Unit 10

• Strategies must be continually Checked and Reviewed


  1. Evaluate whether strategy is working

  2. Monitor whether all parts of the firm are meeting their targets for implementing the strategic changes

  3. Check that each department is sticking to its timescale and budgeted resources

  4. Measure actual performance against objectives in the plan

  5. Monitor the competitive environment to spot and act on external factors that could lead to strategic drift

  6. Find out why targets or objectives are not being met
• If targets or objectives are not being met, it's crucial to find out why
• Action must be taken to get back on track if targets or objectives are not being met
• Businesses use Various Techniques to Monitor how the strategy is going


  1. Use market analysis

  2. Use management information systems

  3. Measure performance of the business

  4. Monitor progress of the strategy towards the business's objectives
• Market analysis


  Shows if assumptions about the market are correct
• Market research used


  • Primary
  • Secondary
• Firms use market research to

  Check how the strategy is proceeding
• Firms audit


  Sales levels, concentrating particularly on the target markets
• If there is a big difference between expected sales and actual sales, then the business will want to know why
• Management information systems


  Computer systems that constantly collect and process routine departmental data, to give a picture of the current state of the business
• Management information systems


  • Enterprise Resource Planning
• Management information systems data is used to


  See if the business is on course to meet its objectives
• Managers use


  Mathematical techniques such as extrapolating trends to interpret the data
• Strategic Drift


  What happens when strategy becomes less and less suited to the business's environment
• Strategic drift happens when a business's strategy doesn't adapt to keep up with changes in the environment
• Factors that can cause strategic drift


  • New technology
  • Changes in consumer tastes and expectations
  • Legal, political and economic factors
• A business should respond to these changes, especially if competitors are benefiting from them
• Managers' reactions to poor results


  1. Improving the way the strategy is being implemented

  2. Making small alterations to strategy, sticking mainly to what the business knows and does already
• Small changes might work in the short-term, but as external change increases, strategic drift will increase
• At this point, managers will be required to step out of their comfort zones to implement big strategic change
• This transformational change will be needed for the business to survive
• Divorce between ownership and control


  The owners of the firm are no longer in day-to-day control
• In small firms, the owner often manages the firm on a day-to-day basis
• As a firm grows, the owner can raise finance by selling shares, and the firm will be run by directors, who are appointed to control the business in the shareholders' interests
• Different groups with ideas and influences - e.g. the original owners, new shareholders, directors and managers might all have different views on objectives and strategy
• Corporate governance


  Describes the power structure of a business, lays out how decisions should be made, the influence that different groups of stakeholders have on strategy, and the information that should be available to each group
• When ownership and control are separate, a company could have internal and external stakeholders with many different interests competing for influence on strategy
• Different groups of stakeholders competing for their own interests to be represented in a strategy can make it difficult to make strategic decisions
• Planned strategy


  • Planned out before action is taken to implement it
  • Can cost a lot of time and money
  • Easy to get caught up in trying to plan the perfect strategy, which is practically impossible
  • Gradually becomes out of date as the environment changes
  • Difficult to adapt to a changing environment
  • Senior managers who plan the strategy could be out of touch with what's really going on in the business
  • Strategic planning could require the input of many people, each with a specific skill set, who may not see the bigger picture
  • Can be too detailed and theoretical, with the plan not focusing on how to implement the strategy in practice
  • Managers can become too concerned with analysing data and making sure everything is going exactly according to the plan, making the strategy too rigid and stopping people being creative or innovating
  • Senior managers who implement strategy could be too busy to fully oversee everything, and if tasks are delegated down to people without authority, then things could be trickier to implement
• Emergent strategy


  • Develops over time, as a business's actions lead to patterns of behaviour
  • Can be adapted as the business learns what works in the current environment
  • Saves a lot of time and money that would otherwise have been spent on strategic planning
  • Stays relevant, because it can adapt to the changing environment
  • Based more on the decisions of junior- and middle-managers, who often have access to more up-to-date information about the business and its environment
  • Gives low-ranking employees a chance to have a say in some aspects of strategy, instead of all decisions being made by people at the top
• Alligators only occasionally implement an emergent strategy
• Disadvantages of emergent strategies


  • It might not be clear what the end goal is — a planned strategy is clearly working towards stated objectives
  • If the strategy is constantly changing in the lower ranks of a company, those at the top might have little idea about what's going on in their business
  • Can be very difficult for large companies to implement because the different parts of the business need to coordinate with each other
  • Emergent strategies work best in a company that has a flat organisational structure, where communication is easier and decisions can be made more quickly
  • Some organisations might be affected by certain requirements that don't allow for an emergent strategy, such as the NHS having a lot of its strategic decisions made for it by the Government
• Strategic Decision-Making


  Involves Risk and Uncertainty
• When a business is deciding on a strategy, there are usually a large number of factors that have to be considered
• The more factors there are to consider


  The higher the number of potential problems
• Most strategies will have an element of risk involved — when you're trying to plan for the future there will always be unknowns that you can't account for
• When managers are making decisions on strategy, they will need to consider how much risk is involved
• It can be difficult to figure out exactly which parts of a strategy are risky
• It is also difficult for a business to judge the feasibility of a strategy
• Managers need to have information about the resources, skills and time available