Global Strategy & Leadership Semester 2 2013

Glossary

7-­‐S model Tool for testing whether a proposed strategy will achieve its aim by asking whether it is in alignment with the following major areas: Strategy, Structure, Systems, reSources, Skills, Style and Shared values. Ansoff product-­‐market matrix Framework for considering possible alternatives and options for an organisation’s growth based on the product and market focus Balanced scorecard Performance management tool organised around four distinct perspectives which balance short-­‐term and long-­‐term performance, external and internal performance, financial and non-­‐financial performance and different stakeholder perspectives. BCG (Boston Consulting Group) Matrix Tool to assess the organisation’s products in terms of market growth and the organisation’s market share, making it easier to identify any promising product areas that are either core to the organisation or the market, or well positioned for growth. Behavioural approach Suggests that leaders can be trained, as opposed to having the traits of leadership at birth (traits approach). Blue Ocean Strategy Creation of new, undiscovered markets through innovative activities. Business ethics Rules of conduct, basic values and ethical principles of an organisation and its practices. Business strategy Strategy of each business unit into which the organisation has diversified (the focus of this segment). Change management Designed to ensure the effective transition of an organisation and its people from the current to future states, and in so doing support the realisation of the expected business benefits. Classical view of ethics The classical view proposes that for an organisation to pursue values other than profit, it is then confronted with a threat to survival and therefore, unjustly undermines the intentions of its owners. Competitive advantage The operations or offerings of an organisation that are unique and offer value where competitors do not. Competitive positioning matrix A tool that allows an organisation to assess its positioning within an industry relative to its competitors. Competitive strategy Performing different activities from rivals or performing similar activities in different ways. Corporate social responsibility Obligation of organisations to minimise their negative effects on society, and account for their economic, social and environmental outputs. Corporate strategy Strategy of the organisation and its businesses overall.

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Global Strategy & Leadership Semester 2 2013

Glossary

Creative destruction The intentional destruction of past processes and behaviours to then re-­‐create and implement the future and desired state. Current performance assessment framework Provides a method for what to assess and how to assess it to determine an organisation’s current operating environment and performance, using both qualitative and quantitative data. Customer market segment The division of an organisation’s customers into groups or segments so as to organise their operations in a way that responds effectively and efficiently to the requirements of different customer markets Differentiation generic strategy Doing something different from competitors, or doing it better. Discretionary spend The amount of money a person can spend voluntarily on items that are not a necessity (food, shelter etc.). Disposable income The amount of money a person has for spending and saving, after income tax has been deducted. Evolutionary approach to strategy Market forces, rather than managerial actions, will determine which organisations will survive and prosper and which will fail. Markets are too unpredictable and uncontrollable for planned strategies to be effective. Export Mode of entry into a foreign country where goods made or found in one country are sent internationally for further trade or sale. Extended SWOT Analysis tool to reveal initiatives that take advantage of the strengths of an organisation in the context of opportunities that may have been identified. Equally, it can be used to identify defensive strategies to protect the organisation from external threats where it has a recognised weakness. External environment Factors outside the organisation that has the potential to impact and/or influence the organisation’s business strategy. The external environment is everything external to the organisation, including but not limited to: markets and industries, political forces, regulations, environmental issues, society, technology and a variety of other factors. Five Forces Model (Porter's five forces) A technique for analysing forces that affect industry profitability. Focus generic strategy Concentrating on the needs of a small part of the market and providing a product or service that meets their needs better than the standard product or service. Four actions framework Tool in shifting organisational focus toward innovative, blue ocean strategies. An organisation must be able to tackle these four actions: reducing, eliminating, raising and creating. Franchising Mode of entry into a new geographic market where an organisation (franchisee) allows another organisation (the franchisor) to have access to proprietary knowledge, processes and intellectual property in order to allow the franchisor to operate under the business’ name.

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Global Strategy & Leadership Semester 2 2013

Glossary

Functional strategy Strategy of each of the functions of the organisation. Aligns with business and/or corporate strategy. Gap analysis Qualitative analysis tool that identifies gaps between any two elements chosen. Goals Defined and specific outcomes sought, which the organisation must excel at to achieve its mission. If achieved, the outcomes will help an organisation achieve its ultimate mission and then vision (see also SMART goals). Growth web Tool used to organise thoughts and events about historic and future growth opportunities of an organisation. Industry The grouping of similar economic or commercial activities that produce goods or services. Industry environment analysis Factors within the industry that affect its profitability and the competitive position of organisations within it. Consideration of the ‘industry’ includes not only the organisation and its competitors, but also their buyers and suppliers, substitutes, potential new entrants etc. (Five Forces Model). Industry key success factors Factors in all industries that are critical to the success of an organisation, for example: strong brand names, efficient distribution networks, effective brand support, marketing and strong merchandising. Industry life cycle The industry goes through a start-­‐up phase, a growth phase, a maturity phase (usually by far the largest phase), shake-­‐out and a decline phase. Innovation The process of creating a new product, service, process or other idea for an organisation that will result in increased customer value and/or positive changes in efficiency, quality, competitiveness, market share etc. Intellectual property Unique, value-­‐adding creations of the human intellect that result from human ingenuity, creativity and inventiveness. Joint ventures Mode of entry into a new geographic market where an organisation forms an agreement with another organisation(s) to pool resources in order to achieve an outcome and leverage the other organisation’s capabilities. Level 5 leadership Highest level of leader in Collins’ theory, illustrating a leader who displays the qualities of personal humility and fierce resolve. Licensing Mode of entry into a new geographic market where an organisation (the licensor) grants rights to another organisation (the licensee) in a country or region for a period of time. Low-­‐cost generic strategy Producing the product or service at a cost cheaper than competitors. Market attractiveness Size value, growth and profitability of a market.

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Global Strategy & Leadership Semester 2 2013

Glossary

Markets Within an industry, there are often several ‘markets’, a ‘market’ being defined as a group of consumers with similar needs, or a geographic area with a targeted focus. Mission The outcome of applying the ‘what’, ‘where’ and ‘when’ elements to the vision so as to provide clear and concise direction for organisational progress; the mission should be the vision in a developed form. Operational effectiveness Performing similar activities better than rivals perform them. Operational levers The levers of revenue, cost and growth that help to achieve the strategic options through the organisation’s operations. Organic growth Growth of an organisation by increasing output and sales, from its own resources. Organisational and people levers The levers of structure, skills and capabilities that help to achieve the strategic options through the organisation’s operations. Organisational design A broader concept than just the corporate structure of the organisation and can also be understood as the configuration of an organisation’s structures, processes and relationships through which the organisation operates. Paralysis by analysis Failure to implement strategy due to too much focus on analysis and formulation at the expense of considering the way in which resources are allocated and the way in which operational decisions are made. Performance management A process and activity that is critical to the task of implementing strategy. Encompasses the goals, action plans and measurement systems that are required to execute and control the strategy process. PESTEL Framework of political, economic, social, technological, environmental and legal factors that influence industry growth (remote environment analysis). Processual approach to strategy Strategy formulation and implementation viewed as entangled activities, and not separate stages, as argued in the rational approach. Program A temporary flexible organisation structure created to coordinate, direct and oversee the implementation of a set of related projects and activities in order to deliver outcomes and benefits related to an organisation’s strategic objectives. A program is likely to have a life that spans several years. Program management The management of a group of projects sharing common strategic goals, managed in a coordinated way so as to realise benefits otherwise not available by managing projects as separate entities. Project A temporary organisational structure that is created for the purpose of delivering one or more business outputs according to a specific business case.

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Global Strategy & Leadership Semester 2 2013

Glossary

Project management The management of a temporary endeavour, having a definite beginning and a definite end, undertaken to create a unique product or service. Qualitative analysis Subjective analysis techniques that use non-­‐numerical information (SWOT, Gap). Rational approach to strategy The development and execution of strategy treated as discrete, sequential activities: clear vision, development of options, establish goals and implement. Remote environment analysis Includes those general influences that affect an industry. Remote environment issues affect many industries, but we are concerned with their effect on the growth of the particular industry we are analysing (PESTEL). Risk management framework A method to follow that allows you to identify risks and assess the impact of the risk, if it occurs (identify risk issues, determine possible causes, determine possible consequences, determine current likelihood, determine risk rating). Rumelt’s criteria Criteria for evaluating the strategic themes: external consistency, internal consistency, feasibility, and competitive advantage. Shareholder view Argues that organisations exist for shareholders. SMART goals The characteristics required for clearly defined and achievable goals. They are specific, measureable, achievable, realistic and timely. Socioeconomic view of ethics In contrast to the classical view, the socioeconomic view argues that the leaders of organisations have a responsibility to the society that creates and sustains them. Stakeholder power-­‐interest grid Tool used to enable an organisation to assess the varying levels of interest and power of each stakeholder group. Stakeholders Any person/group of individuals, internal or external to the organisation that has an interest in, or impact on the business or corporate strategy of the organisation. Stakeholder view Considers the organisation as existing to serve the needs of stakeholders, that is, measuring output or activity, not dollar outcomes. Strategic alliance Mode of entry into a new geographic market where a formal, mutually agreed upon, commercial collaboration between organisations is formed. While partners of the alliance exchange and/or integrate selected business resources for mutual benefit, they remain separate, entirely independent businesses. Strategic capability Is the resource or capability valuable? Is the resource or capability rare? Is the resource or capability costly to imitate or replicate (and difficult)? Is the resource or capability non-­‐substitutable?

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Global Strategy & Leadership Semester 2 2013

Glossary

Strategic drift When an organisation’s changes to strategy are insignificant and therefore the organisation gradually loses relevance to the environment in which it operates. Strategic drivers The factors that differentiates an organisation from its competitors: markets, customers, products/services, channel; and competitive advantage. Strategic fit Matching an organisation’s resources and capabilities with the current opportunities in the external environment. Strategic groups Different groups that consist of competitors following a similar strategy in a similar product-­‐market classification, whereas other organisations in the industry have either a different strategy or a different target product market. Strategic inertia When an organisation fails to adjust according to changing circumstances. Strategic option They are the categories of markets, products/services, customers, channels and competitive advantage options that can be pursued to allow the organisation to differentiate itself from competitors and determine how it will compete in the future. Within each strategic option, a number of options can be developed to guide the future state of that broader strategic option. The options answer the question: ‘Where are we going by when?’ Strategic options and levers framework Three pillars representing the strategic options available to the organisation, and the two levers that need to be pulled in order to assist in achieving these options. Strategic planning The concept that formal planning is the method to formulate an effective strategy. Strategic stretch To think differently and more broadly as to how you may traditionally visualise or act in regards to developing alternative products and services, or exploring new ways of operating to provide existing products and services. Strategic themes The core themes developed from the chosen options that will form part of the final strategy. Strategic thinking Linking concepts to operational practices and being able to understand and articulate the ‘big picture’ in terms of an organisation’s potential strategic directions and developments. Strategic thinking is concerned with developing a conceptual understanding of how the various parts of an organisation operate, both internally and in interaction with the environment and stakeholders outside the organisation. SWOT analysis Qualitative analysis tool that identifies for analysis the strengths, weaknesses, opportunities and threats of an organisation in its current state. Systemic approach to strategy Builds on the importance of culture and politics in the strategy process, arguing that strategy is embedded in the cultural values, norms and rules of the organisation and the society in which it operates. Traits approach Is based on the theory that leaders are born with particular qualities that will produce patterns of behaviour to make them successful leaders over time. It argues that there is a biological basis for leadership. Page 6 of 7

Global Strategy & Leadership Semester 2 2013

Glossary

Transactional leadership Leadership that focuses on the current activities and maintaining efficiencies in the current environment. Transformational leadership Leadership that is required where a change in the mind-­‐set of the organisation is required, or where the shared beliefs, values and culture of an organisation need to be completely transformed. Unrelated diversification Diversifying products or services offered into unrelated products and markets of the current organisation. Value chain (industry) Comprises the business processes, people, organisations, intellectual property, technology and physical infrastructure that transform raw materials or talents into finished goods and services, which are offered and distributed to the consumer to satisfy demand. New ‘value’ is created at each stage of the chain from the activities and processes undertaken in that component of the chain. Value/Effort assessment Tool that is used to assess, narrow down and prioritise the strategic options that have been developed. Values Guiding principles that direct the organisation’s journey and help prioritise the goals that are to follow. Vertical integration Involves moving up or down the value chain to gain strategic control of an aspect of the value chain. Moving ‘up’ the system is called ‘backward integration’—this involves either acquiring control over suppliers or developing new supply operations. Moving ‘down’ the system is called ‘forward integration’—this involves either gaining control over customers or developing new customer outlets and distribution operations. Vision A sweeping, yet succinctly articulated description of an organisation’s ideal future state, but does not include the specifics of how the organisation will achieve this.

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