Strategy Analysis - Ch. 3

Question 1

What is the general worldview, or changes we have seen, in a strategic sense

Answer 1

• business is increasingly unpredicable and changes more turbulent
• critical for businesses to be flexible and responsive, meaning they seek to reduce employment costs
• unions less powerful, meaning governement and EU take this role instead
• companies are using more part time and contract staff
• social customer; social media revolutionising the way we deal with customers
• the use of big data for research requiring more complex ways of storage, handling and processing
• the growth of knowledge based industries means employees have become more valuable assets
• the trend to flatten organisations, decentralise decision making and empower employees
• no jobs for life
• employees demand great job satisfaction, higher rewards, more personal recognition and flexible working
• societal changes;
  
  • greater freedom of expression and thought,
  • improved access to personal information held by governments and organisations,
  • less respect for authority
  • attitudes to change, direction and reorganisation has shifted and needs to be taken into account

Question 2

What are typical contradictions we can see in a strategic sense?

Answer 2

Global versus local -
globalisation = largest markets ever known yet more people want to buy local; global isn’t necessarily the biggest; scarity of products, brand petutation and distribution channels make the difference

• Centralised versus decentralised organisation strutures : finance often central but prices and discounts are set locally
• Hard and soft management : strategy is a ‘hard’ discipline ; yet the creativity and change skills that make it work are the ‘soft’ skills

Question 3

What is strategy?

Answer 3

• business goal or mission
• timeframe: short, medium and long-term
• organisation resources utilisation: finance, skills, assets, technical competence
• environment: the organisation works in

“What’s happening out there, and how do we fit into and maximise return from it?”

Question 4

Whats levels does strategy sit at?

Answer 4

• Corporate
• Business Unit
• Operational

Question 5

How are strategies created?

Answer 5

• Powerful Individual (entrepreneurial)
• Decentralised, empowered organisations (intrapraneurial)
• Formal planning process

Question 6

What is strategic power?

Answer 6

• Dependency (controls resources)
• Financial resources (owns funds)
• Position (organisation structure)
• Uniqueness (no other part of the organisation can do this)
• Uncertainty (unpredicatable effects of the environment give groups ‘power’ to protect people)

Question 7

What technique would you use to analyse the external environment?

Answer 7

PESTLE

Question 8

Give me an example of a political influence

Answer 8

• trade regulations and tariffs,

- social welfare policies

Question 9

What economic influences should you take into account?

Answer 9

• interest rates
• inflation
• unemployment
• disposable income
• business cycles
• money supply
• availability and cost of energy
• internationalisation of business

Question 10

Give me an example of a socio-cultural change

Answer 10

• demographics (ageing population in Europe)
• social mobility (enlarged Europe enabling freer movement of labour)
• lifestyle changes (desire to retire earlier, changes in views about work/life balance)
• concern for the environment

Question 11

What Technological issues should you take into account?

Answer 11

• government spending on research
• focus on technology for innovation and invention
• fast pace of technological change
• creation of technology-enabled industries

Question 12

Give me an example of a legal issue

Answer 12

• legislation about trade practices and competition
• environmental-protection legislation (recycling and wast-disposal)
• employment law (employjment protection and discriminination)

Question 13

What Environmental issues should you take into account?

Answer 13

• global warming and climate change
• animal welfare
• waste, such as unnecessary packaging

Question 14

What part of PESTLE affects your organisation, and how?

Answer 14

• Economic - higher unemployment in Government sector plus less disposable income in population affecting purchase of membership
• Technological - social media leading to a new type of customer, affecting the way we do business with customers. A PULL approach needs to be adopted, researching what customers really want and adapting our business model to deliver it

Question 15

How would you examine the competition your organisation faces?

Answer 15

Porters Five Forces

Question 16

What is Porters Five Forces?

Answer 16

Analysis of the:

• threat of NEW ENTRANTS
• threat of people usign SUBSTITUE PRODUCTS or services
• bargaining power of BUYERS
• barganing power of SUPPLIERS

To show the competitive battleground the business is performing in

Question 17

What increases the threat of new entrants?

Answer 17

• product differentation (little differentation in products or services)
• economies of scale (low invesment required)
• barriers to entry are low (globalistation and deregulation)
• Low capital investment required
• Distribution channels are easily accessible
• No new or specific technology or patentened process required

Question 18

What increases the threat from substitue products?

Answer 18

• product substitution from new technologies is more convenient (buying from mobile device)
• the customer feels they can ‘do without it’
• the need for the product/service is replaced by a different need

Question 19

When would supplier power limit the opportunity for cost reduction?

Answer 19

• costs of switching to one supplier to another are high
• concentration of suppliers, and suppliers are bigger than the many customers they supply
• supplier brand is powerful (Intel Inside)
• customers are fragmented

Question 20

When would the barganing power of buyers be high?

Answer 20

• alternative sources of supply are available and easy to find
• switching costs are low
• cost of product or service is high
• small concentration of buyers and many small organisations in the supplying industry (e.g. supply to food to supermarkets)

Question 21

What is the ‘sixth force’ of Porters Five Forces?

Answer 21

Complementors

• companies or entities that sell or offer goods or services that are compatible with, or complementary to, the goods or services produced and sold in a given industry.
• e.g. hotdog and the hotdog bun. A normal consumer prefers to eat a hotdog in a hotdog bun.

Question 22

What technique would you use to analyse the internal environment?

Answer 22

MOST

Question 23

What is MOST?

Answer 23

Mission - Intention
Objectives - Goals
Strategy - Approach
Tactics - Details means by which the strategy will be implemented

Question 24

What are the 5 key areas to examine in strategy analysis?

Answer 24

Tangible resources

 1) physical (buildings, etc)
 2) financial
 3) human

Intangible resources

4) know-how
5) reputation

Question 25

What technique would you use to analyse your product portfolio?

Answer 25

The Boston Box

Question 26

What is the Boston Box?

Answer 26

Analyses MARKET GROWTH and MARKET SHARE to dietnfiy products that are profitable, unprofitable, consistent earners or problematic. Categories as STARS (get the gold), COW (gets milked), DOGS (get buried), WILD CATS (examined until they behave or join the dogs)

Question 27

What technique would you use to analyse the external and internal environments?

Answer 27

SWOT

Question 28

What is SWOT?

Answer 28

A summary audit of the key Strengths, Weakenesses, Opportunties and Threats a business faces.

Question 29

What part of the SWOT looks at the internal environment?

Answer 29

Strengths and Weaknesses

Question 30

What part of the SWOT looks at the external environment?

Answer 30

Opportunities and Threats

Question 31

What is a common error when using SWOT?

Answer 31

It is often used as the first analytical tool before enough preparatory analysis has been done.