Strategic Management and Risk Flashcards
What is strategy?
It is a plan that a company actions to meet its goals and stakeholders expectations.
How do we create sustainable value for our stakeholders?
- Balance risk appetite with risk tolerance.
- Risk strategy is not separate from corporate strategy.
What is strategy planning?
- Long-term goals include plans, action, policies such as the King IV Governing Body which must approve short, medium and long-term strategies.
What is strategy development?
- Is about diagnosing strategic issues, understanding environments and organisations, formulating a broad line of intent and selecting appropriate strategic options.
- This is sometimes referred to as strategy formulation or strategic planning.
Define strategy execution?
It is also known as implementation, is concerned with taking the broad strategic intent and selected options and translating that into action. It involves instigating change and measuring outcomes on a continuous basis.
Define the 4 phases of strategic planning:
- Strategic Planning:
- Create a mission and vision
- Access internal and external environment
- SWOT analysis, PESTELE, Porters 5 forces - Select appropriate strategies
- Implementing Strategies
- Measures Performance
Define strategic analysis:
What (Vision)
Why (Mission)
Who (Action Plan)
Which (Key Performance Indicators)
SWOT Analysis
S - Strengths
W - Weaknesses
O - Opportunities
T- Threats
External factors which influence the business:
External environment:
- Political Environment:
- Instability, war, nationalism
- Infrastructure, policies - Economic Environment:
- Exchange rate, interest rate, inflation and economic growth - Social Environment:
- Age, geographic location, family structure - Technological Environment
- Advancement, communication, data and processes - Regulatory Environment
- Tax, exchange control, labour laws, consumer protection - Sustainability (ESG)
- Global challenges - Innovation
- Adapting business processes
Internal environment which affects business:
- Leadership Style:
- Capabilities senior
- Visionaries, inclusive style - Management Capabilities:
- Skill and suitable to business - Corporate Culture:
- Innovation, flexibility, creativity - Governance:
- Inclusive, qualitative - Life Cycle Product:
- Price elasticity products - Labour:
- Skills and resources - Financial Resources:
- Future investments - Information Systems:
- Technology, assets
Define PESTELE ANALYSIS:
It studies the key external factors that influence an organisation:
P: Political E: Economic S: Social T: Technological E: Environmental L: Legal E: Ethical
Define the 6 strategies for sustainable value creation;
- Product Market Strategy
- Competitive Strategy:
- Cost Leadership
- Differentiation
- Focus Strategy/Segment - Porter’s 5 Forces:
- Internal and external influence on the business - Price Strategies:
- Price skimming
- Predatory Prices
- Selective discriminating
- Market pricing - Growth Strategy
- Information Tech Strategy:
- Availability and Feasibility
- IT solutions support
- Data Storage
- Software Compatibility
What are the 5 factors which need to be taken into account when trying to implement a sustainable value creation model?
- Feasibility
- Viability
- Sustainability
- Acceptable ROIC
- Positive NPV
Describe the 5 Michael Porters Forces:
- Threats of new entrants
- Rivalry
- Bargaining Power of Buyers
- Threat from substitutes
- Bargaining power of suppliers
Define the 6 step process to implement strategy:
- Link performance to strategy
- Implement Strategy Reporting
- Establish your Strategy Rhythm
- Define KPI’s
- Build your Plan
- Define your strategy framework
You need to communicate performance measures to key personnel in the business.
King IV is the governing body which approves risk associated with strategy.
