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Enterprise Strategy/AW/02b

             Arj Wignaraja
Strategic
             Choice




Strategic                  Strategic
Analysis                Implementation
CIMA Official Terminology: CRITICAL SUCCESS FACTOR
An element of organisational activity which is central
to its future success. Critical success factors may
change over time, and may include items such as
product quality, employee attitudes, manufacturing
flexibility and brand awareness.

According to its originators, critical success factors (CSFs) are:
  the limited number of areas in which results, if they are
 satisfactory, will enable successful competitive performance.
  Rockart & Hoffman, 1992
02b e3 internal environment resources, capabilities, cs-fs_lecture notes
Restaurant          Hospital




             Auto
High tacit
      Limited
                                                             knowledge
                                   Physical




                Financial                             Human
                                                     Resources
                             Capabilities/
                             Competencies



Time & place                                                 Significant sunk
 dependent                                                         costs
                    Reputational              Intellectual
Same as competitor   Different to competitor
                & easy to copy   & difficult to copy




Resources             Basic       Unique




Competencies       Threshold       Core
Rigidity: Preventing change




Resources Audit        Competencies                   Core Competencies



                                                         Comparison:
                                                         Historical, industry
                                                         norms, Benchmark



       Understanding                                        Assessing Balance
                              Identify Key Issues
          Strategic
         Capability
02b e3 internal environment resources, capabilities, cs-fs_lecture notes

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02b e3 internal environment resources, capabilities, cs-fs_lecture notes

  • 2. Strategic Choice Strategic Strategic Analysis Implementation
  • 3. CIMA Official Terminology: CRITICAL SUCCESS FACTOR An element of organisational activity which is central to its future success. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility and brand awareness. According to its originators, critical success factors (CSFs) are: the limited number of areas in which results, if they are satisfactory, will enable successful competitive performance. Rockart & Hoffman, 1992
  • 5. Restaurant Hospital Auto
  • 6. High tacit Limited knowledge Physical Financial Human Resources Capabilities/ Competencies Time & place Significant sunk dependent costs Reputational Intellectual
  • 7. Same as competitor Different to competitor & easy to copy & difficult to copy Resources Basic Unique Competencies Threshold Core
  • 8. Rigidity: Preventing change Resources Audit Competencies Core Competencies Comparison: Historical, industry norms, Benchmark Understanding Assessing Balance Identify Key Issues Strategic Capability

Editor's Notes

  • #4: More recently Johnson and Scholes (1997) have defined CSFs as:those components of strategy where the organisation must excel to outperform competition. These are underpinned by competencies which ensure this success. A critical success factor analysis can be used as a basis for preparing resource plans.
  • #5: The attraction of this approach lies in the fact that it provides a methodology for identifying strategic goals (or CSFs) by basing them on the strengths, or core competences, of the firm. These are implemented through the development of key performance indicators (KPIs) for milestones in the processes delivering the CSFs.
  • #7: Physical assets: Plant and equipment, stock, buildings, location and land are very rarely of strategic value. A very specific location may be of strategic value. Financial assets: Debt/equity reserves or cash may be classified as strategic in a few industries but again rarely. For a venture capitalist, their access to significant funds may be a strategic resource.Human resources: Knowledge, skills and expertise may possibly be classified as strategic but there is always the risk that these qualities are found in one, or at best, a few individuals in the firm. Intellectual assets: Databases, patents, R&D and skilled management are frequently strategic resources.Reputational capital: Goodwill, brands and relationships are often strategic resources.Capabilities and competences: Systems and processes, successful culture of innovation and good team work are often strategic resources.Definitions: Resources are inputs into the production process. They are the basic unit of analysis (capital equipment, skills of employees, patents, brand) o Basic categories: financial, physical, human, technological, reputational and organizational Capabilities: Capacity for a team of resources to perform some task or activity. They constitute the main source of competitive advantage