Problems With Strategy and Why Strategies Fail (AQA A Level Business): Revision Note

The value of strategic planning

• Strategic planning acts as a roadmap that aligns departments, guides decision-making, and helps businesses respond proactively to change

What is strategic planning?

• Strategic planning typically involves:

  • Setting the mission, vision, and objectives of the business

  • Analysing the internal and external environment (e.g. using SWOT)

  • Making informed choices about competitive strategy, growth, resource use, and risk

  • Creating a coordinated action plan that links strategy to operations

Benefits of strategic planning

Strategic planning as a continuous process

• Good strategic planning is not a one-time event—it is an ongoing cycle of:

  • Planning: setting objectives and strategies

  • Implementing: putting plans into action

  • Monitoring: tracking progress

  • Reviewing: updating the strategy in response to performance and environmental change

• This ensures the strategy stays relevant and responsive over time

Difficulties of strategic decision making and implementing strategy

• Creating a business strategy is challenging, but successfully delivering it is often even harder

• Many well-intentioned strategies fail to achieve their goals due to:

  • Internal or external obstacles

  • Poor execution

  • Changes in the business environment

  • Poor planning

  • Lack of flexibility

  • Resistance to change

• This section explores the pitfalls of strategic decision-making and implementation, and examines

  • The contrast between planned and emergent strategies

  • The causes and consequences of strategic drift, when a business’s strategy slowly loses relevance

  • The importance of evaluating strategic performance and being prepared for uncertainty through contingency planning and crisis management

• By understanding why strategies fail, businesses can learn how to become more resilient, adaptive, and forward-thinking

Planned versus emergent strategy

• A planned strategy is the deliberate approach that a business sets out in advance

  • It involves clear objectives, detailed plans, and specific actions intended to achieve certain goals.

• An emergent strategy is an approach that develops over time as the business adapts to changing circumstances

  • It isn't deliberately planned from the beginning but arises in response to unexpected opportunities or challenges

• Initially, a business’s planned strategy should align closely with its emergent strategy

• However, businesses often find that their final strategy becomes a combination of planned intentions and emergent adaptations

Divergence of planned and emergent strategy

• Changing external environment

  • New competitors, technological changes, or shifts in customer behaviour may force a business to adapt its planned strategy

• Internal factors

  • Unexpected internal events, such as leadership changes or resource shortages, may cause a business to change its original plans

• Opportunities and innovation

  • Businesses may discover new market opportunities or innovative ideas along the way, requiring a shift away from the original plan

Strategic drift

• Initially, a business's strategy usually aligns well with external conditions, such as market trends, customer demands, and competitors’ actions

• However, over time, the external environment can change, and if the business fails to adapt effectively, strategic drift occurs

Reasons for strategic drift

• Slow response to change

  • Managers may fail to notice or underestimate the significance of external changes, leading to delayed responses

• Resistance from employees and management

  • Staff or managers may resist changes to familiar ways of working, making adaptation difficult

• Lack of innovation

  • Businesses that don’t continually innovate or refresh their approach risk falling behind competitors who do

• Overconfidence and complacency

  • Previous success may lead managers to believe current strategies will always work, ignoring signs that change is needed

Consequences of strategic drift

• If strategic drift isn't corrected, it can lead to:

  • Loss of competitive advantage

  • Declining sales and market share

  • Reduced profitability and financial instability

  • Ultimately, business failure if the drift continues unchecked

Evaluating strategic performance

• Once a strategy has been implemented, it’s essential for businesses to evaluate its effectiveness

• This allows decision-makers to assess whether the strategy is meeting its objectives, identify areas for improvement, and ensure continued competitiveness

What is strategic performance evaluation?

• Strategic performance evaluation is the process of measuring how well a chosen strategy is delivering its intended outcomes

• It focuses on both quantitative data (e.g. profit margins, market share) and qualitative insights (e.g. employee morale, customer satisfaction)

Why evaluate strategic performance?

Tools and metrics used

When should evaluation occur?

• Evaluation should be:

  • Ongoing: not just at the end of a strategic cycle

  • Built into the implementation process: through regular performance reviews

  • Responsive: results should be acted upon quickly where performance is off track

Challenges in evaluation

• Unclear objectives

  • Makes it hard to measure success accurately

• External factors

  • Market changes can affect outcomes beyond the business's control

• Time lags

  • Some strategies take years to deliver measurable outcomes

• Subjective judgement

  • Qualitative data may be harder to interpret consistently