Theoretical Framework Flashcards
What is the purpose of carrying out an analysis of the external environment?
The purpose is to elucidate all factors that affects organizations value creation
Explain PESTEL (purpose, pros/cons)
Has the purpose of identifying which external factors may affect and organizations day-to-day activities and how these have been impacted by COVID-19.
Very simple to use to get a wider understanding of the business environment, however difficult to anticipate the challenges that might affect organizations due to the pace of change in the world, thus it should be treated on an on-going basis.
What is a market trend?
Defines as one that drives consumers to buy a specific product. It is broad, global, and lasts for an average of 5-10 years. Usually driven by lifestyle, technology, values or demographic.
Explain Trend Analysis (purpose, pros/cons)
Has the purpose of identifying what trends exist in the Danish market, and is divided into technology-, consumer-, and governmental/economic trends.
It is important to use when trying to plan for the future as it increases and organizations possibility of long-term business performance and health if trends spotting, however can be difficult to approach with consistency as trends are constantly changing
What does Strategic Uncertainty consists of?
It is based on the findings from PESTEL and Trend Analysis to make uncertainties manageable by grouping them into logical clusters of state-, effect-, and response uncertainty thereafter assessing them through the use of scenario planning.
Explain Scenario Planning (purpose, pros/cons)
Has the purpose of using uncertainties to drive future scenarios to help produce and evaluate possible strategies.
It describes several futures thereby providing better educated decisions, however is very time consuming and difficult to conduct in rapidly changing environments.
What is the purpose of carrying out an analysis of the internal environment?
To identify if existing competencies or assets are adequate to win in a competitive market.
What is the purpose of using a financial-, and nonfinancial analysis?
The purpose is to get a better understanding of the organizations capital structure, how they finance their operations, and how efficiently the assets are administered, including nonfinancial measures to assess the true value of the organization.
Explain VRIO (purpose, pros/cons)
The VRIO framework has the purpose of assessing an organizations internal capabilities and its possibility of utilizing these. It is based on a decision-tree model.
Provides a strong foundation for framing the internal capabilities in combination with the financial-, and nonfinancial analysis, however can cause implications if capabilities are over/underestimated.
Explain SWOT/TOWS.
SWOT summarizes the market-, and internal analysis.
TOWS has the purpose of presenting alternative actions for implementing strategic decisions based on SWOT.
Explain Strategic Fit (purpose, pros/cons)
Involves the identification of if there is a fit between an organizations internal goals and values with the external environment. Has the purpose of providing a realistic foundation when assessing proposed strategies.
Beneficial as it takes into account both sides when strategizing, however there is a lack of consensus on successful implementation.
