The nature of strategy and planning Flashcards
THE MEANING OF STRATEGY
What is the textbook definition of strategy?
How is this definition expanded on? (2)
The time frame of strategy is very relevant but needs to be considered in the context of what?
Name 2 examples.
Strategy = the combining of knowledge and capability in the perception of a future outcome
Strategy is an overarching construct that is present in 1 or more brains, which incorporates:
(a) the imagination of how a future situation might look, and
(b) the conceptual alignment of what might be required to achieve that situation
Considered in the context of the organisation’s operation cycle
- Tesco plc = short strategic operation cycle = buy from suppliers and sell to consumers (date-sensitive products)
- BAE = long strategic operation cycle = manufacture and supply technology and products to customers = many months or years to complete
THE MEANING OF STRATEGY - DISTINGUISHING BETWEEN PLANNING & STRATEGY
Plan and strategy are often used interchangeably and are intrinsically linked.
What is the important distinction between the 2 concepts?
What is meant by planning? (Combination of what?)
- Plan = explicit idea/statement that identifies several distinct facets expected to encounter/complete on the journey into the future
(tackles questions like how, when, where, who, and what?) - A strategy will, under normal circumstances, precede a plan, and a strategy may contain several different plans e.g., a financial plan, a contingency plan, succession plans etc.
(Strategy is bigger than a plan and tackles the question of why?)
Planning = a combination of objectives, goals, and actions to enable the realisation of an anticipated route (the vision) while maintaining the ethos of the mission
DEFINITIONS OF STRATEGY AND STRATEGIC PLANNING
According to Pettigrew and Whipp (1991), what are the 3 key elements behind any strategic decision?
What dimension do Clegg et al. (2017) add to these concepts and what equation is used to define strategy?
Expand on this. (3)
How does Lynch (2015) define strategic management?
- Context = the environment within which the strategy operates and is developed
- Content = the main actions of the proposed strategy
- Process = how the actions link together or interact with each other as the strategy unfolds (this may be described as the plan)
Clegg et al. (2017) add a human dimension by suggesting that:
Strategy = knowledge + capability
(1) Knowledge is required to imagine a future and visualise how to obtain that future state
(2) Capability is the power to get things done = implement plans
(3) Strategy = the LT vision for direction, requiring knowledge to imagine a structure that is different from today, and the capability to do something about it
Strategic management = the identification of the organisation’s purpose and the plans and actions to achieve that purpose
THE MEANING OF STRATEGY - KEY TERMS RELATED TO STRATEGY
What is meant by vision?
What is meant by mission?
What are objectives?
What is paradigm?
What is iteration?
Vision = the ability of the human brain to imagine something different from today
Mission = the ethos, beliefs and values that enable the forming of a vision
Objectives = a range of criteria that identify and clarify different aspects of the vision and mission
Paradigm = the vision held by 1 or more brains at any particular point in time
Iteration = a repetition of a process or action
What is Cancer Research UK’s strategy?
What is GSK plc’s strategy?
Why are these different?
At the outset, the development of strategy within an organisation requires what?
Cancer Research UK strategy = to see 3 in 4 people surviving cancer by 2034
= a clear strategic aim
GSK plc strategy = bring differentiated, high-quality and needed healthcare products to as many people as possible
= a people-based focus of strategic aims
GSK plc is people-focused due to nature of the business and their organisational culture
a time dimension and an understanding of the level at which the strategy is being visualised.
STRATEGIC PLANNING
When are strategy and planning closely aligned?
What is the purpose of this alignment?
What is the strategic journey?
How is this done? / Describe the process of the development of strategy within an organisations (known as the core strategy model).
What is the purpose of developing a strategy to move from the realities of today towards the vision of the future?
Closely aligned as a process within the development of strategy
Purpose = to enable a comprehensive structure
The journey to close the gap that exists between TODAY and the FUTURE
The strategic journey takes us from ‘today’ towards the ‘future’ through the process of the daily operation of an organisation (implement, monitor, adjust), which drives the visions, the ability to see a different way to operate, and then creates the iterative review process
= to create a map, or a benchmark = will help in strategic planning and also act as a checkpoint along the way, and when we believe the journey has been completed
STRATEGIC PLANNING - TODAY AND FUTURE
What is meant by TODAY?
What is meant by FUTURE?
What is an inevitable consequence and why?
What are 3 difference between the strategic dimensions of TODAY and FUTURE?
TODAY = a fixed moment in time that can be frozen e.g., end of financial year, where it is possible to understand everything that contributes to that position and look backwards to understand why the position exists
FUTURE = an unknown and unrealised reality = know it will arrive but not sure what it will look like
Risk, because the minute leave TODAY and head TOWARDS future = surrounded by risk
- ‘Today’ is a fixed and known point in time
‘Future’ is unknown - ‘Today’ exists because of the decisions that have already been made
‘Future’ will be a result of ‘today’ + future decisions - Possible to analyse a wide range of aspects of ‘today’
Can only ever imagine an analysis of the ‘future’, but can use strategic vision to analyse how it might look
STRATEGIC PLANNING - BOUNDARIES AND PARAMETERS
Why it is important for any organisation to fully understand the boundaries and parameters of the starting point, the route and even the perceived vision?
What do the boundaries of strategy suggest?
Name an example.
What do the parameters of strategy suggest?
Name an example.
= to ensure that the strategic thinking is based in reality
Boundaries suggest the limits beyond which an organisation will not able to operate
A firm of accountants is unlikely to cross a boundary that required it to begin a manufacturing process
Parameters suggest the aspects which need to remain constant
A firm of accountants will have parameters that suggest the expected level of return they require
STRATEGIC PLANNING - BOUNDARIES AND PARAMETERS
Can boundaries and parameters change?
What is it important to do?
Why is it important to establish benchmarks as part of the development of strategy? (2)
What is this often referred to?
As plan/develop strategy, may anticipate that certain boundaries/parameters may need to change to enable the realisation of the objectives
Important to benchmark anticipation of the required changes by plotting the changes on a graph or creating a description
- to enable an understanding of why reality is almost always different from anticipation
- to measure achievement against expectation
= gap analysis or exception analysis
STRATEGIC PLANNING - SUCCESS
If we start our development of strategy on the basis that we intend to achieve something in the future that differs in some way from today, then it is important that we understand what?
How is this usually done? (2)
What is the problem with the term success? (2)
how we will realise whether or not we have succeeded
- Precise strategic goals = clear whether have been achieved or not
- Generic vision aligned to objectives = can only determine whether strategy was successful when reach the future
A. It will be perceived differently by different people
B. How success is perceived at the starting point may be quite different from how it is perceived at the end point
CHARACTERISTICS OF STRATEGIC DECISIONS - TYPES OF DECISIONS
What is an irreversible decision?
What is a reversible decision?
What is an experimental/staged/subjective decision?
What is required for the ability to make decisions? (Must always be aware of what?)
It is useful to consider what the decision is intended to resolve. How can this be approached? (4)
Irreversible decision = means there is no going back (sell off part of the business)
Reversible decision = can go back to the original starting point and rethink (rent new office space with a ‘break’ clause if growth doesn’t meet expectations))
Experimental/stage/subjective decision = one that ‘tests the water’ and maybe provides time before taking an irreversible or reversible decision (test a new product on a small scale before realising to general public)
Must always be aware of the potential consequences and impact of decision-making
Consider:
1. situations that need to improve/ change
2. complexities that need managing
3. issues which need tackling
4. difficulties that need to be overcome
CHARACTERISTICS OF STRATEGIC DECISIONS - TIMEFRAME OF A DECISION
Part of the consideration of the type of strategic decision being made will be to consider the length of time that exists between the known point of today and the anticipated point of the future. Why?
Under UK law, directors are bound to ensure that the company is what?
At a simple level, what does this mean?
What can this act as? (For ST strategic decision making)
The UK CG Code introduced the concept of long-term viability. What does this mean?
What 4 things is it always important to consider?
Some strategic decisions will be taken where the consequences will not be realised for several years, but have an immediate impact e.g., an oil company committing finance and resources searching for new deposits of oil.
A going concern
The organisation has sufficient assets to cover its liabilities for the next 12 months
Can act as a useful strategic dynamic for short-term decision-making
Premium listed companies are required to in the ARA discuss the length of time over which the viability of the organisation has been assessed, why that timeframe is an appropriate length of time, and how the viability is justified
- the immediate impact of a strategic decision
- any change that this might require within an organisation
- the anticipated longer-term impact of that strategic decision
- the potential timing of impacts
CHARACTERISTICS OF STRATEGIC DECISIONS - SCOPE OF A DECISON
Company secretaries and governance professionals will need to consider what?
CHARACTERISTICS OF STRATEGIC DECISIONS - VALUES AND EXPECTATIONS
Values form part of the underlying principles behind the mission of an
organisation. What will the values be a combination of?
What is the cumulatively known as?
CHARACTERISTICS OF STRATEGIC DECISIONS - STRATEGIC CHANGE
What 3 things are required when trying to reach the future? (Consider, realise, recognise)
SCOPE OF A DECISON
the operational scope and parameters of their strategic decisions
(Strategic decisions will consider the external environment and the use of internal resources and competencies to ensure a strategic fit)
VALUES AND EXPECTATIONS
Values = combination of of the beliefs and expectations of the people who lead the organisation, and will also be an accumulation of the practices and actions that have developed within the organisation across its history
The culture of the organisation
STRATEGIC CHANGE
Need to:
1. consider who and what will be affected or influenced by decisions
2. realise that strategic decisions will have an ethical impact
3. recognise that change is often difficult for an organisations and for the people within it
CHARACTERISTICS OF STRATEGIC DECISIONS - COMPLEXITY AND THE DEVELOPMENT OF STRATEGY
The development of strategy is not a simple process and requires what?
What is it important to take?
Name 5 examples that should be considered.
Why is there no shortcut or tick-box approach to the development of strategy?
Requires a depth and breadth of organisational understanding to allow genuine participation in the process
A holistic view of the strategic decisions being discussed and be able to challenge the potential and perspectives of other people
- the uncertainty of the operational environment
- dynamic changes in technology
- intricacies of multinational trade
- differing styles of leadership
- the complexity and challenges of human interaction
= each strategic decision needs to be considered within the context of the people and organisational parameters that surround it
PERSPECTIVES OF STRATEGY - MINTZBERG (2008) 5 Ps
What does Mintzberg introduce?
What is the purpose of such ‘modular’ thinking?
What are Mintzberg’s 5 Ps?
Explain the McDonalds example for each.
Mintzberg introduces the idea of 5 different ways to view the development of strategy
Purpose = to help the human brain identify differing characteristics within each strategic situation
- Strategy as PLAN = the plan gives a direction, attempting to define a route to get from here to there
The number and geographical spread of McDonald’s outlets is based around a plan to attract customers
- Strategy as PATTERN = the pattern describes a manner of behaving across a period of time = humans generally like to work and behave in a comfortable and familiar way
The nature of how McDonald’s outlets work is a pattern and part of the attraction is the familiarity and the known
- POSITION = the position within strategic planning suggests that there is a right time and right place
McDonald’s menu is similar and familiar globally (pattern), but adapted with special offers and products to attract customers in a particular location
- PERSPECTIVE = recognises that strategy does not just happen by chance = people developing strategy must be able to look at the organisation and its strategy from 1< perspectives
McDonald’s introduced the Egg McMuffin after recognising the need to introduce vegetarian options to align their strategy to a wider perspective
- PLOY = the ploy suggests that strategy may often be a deliberate and intended move to thwart the competition and maintain a competitive edge
Setting up a McDonalds in an area where high sales are unlikely to be achieved BUT the strategic ploy will prevent competitors from opening (no alternative for potential customers)
