrier to entry
  • Rivalry among existing competitors
  • Bargaining power of buyers
  • Bargaining power of customers
  • Threat of substitute products or services
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25
Q

What are the stages considered in the corporate lifecycle ?

A

Start up/ Question mark, High Growth, Mature, Fade/ decline, restructure.

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26
Q

What are the stages of an industry lifecycle and how is it measured ?

A

Measured by total industry sales over time.

Early life, Growth, Shakeout, Mature, Decline.

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27
Q

What are the steps for producing a strategic grouping / map & segmentation?

A

Produce industry analysis
Identify characteristics
Group by strategy
Circle each group

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28
Q

What tools can be used as part of a holistic strategic analysis ?

A

SWOT
PESTEL
Value chain analysis
Lifecycle analysis

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29
Q

What are the 4 steps for competitive analysis ?

A

Identify competitors
Compile information
Analyse competition
Develop strategies to compete

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30
Q

How might you identify major competitors?

A

Cluster analysis

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31
Q

Define the business ecosystem

A

Where many parts of the value chain are outsourced and the organisation is no longer seen as a single entity.

Deloitte LLP definitions

Value webs

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32
Q

What are the three types of network organisations ?

A

Internal - large organisation with separate legal entities

Stable - Central organisation that outsources some work

Dynamic - outsources heavily, known as network integrator

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33
Q

Describe drivers for change within the digital ecosystem ?

A

Globalisation
Emerging economies
Geopolitics
Demography
Customer empowerment
Digital tech
Automation
Sustainability

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34
Q

What challenges are then in identifying changes within the ecosystem?

A

Is the information valid?

Is it reliable ?

Is it credible ?

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35
Q

What data systems could be used to analyse changes in the ecosystem ?

A

Think tank consulting group

ONS

Bank of England

EDGAR SEC

News and media / Bloomberg money stuff

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36
Q

What’s the formula for churn rate ? Ie customer turnover rate

A

% of customers that left = Number of customers that left / total number of customers

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37
Q

Name 5 tools useful for analysing customers and markets ?

A

BCG matrix
SWOT as a follow on from PESTEL Analysis
Competitor analysis
Industry lifecycle
Five forces analysis

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38
Q

What are the key strategic questions informed by market research ?

A

Which markets should we compete in?
What customer segments should we serve?
What types of product or services should we offer?
How do we price our products or services?
Where and how do we sell and promote our products or services?

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39
Q

What consumer segmentation approaches could be taken?

A

Geographic
Psychographic or lifestyle
Behavioural
Socio-demographic
Size of purchase
End use
Type or size of organisation

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40
Q

What criteria must be met in order to segment a customer group ?

A

Large enough
Measurable
Reachable with campaigns
Defined characteristics
Financially viable to do so

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41
Q

Describe the components of the marketing matrix ?

A

Product
Place
Promotion
Price
People
Process
Physical evidence

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42
Q

What are the steps of the market research process ?

A

Define the scope of the research
Data gathering
Analyse results and present

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43
Q

Describe the customer value management cycle?

A
  1. Manage customer segmentation
  2. Measure customer margins
  3. Measure customer lifetime value
  4. Measure customer impact
  5. Manage customer profitability
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44
Q

How can the BCG matrix be used as a visual tool to determine portfolio weightings?

A

Circles implemented based on sales for product

or weighing of portfolio for company

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45
Q

What’s the customer lifetime value (CLV) formula ?

A

CLV = (Profit x retention rate x discount rate) cont’d for each time period

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46
Q

What are the components of the customer portfolio management matrix ?

A

Demanders
Champions
Losers
Acquaintances

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47
Q

What’s the formula for relative market share? (BCG)

A

% = 100 x product or brands market share / nearest competitors market share

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48
Q

What is the formula for market growth rate? (BCG)

A

Growth rate = Total sales current year / total sales previous year

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49
Q

Describe the BCG matrix in order of?

A

Growth vs market share

Question marks
Stars
Cash cows
Dogs

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50
Q

What are key useful terms in lifecycle costing?

A

Cradle to grave
Cradle to cradle

Cradle to factory
Cradle to user

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51
Q

Describe the competencies in internal capability analysis ?

A

Core / distinctive - create competitive advantage

Threshold - minimum requirements and don’t create competitive advantage

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52
Q

What is a CSF?

A

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.

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53
Q

What are the 9 M’s in a resource audit ?

A

Make up - structure & culture

Management

Management information

Manpower

Markets

Materials

Methods

Money

Machinery

54
Q

What key things should be identified during value chain analysis ?

A

Cost Drivers

Value Drivers

55
Q

What steps could be used in value chain analysis ?

A
  • Identify sets of value activities
  • Asses activity costs internally
  • Asses the importance of activities
  • Identify where and how cost can be reduced
56
Q

What style of value chain analysis would be better suited for a service company?

A

value shop model

57
Q

Describe the 5 steps of the value shop model ?

A

Finding the problem
Problem solving
Choice of solution
Solution implementation
Control and feedback

58
Q

Whats the main theory behind porters value chain / value system?

A
  • 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
59
Q

What are the six main areas of strategic decision making set out by Johnson, Scholes and Whittington ?

A
  • Long term direction
  • Scope of activities
  • Determining competitive advantage
  • Adapting to changes in the environment
  • Exploiting unique resources or competences
  • Stakeholder values or expectations
60
Q

Describe the combination of capability ?

A

Competence
Capacity
Culture (doing it in the right way)

61
Q

Descrive asnoffs growth matrix ?

A

Product development
Market development
Market penetration
Diversification

62
Q

Describe visionary thinking?

A

Backwards from perfect (working backwards to achieve milestones & goals)

63
Q

How can a company avoid fade ?

A

Incorporate second curve thinking

64
Q

What’s better than if ain’t broke model ?

A

Don’t wait until it’s broken … moving on from success is much harder than moving on from failure

Eg Klopp etc

65
Q

How might a growth strategy develop?

A

SWOT & GAP analysis - use ansoff matrix to close gap.

66
Q

What should senior management beware of ?

A
  • 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
67
Q

What characteristics would greatly assist strategy creation ?

A
  • Long term view
  • Respect all evidence
  • Tolerance of other points of view
  • Openminded
  • Future focussed
  • Ability to see interconnected factors
  • Critical thinker
68
Q

What types of decision maker style exist?

A

Decisive
Flexible
Hierarchic
Integrative
Systematic

69
Q

Describe 2 key strategic choices for businesses ?

A

How do we compete?
Where and how do we grow?

70
Q

How might we assess if diversification is an effective growth strategy?

A
  • Attractiveness test (is the industry attractive?
  • cost of entry test?
  • better off test?
71
Q

What methods for growth exists?

A

Organic
non organic
joint venture

72
Q

What model may be better suited to business units than the BCG matrix?

A

GE McKinsey matrix

73
Q

What is the General electric McKinsey matrix particularly useful for?

A
  • Maps strategic business units
  • Goes beyond existing portfolio
  • Assesses strategic options
74
Q

How might we determine market or industry attractiveness?

A
  • 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
75
Q

How might we determine Business unit strength?

A

Total market share
Brand strength
Profits / earnings
Customer loyalty
VROIO resources
Strength of Value chain
- Level of product differentiation.
Production Flexibility

76
Q

What are the stages in the process of a merger and acquisition ?

A

strategy
principles
target company
Pre lim Valuation
Valuation
Letter of intent
confidentiality
Initial meeting
Due diligence
Definitive agreement
recording Needs
Rapid Integration

77
Q

What are the four foreign growth and market strategies (business models)

A

International
Multinational
Global
Transnational

78
Q

Describe an International company ?

A

An international company is an importer or exporter and has no or limited investment outside of its home market.

79
Q

Describe a Multinational company

A

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.

80
Q

Describe a Global company?

A

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.

81
Q

Describe a transnational company ?

A

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.

82
Q

How could you analyse Growth strategies ?

A

Porters diamond theory of national advantage

83
Q

What re the pillars of porters diamond ?

A

Firm strategy, structure & rivalry

Demand conditions

Factor conditions

Related and supported industries

84
Q

What is a comparative advantage ?

A

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

85
Q

Whats an example of factor conditions? (porter diamond)

A

Land
Labour
Capital

86
Q

Whats an example of Advanced factor conditions?

A

Education
Infrastructure
Technology

87
Q

Why tools can be used to predict future probabilities?

A

Monte Carlo style simulations

88
Q

What types of statistical analysis exist and useful for forecasting?

A

Time series
Correlation
Regression
Econometric

89
Q

What’s the moto for game theory?

A

Think forwards and reason backwards

90
Q

How can real options aid strategy ?

A

Positive NPV

Strategy can be evaluated
Room for development
Allows for discretion

91
Q

What are the key points in decision tree analysis ?

A

Square = decision point

Circle = potential outcome

Draw from left to right / evaluate from right to left

92
Q

How can decision tree analysis be useful ?

A

Present complex data into a diagram of decision making

93
Q

What are the 5 c’s that relate to foresight?

A

Communication
Concentration
Coordination
Consensus
Commitment

94
Q

How can scenario planning be effective beyond the results of the exercise ?

A

Encourage collaborative thinking and learning / decision process in different environments

95
Q

What are the steps involved in scenario planning ?

A

Define scope, issues and horizon

Define key drivers

Collect and analyse data

Develop scenarios

Apply scenarios

Maintain and update

96
Q

What is strategic optimisation with SFA

A

Suitability

Feasibility

Acceptability

97
Q

What are blue ocean strategies

A

In a sea of your own league with no competition/ constantly looking foreword and innovating

Solid growth and high margins

98
Q

What’s a red ocean strategy ?

A

Constantly fighting with competitors ?
Ie bloody ocean

99
Q

What’s a red ocean strategy ?

A

Constantly fighting with competitors ?
Ie bloody ocean

100
Q

Describe the components of mendalows matrix ?

A

Stakeholder matrix

Minimal effort
Keep informed
Keep satisfied
Key players

101
Q

What’s the pyramid of CSR ?

A

Philanthropy
Ethical
Legal
Economic

102
Q

What’s the format for documenting strategic plans ?

A

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

103
Q

What are the 8 steps for making strategy happen at business unit level ?

A

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

104
Q

What’s the process for defining KPI’s ?

A

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

105
Q

How can KPIs be better utilised ?

A

Split into leasing and lagging (building block model)

Ie business drivers (leading)

Actual results (lagging)

106
Q

What tool can be used to implement vision and strategy ?

A

Balanced scorecard with strategic approach

Objectives
Measures
Targets
Initiatives

107
Q

What are the scopes of change and the afire of change in the ‘Types of change model’ ?

A

Nature of change
Incremental
Big bang

Scope of change
Realignment
Transformational

108
Q

What are the key three C’s when managing change ?

A

Communication

Consultation

Counsel

109
Q

What leadership styles exist in change management?

A

Coercion
Education
Collaboration
Direction

110
Q

Describe an integrated model useful for managing the change process ?

A

Scoping change
Strategic alignment
Change planning
Transition
Review

111
Q

Describe an integrated model useful for managing the change process ?

A

Scoping change
Strategic alignment
Change planning
Transition
Review

112
Q

Describe the 8 step change model

A

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

113
Q

Describe the cultural Web/ paradigm

A

Stories
Rituals and routines
Symbols
Organisation structures
Control systems
Power structures

114
Q

Describe McKinsey 7 s model

A

Hard elements
Strategy
Structure
Systems

Soft elements
Shared value
Skills
Staff
Style

115
Q

Describe the SAFeR framework useful for choosing how to grow ?

A

Suitability
Acceptability
Feasibility
Risk

116
Q

Describe the key elements of strategy formulation - target setting

A

Goals
Objectives
CSF
KPI’s

117
Q

What are the types of big data analytics

A

Descriptive - what’s happened so far?

Diagnostic - why did it happen? (Drivers)

Predictive - what do we expect to happen?

Prescriptive - what should we do ?

118
Q

What are the types of big data analytics

A

Descriptive - what’s happened so far?

Diagnostic - why did it happen? (Drivers)

Predictive - what do we expect to happen?

Prescriptive - what should we do ?

119
Q

What are the 12 distrusting technologies as part of the AI Industrial Revolution?

A

X

120
Q

Describe McKinseys two by two digital disruption strategy matrix ?

A

X degree of change
Y pace of change

Low risk moves
Live in two worlds
Build agility
Take bold action

121
Q

Describe McKinseys two by two digital disruption strategy matrix ?

A

X degree of change
Y pace of change

Low risk moves
Live in two worlds
Build agility
Take bold action

122
Q

How do the WEF four pillars fit into CGMA strategy model

A

Pillar 1 - vision
Pillar 2 - business models (environmental analysis)
Pillar 3 - enablers (internal analysis)
Pillar 4 orchestration (implementation)

123
Q

What’s the overriding purpose of the strategy development process ?

A

Use of information collected via external and internal analysis to generate strategic options or choices and evaluate new business models

Define
Create
Deliver
Capture

124
Q

What are the 5 strategic options generated by the WEF?

A

Scenario based
Epicentre-driven
Unorthodox
Customer-centric
Mirrored

125
Q

What are the key elements of an intelligent operating model ?

A

Human
Liquid
Enhanced
Living
Modular

126
Q

What 4 successful digital operating models are described by the WEF?

A

Customer centric
Process oriented
Data powered
Ecosystem

127
Q

Give an example of a digital transformation programme governance structure?

A

Sponsor
Programme board
Business change manager
Program office

128
Q

Describe the change s curve ?

A

Awareness
Understanding
Acceptance
Experimentation
Adoption
Embedded

129
Q

Describe the change s curve ?

A

Awareness
Understanding
Acceptance
Experimentation
Adoption
Embedded

130
Q

What are the three elements of digital traction ?

A

Scale
Active usage
Engagement

131
Q

What financial metrics are useful as well as digital traction?

A

CAC
LTV

LTV / CAC ration = 3

Payback CAC / MRR

CGMA Strategic level case study (6 decks)

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