Strategic management from theory to implementation (4th ed) part 2
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Strategic management from theory to implementation (4th ed) part 2
Part 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 ly stage in strategic thinking, and one where it is very easy Io end up with meaningless lisls of so-called strengths and weaknesses. The chapter will explore five ways of looking at strengths and weaknesses: assessment by managers, often resulting in what many books call SWOT analysis; equilibrium Strategic management from theory to implementation (4th ed) part 2 analysis, which is one way of forcing managers Io make a more careful consideration of strengths and weaknesses: a process to ‘audit’ the facts, drawiStrategic management from theory to implementation (4th ed) part 2
ng conclusions from a detailed analysis of I he organisation; the critical success factor approach; and the core competency approach. For each method,Part 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 tegic management and has looked ar rhe process of planning in relation to a changing environment. It is now time to concentrate on a very specific step in the process - the assessment of corporate strengths and weaknesses. Planning literature refers to this important stage under various headings: th Strategic management from theory to implementation (4th ed) part 2 e corporate appraisal, the position audit, and assessing the present position'1*. The particular terminology used is not important: die action itselfStrategic management from theory to implementation (4th ed) part 2
is vital.The corporate appraisal should be one of rhe first steps in the process of preparing strategic plans, and should provide both the platform frPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 p is rather like trying to reach the lop floor of a building without using the stairs or lift: the ascent is possible, but is highly dangerous and calls for much more effort. Omission of the basic step may lead the company to adopt the wrong strategy, to take decisions which at best restrict its ach Strategic management from theory to implementation (4th ed) part 2 ievement of its highest potential, and at worst lead it on the road to ruin.163In many ways the corporate appraisal may be one of the most difficult sStrategic management from theory to implementation (4th ed) part 2
tages lop management has to face. Il sometimes means striking at the established practices and business areas of the company. It means facing up to unPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 er. It can easily be considered as criticism by managers and accordingly resented. This is the area in which emotional responses may easily be roused. It is probably for these reasons that most companies which have a process of strategic planning - except when they have installed it with the aid of Strategic management from theory to implementation (4th ed) part 2 an outside management consultant - will confess to have cither omitted this step entirely or glossed over it so brusquely that they pay only lip serviStrategic management from theory to implementation (4th ed) part 2
ce to the concepts.It is by no means unknown for a company to take stock of itself without practising any form of formal planning. Cost reduction areaPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 ignments are carried out in many companies by management consultants. It is perhaps because so many of the elements of the corporate appraisal arc long-established management procedures that many books on planning do not dwell very much on the process of the corporate appraisal. Nearly all stress th Strategic management from theory to implementation (4th ed) part 2 e need to assess strengths and weaknesses, but few give any indication how to set about it. The word ‘strategy' conjures up visions of daring action oStrategic management from theory to implementation (4th ed) part 2
n the corporate battlefield; the driving off of competitors; the subjugation of another company through acquisition perhaps it even becomes the prize Part 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 rojects. These emotive phrases may describe where strategy will eventually evolve. They arc certainly not the starling point. And it is perfectly possible for a company to produce a sound strategy that is based almost entirely on opportunities uncovered during the corporate appraisal.I like to think Strategic management from theory to implementation (4th ed) part 2 of die corporate appraisal as a process of establishing the corporate identity. There is a direct comparison between the guidance offered by a careerStrategic management from theory to implementation (4th ed) part 2
counsellor to an individual person, and the use of the corporate appraisal by a forward-thinking management. No good career counsellor would considerPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 al about the aspirations, ambitions, education, general intelligence, abilities, experience, and personality of the person being helped. Instead of a name he or she begins to deal with an identity; a real person who can be matched to a career which will complement his or her own individual and perso Strategic management from theory to implementation (4th ed) part 2 nal characteristics. So it is with rhe company. A superficial list of ‘opportunities' can he produced in five minutes for any company. And it will proStrategic management from theory to implementation (4th ed) part 2
bably be worth less than the rime spent thinking about it. Instead the corporate identity should he established, and this unique combination of skillsPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 cted with the future in mind. Much of it will, of necessity, be equivalent to a photograph of the current position, but there will be many areas where it is possible to extend this static picture into the future. The appraisal should be designed to help solve the problems of tomorrow and.164wherever Strategic management from theory to implementation (4th ed) part 2 possible, should be made dynamic rather than static. Pie fact that a particular product today contributes 80 per cent of profit is interesting: it beStrategic management from theory to implementation (4th ed) part 2
comes much more interesting when linked to information about competitive activity, and whether it is in a declining or growth market. Although at thisPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 tify them. Drucker3 stresses that it is as important to identify ‘tomorrow's breadwinners' as it is to identify today's. Il is because of this future-oriented outlook that I believe the term 'appraising the company’s present position' to be a poor description of what should happen.No company in the Strategic management from theory to implementation (4th ed) part 2 world, however profitable, can afford to neglect opportunities for cost reduction and profit improvement. (It may deliberately opt not to implement thStrategic management from theory to implementation (4th ed) part 2
em, but this is decision, nor neglect.) Although the main purpose of rhe appraisal has to do with rhe future, rhe immediate profit potential which ariPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 ty is a positive way of removing a weakness and avoiding the perpetuation of an unsatisfactory situation, and any additional contribution to cash How reinforces the company’s ability to exploit new opportunities.There arc several ways in which an organisation can set out to undertake a corporate app Strategic management from theory to implementation (4th ed) part 2 raisal, although none of them arc mutually exclusive. Although the aim of this chapter is to focus on rhe internal elements of rhe analysis, in realitStrategic management from theory to implementation (4th ed) part 2
y rhe strengths and weaknesses should nor be completely separated from rhe opportunities available to and rhe threats facing rhe organisation. It is aPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 o chapters on industry and competitor analysis arc also relevant to the final conclusions that should be drawn from a corporate appraisal. In this chapter it will be necessary to stray a little from a total focus on strengths and weaknesses, but as far as possible we will keep to the internal elemen Strategic management from theory to implementation (4th ed) part 2 ts. But remember that in the end it is rhe marker which is important.The five ways of looking at strengths and weaknesses are:•Assessment by managers•Strategic management from theory to implementation (4th ed) part 2
Equilibrium analysis•An analytical method which assesses the key facts, from which strengths and weaknesses can be determined•The critical success facPart 3The Making of StrategyCHAPTER 9The corporate appraisal - assessing strengths and weaknessesThe assessment of strengths and weaknesses is an earl Strategic management from theory to implementation (4th ed) part 2 ty of names. It has been called SOFT (strength, fault, opportunity, threat). SWOT (strength, weakness, opportunity, threat). TWOS, TOWS, and WOTS165UP (the final letters standing for underlying planning). The end product is a list, frequently presented on one sheet of paper, under the headings in th Strategic management from theory to implementation (4th ed) part 2 e order suggested by the acronym. The s and w are the internal elements, and the 0 and T come from the external environment, including the competitorsStrategic management from theory to implementation (4th ed) part 2
and the market. Such a list usually leads into either action plans or projects to put things right.Of course, a list of this nature may well be generGọi ngay
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