L6M2 L01

Question 1

Describe 5 strategic decisions a company can make and how these decisions could impact upon competitive advantage.

Answer 1

1) HR activities
2) Cap Ex Expenditure
3) Diversification
4) Entry into a new market
5) Supplier consolidation or changes to supply chain

Question 2

Explain the characteristics of strategic decisions. At what level of a business are strategic decisions made and why?

Answer 2

1. long-term decisions
2. complex and have inherent risks
3. impact upon all functions within an organisation

Strategic decisions are thus extremely important to all organisations and are therefore made at the corporate level – by people such as the CEO or Board of Directors

Question 3

Discuss 4 causes of resistance to change that staff at XYZ may experience and examine how the CEO of XYZ can successfully manage this resistance to change

Answer 3

P1 – cause 1 - self-interest
P2 – cause 2 - preference of status quo
P3 – cause 3- misunderstanding and fear
P4 – cause 4 - differing view

Question 4

Examine how an organisation can strategically position itself within the marketplace

Answer 4

P1 – cost leadership
P2 – differentiation
P3 – cost focus
P4 – differentiation focus

• Another approach could be to mention Mintzberg’s 5Ps of strategy (plan, perspective, ploy, position, pattern), or to simply take areas of an organisation and explain strategical aspects for each (e.g. logistics, manufacturing, supply and demand forecasting etc).

Question 5

Explain how culture and historic influences can impact upon a business’s strategic decisions and positioning within the marketplace

Answer 5

P1 – power distance
P2 – individualism
P3 – uncertainty avoidance
P4 – past business experiences

Question 6

XYZ is a construction firm which builds houses in Birmingham. Discuss a tool that it can use to assess the remote environment and discuss a tool it can use to evaluate the operating environment.

Answer 6

Introduction – two tools are STEEPLED and Porter
Main Body

1 ) STEEPLED – short explanation as to each factor, relating back to construction
Main Body

2 ) Porter’s 5 forces – short explanation, relating back to construction

Conclusion – XYZ should use both tools in order to understand the environment it is in, will help steer strategic decision making.

Question 7

Describe and evaluate the use of the VRIO Framework in understanding the internal resources and competencies of an organisation.

Answer 7

P1 - Valuable
P2 - Rare
P3 - Inimitability
P4 - Organised

Question 8

Discuss how XYZ, a global beverage manufacturing organisation, could use the Boston Consultancy Group Framework to impact upon strategic decision making

Answer 8

P1 – star
P2 – cash cow
P3 – question mark
P4 - dog

Question 9

Discuss 5 tasks of strategic management

Answer 9

1) Formulate mission and goals
2) Analyse internal resources and capabilities
3) Assess external environment
4) Identify course of action
5) Evaluate process and success

Question 10

How can Minzburg’s 5Ps assist an organisation to develop its global strategy?

Answer 10

Introduction – who is Minzburg?
1) Plan.
2) Ploy.
3) Pattern.
4) Position.
5) Perspective
Conclusion – useful tool to help develop global strategy

Henry Mintzberg, a Management Expert, argues that it can be difficult to get strategy right. To help an organisation think about it more carefully and more in depth, he developed his 5 Ps of Strategy Formation– five different definitions of (or approaches to) developing strategy. This was outlined in his paper “The Strategy Concept 1: Five Ps For Strategy” in 1987.
PLAN
Planning is an essential part of the strategy formulation process, and Minzburg states that organisations should take time to brainstorm new opportunities. Tools like STEEPLED Analysis and SWOT Analysis can help to formulate an effective strategy. However, planning is not enough on its own. This is where the other four Ps come into play.
PLOY
Mintzberg says that getting ahead of competitors, by plotting to disrupt or otherwise influence them, can be part of a strategy. For example, a supermarket might open another store in a specific area to block a competitor from doing the same. Or a technology company may patent an invention to avoid rivals copying the product. In Ploy, global strategy involves using techniques such as Scenario Mapping and Game Theory.
PATTERN
Strategic plans and ploys are both deliberate exercises. Sometimes, however, strategy emerges from past organisational behaviour, history or culture. Rather than being an intentional choice, patterns can develop into a strategy. Management should look at what has worked for the company historically and take this into consideration when developing the global strategy.
POSITION
Position refers to the way an organisation positions itself in the marketplace, taking into consideration the strategic fit between the organisation and the business environment. This helps develop a sustainable competitive advantage. For example, a strategy might include developing a niche product to avoid competition, or choosing to differentiate the services offered. Position looks at the “bigger picture” in relation to external factors. To do this, organisations can use Porter’s Diamond and Porter’s Five Forces.

PERSECTIVE
The choices an organization makes about its strategy rely heavily on its culture – just as patterns of behaviour can emerge as strategy, patterns of thinking will shape an organization’s perspective, and the things that it is able to do well. For instance, an organisation that encourages risk-taking and innovation from employees might focus on launching innovative products as the main thrust behind its strategy. To get insight into an organisation’s perspective, tools such as The Cultural Web are useful.