Revision Flashcards
what are the three main areas of strategic planning
Strategic levels
1.Corporate (strategic) - Business markets to operate in.
2.Business (Managment) - Achieve and advantage in the markets operated in.
3.Functional (Operations) - Practical / day to day.
WHat are the 3 Stages of strategic planning?
1 strategic analysis - what is the current position, SWOT, 5 forces, PESTLE
2. Strategic Choice - JSW approach considers 1. Acceptability, 2. Feasability, 3. suitability
3. Strategic Implementation - consider organisation structure, resources, business change.
what are the four stages of strategic drift?
Strategic drift = the failure of strategy to adjust to environmental changes over time.
1. Incremetal change - small logial steps are taken as part of an existing strategic plan.
2. Strategic drift - rate of market change increases, strategy is adapted incrementally but fails to keep pace.
3. Flux - senior management react with actions more suited to prior environment. strategy has no clear direction.
4. transformational change - strategy is inapproriate or relevant new strategy is implemented.
what are the three main external methods of strategic analysis?
PESTLE - used to consider a variety of uncontrollable external factors the business needs to consider when deciding strategy, relevant to existing markets. Political, economic, social, technological, ecological, legal.
Porters 5 forces - considers the controlable external factors which will impact a business growth. Power of buyers, power of suppliers, threat of new entrants, threat of substitutes, competative rivalry.
Porters diamond - used to assess why a business does well in a specific environment, useful when moving in to new markets or locations. Factor conditions, demand conditions, realated and supporting industries, strategy structure and rivalry.
These three analysis techiniques can be applied to identify the opportunities and threats a business will face as part of a final SWOT analysis.
what are the main internal methods of strategic analysis?
value chain - identifying all activities in a business and determining which give a competative edge. usually split between primary and support actvities.
**competences **- breaks down in to two levels:
* threshold - things that must be done well to compete in the market ie everybody does it!
* Core - things that give a competative advantage. over time these will drift to threshold as competitors catch up.
resources - also split in to two levels;
* threshold - minimum requirement to compete in a market ie accountancy - needs a qualified accountant.
* unique - exceptional resources that give a competative edge.
**9 M’s **- a form of resource planning covering 9 factors that impact a strategy or projects success. Manpower, money, materials, management, minutes, measurement, method, machines & mother nature.
critical success factors - essential business areas to mission, objectives and goals. used to estabilsh KPI’s for performance management and assessment.
These analyses will then be used to identify the strengths and weaknesses in the final SWOT analysis.
What are the different ways that performance analysis can be carried out?
**Benchmarking **- to determine where improvements are required, how high performance is achieved. 3 main types;
1. Internal - looking for best practice
2. competative - looking at performance of a rival.
3. activity/best in class - against a similar process in a different industry.
**quantitative analysis **- carried out in 4 stages;
1. identify figures with significant changes
2. establish links and relationships for those figures.
3. use two/three ratio’s to demonstrate the key issues.
4. make relevant commentary.
Baldridge - seven areas combining to produce superior performance.
1. leadership - set and communicate vision and values to create and sustain performance excellence.
2. strategic planning - align strategys and action plan.
3. customer and market focus - keep pace with market changes.
4. Measurement, analysis and knowledge.
5. workplace focus - systems, processes and people.
6. process management - effecive planning support
7. results - quality of service and customer retention.
in relation to strategic choice how can competative strategys be claissified?
use of the strategy clock can help identify different strategies in relation to price and benefit.
the vertical axis runs from low to high for benefits, the horizontal axis runs from low to high for price.
Underlaying concept is that for higher benefit a higher price and be charged.
positions 6,7,and 8 are refered to as failure strategies as all represent a mismatch between percived benefit and price.
what are the three main ways of maintaining a competative advantage?
- cost leadership - basically be a better price than your competitors.
- Differentiation - this can be through brand, quality, service ect. Apple have a very effective brand differentiation.
- focus strategy - applies to niche markets where there may be cost or differentiation.
What 3 criteria must be satisfied if a strategy is to be successful?
- suitability - does it fit the environment and address the key issues.
- feasibility - does the organisation have the resources to achieve the end result ie staff, finance, tech.
- acceptability - is the strategy consitent with the business objectives and from a risk and return perpective is it acceptable to the shareholders.
what is ansoffs matrix?
Ansoffs matrix can be used to identify the directon of growth a business can undertake and covers 4 main areas;
1. Market penetration - existing products in existing markets - for markets in growth at risk from competitor reaction and may lead to stagnation.
2. Market development - existing product in new markets - targeting a new market segment, may benefit from strategic alliances. may strain business capabilities and new external analysis will be requied.
3. Product development - new product in existing market - either entirely new or a copy of rivals success. demands will be unknown and may harm existing products.
4.Diversification - new product in new market - very different CSF and canreduce business flexibility.
What are the different types of corporate parenting?
synergy manager
* enhance value by sharing resources and activities
* dificult to synergise between different cultures and systems.
Protfolio manager
* enhance value from individual business, i.e. acquire and improve undervalued business.
* minimise central services, lower costs
* targets and incentives to encourage performance.
parental developer
* use central competences to add value to SBUs
* needs to be prepared to sell SBUs it cannot add value to.
what is portfolio analysis and what are the two matrix used?
portfolio analysis is used to determin the fit between SBUs and the overall organisation by:
* assessing performance - BCG matrix.
* determining strategies - Parenting matrix
* and assessing for acquisition or disposal.
BCG Matrix - H axis = rate of market growth L to H, V axis relative market share H to L
* Star - high growth market with high market share. One to keep, but may still be cash using.
* Cash cow - low growth market with high market share. used to generate cash flows to support stars.
* problem child - high market growth low market share. further investment may turn this to a star.
* Dog - low growth and low share - may be reaching maturity or just not great. probably cash using.
Parenting matrix - H axis = ability to add value L to H, V axis = opportunities to add value H to L.
* Ballast - high ability low opportunity. may be one to divest as there is low opportunity to increase value of investment.
* Alien territory - low ability and opportunity. Divest.
* Heartland - high ability and opportunity. keep.
* value trap - low ability high opportunity. bit of a money suck.
What are the main methods a business may use to grow?
- organic growth - through increased customer or sales levels.
1. spreads cost but may be slow.
2. avoids issues from assimilation
3. lower risk but may struggle to acquire skills and experience.
4. will strugle to overcome entry barriers.
Acquisition or merger - larger co buys smaller co or two similar sized companies merge.
1. quicker but more expensive
2. able to build a balanced portfolio, may bring synergies.
3. may run afoul of legisltaion such as monopoly.
4. inherits existing problems and may find that cultures clash.
Joint venture or strategic alliance - JV = 2 or more collaborating on business activity, SA 2 or more cooperating but maintaining identity.
1. Shared cost with reduced risk, but rewards are also shared.
2. combined expertise but may loose compatative advantage.
franchise - paying to use brand, system and processes.
1. quick and raises funds.
2. Loss of control and risk to brand.
How might corporate governance be described and what is its purpose?
Corporate Governance - The system by which companies are directed and controlled in the interests of shareholders and their stake holders.
- Ensure suitable balance of power
- ensure Exec directors are remunerated fairly
- Ensure management accountability through increased disclosure to shareholders
- Top down management and ethics.
What are the charcteristics that are important to Corporate governance?
- Fairness - equality, even handiness
- Open/transparent - building block, agency relationship. default to provide not conceal.
- Innovation - transforms knowledge and ideas.
- Scepticism - questioning approach, crital assessment.
- Independence - from influence and involvement. freedom to be objective.
- Probity/Honesty - foundation ethical stance.
- Responsibility - accept outcomes and consequences of decisions.
- Accountability - folowing on from responsibility.
- Reputation - through moral stance and behviour.
- Judgement - reach and communicate meaningful and balanced conclusions.
- Integrity - hold to ethical standards.
