HNC/HND BUSINESS

Report
LESSON OBJECTIVE
Undertake
a range of planning techniques
 Understand a range of strategic planning
models
 Understand significance of Stakeholder Analysis
 Identify a number of Stakeholder Analysis tools
PLANNING TECHNIQUES
BCG Growth Share Matrix – Boston Cow
 SPACE – Strategic Position and Action
Evaluation
 Directional Policy Matrices
 PIMS – Profit Impact of Market Share
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DIRECTIONAL POLICY MATRICES
Two main ones:
General Electric Business Screen (GEBS)
 Shell Directional Policy Matrix
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Both are more complex versions of Boston Matrix
GENERAL ELECTRIC’S BUSINESS SCREEN
Also known as GE/McKinsey Matrix
 Portfolio analysis that assess business in terms
of:
1. Attractiveness of the industry/market
concerned
2. The strength of the business
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CRITERIA WHICH MAKES A MARKET ATTRACTIVE
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Market size
Growth rate
Overall returns
Industry profitability
Intensity of competition
Profit margins
Differentiation
Industry fluctuations
Customer / supplier
relations
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Variability of demand
Rate of technological
change
Volatility
Availability of market
intelligence
Availability of workforce
Global opportunities
PEST
Government regulation
ASSESSING INTERNAL STRENGTHS
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Production capability
Production flexibility
Unit costs
R&D capabilities
Quality
Reliability
Company image
Product uniqueness
Cost & profitability
Profit margins
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Organisational skills
Market share
Marketing capabilities
Management
competence
Workforce skills
Distribution network
Service quality
Customer loyalty
Brand recognition
GE BUSINESS SCREEN DIAGRAM
PIMS – PROFIT IMPACT OF MARKET SHARE
Developed by General Electric in 1960’s
 The PIMS database provides evidence of the
impact of various marketing strategies on
business success
 Companies that have high market share tend to
have high profits
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MINTZBERG’S 5 P’S
Suggest 5 ways in which the term ‘Strategy’ can
be used
Plan
Ploy
Pattern
Position
Perspective
NEW STRATEGY MODELS
Emergent strategies:
1. Deliberate & emergent strategies
2. Implicit or explicit strategies
3. Crafting emerging strategies
 Behavioural Approach
 Incrementalism
 Competition
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MINTZBERG’S 8 STYLES OF STRATEGIC MANAGEMENT
Planned Strategies
 Entrepreneurial Strategies
 Ideological Strategies
 Umbrella Strategies
 Process Strategies
 Disconnected Strategies
 Consensus Strategies
 Imposed Strategies
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CRAFTING EMERGING STRATEGIES
Henry Mintzberg
Based on the believe that strategies are shaped
as they develop – both reactive and proactive
Why bother crafting?
Direction – emergent strategies maybe
inappropriate for the long term
Resources – implications for resource
competition
BEHAVIOURAL APPROACH
Johnson & Scholes (2002)
“Strategy needs to be understood as an outcome
of the social, political and cultural process of
management in organisations”.
4 step strategic decision making process
INCREMENTALISM APPROACH TO STRATEGY
Involves small scale extensions of past practices – in
increments
Positives
It avoids major errors in strategy
More likely to be acceptable, as consultation, compromise
and accommodation built in
Negatives
Doesn’t work if radical new approach needed
Ignores the influence of corporate culture
Only applicable to a stable environment
COMPETITION AS STRATEGY PLANNING
“A good business strategy is one by which a firm
can gain significant ground on its competitors at
an acceptable costs”
Ohmae (1982)
Customers
Competitors
Ohmae’s Strategic Triangle
Competition
STAKEHOLDER THEORY
Theory of management and business ethics
Growing importance of Corporate Social
Responsibility (CRS)
R. Edward Freeman 1963
“ those groups without whose support the
organisation would cease to exist”
Based on the principle of who or what really counts
SHAREHOLDER V STAKEHOLDER THEORY
SHAREHOLDER APPROACH
 Traditional business
approach
 Business ( management)
acts in the best interests of
shareholders / owners
 Principal aim is to maximise
shareholder returns
 Main focus on growth &
profit
STAKEHOLDER APPROACH
 Increasingly popular
 Business takes much more
account of wider stakeholder
interests
 Approach based on
consultation, agreement, cooperation
 E.g. social and environmental
concerns become more
important
STAKEHOLDER CLASSIFICATION
CLASSIFICATION
Primary v Secondary
 Active v Passive
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INTERESTS, POWER & INFLUENCE
Activity
For each of the stakeholders below identify:
 Their main interests in the organisation
 How they can exercise power & influence over the organisation
Shareholders
Banks & other lenders
Directors & managers
Employees
Suppliers
Customers
Community
Government
10 mins

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