Planning strategy Flashcards
What are the key steps of the strategic planning process
senior managers set corporate objectives
analysis of the internal strengths and weaknesses of the business and analysis of external opportunities and strengths
- develop possible strategies and evaluate each one
- plan out how strategy will be implemented, through setting functional objectives
- set up processes of monitoring and evaluating strategy which it is being implemented
Contingency planning
Having back up plans if things dont go to plan
- can’t plan for everything
- contingency planning is very expensive and so it is not worthwhile for every possibility
- managers need to prioritise what is most likely
How is strategic planning helpful and useless
+ outlines clear direction for the business
+ helps with communication
+ analysis of strengths and weaknesses as well as external opps and threats can help spot opportunities that they otherwise wouldnt have notices
- restricts a businesses flexibility
- inaccurate analysis will affect the effectiveness of the planing
- useful in stable markets but not dynamic innovative businesses.
How does leadership affect implementation of strategy
- leader should take control and overall responsibility
- ability to delegate tasks
- need to motivate and engage everyone into the business
- need for clear communication to limit the resistance to change
functional structures
- organised into several different departments
- each function works within its own specialties
- implementation of strategy can therefore be made easier
- however this could mean to each department having its own culture negatively affecting communication and team work thus making it hard to co-ordinate strategy
Product based structure
- production of lots of different products where each group of products are run almost separately
- each product division has its own directors, marketing teams, finance etc
- ideal for implementing certain strategies - growth in market share for one particular product
- unnecessary duplication of role
Regional structures
- based upon location
- strengthened ability to meet local market needs
Matrix structures
- organise staff in accordance to the task and their departments
- ensures staff have clearly defined objectives and encourages departments to build relationships with each other
- however can very easily lead to conflict
risk and uncertainty in strategic decisions
- high risk levels as you are stepping into unknown territory, minimise risk through contingency planing
- difficulties in judging the feasibility of strategies = heavy requirements on readily available resources in order to make the best decisions
- changes to the internal environment of a business = loss of resources as an example can slow down strategy implementation or halt it all together
- differences in stakeholder needs/wants =
difficulties when implementing strategy
- a lack of resources can make implementing strategy really difficult = need for heavy investment meaning less working capital on a day-to-day basis
- heavy requirement on good communication = miscommunication can lead to incorrect assignment on task and overall strategic drift
- lack of strong leadership and communication can lead to heavy resistance to change
- need for accurate forecasting due to the reliance on assumptions about the amounts of resources a business has available to it
- changing company structure to meet strategy needs can change the overall culture of the business/ lead to demotivated staff
- lack of flexibility
Issues with planned strategies
- heavy costs and takes a long time= can lead to getting lost in developing the perfect strategy
- planned strategy will eventually become outdated
- senior managers may be out of touch with the day to day runnings of the business
- too detailed and theoretical leading to it being inaccurate in practice as well as lacking in flexibility
- too rigid = limit creativity/ innovation
Emergent strategies and benefits
Strategies that develop as times go on - saves money and time - remain relevant and up to date - more reliant upon the knowledge from middle-junior managers meaning they are more likely to have a better grasp on the day to day runnings of the business -
Drawbacks of emergent strategies
- lack of clarity as to what the end goal is
- senior managers dont actually know what is going on within the business
- difficult for large companies as there are so many different factors to consider
- some organisations HAVE to follow certain restrictions and therefore cannot use an emergent strategy (NHS)
Strategic drift
Occurs when a strategy becomes less and less suited to the market and business environment.
CAN be caused by :
- new technology
- change in tastes/ trends
- legal/ political/ economic factors
start off by making small incremental changes in hopes to minimise the damage/ make the strategy remain relevant however there is likely to be the need for transformational change
Divorce of ownership and control
occurs as firms grow and raise finance through selling of shares.
new shareholders have a part ownership of the business and thus the business is then run by directors who are nominated into control by shareholders.
