COMI4ENTS FROL4 V)RITfi?

-ruSTITAING TNE L4ATERTAL

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TTI{ICS,

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 Business and finance

choice) and implementing the chosen strategies (strategy nation), then to develop a strategy a

business has to answer the following questions.

) What is it good at?

) How might the market change?
I )
)
How can customer satisfaction be
What might prevent the plan from comi into being?
) What should be done to minimise
) What actions should be followed?
ln answering these questions the busi needs to mal<e a series of strategic decisions.

2.3.1 Characteristics of strategic tons

Johnson and Scholes (Exploring Strotegy) have summarised the characteristics of strategic decisions
for a business as follows.
) They concern the of the business's activities
) They match a s activities to its capabilities and the environment in which it operates
) They revolve the allocation of resources
) They set off a of 'lesser' operational decisions
) They are on the values and expectations of senior management
) They the long-term direction that the business tal<es
) They to change in the business

3 The strategic planning process

3.1 The stages of strategic planning

Using the rational model we can divide stratetic planning into a number of different stages: strategic
analysis, strategic choice, strategic implementation and ongoing review and control (see Figure 4.2).
The order in which the stages of strategic planning are carried out depends on whether the business takes a
positioning-based or a resource-based view:

) The positioning-based view takes it that che forces at worl< in an industry, sector or market are the
most important factors for strategy, so strategy development is about identifying opportunities in the
environment and developing strategic capability to take advantage of them,
) The resource-based view takes it that the business's strategic capabilities are most important,
because they explain differences between businesses and the superior performance of some over
orhers. Strategies therefore are developed on the unique capabilities of the business, and oPPortunities
should be sought to allow the business to exploit these capabilities to achieve competitive advantage'

ln what follows we shall be taking the positioning'based view.

r00 @ The lnstitute of Chartered Accountants in England and Wales, March 2009
 |NTRoDUCTTON rO BUSTNESS STRATEGY
I

fEf,-TERNALI \\
I nNnrvsts I
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I t-\ I

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STRATEGIC
ANALYSIS

REVIEWAND
CONTROL

t-*-
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IMPLEMENTATION IMPLEMENTATION ,,

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Figure 4.2: Positioning-bos ed strotegic plonning process

3.2 Strategic analysis

Step I External analysis ldentify opportunities and threats in ) PESTEL analysis

(analysing the the business's external environment ) Porter's five forces analysis
environment) ) Competitor analysis
Step 2 lnternal analysis ldentify strengths and weal<nesses. ) Resource audit
(analysing the Analyse the business's current ) Distinctive competences
business) resources, products, customers, ) Value chain
systems, structure, results, efficiency, Supply chain
effectiveness Product life cycle
) BCG matrix
Step 3 Corporate Combines Steps I and 2 ) SWOT analysis
appraisal

Step 4 Mission, goals Mission denotes values, the business's ) Stakeholder analysis
and objectives rationale for existing; goals interpret ) Mission statement
the mission for different stal<eholders;
objectives are quantified embodiments
of the mission

Step 5 Gap analysis Compares outcomes of Step 3 with ) Gap analysis

Step 4

@ The lnstitute of Chartered Accountants in England and Wales' March 2009 t0l
 Business and finance

3.3 Strategic choice

Strategic options Come up with new ideas: ) Resource-based strategies

generation
) How to compete (secure ) Position ing-based strategies
competitive advantage) in the
Porter's generic strategies
market

) Where to compete
- Ansoffsproduct/market
strategies
) Method of growth

Strategic options Stakeholder analysis

evaluation evaluated on the basis of ) Risk analysis (see Chapter 5)

) Acceptability to stal<eholders

) Suitability to the business operational

circumstances

) Feasibility in terms of available finance,

resources, time and comPetences

Strategy selection Choosing between the alternative

strategies

At the end ofthe process, the business should have three types ofstrategy:
) Competitive strategies: the generic strategies for competitive advantage a business will pursue.
They determine how it competes
) Product-market strategies determine where it competes and the direction of growth (which
markets a business should enter or leave)
) lnstitutional strategies determine the method of growth (i.e. relationships with other

3.4
businesses)

Strategy i
v
['r.o.rl^ohi xf.1
Strategy is the conversion of the strategies chosen into detailed plans or obiectives for
oPerating units.
The planning of has several aspects,

) Resource planning
) Operations planning
) Organisation control systems

t02 @ The lnstitute of Chartered Accountants in England and Wales, March 2009
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SWOt: Convet'sion arrtl rnatching

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