Strategic Management and Leadership: Generating, Positioning, and Analysing Strategic Options
Strategic Choice and Generating Strategic Options (Sessions 2.1.4.5 & 2.1.4.6)
Learning Objectives
Recognize that Examiners ask about strategic choices in three primary ways, with generating suitable options being the third approach.
Understand the key components of a professional response if this topic appears on the FAE (Final Admitting Exam) paper.
Competency Statement: Strategic Choice
Students must be able to analyse, rank, generate, and recommend strategic choices for a particular organisation.
This includes performing quantitative analysis and determining the necessary pace of change.
Strategic Options Framework on the FAE Paper
2.1.4.3: Analyse and rank given strategic options.
2.1.4.4: Examine one strategic option in detail.
2.1.4.5 & 2.1.4.6: Generate suitable strategic options.
Guidelines for Generating Strategic Options
Historical Context: This specific task (generating options from scratch) has never been asked in an exam setting, though it appears frequently in assignments and is a common area of struggle for students.
Evaluation Criteria: Use the Feasible, Acceptable, and Suitable (FAS) checklist (as outlined in session 2.1.4.2).
Case Details: Generating options usually requires very little specific detail from the case but must be grounded in reality.
External Links: Watch for connections to corporate governance in RMAS (Risk Management and Audit Strategy).
Exam Mechanics: A conclusion is typically not required. This is essentially a test of the student's ability to think under pressure.
Resource Reference: This topic is covered in Chapters 9 and 11 of Corporate Strategy for Irish Companies by Gallagher.
Practical Execution
Negative Marking Risk: Professional Competence marks may be awarded on a 'negative mark' basis, where students lose marks for each unrealistic option they proffer.
Starting Points: Look for "hooks" or pointers within the case information.
Knowledge Base: Utilize broad business knowledge and established models such as Ansoff’s Matrix, Porter’s Competitive Advantage, and the BCG (Boston Consulting Group) Matrix.
Analogy: Consider similar companies or situations (many exams are based on real companies).
Industry Trends: Consider the impact of COVID-19 on the 21 main industries.
Ansoff’s Matrix
Introduction to Ansoff’s Matrix
Potentially the most useful tool for generating growth options.
Addresses how the majority of businesses grow: incrementally rather than exponentially.
Applies to both products and services.
A well-established and still valid model, particularly for linking strategy with risk.
Example: Dyson is a company that has successfully used all four methods of growth described in the matrix.
Resource Reference: Covered in Gallagher, Chapter 9 (page 275).
Matrix Structure
The matrix is mapped across two axes: Innovation (Products) and Capability (Markets).
Market Penetration: Existing Products in Existing Markets (Lowest risk).
Product Development: New Products in Existing Markets.
Market Development: Existing Products in New Markets.
Diversification: New Products in New Markets (Highest risk).
Real-World Strategic Industry Examples
Aircraft Manufacture Industry (Post-COVID-19 Perspective)
A380-800: Large-scale aircraft manufacture decision.
A320LR: Focused on long-range single-aisle efficiency.
737Max8: High-profile strategic and safety challenges.
Acquisition of Bombardier: Moves toward regional jet markets.
Acquisition of Embraer: Strategic consolidation efforts.
Retention of 747: Decisions regarding older, iconic fleet models.
Case Examples and Growth Types
Facebook with online dating: Product Development (New product for existing users).
Pizza Hut in the UK: Market Penetration/Development.
L’Oreal in India and China: Market Development (Existing products in new geographic markets).
Roses bag of chocolates: Product/Market variant strategy.
Bayer with Monsanto: Diversification/Market Extension through massive acquisition.
Sephora in Europe: Market Development.
Primark with online sales: Product Development (Moving to a new channel).
Royal Mail and WH Smith in the US: Market Development.
Diet Coke with ‘twisted mango’/‘feisty cherry’: Product Development.
Costco in China: Market Development.
Marriott with Homes & Villas (Bonvoy): Product development/Diversification.
Volvo/GM with Amazon: Collaboration as a strategic route.
Danone with WhiteWave: Diversification into plant-based products.
Positioning of a Given Company: Culture (Session 2.1.3.11)
Defining Positioning
Positioning focuses on the current position of the company, not future actions (which fall under strategic choice, implementation, or transformation).
Historically examined via SWOT analysis (covered in 2.1.1.3).
The Competency Statement specifically highlights three aspects: Culture, Technology, and Readiness to Adapt.
The Hierarchy of Strategic Analysis
Macro External Environment (International level).
Micro External Environment (Industry level).
The Company (Internal positioning).
Introduction to Organisational Culture
Brought into SMAL (Strategic Management and Leadership) for the first time in 2022 (previously solely in RMAS).
Charles Handy (1999) Definition: Culture describes the differing atmospheres, ways of doing things, levels of energy, individual freedoms, and personalities within an organisation. Organisations are as varied as nations.
Schein’s Iceberg Analogy:
Artefacts: Tangible manifestations of culture (visible).
Values: Ethical statements of "rightness" (semi-visible).
Basic Assumptions: Unconscious, taken-for-granted ways of seeing the world (invisible/deepest layer).
Models of Organisational Culture
Handy’s Four Types: Power, Role, Person, and Task.
Miles and Snow Typology: Defender, Reactor, Prospector, and Analyser.
Peters and Waterman Excellence Model: Includes attributes like a bias for action, staying close to the customer, autonomy, entrepreneurship, productivity through people, hands-on/value-driven approach, "stick to the knitting" (core focus), simple form/lean staff, and simultaneous loose-tight control.
Thompson et al. Cultural Strength: Maps culture as Strong/Weak against performance (High Performance, Adaptive, or Unhealthy).
Management Philosophy: Distinguishes between People focus, Market forces, Stakeholders, Shareholder focus, and Resource focus.
Positioning: Technology and Adaptability (Session 2.1.3.12)
The Importance of Technology
Technology is an essential "enabler" of modern strategy.
Recent Evidence: COVID-19 showed the necessity of technological infrastructure; the HSE (Health Service Executive) cyber attack in Ireland illustrated the dangers of technological dependency.
In exams, tech is often discussed when a company has ambitious plans but undervalued or incapable technological infrastructure. Example: Facel Facilities mini-case.
Readiness to Adapt
Adaptation is often forced by external shocks (e.g., COVID-19).
This section focuses on the readiness to begin a journey of change, rather than the process of change management itself (which is covered in session 2.3).
McKinsey’s 7S Model
Used to systematically assess an organisation's "fit" for a new purpose.
'Hard' Elements (Easier to influence):
Strategy: Plans to utilize competitive advantage; must be viable.
Structure: Organisational setup (e.g., hierarchical vs. flat, customer-focused).
Systems: Infrastructure for sustainment (e.g., remote working systems, online delivery).
'Soft' Elements (Harder to influence):
Shared Values: The core of the model; long-term beliefs (e.g., customer care vs. profit).
Style: Leadership style (e.g., hierarchy may hinder delegation-heavy strategies).
Staff: Capabilities and personnel; includes whether skills can be hired or need training.
Skills: Specific capabilities required (e.g., technological skills).
Analysing and Ranking Strategic Options (Session 2.1.4.3)
Exam Strategy for Ranking
Usually involves a mixture of limited quantitative and qualitative analysis.
Provides a "fresh pair of eyes" on the organisation's choices.
Evaluation: An option might be functionally "best," but is it affordable and does it align with risk? Affordability is a major factor in the FAS (Feasibility, Acceptability, Suitability) criteria.
Ranking Mechanics: Focus on identifying the clear best and clear worst options; do not over-analyse the middle options. Avoid over-thinking; use instinct and watch for options that are "too good to be true."
Case Example: Halfords
Options identified:
Moving into bike sales (potential to alienate motorists).
Moving into fitting parts (potential to alienate mechanics).
Location in retail parks (travel distances for customers).
Sale of satnav and in-car camera systems (price point sensitivity).
Order basis for specific items like wheels and mats (customer patience for lead times).
Questions & Discussion
Knowledge Check: Positioning
Question: Are the three business issues (Culture, Technology, Readiness to Adapt) the only sources of competitive positioning?
Answer: False. There are many other issues that feed into SWOT analysis.
Question: Are these three issues increasingly important in competitive positioning?
Answer: True.
Practical Reflection
Students are encouraged to record their own bank of examples for the three positioning aspects (Culture, Technology, Adaptability) for companies they are familiar with, such as John Lewis (zero-hour contracts), Tesco/SuperValu (online grocery), Sephora (personalized marketing), or Michelin (bottom-up culture).