Problems With Strategy 3.10.4 Flashcards
what are the difficulties of strategic decision making and implementation
Resistance to Change
co-ordination
Lack of Resources
what is a planned strategy
Planned strategy is based around a formal process of setting corporate objectives and developing a coherent business strategy designed to achieve those objectives with the resources available. … To summarise; Planned Strategy is: The intended strategy.
what is a emergent strategy
•Is the strategy that actually happens. Responds to events as they arise (e.g. changes in external environment). Often involves strategic and tactical changes
Is not restricted by formal planning tools and methods
what are some reasons for strategic drift
Strategic drift usually arises from a combination of factors, including:
•Business failing to adapt to a changing external environment (for example social or technological change)
- A discovery that what worked before (in terms of competitiveness) doesn’t work anymore
- Senior management deny there is a problem, even when faced with the evidence
how can strategic performance be evaluated
It can be measured in any increase of profit margin or market share and through any progressions towards any objectives
what is corporate governance
Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, senior management executives, customers, suppliers, financiers, the government, and the community.
what are the values of strategic planning
Minimizing risk
As part of the process, you’ll be assessing your current situation, resources, strengths and weaknesses, competitors and the business environment. This way, you will be better equipped to make decisions and therefore to minimize risk
Better performance
Strategic planning forces management to set targets, and plan for the future which can improve sales
what are the values of contingency planning
A contingency plan allows the firm to consider what actions it will take if particular opportunities or threats emerge allowing the business to best perform in the situations it is put in or reduce the risks of threats and helps avoid dumb decisions made in the rush of the crisis
Also practising the the crisis situation helps makes employees to perform better when the crisis actually occurs
what are the effects of divorce between ownership and control
divorce between ownership and control” happens when the owners of a business do not control the day-to-day decisions made in the business. This may lead to conflict between them as different shareholders can have varying objectives. This is known as the principal agent problem.
what is strategic drift
Strategic drift happens when the strategy of a business is no longer relevant to the external environment facing it.
what are the four stages of strategic drift
Phase 1 - Incremental Change
In this phase there is little significant change in the external environment. A series of small, incremental changes to strategy enable the business to remain in touch with the external environment.
Phase 2 - Strategic Drift
Now things are starting to drift apart. The rate of change in the external environment is accelerating and small, incremental changes in strategy are not enough on their own to remain in touch. The business will be losing its competitive advantage.
Phase 3 - Flux
This phase is characterised by management indecision. There is now a significant gap between what the market expects and what a business is delivering. Management may have recognised this gap and begun to alter strategy, however there is no decisive improvement. There may be disagreement between the senior management team about how to address what is now significant strategic drift.
Phase 4 - Transformational Change or Death
The moment of truth. Either management recognise the need for a transformational change in strategic direction, or the business fails. It often takes new, external leadership for this recognition to be made and the relevant strategic change programme implemented. For some businesses, this phase comes too late.
What are the drawbacks of contingency planning
It’s takes time and money in the planning process and the practising
It cannot cover every crisis so could end up being pointless if the contingency plan you have isn’t relevant to the crisis
