I have been a private tutor of Business subject (AS & A level, by Cambridge University Press) for a few months. I will jot down points to remember during my teaching.
1. What is strategic management?
The role of management when setting long-term goals and implementing cross-functional decisions that enable a business to reach these goals
2. Influences on strategy formation:
- Strengths of the business
- Resources available
- Competitive environment
- Objectives
3. Strategic management model:
4. Strategic analysis definition: the process of conducting research into the business environment within which an organization operates, and into the organization itself, to help form future strategies
5. Strategic analysis forms: SWOT, PEST, Boston Matrix, Porter's Five Forces, core competencies
6. SWOT analysis:
A business should not necessarily pursue the most profitable opportunities. It may stand a better chance of developing a competitive advantage by identifying a good 'fit' between the firm's strength and potential opportunities.
Subjectivity is often a limitation of a SWOT analysis as no two managers would necessarily arrive at the same assessment of the company they work for. It is not a quantitative form of assessment so the cost of correcting a weakness cannot be compared with the potential profit from pursuing an opportunity. SWOT should be used as a management guidde for future strategies, not a prescription. Part of the value of the process of SWOT analysis is the clarification and mutual understanding that senior mangers gain by the focus that SWOT analysis provides.
7. PEST analysis
PEST analysis focuses on analysing the macro-environment in which a business operates. PEST analaysis plays an important role in assessing the likely chances of a business strategy being successful.
8. Boston Matrix - product portfolio analysis
This should help focus on which products need support or which need corrective action. These strategies can only be taken if the business has a balanced portfolio of products. If there are too many 'dogs' or 'question mark', then the overall shortage of cash may not allow the firm to take approriate action.
This analysis form is also of little use in predicting future success or failure.
9. Porter's Five Forces analysis
Michael Porter provided a framework that models an industry as being influenced by five forces. It has been suggested that the strategic business manager, attempting to establish a competitve advantage over rivals, can use this model to understand the industry context. It has similarities with other tools for external environmental audit, such as PEST analysis, but it focuses on single or stand-alone business units rather than a single product or range of products.
- By analysing new markets in this way, it helps firms decide whether to enter or not.
- By analysing the existing markets a business operates in, decisions may be taken regarding 'Do we stay in these markets in future if they are becoming more competitive?'
- With the knowledge gained and the power of competitive forces, businesses can develop strategies that might improve their own competitive position: product differentiation, buying out some competitors, focusing on segments that might be less competitive,...
Porter's model enables managers to think about the current competitive structure of their industry in a structured and logical way. It is usually regarded as a good starting point for further analysis.
10. Core competencies: an important business capability that gives a firm competitive advantage. Core competencies lead to core products. Core products are not necessarily sold to final consumers. Instead they are used to produce a large number of end-user products.
It is important to realise that a business might be particularly good at a certain activity - it might have competence in this activity - but this does not necessarily make it a core competence if it is not exceptional or is easy to copy.
11. Strategic choice is the next logical element in the strategic decision-making process. Strategic choice is concerned with the identification of different strategic options and deciding between them.
12. Ansoff's matrix: a model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification.
Limitations of Ansoff's matrix include:
- It is lacking in considering SWOT and PEST to give a more complete picture.
- It is not intended to actual detailed marketing options
12. Force-field analysis: technique for identifying and analysing the positive factors that support a decision and negative factors that constrain it.
This technique is widely used in 'change situations' but is has two main limitations:
- Unskilled or inexperienced managers could fail to identify all of the relevant fores involved in the change process.
- The allocation of numercial values is rather subjective.
13. Decision tree: a diagram that sets out the options connected with a decision and the outcomes and economic returns that may result.
14. Strategic implementation is the process of planning, allocating and controlling resoures to support the chosen strategies. It involves putting the strategic plans that have been analysed and chosen into effect.
15. Without sucessful strategic implementation, there can be no effective change within the organisation. Implementing a major strategic change is a very important cross-functional management task. It involves ensuring that all of the following factors are in place:
- an approriate organisational structure to deal with the change
- adequate resources to make the change happen
- well-motivated staff who want the change to happen sucessfully
- a leadership style and organisational culture that allow change to be implemented with wide-ranging support
- control and review systems to monitor the firm's progress towards the desired final objectives
16. Business plan is most important when setting up a new business, but they should be referred to and updated when important strategic choices are being made too. The main purpose of a business plan for a new business is to obtain finance for start-up. A business plan provides a sense of purpose, direction, marketing strategies and what employees to recruit,...The financial and other forecasts contained in the plan can be used as the targets that the business should aim for.
17. Corporate plan is a methodical plan containing details of the organisations' central objectives and the strategies to be followed to achieve them.
The relative importance of internal and external factors to corporate plan will vary from business to business. A company producing income-elastic luxury products may find its corporate plan is most influenced by macro-economic forecasts. The directors of a small company may consider that the plan for their business is most constrained by internal financial limits.
18. Corporate culture: the values, attitudes and beliefs of the people working in an organisation that control the way they interact with each other and with external stakeholder groups.
19. Main types of corporate culture:
- Power culture
- Role culure
- Task culure
- Person culture
- Entrepreurial culture
20. Many businesses have turned themselves around, converting potential bankcruptcy into commercial success. Very often this transformation has been achieved by changing the culture of the business.
A link between culture and strategic implementation is whether culture is strong or weak.
21. Good ways to bring about changes to an organisation's structure:
22. Change management: planning, implementing, controlling and reviewing the movement of an organisation from its current state to a new one.
=> Lead change, not just manage it!
23. Resistance to strategic change:
Reasons:
- fear of unknown
- fear of failure
- losing sth of value
- false belief about the need for change
- lack of trust
- inertia
=> When discussing the possible resistance to changes proposed by management, try to think of the leadership style being used to implement the change.
24. Contingency plan:
Comments