UNIT 1- Introduction to strategic management

Question 1

The GPS analogy of strategic decisions

Answer 1

1. Where am I?
2. Where do I want to go?
3. How do I want to go?
4. What are the alternatives?
5. Go

Question 2

Characteristics of strategic decisions

Answer 2

• long term
• scope of several organization activities
• create advantage over competitors
• fit the business environment (identifying and positioning in the market)
• consider the expectations of powerful actors (stakeholders)

Question 3

Implications of strategic decisions

Answer 3

• Complexity (locations of suppliers, geographical scope, technological changes)
• Uncertainty (the future: competitors, government, etc.)
• Affect all business decisions (suppliers, logistics, product, technology)
• Require integrated strategy for all areas of the company
• Require relationships and networks (all supply chain)
• Require organization changes (resources and cultural)

Question 4

The strategy checklist

Answer 4

• strategic position
• strategic choices
• strategy in action

Question 5

Strategic position

Answer 5

• What are the environmental opportunities and threats?
• What are the organisation’s strengths and weaknesses?
• What is the basic purpose of the organisation?
• How does culture fit the strategy?

Question 6

Strategic choices

Answer 6

• How should business units compete?
• Which businesses to include in a portfolio?
• Where should the organisation compete internationally?
• Is the organisation innovating appropriately?
• Should the organisation buy other companies, ally or go it alone?

Question 7

Strategy in action

Answer 7

• Are strategies suitable, acceptable and feasible?
• What kind of strategy- making process is needed?
• What are the required organisation structures and systems?
• How should the organisation manage necessary changes?
• Who should do what in the strategy process?

Question 8

Strategic position is concerned with:

Answer 8

• the impact on strategy of the external environment
• an organization’s strategic capability, and
• the influence of stakeholders and culture.

Question 9

The strategic position includes:

Answer 9

1. Environment (opportunities and threats)
2. Capabilities (resources and competences = strengths and weaknesses)
3. Purposes (stakeholder expectations)
4. Culture (cultural and historical influences)

Question 10

Strategic choices involve:

Answer 10

• corporate and business unit level
• directions and methods of development

Question 11

The strategic choices

Answer 11

• Corporate-level (diversification decisions about the portfolio of products and the spread of markets, relationship between the separate parts of the business)
• Business level (involve pricing and differentiation strategies, how to compete or collaborate with competitors)
• International strategy
  (diversification into new geographical markets)
• Evaluation (organic grow, mergers/acquisitions, strategic alliances)
• Innovation (first-mover or follower)

Question 12

The strategic in action

Answer 12

• Structuring (to support successful performance)
• Processes (to control the way in which strategy is implemented: intended and emergent)
• Resourcing (people, information, finance, technology)
• Practice (activities involved: people, activities, methodologies)
• Changing (managing: changes and styles)

Question 13

Identify and translate customer needs

Answer 13

• What is your Product?
• Who is your CLIENT?
• What does the CLIENT want?
• How can the environment influence (positively and negatively)?
• What is the value of your business?

Question 14

What is a vision?

Answer 14

A VISION statement is concerned with what the organization aspires to be.

Question 15

What is a mission?

Answer 15

A MISSION statement provides employees and stakeholders with clarity about the overall purpose of the organization.

Question 16

VMOSA

Answer 16

Vision
Mission
Objectives
Strategies
Action

Question 17

Mission definition

Answer 17

Overall purpose of the organization (in line with stakeholders’ values and expectations)

Example: Be healthy and fit

Question 18

Vision definition

Answer 18

Desired future
(what the organization aspires to be)

Example: To run the NY marathon

Question 19

Goal definition

Answer 19

General statement of aim or purpose

Example: Lose weight and do short / middle distance competitions

Question 20

Objective definition

Answer 20

Quantification or more precise statement of the goal

Example: Lose 6 kilos in 3 month , run the San Silvestre (10 km) in 6 month, run a half marathon in one year and run a marathon in 1 1/2 year.

Question 21

Strategic capability definition

Answer 21

Resources, activities and processes that provide ‘competitive advantage’

Example: Proximity to a fitness center, friends that will train with me, …

Question 22

Strategies definition

Answer 22

Long-term direction

Example: Exercise regularly, appropriate diet, participate in short / middle distance competitions

Question 23

Business model definition

Answer 23

How goods, service, information and material ‘flow’ between participating parties

Example: Join running club, following or consulting a nutritionist

Question 24

Control definition

Answer 24

Monitoring of action:
● assess effectiveness of strategies and actions
● modify as necessary strategies and/or actions

Example: Monitor weight, kilometers run and measure times. If progress satisfactory, do nothing. If not, consider other strategies and actions

Question 25

Corporate-level strategy

Answer 25

Corporate-level strategy is concerned with the overall scope of an organisation and how value is added to the constituent business units. The top of the strategy triangle

Question 26

Business-level strategy

Answer 26

Business-level strategy is concerned with the way a business seeks to compete successfully in its particular market. The middle of the strategy triangle

Question 27

Operational strategy

Answer 27

Operational strategy is concerned with how different parts of the organisation deliver the strategy, managing: resources, processes and people. The bottom of the strategy triangle

Question 28

What is stakeholders?

Answer 28

STAKEHOLDER is everybody that can be affected by a company or its strategy, in a good or bad way. Internal stakeholders: - employees - manager - owners External stakeholders: - suppliers - society - government - creditors - shareholders - customers

Question 29

Types of stakeholders

Answer 29

- internal stakeholders - external stakeholders

Question 30

4 types of external stakeholders

Answer 30

– Economic (e.g. suppliers; shareholders, banks) – Social/political (e.g. government agencies) – Technological (e.g. standards agencies) – Community (e.g. local residents)

Question 31

Stakeholders of a large organization

Answer 31

- owners/shareholders - financial community - activist groups - customers - managers - unions - employees - trade associations - competitors - suppliers - government - political groups

Question 32

stakeholder mapping

Answer 32

identifies stakeholder interest and power and helps in understanding political priorities.

Question 33

Stakeholder mapping issues

Answer 33

* Determining purpose and strategy – whose expectations need to be prioritised? * Who are the key blockers and facilitators of strategy? * Is it desirable to try to reposition certain stakeholders? * Can the level of interest or power of key stakeholders be maintained? * Will stakeholder positions shift according to the issue/strategy being considered?

Question 34

Power

Answer 34

Power is the ability of individuals or groups to persuade, induce or coerce others into following certain courses of action.

Question 35

Sources of power- within organizations

Answer 35

1. Hierarchy (formal power)- e.g. autocratic decision making 2. Influence (informal power)- e.g. charismatic leadership 3. Control of strategic resources- e.g. strategic products 4. Possession of knowledge and skills- e.g. computer specialists 5. Control of the human environment- e.g. negotiation skills 6. Involvement in strategic implementation- e.g. by exercising discretion

Question 36

For external stakeholders

Answer 36

1. Control of strategic resources- e.g. materials, labour, money 2. Involvement in strategy implementation- e.g. distribution outlets, agents 3. Possession of knowledge or skills- e.g. subcontractors, partners 4. Through internal links- e.g. informal influence

Question 37

Corporate social responsibility (CSR)

Answer 37

is the commitment by organisations to behave ethically and contribute to economic, social and environmental development, while improving the quality of life of their stakeholders.

Question 38

The "triple-bottom-line"

Answer 38

is the balance of economic, environmental and social imperatives while at the same time addressing the expectations of shareholders and stakeholders.