PART A: STRATEGIC POSITION Strategic Objectives Specific Measurable Achievable Relevant Timescale Johnson, Scholes and Whittingtons Rational

Planning Model 1. Strategic position/analysis a. the company should perform external analysis to identify opportunities and threats b. the company should perform internal analysis to determine its own strengths and weaknesses c. once having decided which are the critical or key factors, it is then necessary to decide on the likelihood of a particular environmental change occurring and the significance of its impact on the firm. Matching the competitive capability of the firm against the attractiveness of the business sector it is operating in will provide an understanding of the firms competitive position and the strategic options open to it Eg PESTEL, Porters Five Forces, Porters Value Chain, Product Life Cycle Model 2. Strategic choice a. how to compete b. where to compete c. choosing the method of expansion 3. Strategy implementation a. translating long-term strategic objectives into detailed tactical and operational targets b. setting of detailed budgets and performance appraisal to control the business c. ongoing assessment as to whether the plans are on track and, if not, what action needs to be taken to rectify the situation d. the company should ensure that planning is not a formal once-a-year exercise but an ongoing process where there is the flexibility to allow strategies to emerge in response to a changing market

Product Life Cycle Model

The model is normally used to assess the overall balance of a product portfolio with respect to: 1. Growth new products replacing those at the end of the life cycle 2. Cash flows positive cash flows from some products can help finance those that are currently cash negative 3. Risk having some stable low risk products to compensate for other high risk ones Social responsibility the idea that an organisation should behave responsibly in the interests of the society in which it operates Advantages of Conducting a Stakeholder Analysis: the company will be able to select investments that are more likely to satisfy the expectations of key stakeholders the company will be able to incorporate the opinions of powerful stakeholders when designing projects identifying and winning over powerful stakeholders will make raising and using resources easier anticipating stakeholder responses will allow proactive management and avoid conflicts. The company will be able to identify potential objectors to investments and could then adjust how projects are done to reduce resistance the company will be able to identify the level of involvement each group requires. For example, which groups need to be included in detailed discussions and which simply need to be kept informed

Mendelows Matrix the principal stakeholders of a company can be analysed using Mendelows Matrix

Porters Value Chain Value activities the physically and technologically distinct activities that an organisation carries on. Value analysis recognises that an organisation is much more than a random collection of machinery, money and people. These resources are of no value unless they are organised into structures, routines and systems which ensure that the products or services that are valued by the final consumer are the ones that are produced. It is important to understand that each part of the operation has an impact on other activities. A failure in one area because of the lack of control or influence can damage the overall performance. The value chain:

Primary activities the activities involved in converting raw material inputs to finished products, the transfer of the product or service to the buyer and any after-sales service Support activities cut across all of the primary activities By analysing each of these activities, we can identify the problems facing a company. After analysing these activities, the main task is to decide how the individual activities might be changed to reduce costs of operation or to improve the value of the companys offerings. Inbound logistics the activities concerned with receiving, storing and handling raw material inputs Operations concerned with the transformation of the raw material inputs into finished goods or services. These activities include assembly, testing, packing and equipment maintenance. Outbound logistics concerned with the storing, distributing and delivering the finished goods to the customers Marketing and sales responsible for communication with the customers, eg advertising, pricing and promotion Service covers all of the activities that occur after the point of sale, eg installation, repair and maintenance Competences an organisations distinctive competences are those things which an organisation does particularly well those things that underpin the organisations competitive advantage. They include the organisations unique resources and capabilities as well as its strengths and its ability to overcome weaknesses. Resources such as technical skills that can easily be bought in confer no competitive advantage. It is only those resources that are unique to the business and enable it to do things differently that create competitive advantage. Core competences should be difficult to imitate and if not, any competitive advantage will not be sustained. Key success factors those requirements which an organisation is essential to have if it is to survive and prosper in a chose environment or industry Eg strong brand name, balanced portfolio of customers, balanced/comprehensive range of products, good relationship/coverage with distributors/retailers, strong support from parent company, strong financial controls, good negotiating and planning and control skills, good people relations skills, administrative competence, skillfully deployed marketing function

It is not guaranteed that the distinctive competences and the key success factors are always in alignment. It is critical to ensure that what the company excels at is what is needed to be successful in that particular area. External environmental analysis/scan an essential prerequisite prior to selecting a strategic option. It enables the company to identify and understand the key external influences and uncontrollable influences which will have an impact on the companys strategy. The acquisition of the external information is obtained by scanning the environment continuously and monitoring key indicators which should enable the company to position itself appropriately with respect to the external environment and the competition. The external scan should be structured around a combination of both the PESTEL and Porters Five Forces models. In addition it is also important to assess potential competitive reactions as part of the scanning process. PESTEL Political Economic Social Technological Ecological Legal Balanced scorecard a set of operational measures which complement the financial measures which some companies tend to concentrate on to the detriment of other areas. 1. Financial perspective 2. Customer perspective measures the performance of the company with respect to its customers 3. Internal business perspective helps to assess how efficiently the company is operating 4. Innovation and learning perspective focuses on the ability of the company to be innovative and to transfer that innovative learning Disadvantages of the Balanced Scorecard approach: 1. Such a comprehensive set of performance measures will take considerable time and commitment on the part of senior management to develop. There is a need to avoid over-complexity and assess the costs and benefits of the process. 2. There is the question of whether all the key stakeholders have shared goals and expectations and whether the measures are focused on short, medium or long-term performance. 3. Its focus on internal and external processes may not come easily to firms that have organised themselves on traditional lines. Changing the way performance is measured may need a radical change in culture and meet significant resistance.

Porters Five Forces Competition/rivalry high or low? Power of buyers/customers Power of suppliers Threat of potential entrants Threat of substitutes Marketing strategy concerned with making choices as to which products you supply and the markets into which you sell them Niche player a company that chooses to specialise in meeting the needs of a defined customer segment with distinctive products Marketing Mix (4Ps) Product Price Promotion Place People Process Physical evidence Porters Diamond Porters research emphasises the fact that no one nation will have a competitive advantage in all its industries and that competitive advantage will be derived from the strategies pursued by firms in the industry rather than from positive industry policies developed by governments. Porters Diamond model is made up of four determinants or attributes. For a country to have competitive advantage in a particular industry, it needs to have the following attributes and relationships: Favourable factor conditions (eg natural resources, climate, availability of cheap labour) do not create a sustainable competitive advantage for a nation. However, advanced factors including a highly educated workforce (human resources and knowledge) and appropriate technology and data communications infrastructure may, if continually invested in, yield sustainable high order competitive advantage. Demand conditions. There must be a strong home market demand for the product or service. This determines how industries perceive and respond to buyer needs and creates the pressure to innovate.

The existence of related and supporting industries (industry cluster) will be of significance in attracting foreign direct investment. The success of an industry can be due to its suppliers and related industries. Firm strategy, structure and rivalry. Domestic competition is vital as a spur to innovation and also enhanced global competitive advantage. Toyotas Production System (Just-In-Time) operating with minimal inventory putting the onus for quality assurance on its component suppliers significant reappraisal of the number of suppliers needed a move towards a relationship based on partnership philosophy of continuous improvement - Total Quality Management (TQM)

McKinseys 7S The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change

Strategy: the plan devised to maintain and build competitive advantage over the competition. Structure: the way the organization is structured and who reports to whom. Systems: the daily activities and procedures that staff members engage in to get the job done. Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company.

Scenarios Johnson and Scholes define scenarios as detailed and plausible views of how the business environment of an organisation might develop in the future based on groupings of key environmental influences and drivers of change about which there is a high level of uncertainty. In developing scenarios it is necessary to isolate the key drivers of change which have the potential to have a significant impact on the company and are associated with high levels of uncertainty. Development of scenarios enables managers to share assumptions about the future and the key variables shaping that future. They are then in a position to monitor these key variables and amend strategies accordingly. For most companies operating in global environments the ability to respond flexibly and quickly to macro-environmental change would seem to be a key capability.