CIMA Strategic Case Study
Theory and the Strategic Case Study
Section A – CIMA E3
Chapter 2
Formulating a business strategy
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CIMA Strategic Case Study
Theory and the Strategic Case Study
1. Business strategy
Strategy
A strategy is a plan of action designed to achieve a goal or objective. The
aim of a strategy is to gain some kind of competitive advantage or to help to
exploit future opportunities.
A strategic plan tends to be an overall guide to the way forward rather than
a detailed step by step approach due to the tendency of the real world to
be uncertain. In the example of a chess game, a ‘strategy’ provides the
over-riding approach that the player will take to win the game, but the
exact set of moves they undertake will vary depending on the opponent’s
moves.
Strategy in business
Applying this to a business scenario, according to the CIMA official
terminology a business strategy can be defined as:
"A course of action, including the specification of resources required, to
achieve a specific objective"
Or, more complete definition is given by Johnson, Scholes and Whittington
as:
“The direction and scope of an organisation over the long term, which
achieves advantage for the organisation through its configuration of
resources within a changing environment, to meet the needs of the markets
and to fulfil stakeholder expectations”
Business strategy therefore is concerned with the overall management of an
organisation and includes the management of and taking decisions about:
a)
Products
b)
Markets
c)
Locations (production and sales)
d)
Structure
e)
Personnel
f)
Buildings and machinery
g)
How to compete
It is vital that you have fully analysed the strategy for your preseen
company and decided on how you would take this company forward if you
were advising a director of this business.
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CIMA Strategic Case Study
Theory and the Strategic Case Study
2. Approaches of Strategy Formulation
There are a number of different approaches to the development of
strategies within organisations.

Planned strategies

Emergent strategies

Incrementalism

Opportunism
These will be examined one by one in the following sections.
Planned Strategies
Strategies can be consciously and formally planned in advance, either by the
directors or by a specialist department. This provides a clear, justifiable
strategy based on the information available about the company’s current
position, environment and competencies. As such the strategy developed
should be well thought through and effective.
Planned strategies are often used in large organisations, and are particularly
suitable where the industry is subject to relatively little change.
Emergent Strategies (Mintzberg)
Emergent strategies are strategies which emerge out of the course of the
business rather than having been formally planned. They could perhaps be
due to opportunities which present themselves (e.g. a competitor comes up
for sale) or threats which need to be addressed (e.g. a competitor develops
a new product and the company must follow suit to remain competitive).
Emergent strategies can be combined with the successful elements of the
planned strategy to define the way forward for the business. The process of
bringing these together is called crafting a strategy.
Incrementalism
In fast changing environments it may be unrealistic to effectively undertake
the full strategic planning process. Instead it is more practical to develop a
short term strategy based on the consensus of opinion of major
stakeholders.
An incrementalist approach was adopted by many businesses during the
economic downturn of the late 2000s as uncertainty made it hard to make
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CIMA Strategic Case Study
Theory and the Strategic Case Study
accurate long term predictions. The strategy is then developed regularly
using a series of small scale changes as dictated by the changing
environment. A shorter term ‘middle ground’ view is taken that ‘satisfies’
all groups.
Freewheeling Opportunism
In this model there is no formal approach to strategy development.
Directors dictate the business direction through taking whatever
opportunities are available at a particular point in time. This allows the
business to be very flexible and take opportunities that companies using a
more formal approach to strategy development would be slow to take.
Freewheeling opportunism is most common in small companies with an
entrepreneurial leader who can direct and focus their organisation down
each new track based on the opportunities they identify and wish to pursue.
The lack of formal processes makes change quick and easy.
Application to the preseen: Strategic approaches
For your case study consider the following, either completing your answers
in the gaps below the questions or on a separate piece of paper:
Which strategic approach as been used by the company in the past?
What strategic approach is currently being used?
What strategic approach do you believe it would be best for this company
to use in the future?
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CIMA Strategic Case Study
Theory and the Strategic Case Study
3. Mission
What is the organisation all about? Why does it exist? Who does it exist for?
What is it trying to achieve? An organisation’s mission answers these
questions.
A mission helps to provide:
Common purpose – so everyone is clear what the purpose and values of the
company are to help guide the company’s culture
Focus for the strategy – strategic decisions can be based upon and reviewed
against their consistency with the mission to ensure the organisation does
not get off track or lose focus on its true values and purpose.
Direction for objectives – to ensure alignment of activities towards
achieving objectives which are consistent with the company’s purpose.
Mission Statements
A mission statement is a written statement of the company’s purpose,
strategy, values and policies.
Campbell set out the following key elements of good mission statements:
Purpose

Why does the organisation exist?

For whom does it exist?

What does the organisation hope to achieve long term?
Strategy

How will the organisation compete?

The range of businesses it is operating within.
Values

What the organisation stands for (quality, value for money,
innovation etc.)
Policies

Policies people are expected to follow which will ensure people act
according to the defined values, strategy and purpose.
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CIMA Strategic Case Study
Theory and the Strategic Case Study
Application to the preseen: The Mission Statement
Is a mission statement provided for your case study company? If so note
it below:
If no mission statement is given, consider what information is given under
Campbell's key headings:
Purpose
Strategy
Values
Policies
4. Objectives
The purpose of objectives
A mission is non-quantifiable i.e. it provides an overall direction and
purpose rather than being directly measurable. This means it is very hard to
measure its success and it is not a good tool for motivating staff since
targets are unclear.
For a mission to be effective, it needs to be supported by clear, measurable
objectives which provide targets for directors and staff, and hence
motivates and provides focus for them.
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CIMA Strategic Case Study
Theory and the Strategic Case Study
They also perform an important role in performance measurement as
organisational and individual performance can be assessed by how
effectively they have achieved their objectives.
Qualities of effective objectives
To be effective objectives should have the following qualities:
Specific – about a clear focused topic e.g. profit, sales, customer
satisfaction, new product development.
Measurable – able to be measured to ensure people can be held accountable
for them, and to give people focus. e.g. Turnover from new products
launched.
Achievable – To ensure they are motivational to those people tasked with
working towards them and to make rewards attached to them meaningful.
Relevant - to the person/division who has been set the objective, and
consistent with the organisation’s mission. E.g. New product launch
objectives might be given to the research and development or marketing
departments.
Timebound – to provide a deadline to focus and motivate people towards,
and ensure accountability at that date
Application to the preseen: The Objective
The objectives provide a focused target to move towards to direct planning,
motivate staff and enable accurate performance measurement.
Are clear objectives set for the case study company?
Is there are clear process for setting and monitoring objectives, all all
levels in the business from strategically down to individuals?
Identify and analyse the objectives of the company given in the preseen
analysis below:
Objective:
Comments:
Objective:
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CIMA Strategic Case Study
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Comments:
Objective:
Comments:
5. Stakeholders
What are stakeholders?
Stakeholders of an organisation are people who are affected in some way by
what the organisation does.
Organisational objectives should always be considered in relation to the
objectives of different stakeholders. This ensures that a wide range of needs
are considered in the objective setting process and balanced objectives are
produced.
Who are the key stakeholders
Stakeholders and their needs include:
Category
Stakeholder
Needs of the stakeholder
Internal
- Directors
- Pay, bonus, overall performance, job security
- Employees
- Pay, bonus, personal performance, job security
Connected - Shareholders
- Share price growth, dividend payments
(usually have
- Customers
- Prices, quality, delivery times, assured supply
a contract)
- Suppliers
- Assured custom, high prices
- Financiers
- Interest payments, ability to pay back loans
- Government
- Tax, law, wealth of nation
External
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CIMA Strategic Case Study
(Other)
Theory and the Strategic Case Study
- Pressure groups
- E.g. environment
- Local community
- Employment, nice place to live
- Wider community
- Environment
Stakeholder power
The degree to which stakeholder needs are considered as part of the
objective setting process depends on the level of power they have to impact
the organisation and its results. The needs of powerful groups will tend to
be prioritised
For example large customers have significant power and products, prices,
location of production facilities and so on may be impacted by their needs.
Small customers have far less power and less consideration will be paid to
their individual needs.
Stakeholder Mapping (Mendelow’s Matrix)
Mendelow's matrix helps to identify the relationships that should be built
with different stakeholders. A stakeholder's position in the matrix depends
on two factors:
Power- The power to influence the organisation, and affect its decisionmaking.
Interest - The interest which the stakeholder has in the organisation. The
greater the interest in the organisation the greater the level of
communication that will be required with them. Many employees have little
power, but good communication of plans is important to retain their loyalty
and motivation.
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CIMA Strategic Case Study
Theory and the Strategic Case Study
Each stakeholder is placed in one box depending on each factor and then
treated differently depending on where they are:
Minimal effort – e.g. Temporary employee. Give them basic information to
meet their needs, but pay little attention to them in decision making and
strategy.
Keep informed – e.g. Full time employee. Regularly communicate with
them, particularly things they are interested in. This helps retain good
relationships and avoids them seeking to increase power (e.g. through staff
grouping together in a union).
Keep satisfied e.g. Government. They have high power so to avoid them
exercising the power they should be kept satisfied e.g. by paying them on
time or meeting whatever needs they have. As they have little interest only
information is given to them as is necessary (e.g. profit information to
government to help assess tax payable).
Key players (Keep Close) e.g. Major shareholder – Regular communication is
maintained and their goals and objectives included as part of the strategy
setting process and business approach.
Application to the preseen : Stakeholder Mapping
Using the information from the preseen, fill in the Mendelow's matrix below:
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