Enterprise. Study Unit 3: Strategy Formulation

Question 1

STRATEGIC GOALS

Answer 1

Strategic goals provide specific direction with regards to elements of the mission.
SWOT – Strategic goals – Appropriate strategy
Vision, Mission & Values provide direction & guidance, but are broad and not specific

Question 2

Importance of Strategic goals

Answer 2

Specific focus points
Translated into short-term goals
Highlights the company’s strength – for competitive advantage
Represent management’s commitment to achieve performance goals in a specific time
Replace aimless roaming with purposeful strategic decision making
Provides a set of benchmarks for evaluating the organisation’s performance

Question 3

Types of strategic goals

Answer 3

Profitability – generate sustainable profits to survive over the long term
Productivity – improve productivity with limited resources.
Competitive position – positioning relative to other organisations in the industry
Human resources – employee development
Technological leadership – right technology to achieve mission & vision
Public responsibility – behaves responsibly towards the environment

Question 4

Requirements for good strategic goals

Answer 4

Acceptable & understandable – to managers & employees
Flexible – external environment changes constantly
Measurable – what & when should be achieved, if goals cannot be measured, they cannot be achieved
Achievable– Success creates success
Motivational – high enough for sense of achievement
Competitive – aimed at depriving the competitor in the market

Question 5

Competitive advantage

Answer 5

Michael Porter (generic business level strategies)
Activities organisations undertake to gain an edge over others in the industry
To have something that your competitors do not have
Uniqueness & differentiated from others
2 basic types – low cost & differentiation (uniqueness)

Question 6

Key success factors & Key performance indicators

Answer 6

Key Success Factors (KSFs) are factors in the industry that contribute to the organisation’s & its competitor’s success
What do our customers want?
What must we do to survive the tough competition?
Eg – Marketing KSFs – excellent customer service, good advertising skills; HR KSFs – competent employees, innovative skills.
KSFs are measured by Key Performance Indicators (KPIs), eg a KPIs for customer service maybe customer surveys.
It is therefore important for organisations to not only identify KSFs, but also KPIs

Question 7

Marketing-related
KSFs

Answer 7

Excellent customer service
Good advertising skills
Good after-sales service
Good customer guarantees and warranties
Sales of a variety of quality products (breadth of product line) Development of distribution networks

Question 8

Human skills-related
KSFs

Answer 8

Competent employees
Expertise in applying technology
Product innovation skills
Excellent capabilities to control quality

Question 9

Distribution-related
KSFs

Answer 9

A well-developed network of wholesale distributors
Ability to keep distribution costs low
Ability to secure enough space on retailers’ shelves for products

Question 10

Technology-related
KSFs

Answer 10

Ability to make innovative improvements in the production process
Ability to apply scientific research in the fields of high-speed internet access, space exploration etc.
Technological expertise in a given field

Question 11

SWOT analysis

Answer 11

SWOT Analysis = strategic management Tool / Technique

SWOT analysis consists out of :
Internal analysis (Strengths, Weaknesses) – micro environment
External analysis (Opportunities, Threats) - macro environment