Some analysts and consultants to large organizations consider strategic decision making to be difficult and complex at best and messy, confusing and time consuming at worst.
- Some analysts and consultants to large organizations consider strategic decision making to be difficult and complex at best and messy, confusing and time consuming at worst. Discuss this view supporting your arguments with organizations and literature of your choice. (50 marks)
Tips for answer: This is intentionally an open question to test students’ understanding of Strategy, Strategic management & decision making. Defining the term is a good starting point together with explaining the conundrum of multiple definitions throughout the history of strategy. A good answer will include some definitions while touching upon some reasons for complexity & messiness & relating it to conflicting stakeholder objectives. A better answer will expand into positioning Strategy correctly in the spectrum of VVMOST ( Values, Vision, Mission, Objectives, Strategy & tactics) A very good answer will do this in a way that demonstrates the students’ clear understanding why strategy without clear & consistent objectives that support & align with the mission & vision of an organization would be a waste of resources & effort. An excellent answer would go even further and give well-argued examples of LHR and the NHS re complexity & time wasting with conflicting stakeholders and possibly contrast these with companies with clear aligned VVMOST (e.g BA and IBM?)
- What is a ‘Blue Ocean Strategy’ as defined by Kim and Mauborgne (2005). To what extend is a Blue ocean Strategy sustainable for the medium to long term survival of an organization? Use examples from industry to support your answer. (50 marks)
Tips for answer: A ‘Blue Ocean Strategy” according to KIM and Mauborgne is a business level strategy which sees competition in a different way. The authors argue that the normal way of looking at competition is to try to compete within an existing industry with existing competitors (i.e red oceans). Kim and Mauborgne argue that firms should engage in ‘value innovation’ which makes competition irrelevant thus enabling the firms to be in a ‘blue ocean’ with no competition. Although this has not been empirically explored it is easy to see the logical problems with the idea. For example, Yellow Tail Wine decided to re-invent the wine industry and sell wine to ‘non-customers’ (i.e beer drinkers). However, this then creates more substitutes for wine. Cirque du Soleil is also cited as moving to a blue ocean but again the blue ocean contained substitutes, this time, in the form of opera and ballet.
- Explain clearly what the concept means and will make reference to how the blue Ocean Strategy is different to the conventional way of seeing competition. Relevant examples will be given and also a reasonable critique.
- Explain to what extent an understanding of the industry life cycle model can assist a strategic management in understanding the external environment of an organization. How would you use a PESTEL analysis to enrich an industry life cycle analysis? Use examples to illustrate your answer. (50 marks)
Tips for answer: The industry life cycle model illustrates the typical trajectory that an industry (not market, firm or product) might go through; i.e introduction, growth, (sometimes shakeout), maturity then decline. It specifically refers to the supply side of an industry; i.e firms not the products. The different stages or phases are evidenced or characterised by different rates of demand growth over time. Innovation is probably one of the main catalysts for life cycle phase changes. It is useful for a strategic management to understand this concept because it gives some indication of the nature of competition and the driving forces of the industry characteristics at a particular time or phases/ stage of the cycle and hence gives a n indication of what is needed to compete. For example, at the growth stage, there are few competitors so creating an initial reputation and product innovation are critically important whilst at the decline stage costs are critically important and it would make sense to exist or look for ways to rejuvenate demand or diversify into another industry or become a lowest cost producer etc,… The problems with the concept are not all industries go through this cycle, it is difficult to tell when innovation is going to occur different stages can be evidenced in different countries at the same time concurrently and economic downtown can make it seem like industries are in decline when they are not.
- Explain strategic group analysis
- Industry behaviours in different stages
- Why the concept is useful and give a reasonable critique.
- “The intensity of competition in an industry is neither a matter of coincidence nor bad luck. Rather competition in an industry is rooted in its underlying economic structure and goes well beyond the behaviour of current competitors” (Porter, 1980, p.3).
Critically evaluate Porter’s statement using relevant literature and examples from industry to support your answer. (50 marks)
Tips for answer: Porter’s fiver force model is a tool for understanding the industry environment and the effect it has an average profitability. Porter argues that profitability is determined by the nature of these five forces underpinned by the structure-conduct-performance paradigm. The five forces model can be used to help judge whether to enter an industry. It can also be used by existing firms within an industry to judge the likelihood of new entrants into the industry. Many empirical studies have been conducted to test Porter’s view. The results are not conclusive. Among these is Rumelt. It is also possible to find examples of firms that have much higher profits than the industry average and this cannot be explained by Porter’s model. The resources-based view of strategy argues that firm profitability is more influenced by the way in which resources are obtained, configured and renewed. Other critique includes;
The model is a static view of competition- only gives a snapshot in time.
Hypercompetitive industries are continually changing because of innovation. Porter’s model is hard to apply to these industries.
The power of complementors needs to be taken into account (6th force)
The effect of government is not considered.
Firms quite often collaborate with each other- this is not a zero-sum game. Porter ignore this.
Difficult to establish industry boundaries. Is the industry global, regional, local?
However, the model is useful for highlighting particular threats in an industry such as excessive supplier power or the amount of substitutes, both of which can reduce potential profitability.
- Ansoff’s matrix can be used to generate strategy directions for growth. Using Ansoff’s matrix, explain the range of strategic options available to an organization and justify an appropriate method for growth leg: Internal development, merger and acquisition, strategic alliance for each option. Use organization of your choice to support your answer. (50 marks)
Tips for answer: Ansoff’s matrix combines the variables (products/markets) to come up with four general strategic directions for growth- market penetration, market development product development and diversification. For any of these options, different methods of growth can be used. For example, if Thorntons wants to stck with same products in same markets (market penetration), it will possibly need to improve marketing in order to gain more market share. This could be done internally but an outside firm that is more expert in packaging design might be an appropriate method to use. If Thorntons wants to appeal to a different market but with same products, thein it would likely use different market activities. This could be done internally or through an outside firm. If Thorntons wanted to appeal to market but with a different product, it might be advantageous to acquire firm and product (depending on degree of relatedness). However, integration can arise.
More Tips: What is Ansoff’s matrix?
Relationship between product and market
- Why is it important for an organization to understand its stakeholder relationship? Critically evaluate the usefulness of stakeholder mapping as s tool for prioritizing stakeholders. Use examples from industry to illustrate your answer. (50 marks)
Tips for answer: Stakeholder model, stakeholder mapping can be used to evaluable strategic options.
- Compare and contrast the different broad of corporate parent showing how the parent can potentially add or destroy value in its business. Use example to support your answer. Critically review two portfolio planning model of your choice and comment on their usefulness for different types of corporate parent. (50 marks)
Tips for answer: For portfolio planning models, students can use Boston, Ashbridge Matrix or GEC Mc Kinsey matrix. The Boston box is problematic for corporations trying to exploit synergies because the Boston box assumes that businesses are standalone. The Boston Box is also too simplistic in that it only has four boxes and only uses two variables. Also, market share and market growth does not give a good indication of future success if the resources are vulnerable to imitation. The Ashbridge Matrix relies on the analyst understanding the resources and market of a firm very well to be able to tell if a certain firm would be a good for acquisition. Therefore, it is debatable whether a corporation would be able to spot the firm. The GCE Mc Kinsey matrix is superior Boston Box because it considers resources ……………..from the problem of treating business as standalone.
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