Notesale: Turn your study into money

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Scenario Planning – (Wack 1985) suggests scenario analysis is a
way of accepting uncertainty and incorporating it directly into the
forecasting process
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Some factors are precise and
predictable some are not (eg
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The SRI Method
consists of 8 steps: 1
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Identifying key decision factors, 3
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Analysing the environmental forces, 5
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Elaborating the scenarios, 7
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Analysing implication for decisions and strategies
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Relies on an experienced scenario
team who are committed to the process and are credible members of
the company
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Weaknesses – relies strongly on the reputation and
communication skills of the team members and is less likely to be
successful in a modelling or scientific environment which would
require a more quantitative approach
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The Futures Group approach
(specialist strategic planning company) – 1
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Create scenario space, 3
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Prepare naïve exploration, 5
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Establish probabilities of
events occurring over time, 7
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Write narratives
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Weakness
– Does not evaluate possible impacts which the events may have on
each other
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Method- identify
possible events and cross analyse them
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Looks at a wider range of outcomes
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Scenarios are tools got improving the decision-making process
against the background of possivle future environments
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The new approach features: focused
scenarios, competitive positioning, strategic vision, and options
management
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Shell build
scenarios at 3 levels global, country or business and individual
project level
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These often fail to consider variety and surprise
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These forecasts fail to anticipate major shifts in the business environment
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Allows organisations to explore a range of plausible
future environments which can improve strategic decision making and a firms
competitive advantage because it alerts managers to potential threats and
opportunities that other firms haven’t prepared for
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Suitability – first determine if the strategic choices are suitable and compatible
within the current and expected external environment
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Feasibility – focuses on whether the organisation has the resources to
pursue the strategic choice
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The 6m model can be used to identify this: money, machinery,
manpower, markets (customers), materials (suppliers), make-up (structure and
culture)
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Building scenarios managers must start by defining the scope of the scenarios
in order to ensure the planning is sufficiently focused
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Then make
use of the basic trends arising from analysis of the macro-environment
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Delphi technique can be used at this stage to overcome organisational bias and
improve chances of predicting low probability events
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A merger means a combination of two companies (of similar size) to form a
new company
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Can be paid
for in cash, stock or dept
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Friendly acquisition –
board of directors approve before it goes through
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They are used to create value in economies of
scale and scope
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Product extension –
complementary products
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M&A – requires the merging of two different cultures which can sometimes
prove a problem
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Huang & Kleiner (2004) – State that although M&A’s today are carefully
designed to ensure a better strategic fit between two companies, the task of
integrating the companies remains difficult
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Culture Coopers and Lybrand 1992 – in 100 failed or troubled mergers, 85% of
executives who were surveyed said that the major problem was differences in
management style and practises
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However,
Southwest Airline’s acquisition of Morris air was successful due to it being
committed to exploring cultural compatibility (Galpin & Herndon 2000)
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A prolonged transition adds cost, destroys profit and decreases cash
flow
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Clarkson et al 1997 – found that employees feel
uncertainty when things move slowly
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Everyone is suffering from the unknown
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DePamphilis (2003) Diversification refers to a strategy of buying firms
outside of a company’s primary lines of business
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To shift from their core product line or markets to into ones that have
higher growth prospects
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They may also develop new products, untested in the market
and selling them into familiar, less risky current markets
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Chakrabariti et al 2007 found that not all firms improve their performance
through diversification
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They
also found that diversification (in terms of product/service and
geographical) require assimilation of extensive knowledge of new
product/service development, cultures in the new market and transfer of
resources between parent and partner companies

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