CICA 20 QUESTIONS Strategy - Institute of Chartered Accountants ...

Making such business arena choices is generally regarded as one of themost demanding activities in the process of formulating or evaluatingan organization’s strategy. It involves the most amount of informationgathering and typically represents the bulk of the organization’sstrategic planning efforts.Accordingly, in making their assessment of the market potential andinternal capabilities associated with various business arenas, directorsneed to have in place a strategic planning process, which ensuresthat the following questions are adequately addressed for eachbusiness arena:• What is the nature and extent of demand for the products andservices offered?• What is the potential for profit?• To what extent (and in what way) are customer needs currentlybeing met by existing competitors?• To what extent are the organization’s products and servicessignificantly differentiated from - and offer a clear advantage over- existing competitors?• Does the organization have the resources, skills and capabilitiesrequired to pursue the growth and profit potential in thebusiness arenas that it has targeted?• If lacking a competitive advantage or any specific resources, skillsor capabilities, how does the organization intend to acquire them– if at all?• What are the major ‘assumptions’ underlying the choice of eachmajor business arena?• What are the methods of entry to or exit from the major businessarenas selected (i.e. merger, acquisition, divestment, closure, sale,etc.)• What alternative business ‘postures’ (i.e., grow/invest, hold,harvest, divest, no entry) were considered and rejected for eachbusiness arena (both existing and new).“ Without competitors therewould be no need for strategy,for the sole purpose of strategicplanning is to enable thecompany to gain, as effectivelyas possible, a sustainableedge over its competitors. ”Kenichi OhmaeStrategy Implementation Considerations17. Have the proper organizational arrangements beenselected, designed and ‘aligned’ to reflect, reinforce andsupport the strategy?Given sufficient time, information and human intelligence, anyorganization is capable of designing outstanding strategies.Thetough part occurs, though, when it comes to execution i.e. turning thestrategy into a reality.One of the major ways in which execution happens is through theorganization’s operating plan. But, directors are generally discouragedfrom becoming involved in this area and for good reason (See thediscussion related to Question 9).The other major method by which an organization executes its strategyis when it aligns its staff, structures, reward and control systems to8