Introduction to Strategic Management

Dr. Fred Mugambi MwirigiJKUAT

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Definitions of Strategy

Strategy refers to the formulation of basic organizational missions, purposes and objectives, policies and program strategies to achieve them; and the methods needed to ensure that strategies are implemented to achieve organizational ends.

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Strategy formulation involves the interpretation of the environment and the development of consistent patterns in streams of organizational decisions.

There is no single universally accepted definition of strategy.

There is also no one best way to create strategy, nor is there one best form of organization.

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The world is full of contradictions and the effective strategist is one who can live with contradictions, learn to appreciate their causes and effects and reconcile them sufficiently for effective action.

No single model or theory can incorporate all the factors that influence major business decisions or all the possible combinations of these factors that could be faced.

No one can anticipate the bizarre changes that occur in real world environments, or, even more important, the impacts of your own or others‘ creative innovations.

Strategic decisions are concerned with:1. The scope of an organisation's activities

2. The matching of an organisation's activities to its environment

3. The matching of an organisation's activities to its resource capability

4. The allocation and reallocation of major resources in an organisation

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5. The values, expectations and goals of those influencing strategy

6. The direction in which an organisation will move in the long term

7. Implications for change throughout the organisation.

Definitions of Strategic Mgnt

… a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises. [Ansoff (1990) Implanting Strategic Management]

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Contd.

…the decision process that aligns the organization's internal capability with the opportunities and threats it faces in its environment. [Rowe et al. (1994) Strategic Management]

History of Strategic Mgt

After WW2 (Western world), most businesses were small and strategic issues were handled by the owner-manager or senior manager

1950s/60s - Expansion of org. size & business opportunities, necessitated systematic or formal ways of looking at the future, leading to long-term planning using formal-rational methods e.g. forecasting (the analytical school)

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History of Strategic Mgt contd.

Assumptions - organizations are purposeful, formal and exist in an objective environment; strategists can be trained to respond to the future and complexity in a controlled manner; strategic planning involves following a set of sequential procedures & using formal models; there are no biases in SP process; etc.

1970s - realized that formal planning often lacked relevance, its resultant plans were often “buried” and strategic decisions were often taken outside the formal Strategic Management process

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The Strategic management Process

Pre-planning Activities Strategic planning Deployment Implementation Measurement and Evaluation

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The Strategic Management Process: Another View

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Environmental Scan

or SWOT

Emergent Strategies

Strategic Learning and

Strategic Thinking

OngoingStrategic Programming

Strategic GoalsAction Plans

Tactics

Deliberate/intended Strategies

Benchmarking

Gap Analysis

Strategic Issues

Mission/VisionOrganizations Philosophy

(a) Pre- Planning Activities

Preparing Senior Management for strategic Planning

Gathering data about the organization and assessing the current state of the organization

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(b) Deployment

Plan Completion With assistance of other staffers to

complete the objectives, strategies and action plans based on the strategic foundation

Plan Communication Publishing and distributing the plan

throughout the organization

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(c) Implementation

Resourcing the plan Provision of the necessary resources (finance, staff,

materials, equipment, info) for the implementation of the plan

Putting it into action Implementing the action plans Using the tactics

Managing the actions Implementing the controls Checking the performance indicators (PIs)

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(d) Monitoring & Evaluation

Monitoring the planned activities and status of implementation and evaluating the achievement of targets is critical

Involves: collecting data (monitoring) analyzing and evaluating against targets communicating results making changes to the plan, if necessary

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A View of Organizational Change

Where: D is Dissatisfaction with the status quo V is Vision for future P is Practical next steps

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= D x V x P

Strategic Planning: Introduction

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Strategic Planning & Organizational Change

A process of developing and maintaining consistency or fit between an organization’s objectives and its resources and its changing ext. environ

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Summary of Strategic PlanningStage Outputs

Where are we? • External environmental analysis

• Internal environmental analysis

Where do we want to go?

• New vision, mission & core values

• Strategic objectives

HOW do we get there? • Strategies

• Results and operational plans

• Required resources

What practical next steps must be made to get there?

• Short-term budgets

• Short-term organizational,

managerial, HR, etc. decisions and

actions (“Quick Wins”)

How do we monitor & evaluate the plan?

• M&E plan22

Key Concepts

Vision Mission Core Values Policies Strategic objectives Strategies

What is a Vision? Possible definitions:

a. Answers the question: What will success look like in future?

b. A mental perception of the kind of environment is to be created within a broad time horizon

c. A shared image of what an org. wants to become – resonates with all & helps them feel proud, excited & part of something bigger…

A Vision is more emotional than analytical – a dream…

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Examples of Visions:

“Become the company most known for changing the worldwide image of Japanese products as being of poor quality.” (Sony 1950s)

To be a university of global excellence in training, research, and innovation for development (JKUAT)

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What is a Mission?

a. An elaboration of the vision statement

b. Defines the basic reasons for the existence and helps legitimize existence in society

c. Common intent to which everyone in the organization can point - captures the broad purpose and functions of the organization

Contents of a mission statement: Purpose statement – Why do we exist? What is the

ultimate result of our work? Business statement – What activities do we do to

accomplish the purpose?26

Examples

“To drive the integration of ICT in research and learning through quality, cost effective and efficient provision of ICT services and to be a key partner in the evolving information society” (Kenya Education and Research Network)

To offer accessible quality training, research, and innovation in order to produce leaders in the fields of Agriculture, Engineering, Technology, Enterprise Development, Built Environment, Health and other Applied Sciences to suit the needs of a dynamic world (JKUAT)

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Core values

Other names: guiding values, corporate philosophy or guiding principles

Definitions:

a. the corporate values which are the guiding principles for corporate actions and ethical behaviour, define the character of relations with stakeholders, and set management style and corporate culture

b. the organization’s essential and enduring tenets - a small set of timeless guiding principles that require no external justification

c. reflection of the deeply held values and tend to be independent of the external environment

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Contd. CVs describe what organizational members:

really care about hold dear makes them stick

Examples of CVs: integrity fairness and justice excellent and friendly customer service team work innovation professionalism, etc

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SWOT

S&W are realistic and objective appraisal of the resources or capabilities that help (S) or deficiencies that hinder (W) an organization to accomplish its mission

O&T are ext. factors or situations that affect an org. in a favourable (O) or negative way (T)

SWOT usefulness: clarifies the conditions within which an organization

operates provides good indication of strategies – build on S, take

advantage of O & minimize the effects of W&T

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SWOT

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O T

S How can X use its strengths to take advantage of the available opportunities?

How can X use its strengths to overcome the threats identified?

W What does X need to do to overcome the identified weaknesses in order to take advantage of the opportunities?

How will X minimize its weaknesses to overcome the identified threats?

Strategic Issues

A strategic issue (SI) is a fundamental challenge affecting an organization’s mandate, mission, product, service delivery or clients

Identifying SIs or Overarching Issues enables an organization to focus on the key challenges or policy choices

SIs should be are derived from SWOT analysis and consistent with the mission and vision

SIs are few Objectives, strategies and activities are developed around

strategic issues Vital for strategic issues to be dealt with expeditiously &

effectively for survival and prosperity

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Importance of identifying SIs

Focuses attention on what is really important

Emphasizes issues rather than answers

Can create “useful tension” necessary for true change

Helps in identifying solutions

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Strategic Objectives? Definitions:

a. Broad statements about where the org. wants to be at some point in the future

b. Goals to be achieved within a period of x years in order to address the SIs and meet the vision and mission in the context of core values

c. The end state to be achieved – “sum total” of objectives = mission, vision

Note: Each strategic issue has preferably one or two

strategic objectives34

Strategies

Strategies are statements that set how the organization will achieve its objectives

They are the many ways to achieve objectives Strategies define the alternatives selected by

the organization

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Thank you

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