Literature Review Outline
I. Introduction
Contains link with the introduction and summary of the contents of the succeeding discussions
II. Concepts and Theories
A. What is strategic audit?
B. What are the uses of strategic audit?
C. What are the components of strategic audit?
1. Resource Audit
2. Value Chain Analysis
3. Core Competence Analysis
4. Performance Analysis
5. Portfolio Analysis
6. SWOT Analysis
III. Empirical Application
A. How do actual business firms perform or use strategic audit?
B. How has strategic audit affected the operations and performance of actual business firms?
C. What issues or challenges emerge in the conduct of strategic audit?
D. What are the best practices in the use of strategic audit?
IV. Synthesis
Literature Review
Strategy
The term “strategy” origins from the Greek word “strategia –
the art of war .According to Webster’s New world dictionary “Strategy is the skill in
managing or planning”.
There are vast amounts of literature on what the “strategy “really means are:
Coulter (2002:7) define that the strategy is a series of goal-directed decisions and
actions in terms of organisation’s skills and resources and the opportunities and
threats from it’s environment.
“Strategies are means to ends, and these ends concern the purpose and objectives of
the organisation. They are the things that businesses do, the paths they follow, and the
decisions they take, in order to reach certain points and level of success.” (Thompson,
2001:7)
Johnson, G & Scholes, K, (1993) describe that the strategy is the direction and scope
of an organisation over the long term which create the competitive advantage for the
organisation in the accordance with it’s resources, environmental circumstances so
that it can fulfil the stakeholder expectations and the needs of the market.
“Strategy is the primary means of reaching the focal objective. The focal objective is
whatever objective is in mind at the moment. Strictly speaking, it is literally
meaningless to talk about strategy without having an objective in mind. Viewed in the
context strategy becomes an integral part of the ends-means hierarchy” (Thorelli,
H.B, 1977)
Chandler ( 1962) also explain that the strategy is the activities of the enterprise
concerned with long-term goals and objectives to formulate , to take the action ,to
allocate the resources that necessary for carrying out that goals.
Strategic Audit
“The strategic audit is a review of a company’s situation by a
person trained in business planning and strategic thinking,” (lasher, 1999)
Thompson, (2001) describes that the strategic audit is a type of management audit
along with a corporation-wide perspective and the purpose is to make a
comprehensive assessment of a corporation’s strategic situation.
Gordon (2002) claims that the strategic audits have unpredictable
results although there are so many definitions set out for that. He also identifies the
questions to cover a framework of the strategic audit and all these questions will also
fully cover the framework of this research.
What business are we in?
What is our current strategy?
What forces are shaping competition?
Where is competitive advantage?
What is our distinctive competence?
What of priorities, timing and resources?
How do we best for the future?
What provisions exist for implementation?
The business should be enough cabale for having a good resources
and competency , to understand the condition .In strategic audit all the business
strategries are evaluated and adjustments are made if nesseary . “ A Strategic Audit takes
a detailed look at the prevailing strategries in key areas of the organization “ ( Detailed
Strategic Audit 2007 ). By conducting a strategic audit , it helps not only to spot out the
weakness of the business strategy and planning process but also giving an ideas to
establish the structured , systematic and the most suitable strategic planning approach of
it .
6. SWOT Analysis
Pearce and Robinson (2002; 202) state that a “SWOT analysis is a
widely used technique through which managers create a quick overview of a
company’s strategic situation.” It provides an overview of the internal
(organisational) factors (i.e., strengths and weaknesses of the organisation) and
external (industry) factors (i.e., opportunities and threats of its environment).
Pearce and Robinson (2002) suggest that this approach can be
seen as one of four distinct areas by matching between a firm’s internal factors and
external factors.
Environmental Scan
/
\
Internal Analysis
External Analysis
/ \
/ \
Strengths Weaknesses
Opportunities Threats
|
SWOT Matrix
Fig 1: SWOT Analysis Framework
To delevop a SWOT profile a matrix is constructed . This matrix is
known as TWOS matrix and it is profounded by Heinz Weihrich . (SWOT Analysis 1999
-2007 )
Strengths
Weaknesses
Opportunities
S-O
W-O
Threats
S-T
W-T
Fig 2: SWOT / TOWS Matrix
S-O Strategy which is most desirable and advantageous strategy it seeks to increase the
firm’s strength to exploit the best opportunity .
W-O Strategy aims at minimizing the weakness to pursue opportunites .
S-T Strategy attempts to use the organization strengths to deal with the environmental
threats .
W-T Strategy established a defensive plan to overcome the weakness and threats .
While SWOT analysis are beneficial , there are also limitations
of it.Recklies(2001) back this by stating that the main weaknesses of the SWOT
model results from the historic context in which it was developed. This idea is claim
back by Haberbeg et al (2001:95) who explain “ it was conceived in simpler times and
does not cope well with some of the subtler aspects of modern strategic theory.”
Grant(1995) further argue that there are variable factors totally
depend on the SWOT Analysis process, such as, capacity of people to analyse
strengths, weaknesses, opportunities and threats objectively or the strategic
perceptions of the organisation which was influenced by hierarchical position,
language and culture although SWOT can be ambiguous in its own assumption.
References
Chandler (1962) Strategy and Structure, MIT press, Cambridge, cited by Hindle, T (1994) Field guide to Strategy, the economist Books Limited, Boston.
Coutler.M, (2002) Strategic Management in action,2nd Edition, Prentice Hall
Fredrickson, J (ed.) (1991), Perspectives on Strategic Management, Harper
Business, New York.
Grant.R.M,(1995)Contemporary Strategy Analysis: Concepts, Techniques,
Application. 2nd Edition Blackwell
Guilford, J.P. and B. Fruchter (1973). Fundamental Statistics in Psychology and Education, 5th Edition. New York: Mc Graw-Hill.
Haberbeg A, Rieple A.(2001) The Strategic Management of Organisations, Prentice Hall, London
Johnson, G. and Scholes, K., (1993) Exploring Corporate Strategy – Text and
Cases, Prentice-Hall, London.
Recklies,D (2001) , Beyond Porter – A Critique of the Critique of Porter,
Management Models, Management Portal.
Thompson, J.L (2001) Understanding corporate Strategy, Thompson learning, London
Thorelli, H.B., Strategy + Structure = Performance: The Strategic Planning Imperative, Indiana University Press, Bloomington, 1977.
Webster’s New World Dictionary, CD-ROM edition, Merrion-Webster, Springfield, MA, 1992.
Credit:ivythesis.typepad.com
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