The Strategy Formulation Process

Chapter 8 Strategic Assessment: General Principles

(c) Macmillan & Tampoe 2001

Purpose of Strategic Assessment

Anchors future strategies in reality Relates strategic intent to the present Address both external and internal aspects of context Combine analysis with judgement

(c) Macmillan & Tampoe 2001

Analysis Vs. Assessment

Assessment is more than analysis Assessment focuses on testing decisions for validity in practice Analysis gives undue weight to what can be measured Assessment takes almost equal notice of quantitative and qualitative data Good assessment should give a balanced understanding of the context
(c) Macmillan & Tampoe 2001

Key Elements of Assessment Process

External

analysis Internal analysis Strategic intent Operational results Strategic choice

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Figure 8.1 Factors likely to influence Strategic Assessment

External Analysis Business Environment, Industry, Competitors & Threats and Opportunities

Strategic Intent

Trigger

Strategic Assessment

Strategic Choice

Results

Internal Analysis Resources, Capabilities & Competencies Strengths and Weaknesses

Operational Results

(c) Macmillan & Tampoe 2001

Figure 8.2 Reconsidering Strategies

Reconsider Strategy
Trigger Strategic Cycle

Review Results

Operational Cycle

Action

(c) Macmillan & Tampoe 2001

Questions for Strategic Assessment to address

What are our chances of survival if we continue as we are? What are the best opportunities for growth given our existing capabilities? What are our competitive advantages and disadvantages? Where can we invest to improve our capabilities most efficiently? What changes can we realistically implement?
(c) Macmillan & Tampoe 2001

Selecting analytical tools

Vast range of tools available Usually use several tools but choice is important Choice depends on: Data available Nature of issues to be resolved Time and skills available
(c) Macmillan & Tampoe 2001

Figure 8.3 Techniques in use in strategic planning processes

Technique Core competencies analysis Scenario Planning Benchmarking Total Quality Management Shareholder Value Analysis Value Chain Analysis Business Process Redesign Time-based Competition
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Adapted from: Wilson, I. Strategic Planning Isnt Dead - it changed Long Range Planning 1994

% Using 72 69 56 44 44 44 33 25
(c) Macmillan & Tampoe 2001

Assessing competitive advantage

Cost-based advantage Differentiation advantage First mover advantage Time-based advantage Technology-based advantage Corporate advantage

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(c) Macmillan & Tampoe 2001

Figure 8.4 The Triangle of Corporate Strategy

Competitive Advantage

Resources
Vision

Businesses

Goals & Objectives

Coordination 11

Organization. Systems, Processes

Control

Adapted from: Collis, D.J. & Montgomery, C.A. Creating Corporate Advantage HBR 98303 (c) Macmillan & Tampoe 2001

Figure 8.5 Successful enterprises tend to make coherent choices

Enterprise A general wide transferri ng financial Control Systems small large Corporate office size Enterprise B Enterprise C specialised narrow sharing Co-ordination Mechanisms operating

Nature of Resources

Scope of Business

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Adapted from: Collis, D.J. & Montgomery, C.A. Creating Corporate Advantage HBR 98303 (c) Macmillan & Tampoe 2001

Figure 8.6 The SWOT diagram may summarise the results of analyses

Strengths

Weaknesses

Internal Analyses

Threats

Opportunities

External Analyses

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(c) Macmillan & Tampoe 2001

Strategic Assessment of a business as a whole

Questions
What

business are we really in? What real customer needs do we satisfy? What problem do we solve for our customers?
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(c) Macmillan & Tampoe 2001