Problems With Strategy And Why They Fail

Question 1

What are strategic decisions?

Answer 1

They are major decisions, involving a large degree of risk and a very high level of uncertainty.
They are unfamiliar decisions not done before.

Question 2

What are the difficulties of strategic decision making?

Answer 2

• The environment will be constantly changing, making it difficult to plan and implement plans.
• There may be criticism and resistance.
• It’s an unfamiliar decision. Even experienced managers will find it difficult, as they are complex decisions involving high costs, many employees and other, linked businesses.
• Manager’s interpretation of data can be different or biased, leading to flawed decision making. To avoid this, firms try to recruit people with differing perspectives.

Question 3

What are strategic decisions?

Answer 3

They are major decisions, involving a large degree of risk and a very high level of uncertainty.

Question 4

What are the difficulties of strategic decision making?

Answer 4

• The environment will be constantly changing, making it difficult to plan and implement plans.
• There may be criticism and resistance.
• It is an unfamiliar decision.
• Manager’s interpretation of data can be different or biased, leading to flawed decision making.

Question 5

Why do strategic decisions go wrong?

Answer 5

• The wrong objectives are set.
• The data may not be available, as this is an unfamiliar decision and change may be occurring rapidly.
• Data may be badly analysed.
• Implementation can go wrong eg. Resistance or delays

Question 6

What are the difficulties of strategic decision making?

Answer 6

• The environment will be constantly changing, making it difficult to plan and implement plans.
• There may be criticism and resistance.
• It is an unfamiliar decision.
• Manager’s interpretation of data can be different or biased, leading to flawed decision making.

Question 7

What is the planned strategy?

Answer 7

The strategy the managers intend to implement. It is influenced by the corporate objectives. A formal strategic planning process is used and is supported by traditional planning tools such as SWOT, Porter’s five forces and PESTLE framework.

Question 8

What is the emergent strategy?

Answer 8

The strategy that actually develops over time. It is an unplanned strategy that emerges in response to changes in the external environment.

Question 9

What is strategic drift?

Answer 9

Strategic drift happens when the strategy of a business is no longer relevant to the external environment facing it.

Question 10

Why does strategic drift happen?

Answer 10

• Businesses fails to adapt to a changing external environment, often technologically.
• What worked before doesn’t work now.
• Complacency has set in, often built on previous success.
• Senior management deny there is a problem.

Question 11

What are the four stages of strategic drift?

Answer 11

Incremental change, strategic drift, flux, transformational change or death.

Question 12

What is the incremental stage of strategic drift?

Answer 12

It is the first stage. There is little significant change in the external environment. Some small, incremental changes are made to remain in touch with the external environment.

Question 13

What occurs in the strategic drift stage?

Answer 13

This is the second stage, where things are starting to drift apart. The rate of change in the external environment is accelerating and small changes aren’t enough. The business begins to lose its competitive advantage.

Question 14

What happens in the flux stage of strategic drift?

Answer 14

This is the third stage. There is now a significant gap between what the market expects and what a business is delivering. There is no decisive improvement from managers either.

Question 15

What happens in the transformational change or death stage of strategic drift?

Answer 15

Either management recognise the need for a transformational change in strategic direction, or the business fails. For some businesses, this phase comes too late.

Question 16

How did Kodak suffer from strategic drift?

Answer 16

They failed to respond to rapid development and take up of digital photography - despite having access to the technology.

Question 17

How did Nokia suffer from strategic drift?

Answer 17

They lost dominant global market leadership in mobile phones by failing to respond to smartphone technology.

Question 18

What is strategic planning?

Answer 18

Analysing the existing position of the business and the external environment, and then developing a strategy to match the two (so strategic drift doesn’t occur).

Question 19

Pros of strategic planning?

Answer 19

• Plans are based on data.
• A plan can unify and motivate employees and provide everyone with a sense of direction.
• It provides a strategy that sets out for managers what the business is doing and how to do it.
• There should be a more efficient use of business resources.

Question 20

What are the stages of strategic planning?

Answer 20

1. Set the mission and objectives
2. Identify the business’ existing position and analyse the external environment.
3. Plan how to achieve the objectives.
4. Implement the plan.
5. Monitor and evaluate the results.

Question 21

What does the SWOT analysis do?

Answer 21

Allow a business to identify the internal position of the business and any potential external opportunities and threats.

Question 22

What does porter’s five forces do?

Answer 22

Helps the business to understand the nature of the competition.

Question 23

What does PESTLE do?

Answer 23

Helps identify the key external factors influencing the business.

Question 24

What does stakeholder mapping do?

Answer 24

Helps identify the most important stakeholders when it comes to strategic planning.

Question 25

What does market mapping do?

Answer 25

Helps identify strategy opportunities in terms of mapping where the competition are.

Question 26

What is contingency planning?

Answer 26

This involves trying to foresee possible problems that may occur and then developing plans to deal with them.

Question 27

What is crisis management?

Answer 27

The process where an organisation responds to a major event that threatens to harm the organisation, its stakeholders, or the general public.

Question 28

What does crisis management require?

Answer 28

- An urgent response and is a case of damage limitation. - A crisis management team. There must be fully trained understudies. - It should be based on contingency planning.

Question 29

Pros of contingency planning?

Answer 29

- Prepares managers to deal with change. - Makes decisions more informed and so reduces the risk in decision making. - Considers merits of different strategies so the firm can select the best strategy. If contingency planning isn’t done, there may not be time to discuss different strategies after the problem has occurred.

Question 30

Cons of contingency planning?

Answer 30

- Time consuming - Ties up resources that may never be needed - The unexpected can’t be completely foreseen and so cannot be properly planned for.