Strategy Analysis & Tools VLE1

Theresa May

Black Swan

Red, white & blue Brexit 🚩

Black, grey & White Brexit 🚩

Structural Break

Industry

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PM Theresa May siad the UK will be going for a ''Red, White & Blue Brexit''. Criticaly consider this comment in the context of black, white & grey options as either a potential structural break or a 'black swan' or 'pink swan', event for the UK's near future. Drawing closely on the recently published white paper, illustrate your answer with a specific industry.

Steel Industry?

Negative Externalities; Social Costs

Recently published White Paper

Brexit as an all or nothing strategy or to sustain trade agreements and remain in the free market but disassociate with the free movement of people within the EU.

Hard Brexit

Soft Brexit

Brexit as a unified strategy to remain under some laws of the European Union and other enforcement by EU commission.

metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on an ancient saying which presumed black swans did not exist, but the saying was rewritten after black swans were discovered in the wild.


The theory was developed by Nassim Nicholas Taleb to explain:


The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
The psychological biases which blind people, both individually and collectively, to uncertainty and to a rare event's massive role in historical affairs.
Examples: The Internet, The dissolution of the Soviet Union. The internet has had globally disrupting ripples of effect which are ever impacting in the present and in the future including; blockchains, taxing robots, social costs (negative externalities).

Pink Swan

Without looking critically at the past, our own wars and others, all of the arguments about AirSea Battle, disruptive technologies, and offset strategies will be largely premature, if not largely uninformed.https://warontherocks.com/2015/08/black-swans-and-pink-flamingos-five-principles-for-force-design/ Richard Danzig’s widely cited CNAS paper, Driving in the Dark, recommended that the “defense community should also design processes, programs and equipment on the premise that predictions will often be incorrect. While trying better to illuminate the road, analysts should recognize that sudden twists and turns in areas of darkness demand special driving techniques.” Danzig’s driving metaphor is appropriate for steering into a future that, by its nature, is uncertain. From that metaphor I have derived a set of five force planning principles:

BLACK BREXIT Such a compromise is midway between a “black Brexit”, a cliff-edge scenario for businesses and financial services in which the government left the article 50 talks without a future deal with the EU, and a “white Brexit”, which would see the UK attempt to remain in the single market.

Such a break often means hard times. Adjustment is neither easy nor quick. Difficult and volatile conditions wipe out some organizations—yet others prosper because they understand how to exploit the fact that old patterns vanish and new ones emerge. The first order of the day is to survive any downturns in the real economy (see sidebar, “Hard times survival guide”), but the second is to benefit from these new patterns. A structural break is the very best time to be a strategist, for at the moment of change old sources of competitive advantage weaken and new sources appear. Afterward, upstarts can leap ahead of seemingly entrenched players. Examples - time - series forecasting, internet and the impact on print newspapers and obsolescence of publishing.

Structural breaks render obsolete many existing patterns of behavior, yet they point the way forward for some companies and at times even for whole economies. The Long Depression of 1893–97 marked the end of the railroad boom, for example, and the start of the transition to an economy based on sophisticated consumer goods. Milton Hershey built his early chocolate brand and distribution advantages in the middle of those hard times. General Electric was a product of the same period, for the structural break also marked the rise of a new economy based on electricity.

Banking Sector

The wrong way forward in a structural break during hard times is to try more of the same. The break and the hard times are sure indications that an old pattern has already been pushed to its limits and is destroying value. As an example of such a pattern, consider the financial sector’s compensation incentives. Decades of careful research shows no evidence that anything but luck explains why some fund managers outperform others. Yet fund and even pension fund managers who supposedly outperform get huge pay and bonuses. Incentives are good in principle, but did Bear Stearns get competent risk management in return for the $4.4 billion bonus pool it distributed in 2006? Does any organization have to give its CEO a $40 million bonus to secure his services? If you pay people enough money to make any future payment beside the point, don’t be surprised when they take vast long-term risks for short-term wins. In almost any pattern, overshooting produces negative returnsAnother pattern that may generate diminished or negative returns is the baffling complexity of our business and management systems. The financial-services industry is a poster child for the costs of this kind of complexity, as well. Calls to regulate such complex systems are misguided—regulators can’t comprehend them if their creators don’t. The best regulators can do in this case is to ban certain kinds of behavior.

During hard times, a structural break in the economy is an opportunity in disguise. To survive—and, eventually, to flourish—companies must learn to exploit it.

Is the recent decision to go for a hard Brexit a structural break, black swan event, pink swan event for the UK's near future.

Tech Industry

On 17 January 2017 the Prime Minister set out the 12 principles which will guide the Government in ful lling the democratic will of the people of the UK. These are:

  1. Providing certainty and clarity;
  2. Taking control of our own laws;
  3. Strengthening the Union;
  4. Protecting our strong historic ties with Ireland and maintaining the Common Travel Area;
  5. Controlling immigration;
    Preface by the Secretary of State 5

6 The United Kingdom’s exit from and new partnership with the European Union

  1. Securing rights for EU nationals in the UK and UK nationals in the EU;
  2. Protecting workers’ rights;
  3. Ensuring free trade with European markets;
  4. Securing new trade agreements with other countries;
  5. Ensuring the United Kingdom remains the best place for science and innovation;
  6. Cooperating in the ght against crime and terrorism; and
  7. Delivering a smooth, orderly exit from the EU.
    In this paper we set out the basis for these 12 priorities and the broad strategy that unites them in forging a new strategic partnership between the United Kingdom and the EU.

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