Tuesday 3 April 2012

Key Elements of Convincing Strategic Recommendations

When putting together the Strategic recommendations for the May 2012 CMA Case Exam the key to remember is that it MUST be convincing. This is not an area to analyze rather an area to state, with authority and supporting backup, what the company should do and why.

Some students stumble in the recommendation section because they fail to convince the reader that their recommendations will in fact address the strategic issue. Students should not word the recommendations in a very weak and uncertain tone, in essence showing the reader that they are not sure of their recommendation. Some also forget to address any new risks that may arise due to the implementation of a strategic alternative (think cons that were listed under the strategic alternative that you are recommending). The following are elements that help create strategic recommendations that are strong, convincing and complete:

  • Show that constraints are met
  • Show that sufficient financing is available
  • If appropriate, recommend only one alternative to avoid calculating the effect of one on the other (unless only one is not reasonable)
  • Indicate how the recommended strategy takes advantage of strengths and opportunities while mitigating weaknesses and avoiding threats
  • State how it will allow the company to address/resolve its overall strategic issue (ie. ‘I recommend that you buy the warehouse to expand into Canada as it will allow you to increase profits as well as market share).
  • Rationalize based on pros and cons (re-worded into several overriding reasons) - Highlight the top pros for the recommended alternative as well as state how you will mitigate/address any cons associated with this alternative. For any cons that are not mitigated you should state two over-riding benefits that still keep this alternative as the right option. (ie. Even though expanding into outerwear may increase the threat from competitor A, the NPV which was calculated using conservative assumptions is positive and this alternative is in line with stakeholder preferences and capitalizes on the company’s strengths)
  • Do NOT say ‘I recommend none’
  • Do not be ambiguous. Use strong and convincing language.
  • Cover all of the alternatives that are not recommended as well – state for each why they should not go with it. (Ie. Even though expanding into dog food is in line with the company’s strengths, this alternative has a negative NPV and is not in line with stakeholder preferences).
  • Provide a brief Pro-Forma – if you do not have time for a detailed one, include very basic pro forma statements as appropriate to the situation (ie. Sales, expenses, Net Income – for 3 years, to show that your recommendations will have a positive impact on the company’s financials) – use ball park figures derived from your quantitative analysis, do not obsess about accuracy, it is better to have ball park #s than none at all
  • State consistency with mission or provide a revised mission
  • Propose a Balanced Scorecard
Image: KROMKRATHOG / FreeDigitalPhotos.net

2 comments:

  1. Hello there, thanks for the great synopsis. This follows my "template" for the recommendation section all the way up to your Pro Forma point. Therefore, I do have a few paragraphs that will tie all your points together. The only extra thing I have is one last paragraph where I say "an implementation plan regarding my recommendations can be seen in Appendix..." I guess I could have another paragraph to say "please refer to the pro forma statements in Appendix..."?

    I have a seperate heading for Revised Mission Statement after the Recommendation section. Would this be appropriate?

    Lastly, when you say "propose a Balanced Scorecard", what would that entail? Do you go in detail or just mention the elements of one to show the markers you know this aspect? I intended on mentioning proposing a Balanced Scorecard but I was intending on mentioning this in the Operational Issue section where I would cover Performance Management aspect of the Contingency Map (or is it Performance Measurement?).

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    Replies
    1. Hi Gordon,

      I prefer to have a separate heading for implementation plan, where I would state the same "an implementation plan is outlined in appendix...". I place the implementation plan heading after the operational issues section because the plan includes both strategic as well as operational items and therefore logically it should be located after your discussion of strategic and operational recommendations.

      A separate heading to clearly identify the revised mission and vision makes sense, that is how I presented it as well (I did subheadings for this).

      I literally just stated 'implement a balanced scorecard'. This is a tip that our moderators gave out to us, they said to always propose one even if in the exam setting we do not have time to discuss or outline it.

      I do not see anything wrong with mentioning it in strategic recommendations and then again touching on it in more detail under performance management (or measurement, I believe these are interchangeable for the most part) if you like.

      Keep in mind that not all cases may require that you discuss Performance Management so do not rely on this section alone for the proposal of balanced scorecard implementation.

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