MGM101 CH5

Question 1

What is the diamond e framework and what does it do

Answer 1

a high-level road map for strategic analysis.

It identifies the key variables that need to be considered in the analysis and it structures the critical relationships among them

strategy is the critical linking variable: it tells wat opportunities the business is pursuing

other variables can drive or constrain strategy

Question 2

Wat is the principle logic for diamond e framework

Answer 2

consistency: will lead to successful performance

coherence: Diamond-E framework is complete in and of itself as well as being internally logical and consistent.

alignment: strategy needs align with opportunities and challenges of environment and with the internal capabilities, drives, and constraints of business

*strategy must satisfy both internal and external factors simultaneously

Question 3

wat is a critical aspect of strategic analysis related to inconsistencies

Answer 3

identify these inconsistencies and to assess the degree of risk associated with them. The risks can then be weighed against the opportunity that the initiative offers

Question 4

Explain environmental risks in the short run and long run

Answer 4

Short run: miscalculate timing, potential, or competitive reaction

Long run: missing or underestimating changes in environment

Question 5

What does Chris Zook suggest for addressing viability of a strategy?

Answer 5

take close look at customers to see where your product stands in terms of profitability, market share, retention rate, loyalty, and share of wallet.

look at relative cost position, degree of differentiation, and emerging business models of competitors so you can see what environmental risks are present and how it affects profit. u can also see growth of industry and the revenues and costs.

Question 6

Explain capability risks in the short run and long run

Answer 6

Short run: New strategy may demand too much from business unit’s resources and capabilities

Long run: Resources and capabilities may not develop adequately to the consistent but continuously demanding strategy. why? cuz environments evolve and strategies change but people become complacent so less innovation.

Question 7

What does Chris Zook suggest for addressing capability risks?

Answer 7

look at the core capabilities and also the organization and its associated culture to determine any stress points arising from undesired attrition (leaving employees?), energy, motivation, or bottlenecks to growth

Question 8

which types of strategies are successful

Answer 8

strategies that stretch what is possible in market and what is possible to implement

Question 9

Why is it incorrect to say that strategy is the endpoint of a grand plan

Answer 9

a strategy is the result of an evolutionary process, the cumulative outcome of a
series of small steps taken one at a time over an extended period of time. it is likely to be the product of a series of important but limited strategic decisions

Question 10

What are strategic proposals?

Answer 10

discrete ideas or action plans that will have significant implications for one or more of the components of strategy and thus for the strategy of the business as a whole

Question 11

How to establish the desirability of strategic proposals

Answer 11

their implications for the ongoing strategy of the business, consistency with the other variables in the Diamond-E framework, and, ultimately, their promise of profitability

Question 12

what is diamond e analysis

Answer 12

shorthand for a systematic review of each of the key linkages in the Diamond-E framework—strategy with respect to environment, resources, management preferences, and organization

Question 13

objectives of diamond e analysis

Answer 13

(1) help assess the appropriateness of the firm’s current strategy

(2) generate new ideas and strategic proposals

(3) evaluate specific strategic proposals

Question 14

what is final step in strategy-environment linkage

Answer 14

put together a performance forecast for the proposal(s) under study based on the assumption (to be tested later in the analysis) that it could be successfully implemented

Question 15

wat is PEST analysis

Answer 15

political, economic, social, and technological analysis

Question 16

what is political analysis

Answer 16

Elements: Laws, regulations, taxes, trade agreements or conditions, political system, political stability

Significance: Rules that business must follow, Protection of consumers and vulnerable groups, Support / protection and regulation of domestic businesses, Opportunity creation in foreign markets

Question 17

what is economic analysis

Answer 17

Elements: Inflation / deflation, interest rates, employment rates, exchange rates, balance of trade, productivity

Significance: Affect economic stability, employment, economic growth (measures: aggregate output, GDP, GNP)

Question 18

what is social analysis

Answer 18

Elements: Customs, values, attitudes, demographic characteristics

Significance: Affect customer preferences and worker attitudes and behaviour, standards of business conduct, and corporate social responsibility

Question 19

what is technological analysis

Answer 19

Elements: Internet, information technologies, not limited to computers and information

Significance: demands constant scanning & learning; legacies / compatibility make change challenging

Question 20

what are the 5 forces in Porter’s 5 forces model

Answer 20

• threat of new entrants
• threat of substitutes
• bargaining power of buyers
• bargaining power of suppliers
• rivalry among existing competitors

Question 21

why is 5 forces model important

Answer 21

• Predicts industry profitability
• Helps determine whether a firm should enter a particular industry
• Helps determine whether and/or how firm can carve out an attractive position in that industry

Question 22

what are the steps in checking strategy-resource linkage

Answer 22

identify the resource requirements for the current strategy or new strategic proposal. Then compare the resources required with those available, to the business and identification of resource gaps. judge probabilities of being able to close the resource gaps and consequences of failing.

Question 23

what to do for checking strategy-organization linkage

Answer 23

identify organizational capabilities required to implement strategy, check consistency between required capabilities and those evident in organization, forecast performance, make changes.

4 critical variables that impact organizational capabilities:
- leadership
- structure
- management process
- culture

Question 24

what is significant about strategy-management preference linkage

Answer 24

it takes into account that strategies can be made differently based on the preferences of key leaders, manager, or anyone in general.

Question 25

what to do for checking strategy-management preferences linkage

Answer 25

identify preferences that is consistent with successful execution of strategy, then compare with preferences of managers that are critical to execution process

possible problems:
- preferences of managers are similar to strategy preferences but are different at critical points

• preferences of managers are completely different to strategy

Question 26

what are the tensions that exist among diamond e framework

Answer 26

• want to do (given management preferences)
• need to do (given the competitive environment)
• can do (given their organization, resources and capabilities)

ex. may have to stretch wat business ‘can’ deliver to satisfy what they ‘need’ to deliver

Question 27

Process of strategic analysis

Answer 27

1. Base case analysis (asses strategic position of business for action/urgency): asses performance, identify evaluate current strategy, forecast future performance, decide on nature and urgency of change
2. Strategy formulation and testing (develop evaluate proposal addressing opportunities/challenges): work from environment/capabilities form new proposals, shape and short-list proposals, prepare performance forecasts
3. Decision and execution (commit, implement, review): decide on proposal(s) to implement, move to build commitment, implement