Strategic plan = long term plan for the whole organisation
Strategic plan is also called corporate plan or long range plan
Three levels of strategy in an organisation is : Corporate plan, Strategic business
units and Operational level
Rational model of strategy
Rational method has typically four steps:
Know or learn the objective and understand where we stand
Strategic choice
Strategic implementation
Position analysis means to make appraisal of the internal and external environments
plus stakeholder appraisal.
While choosing an adoptable strategy, it must go through the SAF test which is
Suitability, Acceptability and Feasibility
Implementation is a crucial stage as it is a matter of detail. The strategic plan has to
be broken down by department and by year. These small parts can be regarded as
discrete projects. The project objectives and constraints have to be communicated to
the departments by budgets and reviewed
The review process is essentially periodical and is called the control process which is
intended to cater to the changing environment and hence a good one for
modifications of plans when necessary plus we need to make sure if the
performance is adequate
Intended strategy
Deliberate strategy
Unrealised strategy
Emergent strategy
Realised strategy
Logical incrementalism
Small additions to past policies. This is based on the view that managers don’t or
can’t have a full knowledge (all relevant facts) [This is called bounded rationality]
because of which all the options cannot be evaluated. When all options cannot be
evaluated, there is huge risk of getting locked into a bad long term plan. There are
known unknowns and unknown unknowns which are potential flaggers that caution
us while making a long term strategic plan. Hence to make an ignorant strategic plan
signifies arrogance and is putting the company at stake. This is why there needs to
be logical steps that incrementally puts a strategic plan in place as time goes by.
Freewheeling opportunism
People who support these are compared to entrepreneurs who are quite agile in their
decision making as and when opportunities arise rather than sticking to a plan. They
believe that planning restricts their thoughts and their ability to see such
opportunities that arise their way. However, these people don’t have the knowledge
of all facts to come to proper conclusions which may lead to drastic results. But on
the other hand, this approach has also produced amazing results for many
companies.
Political approach to strategy
The political approach to strategy is neither rational nor logical nor is it freewheeling.
It is the method by which the internal political negotiations are taken into
considerations and manoeuvring the power of various participants and the outcome’s
success is based on the result of the power struggle amongst individuals
Mission and mission statement
Stakeholders
The management has to enter into a series of negotiations with several of the
stakeholders of the company to strike a balance and try to keep all of them happy.
Managing stakeholder conflict? Mendelow’s matrix
Power vs Interest
-Key players High I, High P
-Keep satisfied High P, Low I
-Keep informed High I, High P
-Minimal effort Low I, Low P
Resources and competencies
What the strategic capability (what the company is capable of doing better than the
others to gain a sustainable competitive advantage in the market) of the company is
based upon is ----Resources plus competencies
Threshold capabilities (Minimum—to exist)
Additional capabilities
o Unique resources (what we have that others don’t)
o Core competencies (These are hard to identify and define. How the
organisation uses its resources better than its competitors and this is
how the company retains a competitive advantage)
M’s of the organisation
Man Machine Money MIS Materials Make Markets Management Manufacturing
Methods
Position base strategy
Resource based strategy
Ansoff’s matrix
Product development
Market development
Penetration
Diversification
Porter’s value chain
Primary activities – Inbound logistics, outbound logistics, Operations, Service,
Marketing and sales
Secondary activities – Firm infrastructure, Technology development, Human
resources, Procurement
Extra value adding is for what the customer is willing to pay for called the profit
margin
Resources that give competitive advantage – both tangible and intangible
Valuable
Rare
Imitable
Non-substitutable
Environmental influences on the organisation – PESTEL //LoNG-PEST
Political
Economical
Social
Technological
Environmental
Legal
Important points are industry convergence and international dimension
Porter’s diamond model – Four influences
Firm strategy, structure and rivalry
Factor Conditions
Demand conditions
Related and supporting industries
Porter’s five forces
Rivalry
Threat of new entrants (barriers to entry)
Power of suppliers
Power of buyers (switching costs)
Threat of substitutes
SWOT analysis
Strengths and weaknesses are internal
Opportunities and threats are external
The point of any analysis is to stimulate action
By SWOT analysis, we need to look for strategies to address the weaknesses, look
for opportunities that can utilise the strengths. Look for strategies to use the
strengths in order to avoid or minimise the threats.
Competitor analysis is analysing the strengths and weaknesses of our company
relatively to that of the competitor’s so that a successful competitive strategy can be
built. Competitor analysis is the analysis of the business which competes with ours
directly or indirectly at least in one market/product.
4 types of competitors?
Industry
Form
Brand
Generic
Competitor response profile –
What drive the competitor? (Mission and objectives)
What the competitor is capable of doing? (Resources, strategy and
capabilities)
Process needed to complete the competitor analysis is the 4C’s
Collecting
Converting
Communicating
Countering
Product life cycle
Introduction
Growth
Maturity
Decline
Boston consulting group model (BCG)
If there is more than one product in the company’s portfolio, this model comes to
rescue analysis. This model is also called as the portfolio analysis.
The axes are Relative market share vs the Market growth rate
Question mark/problem child
Star
Cash cow
Dog
Big data – 4Vs (characteristics)
Volume
Variety
Veracity
Velocity
Management is getting things done through other people
Social arrangement with collective goals in a controlled environment with the
performance being evaluated
Planning
Organising
Controlling
Commanding
Co-ordinating
Leading, inspiring, motivating
Train people
Make employees feel heard and ask them for suggestions
Group behaviour
Manage a business
Manage other managers
Manage the workers and the work
5 activities
Setting objectives
Organising the group
Motivating and communicating
Measuring performance
Developing people
Qualities
Integrity
Magnanimity, Humility
Dedication
Openness
Creativity
Important ones:
Power
Authority
Responsibility
Delegation
Culture
Symbols and titles
Power relations
Organisational structure
Control systems
Rituals and routines
Myths and stories
Organisational assumptions
Types of culture
Power
Role
Task
Person
Levels of culture (Organisational iceberg- what can be seen and what can’t be
seen)
Artefacts
Espoused values
Underlying assumptions
National cultures impact on organisations
Power/distance
Masculinity/Femininity
Uncertainty avoidance
Individualism/Collectivism
Forming
Storming
Norming
Performing
Dorming
Form thought—encode—receive—decode—feedback—repeat
Thomas Killman Conflict mode instrument
Co-cooperativeness vs assertiveness
Competing – Low C, High A
Collaborating – High C, High A
Avoiding – Low C, Low A
Accommodating – High C, Low A
1. Re-engineering
2. Simplification
3. Value added analysis
4. Analyse gaps and disconnects
Types of change
Automation
BPR
Rationalisation
Scope of change (Realignment/ Transformation) vs Nature of change
(Incremental/ Big bang)
R/I – Adaptation
T/I – Evolution
R/B – Reconstruction
T/B – Revolution
TARA Framework
Transfer
Avoid
Reduce
Accept
Project risk can be assessed by the following independent factors:
Complexity
Project scope definition
Size of the project
Project feasibility analysis?
Financial
Operational
Technical
Social
Types of benefits
Observable
Measurable (Can be measured but not predicted)
Quantifiable (Can be measured and predicted)
Financial
Project management controls
Time
Cost
Quality
Work breakdown structures
PRINCE2 methodology
Critical path analysis
GNATT chart
WACC can be used in the evaluation of projects (investment appraisal) if:
No change in financial risk
No change in business risk
Small project
Pooled funds
Perfect capital markets
