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Enterprise Strategy. CIMA Paper E3. 1. Session. CIMA Verb Hierarchy. CIMA verb hierarchy – strategic level. CIMA verb hierarchy – strategic level. at strategic level, you will usually encounter verbs from levels 3, 4 and 5 of the CIMA hierarchy
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Enterprise Strategy CIMA Paper E3
1 Session CIMA Verb Hierarchy
CIMA verb hierarchy – strategic level CIMA verb hierarchy – strategic level • at strategic level, you will usually encounter verbs from levels 3, 4 and 5 of the CIMA hierarchy • you must avoid giving a “level 2 response to a level 5 verb” (common examiner’s comment)
CIMA verb hierarchy – levels 3, 4 and 5 CIMA verb hierarchy – strategic level Learn the meaning of each of these verbs, and follow the instructions in exam requirements specifically
2 Session Introduction to Strategy
A means to achieve the objectives… A basis for competitive advantage… Strategy Question and Process Two Basic Questions Where to Compete How to Compete
Strategic Planning Process Internal Env Evaluation and Choice Implementation and Control Position Audit Options Mission and Objectives External Env
Strategic Planning Process Strategic analysis Strategy into action Strategic choice
3 Session Mission, Objectives and Stakeholders
Mission What is our business? What should our business be? What is valued by the customer? Mission What will our business be?
Objectives Mission • Objectives become increasingly SMART • Specific • Measurable • Attainable • Relevant • Time-bound Strategic plans and objectives Tactical plans and objectives Operational plans and objectives
Stakeholder Mapping Low Minimal Effort Keep Informed Power Keep Satisfied Key Players High Level of Interest Low High
Ethics and CSR Ethics CSR moral duty and obligation exceeding the minimum obligations to stakeholders • Ethical stances (JSW) • Short-term SH interest • Longer-term SH interest • Multiple stakeholder interest • Shaper of society • Dimensions (Carroll) • Legal • Ethical • Economic • Philanthropic
Stakeholder Mapping 4 Session Environmental Analysis
Sources of Data • Primary data collection: • - Observation - Surveys • Secondary data collection • - Internal sources - accounting / marketing data • - External sources - Periodicals / internet
5 Session External Environment
The Pestel Framework • Political • Economic • Social • Technical • Environmental-social responsibility • Legal
Porter’s 5 Forces Threat of New Entrants Power of Buyers Rivalry Power of Suppliers Threat of Substitutes
Porters DiamondThe Competitive Advantage of Nations Demand Conditions Strategy, Structure and Rivalry Related and Supporting Industries Factor Conditions
The Life Cycle Intro Growth Maturity Decline Sales Time
Competitor Analysis • Strategy – where and how • Resources and competences • Objectives – are they being met? • Assumptions – culture? • Competitors – who are they? • Predictions – for the future? • What are they likely to do in the future? • How will they respond to our initiatives? • How can we influence their reactions to our initiatives?
6 Session Internal Environment
Resource-based view of strategy • Strategic analysis • Internal analysis to identify strengths and weaknesses by looking at the firm’s resources and competences • External analysis to identify CSFs in markets • Strategic choice • Select strategies where the firm has or can acquire the core competences to meet the CSFs in the markets concerned • Strategic implementation • Formulation of detailed plans and budgets • Target setting for KPIs • Monitoring and control – especially of core competences
Resources and Competences Same as Competitor Easy to Copy Different and Difficult to Copy Basic Unique Resources Threshold Core Competence
Porter’s Value Chain Infrastructure HumanResourceManagement Technology Margin Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales Service
7 Session Position and gap analysis
The Position Audit Where are we now? Internal Environment External Environment Weakness Threat Strength Opportunity What happens if we do nothing?
Gap Gap Analysis Objective Objective Measure Future operations Current operations Time
8 Session Strategic Choice
Porter’s Generic Strategies How Cost Leadership Differentiation Broad Scope Where Focus Narrow Scope
Existing Market New Ansoff Growth Strategies Product Existing New Market Penetration Product Development Market Development Diversification
High Market Growth Low Boston Consulting Group (BCG) Matrix Market Share High Low Star Problem Child Cash Cow Dog
Methods of expansion • Acquisition v organic growth • Speed • Cost • Economies of scale • Risk • Synergy • Implementation issues • Joint methods • Sharing of costs • Sharing of benefits • Sharing of risks • Ownership of resources • Control / decision making
Strategy Evaluation • Feasibility • Resources • Competencies • Implementation • Suitability • Objectives • Strengths • Opportunity Acceptability To Stakeholder Groups
9 Session The Performance Measurement Mix
Determination of the Measurement Mix Identify Objectives Update the CSF Draft CSF Position Review Draft a Mix Consider Change Implications and Test Deploy and Monitor
The Balanced Scorecard Financial Customer Operations IT? Learning HR Research Kaplan and Norton
Benchmarking Identification of best practice……. Internal Process Competitor Same Company Different Department Different Company Similar Process Similar Process Direct Competitor
10 Session Business Unit Performance
Shareholder Value Shareholder value = Present value of free cash flow from operations plus value of marketable securities - Value of debt
11 Session IT and e-business
Earls Three levels of Strategy ISStrategy “What” • Division/SBU/function based • Demand orientated • Business focussed Applications IM Strategy “Wherefore” • Organisation based • Relationship orientated • Management focused Management ITStrategy “How” • Activity based • Supply orientated • Technology focused Delivery
McFarlan’s Strategic Grid Strategic Impact of Future Systems Low Support Turnaround Strategic Impact of Current Systems Factory Strategic High Low High
12 Session Information for Advantage and Knowledge Management
Information Issues Sources Internal External • Who • When • Why • What Reliability Known Reliability ? • Broader Focus • Less Cultural • Distortion Relevance ? More Relevant
Data Warehousing This is a subject orientated, integrated, time variant, non-volatile collection of data in support of management’s decision making process ADatabase A Data Extraction Tool A Decision Support Tool Maintained by constant updates from operational systems
Data Mining The analysis of data to unearth unsuspected or unknown relationships, patterns and associations The Warehouse Stores Data The Mining Turns Data into Information • Statistical technique and modelling that gives: • Associations – correlation • Sequences – sequences • Classification – recognition of patterns • Clustering – finding groups of facts • Forecasting – predicting the future
Knowledge Management The management of the information, knowledge and experience available to an organisation. Create Capture Store Make Available Utilise To Build a Competitive Advantage
Knowledge Management To Build a Competitive Advantage Structural Capital Human Capital • Development • Maintenance • Retention • Innovation – intellectual property • Customer – address lists / records • Organisational – processing systems