Nov 2017 Q7 a.
A strategy is a course of action, including the specification of resources required to achieve a specific objective. Strategy is concerned with the higher direction of an enterprise that involves top management.
As an alternative to a systematic goal-structured approach, an organisation may focus on Critical Success Factors (CSFs) to manage strategy. Johnson and Scholes describe SIX stages in process of managing strategy using CSFs
Required:
i) What are Critical Success Factors (CSFs)? (2 marks)
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Critical Success Factors (CSFs) are areas in which (a) satisfactory results will enable successful competitive performance and (b) an organization must excel in order to outperform competition. Control and improvement can be achieved by setting key performance indicators (KPIs) in these areas, and monitoring progress against targets.
ii) Explain any FOUR of the stages of managing strategy using CSFs. (8 marks)
View Solution
- Step 1. Identify CSFs. This requires both experience of the organization and its activities, and sound judgment. The emphasis is not on what activities must be undertaken, but on what must be achieved in broad terms. Johnson and Scholes recommend that the number of CSFs should be restricted to six or fewer.
- Step 2. Identify the competences that must be displayed if the CSFs are to be achieved. Note that the emphasis has now changed from what must be achieved to the special skills and processes that will enable the required achievement.
- Step 3. The core competences identified must then be considered to determine whether they are adequate to provide genuine competitive advantage, or whether they must be improved or supplemented.
- Step 4. A Key Performance indicator (KPI) must be identified for each competence so that strategic control may be exercised.
- Step 5. We should ensure that core competences, the skill and abilities by which resources are deployed through and organisation’s activities and processes such as to achieve competitive advantage in a way that others cannot imitate or obtain are present else, competitive advantage will not be achieved.
- Step 6. Competitors’ responses must be monitored and their effects on the CSF structure forecast. (Any 4)