Weeks 1 & 2: Strategy Development Risk

Question 1

Examples of what strategy is not

Answer 1

• Best practice improvement
• Execution
• Aspirations
• Learning
• Merges
• A vision
• Innovation

Question 2

What is strategy?

Answer 2

Strategy is a Defined Plan to create value for
* Customers
* Suppliers
* Employees
* Shareholders

• It also consists of all aspects of the five tests of a good strategy
• Porter’s definition: Strategy is the creation of a unique and valuable market position, involving a different set of activities.

Question 3

What questions must we answer when articulating and developing strategy?

Answer 3

1. Clarify Mission: Why are we in Business?
2. Conduct Strategic Analysis: What key issues affect our strategy?
3. Formulate the Strategy: How can we best compete?

Question 4

List the tools/frameworks for evaluating strategy

Answer 4

• Porter’s 3 Generic Strategies
• SWOT
• Ansoff
• OAS
• PESTEL
• Porter’s Five Forces
• Value Chain

Question 5

The role of organizational bias accentuates

Answer 5

• Exaggerating our talents & control
• Anchoring: Creating proposals in which we accentuate the positive and do not adjust our original estimates tending toward overoptimism
• Neglecting Competitors: We ignore their capabilities and plans
• Rewarding optimism and interpreting pessimism as disloyalty

Question 6

The strategy development process

Answer 6

The closed-loop process of strategy management with the key elements of
1. Develop the Strategy
2. Plan the Strategy
3. Align the organization
4. Plan Operations
5. Monitor and Learn
6. Test and Adapt

Question 7

Strategic positioning attempts to

Answer 7

achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals or performing similar activities in different ways.

Question 8

Another word for competitive advantage

Answer 8

strategic continuity

Question 9

Types of Strategic Risk

Answer 9

1. Strategy development risk
2. Strategy execution risk
3. Competitor risk
4. Strategic relationships risk
5. Supply chain risk
6. External relations risk
7. Governance risk
8. Legislative/regulatory risk
9. International risk

Question 10

What is Strategic Risk Management?

Answer 10

Risk to earnings or capital from flawed business strategy / decisions

• a process of identifying, assessing, and economically managing potentially enterprise-threatening losses over time
• in other words, it is a way to mitigate developing ambiguous threats before they manifest themselves and then spiral out of control

Question 11

Five Tests of a Good Strategy

Answer 11

1. a unique value proposition
2. a different value chain
3. clear trade-offs
4. activities that fit and reinforce each other
5. strategic continuity

Question 12

A deficiency in the Five Tests of a Good Strategy is

Answer 12

a strategy development risk

Question 13

Delusional Optimism is created from

Answer 13

cognitive biases & organizational pressures