Strategy Flashcards
Levels of strategy
- Corporate
- Business
- Functional / operational
Rational Strategy (key features)
- Top down / formal
- Predicts the future
- Formal process
- Set goals and design a strategy to fit
- Often leads to ‘deliberate strategies’
- Mission is the starting point of strategy
Emergent Strategy (key features)
Bottom up approach
Empowerment of managers
Strategic choice and implementation happen simultaneously
Crafting
Mission is embedded in the culture of an organisation
The time horizon
Short term - 1-3 years
Medium term - 3-10 years
Long term - 10 years plus
Influenced by
Nature of ownership eg private v state
Capital structure eg venture capitalists expect speedy returns
Nature of industry eg levels of capital investment
Management skills
Business environment eg technical industries change more quickly
The strategic planning process
- Mission (RSVP)
- Objectives (SMART)
- Internal appraisal (9 Ms, BCG Matrix, Porter’s value chain)
- External appraisal (Pestel, Porter’s 5 forces, Porter’s diamond, Ohmae’s 5 Cs)
- Corporate appraisal (SWOT) (combine internal and external appraisal)
- Gap analysis
- Strategic plan (eg cost leader or differentiator, Bowman’s clock, SAF)
- Strategic implementation
- Change management (force field analysis, iceberg, 4 Rs),
- Direction of growth (acquisition, merger, organic)
- Strategic control - suitable measures (profit, liquiditiy, ROCE, balanced scorecard, CSF, KPI)
- Mission
RSVP
Reason - why do we exist?
Strategy - competitive position of the organisation in the market
Values - what does the company believe? what are personal values of employees?
Policies and standards of behaviour - behaviour of staff
Why should an organisation have a mission statement?
- Control
- Communication
- Training
- Culture
- Objectives
For a profit seeking organisation the primary goal is to deliver value to shareholders
For a not for profit the primary goal is to meet the stakeholders’ needs
Must be SMART
Stakeholders
Internal (employees, management)
Connected (shareholders, customers, financiers)
External (community, government, pressure groups)
Stakeholder mapping: Mendelow (level of interest vs power) minimal keep informed kept satisfied acceptable
- External appraisal
Environmental fit (expectation of owners, products that meet clients expectations, ability ro remain within legal and ethical codes, attractive to staff, satisfy the needs of other stakeholders)
PESTEL
5 Cs (tool for considering global expansion) Customer, Company, Competition, Currency volatility, Country)
Porter’s diamond (international) - strategic structure and rivalry, demand conditions, related and supporting industries, factor conditions
5 forces - bargaining power of customers, bargaining power of suppliers, threat of substitute products, threat of new entrants, competitive rivalry within the industry.
Industry lifecycle - intro, growth, shakeout, maturity, decline
- Internal appraisal
Critical success factors
- threshold resources
- unique resources
- threshold competencies
- core competencies
Sources of core competencies (Kay)
competitive architecture (internal, external, network)
reputation
innovative ability
9 Ms
money, manpower, machinery, markets, makeup, method, materials, management, management information
Benchmarking
internal, competitive, best in class, generic
Value chain
Support: infrastructure, technology, HR, Procurement
Primary: inbound logistics, operations, outbound logistics, sales and marketing, service
BCG matrix (portfolio of products) - cash cow, question mark, star, dogs (war horses and dodos)
- Corporate appraisal
6. Gap analysis (see 7)
SWOT - convert weaknesses to strenths, threats to opportunities, match strengths to opportunities
This is a useful model to bring together the results of the internal and external analysis
Gap analysis
- Strategies to fill the gap
Generic strategies - cost leader, differentiation, niche or focus. Don’t want to be stuck in the middle
Bowman’s strategic clock - no frills, low price, hybrid, differentiation, focused differentiation
Ansoff’s growth matrix - product development, market development, penetration, diversification
