SUBJECT MAP AND CONCEPTS | 3 Module 2: Understanding the external environment Module 2 provides an approach to understanding the external environment within which the organisation operates. Understanding how an industry has developed and the key trends driving its growth and profitability are critically important in the development of strategy. Equally important is the need to understand the concept of blue ocean strategy in new customer markets, the basis of competition in the industry, the competitive positioning of industry competitors and what it takes to succeed in the competitive environment. With this knowledge, it is then possible to evaluate the organisation’s choice of strategy— the subject of Module 3. Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 2 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions What is the ‘industry’ of analysis? How can it be defined? How broad or narrow is it? • Industry definition What’s the typical way products or services in this industry get to the customer? Who are all the different types of organisations involved? Where does my organisation sit within this chain? • Industry value chain What are the industry segments? Are any growing faster than others? Are any declining more quickly than others? • Industry segmentation • Historical data analysis What stage of the industry life cycle is the industry in? How well developed/established is the industry? Are all the segments in the industry at the same stage of the life cycle? • Industry life cycle stages (start-up, growth, maturity, shake-out, decline or renewal) • Historical data analysis What have been the key factors influencing past growth in the industry and what is expected to drive future growth? • PESTEL (political, economy, social, technology, environment, legal) What are the forces that determine the profitability of the industry? What therefore is the current and expected profitability of the industry? How are the forces changing and so will the industry be more or less profitable than today? • Porters five forces of industry competitiveness (new entrants, suppliers, buyers, substitutes, industry rivalry) Who are the customers for the products and/or services of the industry? How are they defined? • Linking markets to industries • Customer market segmentation How can blue ocean strategy be used to find new customer markets? • Search for uncontested space • Four action framework On what basis do providers in the industry compete? What are the key success factors for them to be able to successfully compete? • Industry definition • Value chain • The basis of competition • Industry key success factors • Competitor analysis worksheet • Strategic groups Note: Some of the models and concepts provide input into answering more than one question.4 | GLOBAL STRATEGY AND LEADERSHIP Module 3: Understanding the internal environment Module 3 provides an approach to understanding how the organisation is performing in terms of factors within its control and in the context of the remote industry environment within which it operates. Identification of key stakeholders and determining their needs and whether these are aligned to the organisation is a critical first stage. Assessing performance requires an understanding of strategic, operational and organisational/people drivers as well as a baseline from which to determine relative performance with identified competitors, and also a goal for where the organisation wants to be. This then makes it possible to identify any gaps in performance between the current and desired performance. An organisation also needs to understand what its capabilities are—i.e. what it’s good at. With the information about an organisation’s performance and its capabilities in the context of the remote environment, it is then possible to develop and evaluate options for what the organisation might be able to do to address any gaps in performance. Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 3 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions Who are the organisation’s key stakeholders, and what are their expectations of performance? • Key stakeholder requirements At the business unit level, what are the organisation’s strategic drivers? • Strategic drivers approach to business performance assessment (industry and markets, products and services, customers, channels, competitive advantage and generic strategy) What are the organisation’s operational drivers— measuring organisational performance? • The shareholder v. the stakeholder view • Performance measures • Benchmarks How is the organisation performing? • The balanced scorecard (financial, customer, internal and learning and growth) What are the organisation’s people & organisational drivers—values, innovation and learning, capabilities • Values • Innovation and learning • Capabilities What is the organisation good at? What capabilities does it have? Does anything it does provide a unique competitive advantage? • Strategic capabilities • SWOT analysis (strengths, weaknesses, opportunities and threats) Where is the organisation not performing relative to where it wants to be? • Gap analysis Note: Some of the models and concepts provide input into answering more than one question.SUBJECT MAP AND CONCEPTS | 5 Module 4: Product and market development Module 4 provides an overview of some of the business options that organisations have to achieve their strategy. In particular, Module 4 explores in detail what is required for the product and market development options including the capabilities required to implement these options and the various options for new market development that is available. Accounting issues in expansion to new markets is also important to consider. Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 4 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions What are the key growth options available to the organisation? What are the risks associated with each option? What’s the best order for them to be done in? • Ansoff product/market matrix (market penetration, product development, market development, diversification) • Other alternatives to products and markets Why is innovation so important and how does it link into new product development? • Competitors keep progressing, so doing nothing is going backwards. • Innovation is the art of introducing something new. • Strategic alignment and a culture that supports innovation is crucial. What is new product development and what is needed to be successful in new product development? • Key success factors for new product development • Stages of the new product development process • Intellectual property protection • Intellectual property considerations What is new market development and what is needed to be successful in new markets? • Strategic objectives of market entry • Assessing market attractiveness • Market development resources • Key success factors for new market development What are the different ways an organisation can enter new geographic markets? • Common modes of entry (exporting, licensing, franchising, joint ventures, strategic alliances, wholly owned foreign enterprises, mergers and acquisitions, greenfield operations) What are the various pros and cons of the different market entry modes? What’s needed to be successful for each? • Common modes of entry (exporting, licensing, franchising, joint ventures, strategic alliances, mergers and acquisitions, greenfield operations) What are the key accounting issues associated with different geographic markets? • Accounting issues in new market entry (foreign exchange, multiple accounts, reporting dates, IT systems, business standards, taxation, transfer pricing) Note: Some of the models and concepts provide input into answering more than one question.6 | GLOBAL STRATEGY AND LEADERSHIP Module 5: Developing the strategic plan Module 5 discusses an approach for strategy development based on an adaption of the ‘Current Performance Assessment’ framework that was shown in Module 3. The development of the strategy will include evaluating the strategic options so that an organisation can decide which option or options to implement. The approaches used for evaluation draw together information and analysis which were covered in Modules 2, 3 and 4. This module also covers turning the strategic options into a strategic plan for implementation. Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 5 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions How are the strategy components aligned? • Vision, Mission, Values: what do we want to be? • Goals, strategic themes: how do we articulate that, what is success? • Strategic projects: how do we implement it? How does an organisation develop the strategy? • Strategic options and levers How do you prioritise the options available in terms of size and potential organisational impact? • Value/effort assessment • Product and market evaluation criteria (size and value, growth, profitability, distribution access, value proposition, capabilities, resources, capacity, service, risks) How do you assess the risks inherent in the possible options and their implementation? • Risk management framework • Identifying risks • Risk rating: consequences and likelihood • Risk assessment (understanding risk, types of risk) How does an organisation develop strategic themes and why? • Strategic themes are groupings of strategic options • Making the choice of which options to pursue How do you decide from the shortlist of themes developed which are the best strategic fit? • Rumelt’s criteria (external consistency, internal consistency, feasibility and competitive advantage) How do you articulate the strategic actions and decisions? • Creating the strategic plan Note: Some of the models and concepts provide input into answering more than one question.SUBJECT MAP AND CONCEPTS | 7 Module 6: Strategy implementation Module 6 focuses on transforming the strategy into action by a focus on the dynamics of implementation and change management: how to implement strategy, the challenges of implementing strategy and using change management to implement strategy, Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 6 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions How is strategy implemented? • Strategic implementation steps • Program and project management How does an organisation successfully lead change management? • Key elements for successful change • Key steps of change • Kotter’s 8 step process for leading successful change Why does strategy implementation fail? • Why change is hard • The challenges of implementing strategy Note: Some of the models and concepts provide input into answering more than one question.8 | GLOBAL STRATEGY AND LEADERSHIP Module 7: Leadership and decision-making Module 7 discusses the role of leaders in the strategy development and implementation process to drive the strategy, drive the change and align the organisation’s structure, resources and culture with the strategy, An introduction to the topic of leadership is provided, and the importance of transformational and strategic leadership discussed, as is the need to align the organisational life cycle position to the strategic leadership style. Some key questions candidates should be able to answer using the concepts, models and approaches described in Module 7 include the following. Key questions Concepts/models/approaches that can be used to answer the key questions How are leadership and ethics related and what is leadership? • Leaders as role models who establish and shape ethics and values • Definition of leadership • Roles of leaders and managers What’s the role of the leader? • Hierarchy of leadership (level 1 to level 5) • Transformational leadership • Strategic Leadership What type of leadership is required at different stages in the organisational life cycle? • The organisational life cycle and strategic leadership styles How should strategic decisions be made? • Rational approach to decision making What are the roles leaders play in strategic thinking and decision making? • Leadership styles • Balancing stability and change What is the role leaders play in strategic analysis? • Role in external analysis • Role in internal analysis What role do leaders play in strategy formulation and implementation • Importance of communication • Developing future leaders Note: Some of the models and concepts provide input into answering more than one question.