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Accounting > Strategic Management > Flashcards

Strategic Management Flashcards

1
Q

What is strategy?
What is strategic planning?

A

Plan of action designed to achieve a particular goal

Its about the longer term plans for our business

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2
Q

Identify the steps in strategic management MCQ

A

Strategic Planning
Strategy Implementation
Strategic Control

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3
Q

Within Strategic planning what steps are involved?

A

*Stakeholders
*Vision and objectives
*SWOT analysis –Internal analysis– External analysis
*Crafting strategy

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4
Q

What is strategy?

A

Strategy is the pattern of actions used by a farmer/business manager to accomplish goals and objectives.

Moves and approaches to:
*Strengthen the farm’s position
*Satisfy customers
*Achieve performance targets
*Accomplish long-term vision

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5
Q

What does having a strategy help the farmer make?

A

Make reasoned, cohesive and consistent choices among alternative courses of action in an uncertain world

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6
Q

What are the 4 questions to ask for strategy?

A

*What do we want to achieve?
*Where should we put our efforts, and why?
What resources do we have available?What do we need to do to compete, survive and meet our goals?

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7
Q

What are the 4 things involved in strategic management?

A

–Planning/developing a strategy
–Implementing the chosen strategy
–Controlling the outcomes of the strategy implementation
–Adjusting the chosen strategy over time as time and conditions change

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8
Q

Strategy implementation what 2 things are done for this?

A

–Obtain and organise farm resources
–Direct the resource

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9
Q

Strategic control, what are the 3 measures taken?

A

–Measure and evaluate farm performance
–Monitor external events
–Take corrective actions as needed

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10
Q

Identify which of the following is NOT a competitive strength MCQ

A
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11
Q

Whats the advantages of Strategic Planning? (5)

A

*Helps keep the farmer/manager focused on what is important to the success (or failure) of the business

*Filter out distractions (e.g. short-term opportunities) that do not fit with the longer term objectives

*Can evaluate potential opportunities and threats for their ability to contribute to the strategic goals of the manager

*The strategy can guide day-to -day decision-making

*Without strategy the farmer/manager may drift along without any clear idea of where the business is heading in the longer-term

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12
Q

A good strategy development and management process will: (7)

A

1- Provide better guidance on the crucial point of what the farmer/manager is trying to achieve

2- Make the farmer more alert to the winds of change, new opportunities, and threatening developments

3- Provide criteria to evaluate alternative investment options:
resources should be steered into strategy-supportive, results-producing areas (not the first apparent ‘good deal’ that comes along)

4- Unify decisions across the different management areas of the business towards a common set of long-term objectives

5- Create more proactive management style and counteract the tendency for decisions to be reactive or defensive

6- Allow flexibility for adjustment to produce sustained success in a changing environment

7- Help farmers become better decision maker

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13
Q

What is a systematic approach for Strategic Planning ? (3)

A

–Setting objectives

–Evaluating the business and its environment

–Determining a route map for longer-term development of the business to achieve its objectives

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14
Q

List the 4 Strategic Planning processes:

A

–1) Identification of stakeholders

–2) Development of vision and objectives

–3) SWOT analysis
* 3a) Internal analysis
* 3b) External analysis

–4) Crafting strategy

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15
Q

Who are the stakeholders?

A
  • More than just the farmer
  • Internal and external stakeholders
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16
Q

Internal Stakeholders:

A

farmer, farm family, business partner(s), employees

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17
Q

External Stakeholders:

A

bank manager/lender, customers, suppliers, government, wider community/public

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18
Q

If certain stakeholders are ignored what will occur?

A

conflict will occur

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19
Q

What is crucial in defining the strategic direction of the business?

A

Vision and Objectives

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20
Q

What business are usually more successful than others?

A

Businesses that are able to clearly communicate who they are and what they stand for are often more successful than those that don’t have a true understanding of their focus.

  • Reflection of the values and purposes of the management
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21
Q

What can be very rewarding if done properly?

A

Can be a challenging and time-consuming process but very rewarding if done properly

Provides strong foundation on which to make business decision

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22
Q

What is a strategic vision?
What are example questions in developing vision?

A
  • A strategic vision is what the stakeholders want the farm to look like 10 years or more into the future

– Example questions in developing a vision:
* What products and activities?
* How big?
* Who will be involved and where?
* How will it be organised
* Who will be the customers?
* What will the farm be good at?

  • Examples:
    – “We will be low-cost leaders in milk production through our choice of technology, production practices and science-based decisions.”
    –“We will be a profitable, sustainable, and expanding producer of cereal crops demanded by the Irish feed industry”
    –“We will be the premier supplier of organic beef and lamb to Good Herdsmen Ltd.”
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23
Q

What is a mission statement defined as?

A

A mission statement defines a farm’s current business direction(s)

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24
Q

Porters’s 5 Forces Model: Know these

A

1- Competitive Competition / Revelry (analysing external revelry)

2- The bargaining power of suppliers
Looking at how many suppliers there are, are you limited in the suppliers you have available to you

3- Bargaining power of buyers or customers

4- Threat of new entrance . how easy or difficult it is to come into the market that your in .

5- the threat of substitute products or services

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25
Q

What does a mission statement deal with?

A

–Deals more with the present and very near future (vision deals with the long term)
–It should use a customer orientation (not a production orientation)
–Developing a customer orientation, think:
*Which consumer/customer groups are being satisfied?
*What and how are customer needs are being satisfied?
*Customers: final consumers and processors of farm products

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26
Q

How do you complete a mission statement ?

A

Complete the mission statement …
–“We, [the farm, farmer, and others involved]
–will [plans and objectives]
–By [the process]
–So that [customer’s needs being met].

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27
Q

Example Mission Statements :

A

“Rosy-Lane Holsteins mission is to care for our animals by balancing production and profitability, while protecting natural resources (air, land and water) and providing a comfortable living for our family and employees. Specifically, we provide superior Holstein genetics to worldwide markets; utilize and experiment with profitable and environmentally sound technologies for plants and animals; maintain an economically viable business unit with future potential; and produce high-quality milk and receive maximum returns with minimal inputs”

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28
Q

What should objectives be: (5)

A

–Focus on important issues
–Be specific, precise, measurable
–Have clear time scales
–Reflect potential capability (realistic)
–Require “stretch” i.e. “challenging but achievable

29
Q

Objectives SMART:

A

SMART–Specific, Measurable, Achievable, Relevant, Time-scaled

30
Q

List whats included in a SWOT analysis:

A

Strengths, Weaknesses, Opportunities, Threats (SWOT Analysis)

Examine the :

a)Internal analysis: strengths and weaknesses within the farm

b)External analysis: opportunities and threats in the farm’s external business environmen

31
Q

What are the 3 key questions for internal analysis:

A

i.How well is the present strategy working?
ii.What are the farm’s strengths and weaknesses?
iii.How strong is the farm’s competitive position?*Are the farm’s costs competitive with rivals

32
Q

List the 4 Building Blocks for Competitive Advantage:

A

–Superior efficiency
–Superior quality
–Superior innovation
–Superior customer responsiveness

33
Q

What is Competitive Advantage?

A

Having a profit rate higher than the industry average–Profit rate: Rate of return on assets (ROA)

34
Q

What are the performance indicators to see if the current strategy is working? (5)

A

Performance indicators:
profitability,
solvency,
liquidity,
repayment capacity,
efficiency

35
Q

What are strengths of the business?

A

Core competencies,
e.g. what do we perform well relative to our competitors?
What characteristics of the business gives us a competitive edge?

36
Q

What are weaknesses of a business?

A

A condition or characteristic that puts us at a disadvantage

37
Q

What do many strengths and weaknesses follow from?

A

Follow from a systematic financial analysis

38
Q

What can other Strengths and Weaknesses be identified by? (3)

A

–Tangible resources
–Intangible resources
–Capabilities

39
Q

List signs of strengths of a competitive position:

A

–Important core competencies
–Distinctive strategies
–Cost advantages
–Good match between farm’s strategic product groups with the industry’s growth areas
–Above average profit margins
–Taking advantages of cost economies
–Above average technological and innovation capability
–Creative and entrepreneurial management
–Capable of capitalising on opportunities
–Possessing skills in key area

40
Q

Signs of a competitive weaknesses:

A

–Lack of clear direction
–Losing ground compared to other farms
–Below average growth
–Short on financial resources
–Poor strategic product groups compared to industry growth
–Weak where best growth potential is
–High cost producer
–Not able to take advantage of cost economies
–Poor quality of skills in key area

41
Q

Are costs competitive?
Whats major source of competitive advantage?

A

Major source of competitive advantage: lower unit costs

42
Q

Comparative analysis:

A

with other farms (and countries perhaps)
–Costs per tonne of crop, per kg of beef, per litre of milk, etc

43
Q

Horizontal analysis:

A

How costs have changed over time
–Sustained competitive advantage?

44
Q

Vertical analysis:

A

Evaluation of costs by category to identify areas with largest potential for savings/improvement (e.g. fertiliser, sprays, contractor)

45
Q

Value chain analysis:

A

breaks down the whole process by activity to analyse outputs and costs and to identify where efficiencies can be improved (use of enterprise gross margin accounts)

46
Q

Benchmarking involves:

A

Comparing costs and physical efficiencies of activities with recognised standards (e.g. Teagasc farm management standards)
–Farmer discussion group

47
Q

Cost Analysis.. (5)

A

Comparative analysis
Horizontal analysis
Vertical analysis
Value chain analysis
Benchmarking

48
Q

When formulating strategy for farm it is important to evaluate external conditions that impact on the business (list the 3)

A

–Opportunities and threats
–Important not to be too blinkered
–Factoring in an understanding the business environment makes for better strategies

49
Q

What are the conditions and trends in the macro environment?

A

–Macroeconomic environment
–Technological environment
–Social/demographic environment
–Policy/legal environment

50
Q

PESTEL: External Analysis of the Farm:

A

Political,
Economic,
Social,
Technological,
Environmental,
Legal

51
Q

LoNGPESTEL:

A

Consider:
Local,
National and
Global aspects

52
Q

What are the industry’s dominant economic traits?

A

–Market size
–Market growth rate and where the industry is in the growth cycle
–Ease of entry to the sector
–Number of ‘players’ and their relative sizes
–Pace of technological change
–Presence of economies of scale
–Industry profitability

53
Q

What is competition like and how strong are each of the competitive forces?

A

Porter’s model

54
Q

What is causing the industry’s structure to change?

A

–Changes in the long-term industry growth rate
–Changing buyer preferences/profiles
–Technological change
–Marketing innovation
–Entry or exit of major players
–Increasing globalisation of the industry
–Changes in cost and efficiency
–Regulatory influences and government policy changes
–Changing societal concerns, attitudes and lifestyles
–Changes in the level of uncertainty and business risk

55
Q

What key factors will determine competitive success in the industry environment?

A

Key Success Factors (KSF)
–Technology-related
–Production-related
–Distribution/Marketing-related
–Skills-related (e.g. organisational capability)
–Others, e.g. reputation, location, access to capital and/or other resources

56
Q

Which farms are in the strongest/weakest competitive positions?

A

–What are the characteristics of the strongest? And the weakest?
–Characteristics: size, location, production methods, equipment, labour/skills, specialisation, diversification, vertical integration, etc

57
Q

Is this an attractive industry and what are the prospects?

A

–Putting all the above together:
*Overall assessment of the industry’s attractiveness/unattractiveness
*Profit outlook
*Special issues and problems

58
Q

SWOT: Strategic Issues to be Addressed
The SWOT should consider:

A

–How should the strengths be used?
–Which weaknesses are critical to success? i.e. which need to be improved
–Which opportunities can be taken advantage of?
–Which threats are potentially destructive?
–Will our combined response to these generate particular synergies, efficiencies or other benefits?

59
Q

Crafting Strategy:

A

Managerial process of deciding how to achieve the targeted results within the farm’s physical and economic environment and its prospects for the future
–Recognises organisational resources and capabilities and the competitive environment
–Good strategies are based on the competitive advantages of a business

60
Q

Crafting Strategy may involve:

A

–Actions to respond to changing industry conditions (e.g. new regulations, changing demand patterns, etc)
–Fresh offensive moves to strengthen long-term competitive position
–Efforts to broaden/narrow product mix or alter product quality
–Efforts to integrate backward or forward
–Actions to capitalise on new opportunities (e.g. new technology, product innovation, purchase extra land, etc)
–Defensive moves to counter against external threats–Redefining how key functions and activities are managed
–Actions to improve short-term profitability
–Moves to diversify the revenue base of the business and enter a new sector

61
Q

Crafting Strategy (cont’d)
Actual Strategy thats chosen may follow a combination of generic strategies:
MCQ
Identify 2 generic strategies:
Identify what one isnt thats a generic strategies:

A

–Low cost leadership
*Aim to develop a low-cost production position (efficiency)

–Growth
*Increase scale of the farm (usually acreage)

–Focus or niche
*Emphasis on market development: targeting a niche
*e.g. interest in alternative farm enterprises

–Reactor
*Not choosing a strategy because the manager is unable to develop a competitive advantage
*In the long term this approach is unlikely to lead to success

–Differentiation
*Trying to differentiate your product from that of your competitors (e.g. better quality, organic, welfare-friendly)

–Best-cost provider
*Aim for reasonable cost but also aim for other characteristics such as quality

–Retrenchment
*If current strategy not working
*Involves revising objectives and timetables toward more realistic levels

62
Q

Choosing a Strategy: Scoring Proposed Strategies
Tests we can do when we have a vision for our business

A

*Vision Consistency Test
–How well does the proposed strategy fit with the vision of the farmer and other stakeholders?

*Goodness of Fit Test
–How well does the proposed strategy fit with: the external analysis of the industry and the internal analysis of the farm?

*Building for the Future Test
–How does the proposed strategy help build competitive advantage (efficiency, quality, innovation and customer responsiveness)
–Does it contribute to building resources and capabilities for the future?

*The Performance Test
–How well does the proposed strategy contribute to achieving the objectives of the farm?

*Importance Test
–Are important issues identified in the external and internal analyses addressed by the strategy

*Feasibility Test
–Can it be implemented/accomplished?

*Resource Test
–Are resources available to implement the strategy? (e.g. finance, expertise)

*Confidence Test
–How confident that anticipated outcomes of the strategy will occur?

63
Q

What is scoring proposed strategies Example?

A

*Score each proposed strategy on a scale of 1 to 5 for each of the tests
*5 indicates the best a strategy can achieve for a given test

slide 35 Eg of scoring proposed strategies

64
Q

Whats the most difficult part of strategic management?

A

Strategic Implementation
–Need to keep overall vision in mind without getting overwhelmed by the details of day-to -day operations

65
Q

What does strategic implementation involve?

A

–designing the structure of the farm and aligning functional areas of management (production, marketing, finance) with the chosen strategy
–Setting target dates for implementation of key stages of the plan
–Assigning tasks to specific personnel
–Motivating staff to accept and implement the plan
–Facilitating specific training/up-skilling if required
–Obtaining and directing the needed resources
–Comparing actual performance with budgets–Adapting the plan and implementation to changing circumstances

66
Q

Slide 37 Example of a layout of a strategic Project plan

A
67
Q

Are strategic planning and implementation a one time exercise?

A

*Strategic planning and implementation are not one-time exercises
–Strategic control involves evaluating farm performance during and after implementation of chosen strategy
–New development/circumstances may call for corrective action performance
–Reviewing changes in the surrounding environment, and making adjustments are normal, constant, and necessary parts of the strategic management process

68
Q

A strategic control system involves: (6)

A

–Choosing the key indicators that measure progress towards objectives (financial, productivity, etc)
–Establishing standards against which performance is to be evaluated
–Creating recording systems for the key indicators
–Comparing actual performance to the established standards
–Evaluating the results
–Taking corrective actions as necessary

69
Q

What are common problems in strategic planning ?

A

*Planning under uncertainty
–Difficult to prepare forecasts
–Some people feel uncertainty is a reason for not planning (FALSE)
–Need to examine proposed strategies under a range of scenarios (re external environment)

*Ivory tower planning
–Out of touch/unrealistic?
–Resource capabilities?
–Advantage of seeking evaluation of plan by another person(s) (e.g. Advisor)

*Planning for present
–Strategy does not include adaptations needed for future
–Need to continually monitor both internal and external environment and factor that into planning
–Focus more attention on vision for the future (Strategic intent)

*Errors caused by cognitive biases
–Prior hypotheses/assumptions/bias
–Escalating commitment
–Illusion of control

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