Strategic Business Analysis

Organisations operates in an uncertain environment for their future direction.   The recent financial crisis tells how the future can be unpredictable even with the sophisticated  available tools to management. A strategy is often needed to overcome this uncertainty. Strategic Business Analysis (SBA) is a a planning tool for the future direction and scope of an organisation. As a planning tool it looks at the long-term and considers the whole organisation including stakeholders, resources and competencies. It is basically about 'strategic management' that seeks to achieve the objectives of the organisation and adapt its scope, resources and operations to environmental changes in the long term. There are various approaches to SBA, the most common and popular is the 'top down' rational process. This strategic planning approach, also known as the Johnson, Scholes and Whittington (JSW) model, is broken down into three interdependent phases of strategic analysis, strategic choice and strategic implementation. Apart from this, there is the emergent strategies by Mintzberg (1987) that sees strategy as evolving over time and the incremenatalism approach  sees strategy as extensions of small scale practices. There is also the freewheeling opportunism to strategy, describing the process as  grabbing opportunity as they happen.

Strategic Planning

The strategic planning process  starts by setting the mission- that is identifying the purpose of the organisation - and then establishing objectives to achieve the mission. These objectives are targets usually quantified with time-limits. The next stage is analysing the internal and external environment for strength, weaknesses, opportunities and threats, including stakeholder analysis for their power and influences on the organisation. This process leads to identifying strategic options, making a choice and implementing the strategic plan as outlined below. This process includes a control loop that compares the objectives set to results. Deviations from the plan/objectives is adjusted in continuous periodic process.  See Below:

Strategic planning is also carried out at different levels of an organisation. At the corporate level, decisions like, what business is the firm undertaking? What business should it be undertaking? is compared with the firm's environment, resource capabilities and the values and expectations of stakeholders.This is known as the corporate strategy. At the business level, the strategy considers how each strategic business unit (SBU) try to accomplish its mission within its selected area of activity.This is the business strategy. At the functional level, the strategy considers how distinct functions of the business support the corporate and business strategies. This the functional strategy.

The Strategic Analysis/Position

This assessment process involves analysing the environment in which an organisation operates  for example competitors, markets, regulations, opportunities and threats etc. The environmental variables - political, economic, social, technological environmental and legal are scan for their effect on the organisation and it activities. Assessing the strategic capabilities of the organisation is part of this process for example resources, competences, for its relative strengths and weaknesses. This is done taking into consideration the culture, beliefs and assumptions of the organisation; and of the power and expectations of stakeholders. Major stakeholders include shareholders, managers, employees, trade unions, customers, suppliers government and the general public.

The Strategic Choice

This is based on producing strategic options-establishing possible choice for future strategies-for example producing at the lowest cost, differentiating products and/or determining a method of growth (acquisition vs organic). The next step is assessing the options as to their comparative merits and feasibility to the organisations existing position. This is done by building on strengths, overcoming weaknesses, taking advantage of opportunities and minimising threats; The last step is the selection of an option/strategy for the organisation to pursue. the strategy chosen could be single or mixed and not be the right or wrong one but on merits and demerits. The selection is influence by values of managers and interest groups within the organisation reflecting the power structure.  These choices are made at every level of the organisation. That is at the corporate, business and operational levels.

The Strategic Implementation/Action

This process involves detailed plans or objectives for operating units, targets for managers to achieve,  including detailed specifications on how the activities are to be carried out.  Several parts form this process into a coherent plan which includes resource planning and the logistics implementation. Others include the organisation structure needed to carry out the strategy and the systems  (information, procedures and controls) employed to manage the organisation. Sub-strategies for products, markets, human resources etc. is part of this process.

Alternative Strategies

Mintzberg (1987) suggests that strategies evolve over time (emerge) and do not arise out of conscious strategic planning process. This emergent strategies result from a number of ad hoc choices in a down top approach to the final unclear objective of the strategy whiles continuously adapting to human needs. Separate part still develop as strategy proceeds in an incremental faction. The incremenatalism approach believes strategy is built on the process of consultation, compromise and accommodation by making small scale extensions of former practices. Freewheeling opportunism is another alternative strategy that grabs opportunity as they occur. Basically it is used by entrepreneurs who dislikes planning and enjoy taking risks and new ventures only to lose interest once its up and running. Johnson and Scholes describe strategy as design, experience and ideas. This they called the three lenses of strategy. Essentially, strategy as design is the same as the rational planning model and strategy as experience reflects the emergent approach, whiles strategy as ideas mirror freewheeling opportunism.

Further Reading:

Johnson G, Scholes K, and Whittington R, Exploring Corporate Strategy, FT Prentice Hall, seventh edition, 2005

Mintzberg H, Ahlstrand B, Lampel J, Strategy Safari : The Complete Guide Through the Wilds of Strategic Management, FT Prentice Hall, 1998

 

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KidsCash is Following Me on Twitter

One thing you never expected and there it is in front of you. KidsCash a for-profit company dedicated to the future financial success of the youth in US is now following me on twitter. How on earth would they be following me? Is it my discussion on financial issues on twitter? Or recent blog posts, watch out for the scam or my personal stories,  the come back and the come back2. Whatever the reason all is in the name of social networking using social media.

One interesting thing about this organisation is, it is a for-profit company. Traditionally all companies are set up to make profits and there came variation like non-governmental organisations (NGOs) that are basically non-profits. For a company to name itself a 'for-profit' is unusual. This shows how profit minded they are from the start. Some non-profit organisations are set up to correct the imperfections in a pure capitalist/market economy. So non-profits and for-profits organisations can both work together to develop an economy.

The other issue is the , Muskegon County, Michigan based, company is a debt-free one with a cash-only philosophy. Which company on earth is completely free of debt. These kids mean business by taking a cash-only philosophy. Apart from that they have started selling their own-made products. They also offer financial education as well as community mentorship. Working with kids ages 8-18 but acknowledge that even adults need help as well. Parents can come free to any or all of the classes their children attend.

This is an effort wealthy of emulation to developing economies as well, where the teaching of this skill is virtually non-existing. It is also an alternative to AID projects like the One Laptop per Child (OLPC) in developing countries in Africa. Teaching kids to be self reliant is a first step to self-sufficiency rather  than making them dependent on others for their basic survival.

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Watch Out for the Scam

Whilst most of us are facing financial crisis at this time, there are others who want to steal all that we have worked for. I woke up this morning to find two scam emails in my inbox. The first, apparently from a bank requesting me to complete a form attachment that includes my security details for PINsenty upgrade, they called it.  Below is the email.   The email itself has the 'to:' as 'none' and the 'Cc:' as 'recipient not shown'. Some one or some group of people want to take this information for mischievous reasons.  Being a victim of scams like this in the past, I knew what I was going in for. After downloading the attachment, the details they are requesting is shown below:

Even the bank will not request such information from you so why do they want it now? Is it a security lapse in the organisation's IT system or is it an insider operation? I tried to investigate further.

When I copied the the domain name and pasted it into my browser, it came out as barciays.co.uk. So someone is playing with 'l' in the Barclays to read as capital 'i'. The web site is shown below:

The website itself looks ok with nothing mischievous. So I wanted to find out who is behind this. Actually, I was able to know who is hosting this domain and the purported owner but due to legal reasons I can not disclose on this blog.

The lesson are straight forward:

• Do not give your security details to anybody including the financial organisation you are dealing with.
• Contact your financial organisation to report any suspicious scam
• The Financial Services Authority has guidance on Staying safe against scams.

The Come Back 2

This post is a continuation of an earlier one, The Come Back, that describe the teenage years of my career. As a teenage boy leaving my parents, as part of my education, to a boarding school in the remote part of the country that landed me doing business and accounting subjects. The decision that was to be made after those years was to go on a full-time university, work full-time or combination of the two on a part-time basis.

I landed a job in an auditing practice  as an audit trainee. Computers were not that common those days. The available ones were using Microsoft Disk Operating System (MS DOS) that allow users to perform commands using a text-based programming language. I had to learn these commands rote to get things done apart from manually writing clients accounts books on ledger sheets from almost incomplete records. It was a test time for me as most of the clients had small businesses and needed a financial statement for tax purpose or requirements of the register of companies. I was in the practice for almost two years and decided to further my studies. Though qualifying for a place in a tertiary institution in the first place, I thought as at then to gain enough work experience. The work training broaden my perspective about life and it was time to move on.

I then enrolled at Institute of Professional Studies (IPS),  the institution that trains professional accountants and secretaries, on a part-time basis while continuing my job training at the accountancy firm. After three years of studies, I was to do a compulsory national service for two years. I left my city job for a rural post of Resource Personnel for Enhancing Opportunities for Women in Development (ENOWID) project. I was training the village women in records and accounting bookkeeping apart from providing them with management services on how to run their small businesses. Part of the project was the giving of micro credit to these women who have no knowledge of western form of business. I travelled the length and breath of these villages first in small vans loaded beyond capacity with sheep, goats, chicken food stuffs and human beings and then on small boats since some of the villages were not accessible by road. I was finally given a jump bike to make my trips. Sometimes when I sit back to reflect on these experiences, I see how dangerously I was leaving, travelling on those boats without a life jackets and overloaded with all sort of stuff was something I didn't realise as at the time. I am poised to go back there and make a life changing experiences for those villagers.

After these periods with the villagers I continued with similar activities for a Church Organisation after my national service. This organisation, Evangelical Presbyterian Church, Ghana was mother's church were we grew up and worship together. This time I was to visit branches in villages to help them sort their financial records. After a few months, I thought it was now time to go back to city. I was employed by one of the big shipping companies in the harbour city of Tema were I was subjected to handling big and numerous accounting reconciliations. It was a place that changed my career forever. This would be the content of the next blog on this series.

Related blog:

The Come Back

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