Chapter 1: The nature of strategic business analysis

Chapter learning objectives

Upon completion of this chapter you will be able to:

  • describe the common vocabulary of strategic management and why strategic management is important
  • describe the different levels of strategic planning for a profit-seeking and a not-for-profit organisation
  • describe the JSW model for both profit-seeking and not-for-profit-seeking organisations
  • describe the JS lenses (strategy as design, experience, ideas)
  • explore the scope of business analysis and its relationship to strategic management.

1 The common language of strategic planning

This chapter introduces some of the main terms used in discussionsabout strategy. It also looks at the meanings of the word 'strategy' andasks to what extent strategic planning is useful.

Strategic planning

'Strategic planning' can also be known as 'long-term planning' or'corporate planning'. Those alternative names give some insight into thenature of strategic planning. It:

  • considers the longer term (think of a time-horizon of about five years or beyond)
  • considers the whole organisation.

Other characteristics of strategic planning are that:

  • it gives direction to the whole organisation, and integrates its activities
  • it considers all stakeholders
  • it looks at how to gain a sustainable competitive advantage
  • it relates the organisation, its resources and competences to its environment.

There is no universally accepted definition of strategy, and theword is used in different contexts to mean different things. Thefollowing definition is as useful as any.

'Strategyis a pattern of activities that seeks to achieve the objectives of theorganisation and adapt its scope, resources and operations toenvironmental changes in the long term.'

Why bother?

Studies show that companies that plan are more successful thanthose that do not. Strategic planning can have the following potentialadvantages:

Strategic planning is particularly important when:

  • there are long lead times
  • the business needs to be turned around
  • there is high capital expenditure
  • many stakeholders are affected.

Illustration of the importance of strategic planning

Illustration – Introduction


In the 1970s IBM was one of the most successful and profitablecompanies in the world. It made most of its profits by selling large,main-frame computers to corporations and governments. Substantialrevenues were also earned in providing maintenance and support fornon-user friendly hardware and operating systems. Success continued intothe early 1980s, but soon IBM reported the largest corporate loss evermade. What led to the rapid turnaround?

The following are often cited as reasons.

  • Development of personal computers in the early 1980s and, in particular, how much users preferred having a computer on their desk, on which they could carry out work as and when they wanted, rather than having to submit work to the data processing department.
  • Network technology that allowed PCs to be interconnected for work and data sharing.
  • Simpler manufacturing. PCs are very modular, susceptible to mass production techniques, and factories could easily be established in low-cost economies.

IBM did not correctly predict the revolutionary effect that PCswould have on manufacturing and consumers. The market for main-framecomputers declined rapidly and IBM was left with very high overheads andover-manning.

Why were these developments not predicted more accurately? Perhapswhen a company is very dominant, it begins to think itself invincibleand immune to outside developments. Long periods of success may lead toassumptions about future success. Who in management might be braveenough to say that a company might have to change radically if successis to continue in the future?

IBM has now changed from being predominantly a hardwaremanufacturer to being a provider of consultancy services. Recently, itsold its laptop business to Lenovo, a company based in China. IBM foundthat the market for PCs was a commodity market in which it was difficultto add value to enable profits to be made.

Mark-ups are better in consultancy, the provision of skilledservices are more difficult for others to copy and consultancy servicesare almost immune from threats from cheap overseas suppliers.

Test your understanding 1

How important is strategic planning likely to be to the following organisations?

(a)A health service.

(b)A small building contractor.

2 The rational 'top down' approach to strategic planning

The traditional approach

This approach breaks down the process of strategic planning into three distinct steps:

  • strategic analysis (examination of the current strategic position)
  • strategic choice
  • strategic implementation (or strategy into action).

This can be represented in the diagram on the following page.Broadly, information about the organisation and its environment iscollected and rational decisions are made about future courses ofaction.

A modern adaptation

The Johnson, Scholes and Whittington (JSW) model of strategicplanning is a modern development of the rational planning model. Itconsists of the three elements already discussed (analysis, choice,implementation) but instead of presenting these linearly, it recognisesinterdependencies. For example, it might only be at the strategy intoaction (implementation) stage that an organisation discovers somethingthat sheds light on its strategic position. The other key difference isthat Johnson, Scholes and Whittington argue that strategic planning canbegin at any point. For example, firms might decide that they willlaunch an internet sales division without first carrying out anystrategic analysis or choosing how the new strategy might compete. Theexaminer believes that this is a key exam model and the bulk of thesyllabus is built around it.

The strategic position/analysis

Assessing the strategic position consists of analysing:

  • the environment (competitors, markets, regulations, discoveries etc. Opportunities and threats)
  • the strategic capability of the organisation (resources, competences. Strengths and weaknesses)
  • the culture, beliefs and assumptions of the organisation
  • the expectation and power of stakeholders (what do the shareholders want? Will employees co-operate?).

The aims of strategic analysis

The aim of strategic analysis is to form a view of the maininfluences on the present and future well-being of the organisation.This will obviously affect the strategy choice.

Strategic analysis would cover the following areas.

  • The PESTEL environmental variables – political, economic, social, technological, environmental and legal as well as competitive factors and how they will affect the organisation and its activities.
  • The resource availability and its relative strengths and weaknesses.
  • The aspirations and expectations of the groups that have an interest in the organisation, e.g. shareholders, managers, owners, employees and unions.
  • The beliefs and assumptions that make up the culture of the organisation will have an effect because they are the means of interpreting the environment and resource influences.

The environmental variables – Since strategy is concernedwith the position a business takes in relation to its environment, anunderstanding of the environment's effects on an organisation is ofcentral importance to strategic analysis. The historical andenvironmental effects on the business must be considered, as well as thepresent effects and the expected changes in environmental variables.This is a major task because the range of environmental variables is sogreat. Many of those variables will give rise to opportunities of somesort, and many will exert threats upon the organisation. The two mainproblems that have to be faced are, first, to distil out of thiscomplexity a view of the main or overall environmental impacts for thepurpose of strategic choice; and second, the fact that the range ofvariables is likely to be so great that it may not be possible orrealistic to identify and analyse each one.

The resources of the organisation – There are internalinfluences as well as outside influences on the firm and its choice ofstrategies. One of the ways of thinking about the strategic capabilityof an organisation is to consider its strengths and weaknesses (what itis good or not so good at doing, or where it is at a competitiveadvantage or disadvantage, for example). Considering the resource areasof a business such as its physical plant, its management, its financialstructure and its products may identify these strengths and weaknesses.Again, the aim is to form a view of the internal influences andconstraints on strategic choice. The expectations of differentstakeholders are important because they will affect what will be seen asacceptable in terms of the strategies advanced by management. However,the beliefs and assumptions that make up the culture of an organisation,though less explicit, will also have an important influence.

Expectations and influence of stakeholders – A stakeholdercan be defined as someone who has an interest in the well-being of theorganisation. A typical list of stakeholders for a large company wouldinclude shareholders, employees, managers, customers, locality,suppliers, government and society at large.

Strategic planning and management cannot be achieved without regard to stakeholders.

  • In a profit-making organisation, management might have a choice of adopting a high risk/high return strategy or a low risk/low return strategy. It's important to know which the shareholders want.
  • In a not-for-profit organisation, such as a hospital, managers need to know what the government and potential patients want. How much resource should go into heart operations, how much into hip replacement, etc.

The beliefs and assumptions within an organisation –affect the interpretation of the environmental and resource influences;so two groups of managers, perhaps working in different divisions of anorganisation, may come to different conclusions about strategy, althoughthey are faced with similar environmental and resource implications.Which influence prevails is likely to depend on which group has thegreater power, and understanding this can be of great importance inrecognising why an organisation follows, or is likely to follow, thestrategy it does.

A consideration of all relevant features – theenvironment, resources, expectations and objectives within the culturaland political framework of the organisation – provides the basis forstrategic analysis of that organisation. However, to understand itsstrategic position, it is also necessary to examine the extent to whichthe direction and implications of the current strategy and objectivesthat it is following are in line with, and can cope with, theimplications of the strategic analysis.

Strategic choice

Strategic choice follows strategic analysis and is based upon the following three elements.

  • Generation of strategic options, e.g. growth, acquisition, diversification or concentration.
  • Evaluation of the options to assess their relative merits and feasibility.
  • Selection of the strategy or option that the organisation will pursue. There could be more than one strategy chosen but there is a chance of an inherent danger or disadvantage to any choice made. Although there are techniques for evaluating specific options, the selection is often subjective and likely to be influenced by the values of managers and other groups with an interest in the organisation.

In addition to deciding the scope and direction of an organisation,choices also need to be made about how to achieve the goal. Broadly,there are two ways in which a strategy can be pursued:

  • internal development (organic growth)
  • external development – merger/acquisition, JV, franchising/licensing.

The generation of strategic options

Generation of strategic options

There may be several possible courses of action open to theorganisation. For example, an international retailer may need to decideon areas such as:

  • which areas of the world are most important to concentrate on
  • whether it is possible to maintain a common basis of trading across all the different countries
  • whether it is necessary to introduce variations by market focus
  • what strategic directions are necessary for product development and product range
  • should the company attempt to follow these strategies by internal development or joint venture activity through franchising?

All of these considerations are important and need carefulconsideration: indeed, in developing strategies, a potential danger isthat managers do not consider any but the most obvious course of action– and the most obvious is not necessarily the best. A helpful step instrategic choice can be to generate strategic options.

Strategic options generation is the process of establishing achoice of possible future strategies. There are three main areas toconsider.

Porter describes certain generic competitive strategies (lowestcost or differentiation) that an organisation may pursue for competitiveadvantage­. They determine how you compete.

Ansoff describes product-market strategies (which markets youshould enter or leave). They determine where you compete and thedirection of growth.

Institutional strategies (i.e. relationships with other organisations) determine the method of growth.

Evaluation of the options

Strategic options can be examined in the context of the strategicanalysis to assess their relative merits. In deciding on any of theoptions that they face, the organisation might want to know whether theyare suitable to the firm's existing position. They need to know whichof these options builds upon strengths, overcomes weaknesses and takesadvantage of opportunities, while minimising or circumventing thethreats the business faces. This is called the search for strategic fitor suitability of the strategy. However, a second set of questions isimportant.

  • To what extent could a chosen strategy be put into effect?
  • Could required finance be raised, sufficient stock be made available at the right time and in the right place, staff be recruited and trained to reflect the sort of image the organisation is trying to project?

These are questions of feasibility.

Even if these criteria could be met, management would still need toknow whether the choice would be acceptable to the stakeholders.

A variety of techniques are used to assess the value of strategies.Some strategies will be assessed on financial criteria (such as netpresent value). Where this is not possible, or where the uncertainty inthe environment is great, more sophisticated models are used.

Selection of the strategy or option

This is the process of selecting those options that theorganisation will pursue. There could be just one strategy chosen orseveral. There is unlikely to be a clear-cut 'right' or 'wrong' choicebecause any strategy must inevitably have some dangers or disadvantages.So in the end, choice is likely to be a matter of management judgement.It is important to understand that the selection process cannot alwaysbe viewed or understood as a purely objective, logical act. It isstrongly influenced by the values of managers and other groups withinterest in the organisation, and ultimately may very much reflect thepower structure in the organisation.

Strategy into action/implementation

Implementing a strategy has three elements.

  • Organising/structuring. For example, should the organisation be split into European, US and Asian divisions? How autonomous should divisions be?
  • Enabling an organisation's resources should support the chosen strategy. For example, appropriate human resources and fixed assets need to be acquired.
  • Managing change. Most strategic planning and implementation will involve change, so managing change, in particular employees' fears and resistance, is crucial.

The implementation process


It is likely that changes in organisational structure will beneeded to carry through the strategy and there is also likely to be aneed to adapt the systems used to manage the organisation.

Organisation structure – lines of authority and communicationmust be established that are appropriate to the way the strategy isbroken down into detailed targets. Systems are necessary to provide thenecessary strategic information, as well as essential operationalprocedures. Control systems are used to assess performance. The type ofquestions that will need answering include:

  • what will different departments be held responsible for?
  • what sorts of information system are needed to monitor the progress of the strategy?
  • is there a need for retraining of the workforce?

Implementation involves devising sub-strategies for products and markets, human resources and so on.

Resource planning

Resource planning covers finance, human resource management andphysical resources such as land and buildings. It involves assessing thekey tasks to satisfy the critical success factors, and the resources tobe allocated to the key tasks. It is concerned with the followingquestions.

  • What are the key tasks that need to be carried out?
  • What changes need to be made in the resource mix of the organisation?
  • By when?
  • Who is to be responsible for the change?

Managing change

Successful implementation will rely on the successful management ofthe change to the new strategy. This will involve not only themanagement of the systems and structures of the organisation, but alsothe management of its people and routines. This will involve twoelements:

  • overcoming resistance to change from staff
  • leading staff in a manner that encourages them to make the change successfully.

Illustration 1 – The JSW model of strategic planning

Illustration – Johnson, Scholes and Whittington model of strategic planning

A full-price airline is considering setting up a 'no frills',low-fare subsidiary. The strategic planning process would include thefollowing elements.

Strategic position: competitor action, oil price forecasts,passenger volume forecasts, availability of cheap landing rights, publicconcern for environmental damage, effect on the main brand.

Strategic choices: which routes to launch? Set up a servicefrom scratch or buy an existing cheap airline? Which planes to use, whaton-board services to offer?

Strategic implementation: how autonomous should the newairline be? How to recruit and train staff? Implementation of theinternet booking system. Acquisition of aircraft. Obtaining landingslots.

Test your understanding 2

A health provider has only large, edge of town, hospitals. It isconsidering setting up additional small city centre clinics capable oftreating less-serious day cases.

Give examples of what the provider should consider under theheadings of strategic position, strategic choices and strategicimplementation.

3 Alternative approaches

Emergent strategies

The research of Mintzberg (1987) suggests that few of thestrategies followed by organisations in the real world are asconsciously planned as the approaches above suggest.

He believes this to be an unrealistic view of strategic planning,believing instead that strategies evolve over time (emerge) rather thanresult from an in-depth analysis of every aspect of the environment andan impartial evaluation of every possible alternative.

More details en emergent strategies

Emergent strategies

Emergent strategies do not arise out of conscious strategicplanning, but result from a number of ad hoc choices, perhaps made lowerdown the hierarchy. In this view, the final objective of the strategyis unclear and elements still develop as the strategy proceeds,continuously adapting to human needs – the emergent strategy isevolving, incremental and continuous. Emergent strategies develop frompatterns of behaviour; one idea leads to another, until a new pattern isformed and a new strategy has emerged. For example, a salesman visits acustomer out in the field. The product isn't right, and together theywork out some modifications. The salesman returns to the company andputs the changes through; after two or three more rounds, they finallyget it right. A new product emerges, which eventually opens up a newmarket. The company has changed strategic course.


Lindblom did not believe in the rational model to decisionmaking as he suggested that in the real world it was not used, citingthe following reasons.

  • Strategic Managers do not evaluate all the possible options open to them but choose between relatively few alternatives.
  • It does not normally involve an autonomous strategic planning team that impartially shifts alternative options before choosing the best solution.
  • Strategy making tends to involve small-scale extensions of past policy – 'incrementals' rather than radical shifts following a comprehensive search.

Lindblom believed that strategy making involving small scaleextensions of past practices would be more successful as it was likelyto be more acceptable as consultation, compromise and accommodation werebuilt into the process. He believed that comprehensive rationalplanning was impossible and likely to result in disaster if activelypursued.

Freewheeling opportunism

  • Freewheeling opportunists do not like planning. They prefer to see and grab opportunities as they arise.
  • Intellectually, this is justified by saying that planning takes too much time and is too constraining. Probably, the approach is adopted more for psychological reasons: some people simply do not like planning.
  • Often such people are entrepreneurs who enjoy taking risks and the excitement of setting up new ventures. However, once the ventures are up and running, the owners lose interest in the day-to-day repetitive administration needed to run a business.

Test your understanding 3

McNamee states that 'strategic management ……… isconsidered to be that type of management through which an organisationtries to obtain a good fit with its environment'.

Management Accounting – Strategic Planning and Marketing, McNamee

This approach has been characterised as 'proactive'.

There are many successful organisations that do not undertakestrategic planning. This approach has been characterised as 'reactive'or sometimes 'freewheeling opportunism'.


Explain the essential characteristics of the two approaches(strategic planning and freewheeling opportunism) mentioned above. Whatare the advantages and disadvantages of the two approaches? Explain inwhat circumstances you would recommend an organisation to adopt eachapproach.

Levels of strategic planning

Corporate, business functional levels

  • Corporate Strategy

    What business is the firm in? What businesses should it be in?

    These activities need to be matched to the firm's environment, its resource capabilities and the values and expectations of stakeholders.

    How integrated should these businesses be?

  • Business Strategy

    Looks at how each strategic business unit (SBU) attempts to achieve its mission within its chosen area of activity.

    Which products should be developed?

    What approach should be taken to gain a competitive advantage?

    Which markets to enter?

  • Functional or Operational Strategy

    Looks at how the different functions of the business support the corporate and business strategies.

Note that it is not always clear and rarely important whether a decision is classified as corporate, business or functional.


The strategies at the different levels should be consistent.There's no point having a corporate strategy that says that theorganisation should move up-market, if the business strategy is to stayin cheap markets and operations provide low-quality products andservices.

Strategic choices need to be made at every level, though obviouslychoices made at any particular level can influence choices at otherlevels.

Illustration – Levels of strategic planning

Gap is an international clothing retailer. Classification of different levels of strategic planning could be:


  • Should another range of shops be established (as Gap did with Banana Republic, a more up-market chain)?
  • Should the company raise more share capital?


  • What markets should the new range of shops open in?
  • How often should inventories be changed?

Functional / operational

  • How will suitable premises be found and fitted out for the new range of shops?

Test your understanding 4

A full-service airline is making the following decisions.

(a)Should a 'no-frills', low-fare subsidiary be set up?

(b)If it is set up, how should cabin staff be recruited?

Are these likely to be strategic, business or operational decisions?

Strategic management in different contexts

Strategic management in different contexts

The different elements of the strategic planning process will varyin importance, depending on the type of organisation concerned.

4 The strategy lenses

Overall, strategy is likely to come from a variety of sources and acombination of the above techniques. Johnson and Scholes talk about'strategic lenses', which are three ways of viewing what can be meant bythe term 'strategy'. These are as follows.

  • Strategy as design. This is the view that strategy formulation is a rational, logical process where information is carefully considered and predictions made. Strategic choices are made and implementation takes place. Essentially this is the same as the rational planning model discussed earlier.
  • Strategy as experience. This is the view that future strategies are based on experiences gained from past strategies. There is strong influence from the received wisdom and culture within an organisation about how things should be done. This reflects the emergent approach described above.
  • Strategy as ideas. This is the view that innovation and new ideas are frequently not thought up by senior managers at the corporate planning level. Rather, new ideas will often be created throughout a diverse organisation as people try to carry out their everyday jobs and to cope with changing circumstances.
  • Johnson and Scholes suggest that viewing strategy through only one of these lenses can mean that problems that the other lenses might show up are missed. For example, too much reliance on incremental changes (strategy as experience) might overlook radical new developments that could be essential for the organisation's success (strategy as ideas).
  • It is worth considering the very strong influence the design and experience lenses have in large organisations and government departments. Often, the larger the organisation, the less able it is to adopt early essential but radical changes.
  • Ideally, managers should try to look at strategy through all three lenses in turn.

The strategy lenses

A university in a developing country wants to introduce newproducts via the medium of e-learning (where products are delivered overthe internet and students study at home). The country has poorinfrastructure and a cultural aversion to social mobility. But itsgovernment are planning (with the help of international investment) amajor investment in technology over the next five years. This will allowover 75% of the country to have access to high speed WiMax internet atvery low costs.

Let's look at how the university's strategy might develop:

Strategy as design

The environmental changes that the university is experiencing aresignificant and it will be important that the university react to these.Through the use of environmental analysis in combination with resourceanalysis etc. the design process will begin. It will then move on tostrategic choices such as the decision to move onto to e-learningproduct development.

The design will be developed logically with carefully plannedsteps. Middle and lower management will play a role in theimplementation of the strategy and it will have clear goals andobjectives.

Strategy as experience

But the strategy is likely to be adapted over time, possibly due tothe influence of all levels of management. They will have cleartaken-for-granted assumptions about how strategy should proceed, basedmainly on what has worked and not worked in the past. They may alter thedetailed plans due to their own ideas about what will work and whatwon't.

But the strategy will be added to as well from these experiences.For example, the middle line managers might know from past experiencethat when students study at home they require a higher level of servicein areas such as tutor feedback, exam marking and material delivery.This might lead to the strategy to be adapted to incorporate plans suchas dedicated support staff etc. and a deliberate choice to focus on amore differentiated service from rivals who might launch low costalternatives.

Strategy as ideas

The university's environment is not static and it will continue toevolve. A five year plan cannot therefore be static and it also shouldevolve as the environment evolves.

For example, if telecommunications infrastructure were to grow asother technologies grow it may well be that citizens of the countrymight begin to own mobile 'smartphones' (especially those in theuniversity's target age group). This might provide an idea for providingsome product aspects (such as mini exam questions) as mobile phoneapplications. This is unlikely to be part of the original strategicdesign, but as such ideas arise they will be built into the strategyover time.

Further illustration of the strategic lenses

Illustration – The strategy lenses

At the start of this chapter, a brief history of IBM was set out,describing how the rise of the personal computing and new electronicstechnology caused IBM to swiftly change from being one of the world'smost successful companies to one that posted one of the largest everlosses.

It can be argued that IBM certainly saw strategy as a matter ofdesign and probably one of experience. The company was large,conservative, conventionally organised and highly centralised. The mainboard would certainly have kept tight control of corporate strategy andthe company would have progressed incrementally, based on its experienceand constrained by a strong conservative corporate culture.

Perhaps if someone had been able to draw attention to the challengeto IBM arising from personal computers, and top management in thecompany had been willing to take this challenge more seriously, IBMmight not have had the problems it had, or to the extent it had.

5 Chapter summary

Test your understanding answers

Test your understanding 1

(a) Health service

Strategic planning is vital. Hospitals arehugely expensive and take years to plan and build and their provisionmust be closely aligned with population trends and treatment advances.Training medical staff is also a long-term process. If hospital andother health service facilities are inadequate, many people will beadversely affected.

(b) A small building contractor

Relatively little long-term planning isneeded. If the builder buys and develops land, then some planning willbe needed to ensure that land and planning permission can be acquired.Otherwise, many builders work from job to job using a high proportion ofsub-contractors.

Test your understanding 2

Suggestions are:

Strategic position: likely demand. Some type of cost/benefitanalysis to show that the strategy is worthwhile. Safety of patientsbeing treated in less well-resourced environments. Acceptability topatients. Acceptability to staff.

Strategic choices: which illnesses to treat? Where should the clinics be? How should the clinics be staffed? Opening hours?

Strategic implementation: acquiring and fitting out clinics.Hiring and/or transferring staff. Publicity, so that patients knowwhere and when to go. Liaison with general practitioners and the mainhospitals.

Test your understanding 3

Strategic planning

This is a formal planning process that has clearly definedobjectives, which will have been agreed by its stakeholders. Strategicplanning operates within a logical set of procedures, which give it aneasily understood structure.

Strategic planning is a long-term planning process with a timehorizon of several years. It relates to the whole undertaking andrecognises that an organisation is an open system continuouslyinteracting with its external environment.

Strategic planning advantages:

  • It sets out a clear direction for the organisation to move towards. This provides a vision for the future.
  • It makes managers look ahead, think ahead and be proactive.
  • Future threats and opportunities can be identified and evaluated.
  • It gives a perspective of future changes so the organisation can adapt to them gradually.
  • It is a structured method of planning, which employees and managers can understand and put into practice.

Some disadvantages of strategic planning include:

  • It acts as a constraint on management ability to act.
  • Once set, achieving the plan becomes the goal. The real objectives are lost sight of.

Freewheeling opportunism

This is the short-term identification and exploitation ofopportunities. It only looks at the present and immediate future anduses an ad hoc approach to management, reacting to situations as theydevelop.

Freewheeling opportunism relies on the individual entrepreneurialskills of the organisation's proprietors or managers. It is informal andhas no set procedures that must be followed.

Some of the advantages claimed by supporters of freewheeling opportunism are:

  • It is flexible and can spontaneously adapt to a rapidly changing situation.
  • It has none of the procedural constraints that formal strategic planning has.
  • Decisions can be made rapidly and implemented, giving the organisation a competitive advantage.
  • It supports and encourages an innovative culture in the organisation.

Some disadvantages of freewheeling opportunism are:

  • There is no long-term vision for the future. Threats may not be seen in advance.
  • In large undertakings, sub-optimisation will occur when it is used.
  • There are no clear objectives to work towards.

Recommended approach

The method of planning used in an organisation will depend on many factors, including:

  • Its size and leadership style.
  • The organisation culture and structure.
  • The nature of its activities.
  • The skills and aspirations of its managers.

Formal strategic planning should be used in larger organisationsthat are established and have a degree of centralised control. It isunlikely that organisations such as government institutions and publiclimited companies, would survive without strategic planning in today'scompetitive world.

Freewheeling opportunism might be justified in very smallundertakings in which responsibility for management is vested in theproprietors who have considerable entrepreneurial skills, such as a abusiness operatingin a turbulent, creative market.

Test your understanding 4

(a)There will be very high costsinvolved, careful planning is needed to ensure that the cheap flights donot cannibalise the expensive service. This is a decision that would bemade by the main board and is strategic.

(b)The nature of this decision is lessclear. It's probably a business-level decision that would be delegatedto the management team of the new subsidiary.

Created at 5/24/2012 12:45 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London
Last modified at 5/25/2012 12:55 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London

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