Lecture 3 - Context of Strategy (External Macro Environment & Strategic Purpose) Flashcards Preview

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Flashcards in Lecture 3 - Context of Strategy (External Macro Environment & Strategic Purpose) Deck (27)
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1
Q

What does PESTEL stand for?

A
Political
Economic
Social
Technological
Environmental
Legal
2
Q

The PESTEL analysis helps to identify…

A

…key drivers of change, opportunities and threats

3
Q

The key drivers of change can be used to…

A

…construct scenarios of alternative possible futures

4
Q

Key Success Factors (KSFs) are…

A

…environmental issues that can affect an organisation’s ability to achieve its aims

5
Q

Economic factors:

A

1) Exchange rates
2) Business cycles
3) Differential economic growth rates around the world,

6
Q

Social influences

A

Changing cultures and demographics

E.g. ageing population

7
Q

Legal factors

A

Legislative and regulatory constraints

8
Q

Megatrends

A

Large scale social, economic, political, ecological, technological changes typically slow to form but which influence many other activities and views, possibly over decades

Typically shapes other trends

9
Q

Inflexion points

A

When trends shift in direction, e.g. economic growth

10
Q

Weak signals

A

Advanced signs of future trends

Particularly helpful in identifying inflexion points

11
Q

Weak signals are typically…

A

…unstructured, fragmented bits of information

12
Q

Scenario analyses

A

Carried out to allow for different possibilities and help prevent managers from closing their minds to alternatives

13
Q

Scenarios offer…

A

Plausible alternatives of how business environment might develop in future

14
Q

Scenario analyses typically build upon

A

PESTEL analyses

15
Q

Critical strategic question:

A

BUSINESS DEFINITION

Whats kind of business are we, or want to be?

16
Q

3 influences on strategic purpose:

A

Governance structure

Social responsibility and ethics

Stakeholder expectations

17
Q

Business mission should be defined by: (4)

A

Customers needs served (WHAT)

Customer groups (WHO)

Technologies utilised (HOW)

Employees are bonded (HOW)

18
Q

Mission statement

A

Aims to provide employees and external stakeholders with clarity about the overriding purpose of the organisation

What business are we in?
How do we make a difference?
Why do we do this?

19
Q

Strategic context: External environment

A

Environment in which firm operates

Environmental constraints that may limit what an organisation might do

20
Q

Strategic context: Internal environment

A

Organisation’s CAPABILITIES which will determine what organisation can do and how these capabilities are fitted to the external environment and the strategies are employed

21
Q

Changing views of the environment - CONTESTED ASSUMPTIONS

A

Environment is STATIC (unchanging and predictable)

Environment is SIMPLE
homogenous, perfect information, compete on price

22
Q

Changing views of the environment - CURRENT ASSUMPTIONS

A

Environment is DYNAMIC (speed of change, predictability of change)

Environment is COMPLEX (Heterogeneous, imperfect information, compete on 4Ps)

23
Q

Why analyse the environment?

A

Identify KSF (Key success factors)

Establish opportunities and threats

24
Q

How can we understand the environment?

A

PESTLE analysis

Scenario planning

SWOT analysis

25
Q

PESTLE analyses the…

A

Macro-environment

26
Q

PESTLE identifies…

A

Opportunities and threats

27
Q

Scenario planning:

A

Internally consistent view of what future might turn out to be

Can be defined as method for imagining possible futures

Not a forecast in sense that one can extrapolate using past data –> but a tool of analysis to help the organisation recognise the signals.

Helps managers to recognise change objectively –> overcoming biases and imperfect reasoning