1) The Concept Of Strategy And The Rational Approach To Strategy Development

Question 1

Druker’s five fundamental questions in relation to an organizations strategy?

Answer 1

What is our mission?
Who is our customer?
What is our plan? 
What are our results? 
What does the customer value?

Question 2

Mintzberg’s five P’s of strategy?

Answer 2

Strategy as a plan
Strategy as a pattern
Strategy as a ploy
Strategy as a position
Strategy as a perspective

Question 3

Levels of strategy?

Answer 3

Corporate strategy:
Concerned with determining the overall purpose and scope of the organization.
- acquisitions, mergers and sell offs.
- relations with key external stakeholders (investors, gvnt & regulatory bodies).
- decisions to enter new markets or embrace new technology.
- development of corporate policies (public image, employment practices, information systems).

Business strategy:
Concerned with how SBU’s approach a particular market. Responsible for winning customers and beating rivals (aka the competitive strategy).
- marketing issues such as product, pricing, promotion and distribution.
-how should it segment the market.

Functional strategies:
This refers to the main business functions such as sales, production, purchasing, HR & finance. Long term strategies intended to help SBU’s achieve the goals of its corporate strategy.

Question 4

The rational approach to strategy formulation?

Aka the traditional, formal or top-down approach

Draw diagram and explain?

Answer 4

Refer to page 8

Question 5

Describe the typical features of the formal top-down strategy/rational approach to strategy formulation within a large organization?

Answer 5

1. A designated team responsible for strategy formulation. There are several groups involved.
2. Formal collection of information for strategy purposes.
3. Collective decision-taking by a senior management team.
4. A process of communicating and implementing the business strategy.
5. Regular review and control of the strategy.

Question 6

What is a mission statement and what 3 main questions does it address?

Answer 6

A mission statement is a statement in writing that describes the purpose of an organization, that is, what it is trying to accomplish.

• why do we exist?
• what are we providing?
• for whom do we exist?

Question 7

What is the purpose of a mission statement?

Answer 7

• to provide a basis for consistent planning decisions.
• to assist in translating purposes and direction into objectives suitable for assessment and control.
• to provide consistent purpose between different interest groups connected to the organization.
• to establish organizational goals and ethics.
• to improve understanding and support from key groups outside the organization.

Question 8

Roles of mission statements: mission statements help which four places in the rational model of strategy?

Answer 8

1. Mission and objectives
2. Corporate appraisal
3. Strategic evaluation
4. Review and control

Question 9

What is a vision statement?

Answer 9

A vision statement describes how the future will look if the organization achieves its mission. The “preferred future”.

Question 10

Describe the acronym used when setting objectives? SMART

Answer 10

Specific - clearly expressed

Measurable - quantifiable

Achievable - perceived as achievable by those being held responsible for achieving them.

Relevant - explicitly linked to the overall goals of the business.

Timely - timescales have to be set if the objective is ever to be achieved.

Question 11

Objectives perform a number of functions? PRIME

Answer 11

Planning

Responsibility

Integration

Motivation

Evaluation

Question 12

Explain the following: CSF’s, KPI’s & individual performance targets?

Answer 12

CSF is defined as something which must go right if the objectives and goals are to be achieved ( can financial or non financial).

Each CSF must have a KPI attached to it to allow it to be measured. KPI are low level and detailed. They are used to measure performance which indicates whether the CSFs have been achieved or not.

KPIs can be further broken down into individual performance targets.

Question 13

Define ‘goal congruence’?

Answer 13

If the goals of an individual are derived from the goals of a business unit, and these in turn derived from the goals of the entity, ‘goal congruence’ is said to exist.

Question 14

Provide the elements, environment & analytical tools for SWOT? And explain how to carry out a good SWOT analysis?

Answer 14

Page 17

Question 15

Explain the benefits of a corporate appraisals for an organization?

Answer 15

• provides a critical appraisal of SWOTs affecting the organization.
• can be used to view the internal an external situation facing an org at a particular point in time to assist in the determination of the current situation.
• can assist in the LT strategic planning of the org.
• help to provide a review of an org as a whole or a project.
• can be used to identify sources of competitive advantage.

Question 16

Explain the generate strategic options & evaluation and choice stages in the rational approach process, using the Ansoff Matrix and the strategic methods?

Answer 16

Pg 19, 20, 21

Question 17

Describe the strategy implementation stage?

Answer 17

This stage involves drawing up the detailed plans, policies and programmes necessary to make the strategy happen. It will also involve obtaining the necessary resources and committing them to the strategy. These are commonly called tactical and operational decisions:

• Tactical programmes and decisions are medium term policies designed to implement some of the key elements of the strategy such as developing new products, recruitment, or downsizing of staff or investing in new production capacity. Project appraisal and project management are valuable at this level.
• Operational programmes and decisions cover routine day to day matters such as meeting particular production, cost and revenue targets. Conventional budgetary control is an important factor in controlling these matters.

Question 18

The John, Scholes and Whittington (JSW) model of strategic planning is a modern development of the rational planning model. Draw and describe it?

Answer 18

Pg 22

Question 19

Explain the review and control stage of the rational process?

Answer 19

This is a continuous process of reviewing both the implementation and the overall continuing suitability of the strategy. It will consider two aspects:

1. Does performance of the strategy still put the business on course for reaching its strategic objectives?
2. Are the forecasts of the environment on which the strategy was based still accurate, or have unforeseen threats or opportunities arisen subsequently that might necessitate a reconsideration of the strategy?

Question 20

What are the different classifications of stakeholders?

Answer 20

• internal stakeholders (employees and management).
• connected stakeholders (shareholders, customers and suppliers).
• external stakeholders (gvnts, community and pressure groups).
• primary stakeholders have a formal contractual relationship in a strategy or a project.
• secondary stakeholders have no formal relationship.

Question 21

Managing stakeholders - draw and explain Mendelow’s Matrix?

Answer 21

Pg 25

Review Scholes strategies to deal with stakeholders on page 27

Question 22

Stakeholder analysis table?

Answer 22

Pg 28, 29, 30

Question 23

Suggest ways to manage stakeholder conflict? Start by mentioning Cyert and March’s techniques.

Answer 23

• Satisficing: usually by negotiation to keep most and not necessarily all powerful stakeholders happy.
• Sequential attention: by giving stakeholders turns to realize their objectives. Eg staff get a pay rise every three years but, pay remains static in btn while dividends are being paid.
• Side Payments: where compensation is given to make up for not addressing particular stakeholder objectives.
• Exercise of power: where deadlock is overcome by powerful figures forcing their preferred strategic option.

Others: Prioritization, weighting and scoring, balanced scorecard. (Pg 32)