E3 Enterprise Strategy revision summarise - Acorn Live PDF
Preview E3 Enterprise Strategy revision summarise - Acorn Live
CIMA Strategic Level (cid:8211) Paper E3 ENTERPRISE STRATEGY (REVISION SUMMARIES) Chapter Topic Page Number 1 Strategic Management 3 2 Mission, Objectives and Stakeholders 11 3 Environmental Analysis 15 4 The Position Audit and Corporate Appraisal 19 5 Strategic options 25 6 Marketing 33 7 Information Strategy 45 8 Corporate Social Responsibility and Ethics 61 9 Organisations 67 10 Change Management 73 11 Strategic Performance Measurement 85 12 Numerical skills for strategic evaluation 103 1 E3 revision summaries 2 E3 revision summaries Chapter 1 Strategic Management 3 E3 revision summaries Key summary of chapter What is strategy? Strategy (cid:8220)A course of action, including the specification of resources required, to achieve a specific objective.(cid:8221) CIMA: Official Terminology Levels of strategy - Johnson and Scholes Corporate strategy (Where) Business Strategy (How) Functional Strategy (Who) Arguments in favour of a strategic approach (cid:252) Strategy helps minimise risk (cid:252) Avoids short-term behaviour (cid:252) Improves stakeholder perceptions (cid:252) Encourages environmental analysis e.g. critical to react to change (cid:252) Evidence indicates performance can be improved using strategic approaches (cid:252) Integration and coordination of activities and processes Arguments against a strategic approach Difficult to plan when environment changing, uncertain or complex Encourages (cid:8216)conformity(cid:8217) stifling innovation e.g. the corporate straightjacket Infrequently reviewed e.g. chosen long-term strategy may not keep pace with change Implementation often managed poorly Rational planning a complex methodology and costly for small businesses 4 E3 revision summaries Comparing and contrasting approaches to strategic formulation The Rational Incremental Freewheeling Emergent Planning process approaches Opportunism strategies Top-down and Top-down and Top-down and Bottom-up and centralised centralised centralised decentralised Time horizon Time horizon 6 Time horizon Time horizon 2-10 years months to 2 years day to day basis indefinite Formal Less formal Informal Informal planning planning planning planning Complex and Less complex Less complex More complex costly and costly and costly and less costly Stable and Dynamic and Dynamic and Dynamic and certain uncertain uncertain uncertain environment. environment. environment. environment. Inflexible. Flexible. Flexible. Flexible. 5 E3 revision summaries The rational planning process Top-down (centralised) and formalised approach to strategic planning. Originated from the USA e.g. the planning horizon for the organisation could be over 2-10 years. Advantages Disadvantages (cid:252) For transformational or Rational planning can be too radical change rigid and bureaucratic e.g. no use (cid:252) Copes with the uncertain for the small business future by providing long- Rational planning can stifle term plans innovation e.g. locked into plans No use for dynamic or uncertain (cid:252) Helps integrate and environments e.g. plans quickly coordinate complex become (cid:8216)out of date(cid:8217) organisations The rational planning process POSITION REVIEW & CONTROL AUDIT MISSION & CORPORATE OPTION EVALUATION OBJECTIVES APPRAISAL GENERATION & CHOICE ENVIRONMENTAL ANALYSIS IMPLEMENTATION 6 E3 revision summaries Incremental planning approaches (logical incrementalism) Top-down (centralised) and less formalised approach to strategic planning. Smaller, gradual and more incremental adjustments to strategic plans e.g. every 6 months up to 2 years maximum. Advantages Disadvantages (cid:252) Less complex and long winded Too reactive, (cid:8216)muddling through(cid:8217) (cid:252) Better for uncertainty or rapidly Not suitable for transformational or changing environments radical change (cid:252) More frequent gradual Lack of long-term direction e.g. adjustment e.g. easier to control (cid:8216)strategic drift(cid:8217) may occur and manage (cid:252) Greater frequency of planning to adjust plans to environmental change The entrepreneurial model (or freewheeling opportunism) Henry Mintzberg referred to (cid:8216)freewheeling opportunism(cid:8217) as an opportunistic strategy, dominated by the search for new opportunities, with bold and often high risk decisions that need to be made by the entrepreneur him or herself. Freewheeling opportunism is a top-down (centralised), informal and short-term approach to strategic planning. Advantages Disadvantages (cid:252) Focus on exploiting product and Organisation too reactive, (cid:8216)muddling market opportunities e.g. (cid:8216)never through(cid:8217) miss a good opportunity(cid:8217) Not suitable for transformational or (cid:252) Less time consuming and radical change complicated Lack of long-term direction. (cid:252) Greater frequency of planning to Relies heavily of the judgement and adjust plans to environmental experience of the founder e.g. one change single individual (cid:252) Better for uncertainty or rapidly changing environments 7 E3 revision summaries Emergent strategies Henry Minzberg, described emergent strategies as (cid:8216)patterns or consistencies realised despite or in the absence of conscious intention by senior management(cid:8217). Strategy emerges and is (cid:8216)unanticipated(cid:8217). Informal and bottom-up (decentralised approach) allowing strategic courses of action to be developed from both tactical and operational levels within the organisation. Advantages Disadvantages Chaotic organisation that lacks (cid:252) Quicker change or repositioning for control over planning the organisation e.g. lower strategic Lack of long-term direction. levels (cid:8216)closer to the customer(cid:8217) Organisation too reactive, (cid:252) Tactical and operational levels an (cid:8216)muddling through(cid:8217) extensive source of innovative ideas Requires entrepreneurial skills (cid:252) Greater motivation to other strategic from staff which may not exist levels (cid:252) Supports culture of flexibility, learning and enterprise Comparing and contrasting RBV to the Positioning Approach Resource Based View (RBV) Positioning View (PA) Similarities • Both ideas stem from the rational planning process. • Both can use centralised (rational planning) or decentralised (emergent) approaches. • Both aim to achieve competitive advantage e.g. ways to compete with rivals. Differences • Resource based approach • Market based approach • Inside out e.g. key internal • Outside in e.g. best external resources for achieving success. opportunities to exploit. • Organisation focuses on what it • Organisation focuses on diversity does best e.g. (cid:8216)stick to knitting(cid:8217). and innovation. • Emphasis on internal appraisal • Emphasis on external e.g. unique assets or core environment e.g. competition and competences. customers • Higher cost and time to exploit • Less costly to exploit but short- but long-term advantage. term advantage gained. 8 E3 revision summaries Two contrasting leadership styles generally exist, democratic and autocratic. Democratic is based on democracy and social equality. Autocratic a bossy way and often aggressive and dominating. Huneryager and Dictatorial Autocratic Democratic Laissez faire Heckman 9 E3 revision summaries 1 0 E3 revision summaries
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