Strategic Management

Contents
IntroduCtIon: strategIC management for professIonal praCtICe 2 Authors and teaching staff 2 Academic liason 2 Prescribed textbook(s) 3 Accessing UNEonline 5 Unit evaluation 7 Unit aims 7 Overview 8 Studying this unit 9 Discussion/Bulletin Board 1 1 StUDy timEtABlE 1 3 ASSESSmENt 3 1 Assessment details 3 1 General information 4 1 Referencing 0 2 Plagiarism 2 2 marking/Grading system 3 2 Self assessment activities 3 2 Examination 2 5 ASSiGNmENt 1: ON-liNE tESt 2 7 ASSiGNmENt 2 topIC 1: IntroduCtIon to strategIC management 1 learning objectives 1 introduction 1 What is strategic management? 4 the nature of strategic decisions 4 Adapting strategic management to an organisation 5 ACtiVity 7 READING 1.1 (Marren, P. 2004)
Graduate School of Business
topIC 2: strategIC analysIs: external envIronment Industry 1 learning objectives 1 introduction 1 Analysing the external environment 2 Analysis of competitive forces in the industrythe Porter model 7 ACtiVity 9 READING 2.1 (Porter, M.E. 1980) 2 7 READING 2.2 (Porter, M.E. 1980) topIC 3: strategIC analysIs: external envIronment CompetItors 1 learning objectives 1 introduction 1 Strategic groups 2 Key factors for competitive success 3 ACtiVity 5 READING 3.1 (Foster, W. & Bradach, J. 2005) topIC 4: strategIC analysIs: Internal envIronment organIsatIon sItuatIon analysIs 1 learning objectives 1 introduction 2 Examination of the organisations resources and competencies 2 investigation of the organisations cost competitiveness 5 ACtiVity 7 READING 4.1 (Miller, D., Eisenstat, R. & Foote, N. 2002) topIC 5: alternatIves to strategIC analysIs 1 learning objectives 1 introduction 1 Emergent strategies 3 ACtiVity 5 READING 5.1 (Mintzberg, H. 1987) 1 7 READING 5.2 (Mintzberg, H. 1994)
topIC 6: strategy formulatIon: developIng a vIsIon/ mIssIon and settIng objeCtIves 1 learning objectives 1 introduction 1 Developing a strategic vision and mission 2 Setting objectives 2 levels of strategy 5 ACtiVity 7 READING 6.1 (Chatterjee, S. 2005) 2 7 READING 6.2 (Sawhill, J. & Williamson, D. 2001) topIC 7: strategy formulatIon: generIC strategIes and other dImensIons of strategy formulatIon 1 learning objectives 1 introduction 1 Generic competitive strategies 3 Other dimensions of strategy formulation 7 ACtiVity 9 READING 7.1 (Wakeam, J. 2003) topIC 8: strategy formulatIon: InternatIonal strategIes 1 learning objectives 1 introduction 1 Reasons for moving into international markets 2 types of international strategies 5 ACtiVity 7 READING 8.1 (Viljoen, J. & Dann, S. 2000)
topIC 9: strategy formulatIon: dIversIfICatIon strategIes 1 learning objectives 1 introduction 1 Entering a new business 1 Related and unrelated diversification 3 ACtiVity 5 READING 9.1 (Gopinath, C. 2003) topIC 10: strategy ImplementatIon: budgets and struCture 1 learning objectives 1 introduction 1 the nature of strategy implementation 2 Organisational structure 2 Developing organisational resources via the budgeting process 3 ACtiVity 5 READING 10.1 (Zagotta, R. & Robinson, D. 2002) topIC 11: strategy ImplementatIon: polICIes, systems and rewards 1 learning objectives 1 introduction 1 Organisational policies and procedures 3 ACtiVity 5 READING 11.1 (Freedman, M. 2003)
topIC 12: strategy ImplementatIon and evaluatIon: Culture and leadershIp 1 learning objectives 1 introduction 1 Creating a strategy-supportive organisational culture 2 Exerting strategic leadership 2 Evaluation of strategy 3 ACtiVity 5 READING 12.1 (Finkelstein, S. 2005) 7 READING 12.2 (Roxburgh, C. 2003) topIC 13: strategy and ethICs 1 learning objectives 1 introduction 1 Business ethics 2 Social responsibility 3 ACtiVity 5 READING 13.1 (Skrabec, Q.R. 2003) 1 1 READING 13.2 (Johnson, H.H. 2003) worksheets/ exerCIses
Printed for First trimester, 2010 Copyright 2010 Graduate School of Business University of New England, Armidale NSW 2351 Australia Printed at the University of New England All rights reserved. No part of this book or related video or audio cassettes or computer disk may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior permission from the copyright owners.
IntroduCtIon: strategIC management for professIonal praCtICe
Welcome to UNE, the Graduate School of Business and this unit of study. This introduction contains information relevant to this unit, and provides links and directions to general policies and procedures to assist you in your study. Information for current students can be found at www.gsb.une.edu.au under the current students link. It includes: academic and other support services policies and procedures exams IT/computer requirements and support library services your responsibilities
It is imperative that you are familiar with University of New England policies and procedures as well as your responsibilities as a distance education student. Please read your responsibilities in the student details link under current students on the web site. We assume that you are familiar with this information in any discussion regarding your studies. GSB staff are here to assist you during office hours. Please contact us with any administrative queries at: Graduate School of Business University of New England Armidale NSW 2351 Phone: Fax: Email: Web: 02 6773 3382 02 6773 3461 gsb@une.edu.au http://www.gsb.une.edu.au
For academic queries, details of the Unit Coordinator follow.
Remember to
> > > > > > Check assignment due dates and mark them in your diary Check your UNE email account or forward it to your regular email account Check your myUNE and unit discussion boards regularly Keep in touch with GSB if you are having difficulties that may affect your study Note the GSB principal dates to avoid academic or financial penalty Call us if you have ANY queries.
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authors and teaching staff

This study guide was written by Allastair Hall, David Pearson and Ingrid Bonn. This unit is taught by Allastair Hall. Let me introduce myself I am a lecturer in the School of Business Economics and Public Policy at the University of New England. I have an MBA from UNE and a background in marketing and international business management. I spent 13 years in Southern Africa working for the Shell International Oil Company in various management and marketing roles, and have just returned from a two year stint as Director of the UNE operation in China. Although you are studying this unit by distance education, you should not hesitate to seek academic advice if it is required. I am here to help you.
Allastair Hall
academic liason
For queries concerning this unit, in general and academically, please contact me as follows. Email: ahall4@une.edu.au
Telephone: (02) 6773 2604 Fax: (02) 6773 3148
If you prefer, you may write to me at this address: Allastair Hall New England Business School Faculty of Economics, Business and Law University of New England Armidale NSW 2351
prescribed textbook(s)
Thompson, A.A., Strickland A.J. & Gamble, J.E. 2009, Crafting and Executing Strategy: The quest for competitive advantageconcepts and cases, 17th edn, McGraw-Hill, New York. ISBN 9780073530420.
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Textbook information can also be checked online through MyUNE or via the Courses and Units Catalogue http://www.une.edu.au/courses/2010/units Textbooks can be ordered from the UNE United Campus Bookshop http://www.ucb.net.au Used textbooks are available from the UNE Second Hand Bookshop http://www.servicesune.com.au/support/bookshop.htm
accessing uneonline
UNEonline is the generic name for the Learning Management System (LMS) software application/s that UNE uses to facilitate online and flexible learning. Most units offered in the GSB use the Blackboard Learning System CE. All units in UNEonline contain a range of tools and functions including: Link to the Course and Unit Catalogue Link to Student Assist Link to e-Reserve Link to e-Submission Message of the day/announcements Discussions/chat Calendar
You must be a currently enrolled UNE student and have registered your UNE username and password to access units through UNEonline. At the beginning of each semester, all students with a current UNE username and password are automatically loaded into the units in which they are enrolled.
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To register
To access your myUNE and therefore your online units, you first need to register your username and set a password. You can register online at: http://www.une.edu.au/register You will need your student number. Take care to remember the password you create. Your login details take effect within three hours and you can access your online units from the first day of teaching.
To access your online units

You will need to access your online units via the myStudy tab in the myUNE portal; however, depending on which Learning Management System (LMS) is being accessed, the appearance and navigation of the online units will be different. Any problems with registration and initial online unit access should be directed to the ITD Service Desk: Phone: (02) 6773 5000 Email: servicedesk@une.edu.au
List of usernames disclaimer

Please note that your username within UNEonline appears as part of a list in some places. Only students enrolled in the unit have access to this list. Please contact your unit coordinator if you have any concerns.
Library services
The UNE University Library has an extensive collection of books, journals and online resources. You can borrow books, obtain copies of articles and exam papers, and request advice from librarians on search strategies and information tools to use. Information on the services and resources outlined below is available on the University Library page at http://www.une.edu.au/library
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Look down the screen for the blue Services heading and choose Local students or External students. If you are a new student, click on the Services heading and then on New to see lots of hints about using the Library.
unit evaluation
The University and the Graduate School of Business appreciate your feedback. Your unit coordinator will welcome comments on the Discussion Board during the Trimester, particularly those that point out problems which can be addressed immediately. You will also be emailed an invitation to participate in an online survey to provide anonymous formal feedback, in the second half of the trimester. A link will also be available through myUNE and feedback will be forwarded to the unit coordinator and Head of School.
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guIde to studyIng thIs unIt
unit aims
This unit aims to: > provide students with a working model of the strategic management process > develop your ability to think strategically about an organisation, that is, its position in the market place and how it can gain sustainable competitive advantage; > build your skills in conducting strategic analysis in different industries and competitive situations; > improve your ability to manage the organisational processes by which strategies are implemented; and > integrate the knowledge gained in earlier post graduate courses.
overview
GSB 600Strategic Management for Professional Practice is designed to be a challenging and exciting unit. It is a course about strategy and about managing for long-term success. GSB 600 is a big picture course. Many other courses are concerned with either a specific functional area such as marketing, accounting or human resource management or with a specialised body of knowledge, for example quantitative analysis, legal studies or gender issues in management. These business courses are narrower in scope and somewhat specialised, some concern the hard side (e.g. formalised procedures and analysis of numbers) and others the soft side (e.g. values and beliefs held by people) of managing. Some relate to important concepts and information, while others involve skills-building. But none of these courses covers the whole spectrum of managing as does strategic management. Developing, implementing and evaluating company strategies requires a total enterprise perspective. It demands that many functional area variables and situational issues be dealt with simultaneously and calls for judgments about how all the relevant factors relate to each other. It requires integrative thinking and the ability to shape the actions which need to be taken within an increasingly global environment.
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studying this unit

The assignments have three roles: > > they enable us to assess, equitably, the knowledge and skills you have acquired from the unit; they provide feedback to us on the extent and rate of your learning of the material. (This enables adjustment of the flexible aspects of the unit to ensure that we maximise its value to you.); and they assist in learning required for the examination.
>
The assignment topics and details for formatting and submission are located towards the end of this Introduction. This unit begins with a topic which examines the context of strategic management. It first discusses the complexity and ambiguity strategic management has to deal with and outlines the challenges which are posed by them. It then depicts the different components of strategic management and their interrelationship. Although strategic management is presented in a step by step approach, in reality it is a dynamic process with much interplay between the individual parts. The next three topics (24) deal with strategic analysis, in particular external environmental analysis and analysis of the organisation, the internal environment. These topics focus on issues such as industry and competitive analysis, analysis of strategic groups, the examination of resources, and competencies, and the investigation of cost competitiveness. Topic 5 expands the strategic management approach by stating that strategies are not necessarily derived through a formalised process, but can emerge within different parts of the organisation. It emphasises the need to recognise these strategies and to make them work for the organisation. Topics 6 to 9 focus on strategy formulation and discuss the development of a vision, mission and objectives, the development of strategic alternatives, including generic strategies, international strategies and diversification strategies. Topics 10 to 12 deal with the translation of strategies into action, that is, strategy implementation and evaluation. These topics emphasise the importance of strategy implementation in the strategic management approach of an organisation and place particular importance on the development of a supportive organisational culture, appropriate budgets, policies and systems as well as the need for strategic leadership. Topic 13 deals with strategy and ethics in terms of cross-cultural differences and the notion of social responsibilities of an organisation.
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Structure
The unit consists of the following components: > > > > > topic notes prescribed text readings activities assignments.
The topic notes aim to guide you through the study of strategic management. They outline and discuss the key issues and link the material provided in the prescribed text and the readings into a coherent approach. The readings provide additional material which aims to deepen your knowledge gained in the topic notes and to help you explore the concepts and practical application of strategic management further. Some of the readings also address critical issues which have not been raised in the prescribed text and help you to gain a more balanced understanding of strategic management.
discussion/bulletin board
An electronic Discussion (or Bulletin) Board is provided for this unit via the Blackboard LMS accessed through your myUNE. This has two purposes. One is as a source of important news and advice about the unit. It is assumed that all students in this unit will check the Discussion Board on a regular basis. The second purpose of the Discussion Board is as a forum for discussion among students and with the coordinator. You can use it for this purpose as much as it suits your interests and situation. You will also find a GSB Student Discussion site near your unit website. This is for interaction and information related to the Graduate School and its awards, and for general issues regarding studying as an external student. Unit-specific discussion will not normally appear here and it is not assumed that you will necessarily check this site. Please remember to check your Discussion Board!
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study tImetable
Week 1 2 3 4 5 6
Commences 18 January 25 January 1 February 8 February 15 February 22 February Topic 1: Topic 2: Topic 3: Topic 4: Topic 5: Topic 6:
Topic Introduction to Strategic Management Strategic Analysis: External Environment Industry Strategic Analysis: External Environment Competitors Strategic Analysis: External Environment Organisation Situation Analysis Alternatives to Strategic Analysis Strategy Formulation: Developing a Vision/Mission and Setting Objectives Strategy Formulation: Generic Strategies and other Dimensions of Strategy Formulation Strategy Formulation: International Strategies and Industry/Company Strategy Formulation: Diversification Strategies Strategy Implementation: Budgets and Structure Strategy Implementation: Policies, Systems and Rewards Strategy Implementation and Evaluation: Culture and Leadership Strategy and Ethics
Assessment
7 8 9 10 11 12 13 14 15
1 March 8 March 15 March 22 March 29 March 5 April 12 April 19 April 26 April
Topic 7: Topic 8: Topic 9: Topic 10: Topic 11: Topic 12: Topic 13:
Assignment 1 (on-line test) to be completed by Friday 5 March at 5pm
Assignment 2 to be submitted by Monday 12 April
Private Revision Examination Period (27 April 30 April)
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assessment
assessment details
Assessment for this unit comprises two compulsory assignments and a compulsory examination. Performance will be weighted as follows. 20% 30% 50% 100% The University uses criterion-referenced assessment of your work. This approach involves the assessment of the extent to which a student has achieved the learning outcomes of a unit, measured against previously specified assessment criteria. Further information can be found at http://www.une.edu.au/policies/alphabetic.php Assignment 1 Assignment 2 Examination
general information
Information on all aspects of assessment can be found at http://www.une.edu.au/policies/pdf/assessment.pdf This information includes: Late submission of work Non-discriminatory language Re-marking and previewing Grading Assignment extensions Special extension of time (SET) Special Examinations Special Consideration
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Word limits
You are required to comply with set word limits. They have a dual role they limit the burden on the person marking them, but most importantly they encourage good academic writing. They also provide a good indicator of the depth to which you are expected to go. Deviations beyond 10% either way may be penalised at the discretion of the unit coordinator.
Presentation
Assignments are to comply with the following format, unless otherwise indicated by your unit coordinator: Title page showing your name, unit name, essay topic and word count Essay divided into subsections with appropriate subheadings, to help you organise your work, and to facilitate marking. This should include: > > > a margin of at least 4cm on the left hand side Double spaced in 12 point type A4 paper
References alphabetical listing of works to which you have referred.
referencing
Correct referencing is essential in all GSB units. You must properly recognise the contribution of the work of others to your assignment. If you do not do this properly, you are engaging in plagiarismthe theft, intentional or otherwise, of the intellectual or creative work of others. (See Plagiarism below) Referencing also enables the reader to access material you have used. The referencing system preferred by the GSB is the Author-date (Harvard) System. You can find information on this at: http://www/tlc/students/publications/referencing.pdf
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Citing page numbers from the topic material in this unit guide
If you are citing page numbers from the topic material in this guide, you should reference them as you would a book or article. For example, ...according to Hall (2010 1:7)... In the reference list at the end of your assignment, the full details for that reference will be listed as: Hall, A. 2010, GSB 600Strategic Managment for Professional Practice, Graduate School of Business, University of New England, Armidale.
Citing page numbers from readings in this study guide

If you are citing page numbers from a reading in this study guide, you should reference them as you would from a book or article. However, use the page number from the original book or article, not from the unit study guide. For example: according to Harrison (1999:98-99) In the reference list full details will be listed as: Harrison, E.F. 1999, The Managerial Decision-Making Process, 5th edn, Houghton Mifflin, Boston and Guest, D.E. 1990, Human resource management and the American dream, Journal of Management Studies, vol. 27. no. 4, pp. 337-397 Referencing for law units may differ, and you should check with your unit coordinator if unsure.
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Submission
All assignments that can be, must be submitted electronically via the Universitys e-Submission system. e-Submission is accessible via UNEonline by clicking on the e-Submission link in your online unit or in the myUNE student portal. Once the assignment has been e-submitted for marking, it will be submitted to TurnItIn for final checking by UNE. This submission will generate a report for the unit coordinator. If you have trouble e-Submitting, download an Assignment Cover Sheet and post it to the Teaching and Learning Centre.
TurnItIn
UNE uses a software application to determine the originality of assessable work submitted by its students. This software is called TurnItIn and is completely integrated into the e-Submission process. You can submit your assignment to TurnItIn to check your own work before submission. This can occur as many times as you require in order to receive a satisfactory report. Once you are satisfied with your report, you will then submit your assignment for marking. When a file is submitted to TurnItIn, the software compares the text in the submitted files with text from a range of electronic sources including online journals, online databases, the Internet and the TurnItIn database. Any strings of text that occur in both the submitted document and in one or more of the electronic sources are identified by the software with a unique number and colour in what TurnItIn calls the originality report.
Assignment cover sheets

e-Submitted assignments do not require assignment cover sheets as these are generated automatically by the e-Submission system when you submit your assignment. All assignments that are submitted in hard copy should have an assignment cover sheet attached. These can be accessed from myUNE, and clicking on the myStudy tab and then the icon in the Assignments list. If you have received an exemption from the requirement to have computer access, you will receive your assignment cover sheets in the mail.
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Post
Assignments that are being submitted in hard copy should be mailed to: Assignment Section Teaching & Learning Centre University of New England Armidale NSW 2351
DO NOT FAX
Faxed assignments will not be accepted.
Assignment extensions
If you find that you cannot meet the due date for an assignment, you must contact the unit coordinator in writing prior to and no later than the due date to request an extension. Any supporting information, such as a medical certificate, should be provided at the same time. Extensions will be granted on the basis of unavoidable or unforeseen circumstances. Normal occupational commitments and extracurricular activities are not accepted as grounds for extra time, because you are expected to plan ahead. Requests that relate to avoidable time management issues such as heavy work commitments in other units or leaving my run a little late will not be considered favourably. The maximum possible extension that may be granted is two weeks, except under exceptional circumstances, and only one extension is available per assignment.
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Late assignments
Assignments are deemed to be late if (i) they are not submitted (in accordance with the submission requirements outline above) on, or before, the published due date, or (ii) they are submitted after an assignment extension date previously negotiated with the unit coordinator. If you are unable to submit your assignment on time, you must contact the lecturer before the due date and again if you cannot meet the agreed extension date. Failure to do so may result in an NI (fail incomplete) grade for the unit. You should contact your lecturer about any difficulties you are having with the unit. If a problem arises that you feel will affect or cause you to fall behind in your studies to the extent that it will be difficult to catch up, you should speak to the GSB about your options.
Return of assignments
The unit coordinator will endeavour to have a students assignment marked and either (i) available for collection by internal students, or (ii) returned to the Teaching and Learning Centre within four (4) weeks of receiving the assignment. Please note, we will return internal assignments only to their author; no student will be permitted to pick up assignments for other students. Of course, if you receive an assignment extension you can expect the return of your work to be later than assignments submitted on time. This means that in some cases assignments may not be returned before the next assignment is due or before the exam.
Marking of assessment tasks

Students are advised that their assessment tasks may be marked by someone other than a member of the teaching team. If this is the case, the Head of School will approve the appointment of all casual markers, and the unit coordinator will moderate the marking process to ensure competence, fairness and consistency.
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Appeals
Students wishing to lodge an appeal in relation to unit assessment; practical and/or professional experience assessment; the application of faculty policies; Special Examinations; and Special Extensions of Time, should consult the Universitys Student Appeals Policy at: http://www.une.edu.au/policies/pdf/studentappealspolicy.pdf
Special extensions of time

Students must submit the required work by the date specified by the unit coordinator. A student who has been prevented through illness or other unforeseen or unavoidable circumstances from completing an assignment or other assessable work and submitting it prior to the commencement of the examination period in the relevant trimester may seek from the GSB either 1. or 2. withdrawal without failure (by making a documented case) a special extension of time
In seeking a special extension of time, a student must have complied with the late assignment policy of the relevant school/faculty and must apply in writing, attach all documentation and forward it to the GSB no later than five working days after the students final examination in that examination period. It must be accompanied by a medical certificate or other relevant independent evidence. Full details are available at: http://www.une.edu.au/policies/academic.php
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plagiarism
You must comply with the Universitys policy on Plagiarism and Academic Misconduct (go to http://www.une.edu.au/policies/pdf/plagiarismcoursework.pdf for details). Your work will be checked for originality. Plagiarism is the action or practice of taking and using as ones own the thoughts or writings of another without acknowledgment. The following practices constitute acts of plagiarism and are a major infringement of UNEs academic values: where paragraphs, sentences, a single sentence or significant parts of a sentence are copied directly, are not enclosed in quotation marks and appropriately referenced; where direct quotations are not used, but are paraphrased or summarised, and the source of the material is not referenced within the text of the paper; and where an idea which appears elsewhere in any form is used or developed without reference being made to the author or the source of that idea. Some examples of this are books, journals, WWW material, theses, computer stored data and software, lecture notes or tapes.
Your responsibility
You need to: read, understand and respect the policy on Plagiarism and Academic Misconduct found at the website above; familiarise yourself with the conventions of referencing for your discipline(s); avoid all acts which could be considered plagiarism;
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seek assistance from appropriate sources with any academic writing areas where you are aware you need more knowledge and skills; submit a separate signed and dated Plagiarism Declaration Form with every task, report, dissertation or thesis submitted for assessment or examination; be aware that when you submit an assignment electronically, you are deemed to have signed the declaration.
Avoiding Plagiarism
You should refer to the following websites or to academic units for further advice and assistance: eSKILLS UNE Keeping Track http://www.une.edu.au/library/eskillsune/keeping/index.php Avoiding Plagiarism and Academic Misconduct (Coursework): Information for Students http://www.une.edu.au/policies/pdf/plagiarismstudentinfocw.pdf
marking/grading system
Mark Grade Description Excellent performance indicating complete and comprehensive understanding and/or application of the subject matter; achieves all basic and higher-order intended goals for the assessment tasks; minimal or no errors of fact, omission and/or application present; clear and unambiguous evidence of possession of a very high level of required skills; demonstrated very high level of interpretive and/or analytical ability and intellectual iniative; very high level of competence. Very good performance indicating reasonably complete and comprehensive understanding and/or application of the subject matter; achieves all basic and most higher-order intended goals for the assessment tasks; some minor flaws; clear and unambiguous evidence of possession of a high level of required skills; demonstrated high level of interpretive and or analytical ability and intellectual iniative; high level of competence. Good performance indicating reasonable and well-rounded understanding and/or application of the subject matter; achieves all basic but only a few higher-order intended goals for the assessment tasks; a few more serious flaws or several minor ones; clear and umanbiguous evidence of possession of a reasonable level of most required skills; demonstrated reasonable level of interpretive and/or analytical ability and intellectual initiative; reasonable level of competence. Satisfactory performance indicating adequate but incomplete or less well-rounded understanding and/or application of the subject matter; achieves many basic but very few or none of the higher-order intended goals for the assessment tasks; several serious flaws or many minor ones; clear and unambiguous evidence of possession of an adequate level of an acceptable number of required skills; demonstrated adequate level of interpretive and/or analytical ability and intellectual initiative; adequate level of competence. Unsatisfactory performance indicating inadequate and insufficient understanding and/or application of the subject matter; achieves few or none of the basic and higher-order intended goals for the assessment tasks; numerous substantive errors of fact, omission and/or application present; clear and unambiguous evidence of non-possession of most or all required skills; insufficiently demonstrated level of interpretive and/or analytical ability and intellectual initiative; inadequate level of competence.
85% or above
High Distinction (HD)
between 75% and 84%
Distinction (D)
between 65% and 74%
Credit (C)
between 50% to 64%
Pass (P)
less than 50%
Fail (N)
The marking process will not compare your performance to other students; it will compare your performance against a standard set of expectations about material mastery at various levels of depththe greater the depth and sophistication of your knowledge demonstrated in an assessment task, the higher your grade will be.
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self assessment activities

You may find an exercise or activity at the end of some topics. These are to help you consolidate concepts and unit information and will not be marked.
examination
Examinations are held in the fifteenth week of trimester, at exam centres throughout Australia and overseas. Students in Australia need to be able to travel up to 120 kms to an established exam centre if there is not one in the town where you live. Overseas students may have to travel up to 300 kms. With the exception of law units, you will not be permitted to take the text or any other printed or written material into the exam. The exam will be of two hours duration, preceded by 15 minutes reading time. It will cover the entire course. Books will be provided in which to write your answers. A guide to the exam is included after the final topic in your unit material. Sample exam questions may be included, or may be posted on the discussion board prior to the exams. You may also find some previous exams on the library website. You will be notified by the Student Centre through myUNE on the location, date, time and supervision arrangements for your exam prior to the examination period for the trimester. If you have not received details for your examination by the beginning of week thirteen (13) of the trimester, or if you have any queries regarding the examination timetable, contact the GSB immediately. The final examination in this unit is worth 50%. You must obtain a pass mark or better in this exam, as well as overall, to pass the unit.
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assIgnment 1: on-lIne test
external students
Value: Start date: Complete by: 20% of assessment Monday 1 March at 9am Friday 5 March at 5pm
Assignment one is a multiple choice on-line test. The on-line test will be available to students on the units website, from 9.00am Monday 1 March 2010 until 5.00pm Friday 5 March 2010. Students should choose a time that is convenient to them, noting that they will be: > only able to access this test site once during the availability period specified above, and > automatically logged out of this test site after 60 minutes has elapsed. The on-line test is designed to assess your understanding of theories and concepts that are presented in the course. More details of the specific test content will be posted on the website for this unit on the first day of the trimester.
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assIgnment 2
students must choose either option one or option two. Option One
Word length: Value: Submission date: Topic Choose an organisation with which you are familiar and address the following: (Using the worksheets at the back of this guide.) 1. Describe the strategic management of this organisation. 2. Discuss the advantages and disadvantages of this approach to strategic management. 3. Recommend potential changes in order to improve this approach. (It may be beneficial to provide a brief overview of the organisation and to briefly mention your relationship with it.) To achieve a high mark for this assignment you will need to make explicit reference to the course material. Hence, consideration of material covered in all topics, that is Topics 112 of the unit notes and associated readings, is required for this Assignment 2. Please note that due to the benefit of having an assignment that allows for consideration of the majority of the topics in Strategic Management, this assignment will not be marked and returned to you prior to the final exam. Also, as appendices are not included in the word count, you may find them of assistance with this assignment. Students should make use of the worksheets provided at the back of this guide in developing their reponse. 2 500 words 30% of assessment Monday 12 April
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Option Two
Word length: Value: Submission date: Topic Students are required to complete a case analysis using the analytical exercises (worksheets at the back of this guide) provided and to answer the following questions; 1. Describe the strategic management of this organisation. 2. Discuss the advantages and disadvantages of this approach to strategic management. 3. Recommend potential changes in order to improve this approach. To achieve a high mark for this assignment you will need to make explicit reference to the course material. Hence, consideration of material covered in all topics, that is Topics 112 of the unit notes and associated readings, is required for this Assignment 2. Please note that due to the benefit of having an assignment that allows for consideration of the majority of the topics in Strategic Management, this assignment will not be marked and returned to you prior to the final exam. Also, as appendices are not included in the word count, you may find them of assistance with this assignment. 2 500 words 30% of assessment Monday 12 April
The marking template which will be employed to assess your assignment is presented overleaf. The case study will be available from the bulletin board at the start of the trimester.
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Aspect
Breadth of answer, i.e. identification of relevant issues Depth of answer, i.e. quality of analysis, logic of argument Use of supporting evidence, i.e. examples, appropriate referencing Presentation, i.e. layout, title page, word limit Total
Maximum Marks
40 40 10 10 100
Your Mark
topIC 1: IntroduCtIon to strategIC management
learning objectives
At the end of this topic, you should be able to: > describe the strategic management process within an organisation; > explain the difference between strategic planning and strategic management; and > distinguish between strategic and operational decisions.
Introduction
This topic introduces the concept of strategic management. It addresses two main issues: What is strategic management? and The nature of strategic decisions.
what is strategic management?

As mentioned in the overview of this course, strategic management is concerned with managing an organisation from a total enterprise perspective. It deals with the decisions and actions involved in formulating organisation-wide strategies and in managing an organisations operations in a way that effectively carries these strategies out. Every aspect of the organisation plays a role in this process, for example its people, finances, production methods, organisation structure, environment and organisational culture. This is one reason why strategic management is such a complex and often ambiguous process, because it has to deal with many variables and issues simultaneously and has to take conflicting interests and approaches into consideration. Study Reading 1.1 (Marren 2004).
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Furthermore, strategic management has to deal with changes in the nature of competition in many industries. Consider, for example, how the economic development of Asian countries has influenced the competition in Australia. Technological changes and trends have created further challenges and altered significantly the nature of competition. The rate at which new technologies become available, for example, has reduced the product life cycles of many products and requires organisations to introduce new products and services at a much faster rate than in previous decades. A term closely related to the concept of strategy is that of a companys business model. This term is widely applied to managements plan for making money in a particular business. The term business model deals with whether the revenues and costs flowing from the strategy demonstrate business by ability. Another term that is often used in relation to business model is that of key economic driver of the proposed strategy. Strategic management aims to help an organisation respond effectively to the challenges of this competitive landscape. It calls for undertaking a sound strategic analysis in order to identify the threats and opportunities in the market place and to determine how to use the companys strengths to achieve the desired strategic outcomes. This analysis helps the organisation to formulate its strategic vision/mission, objectives and strategies so that it can leverage its exsisting resources, capabilities and core competencies, as well as create new ones, to achieve competitiveness in the market place. The strategy-formulation process has to be combined with good strategy implementation to achieve long-term success. The aim of strategy implementation is to translate the strategies into action. Good implementation looks at issues such as resource allocation, the appropriateness of the organisational culture and organisation structure, and the design of policies, as well as support and reward systems. Finally, it is important to assess and evaluate the strategic performance to enable the company to undertake strategic adjustment and corrective action. Hence, the strategic management process consists of four main components: strategic analysis, formulation, implementation and evaluation. It is, however, important not to regard the strategic management process as a sequence of steps which starts with strategic analysis and finishes with evaluation. Instead, it is a dynamic process with much interplay between the individual parts. For example, while formulating strategies, managers need to think about how to implement them. Similarly, problems during the implementation phase might
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require further strategic analysis to be undertaken. Thus, the separation of the four elements in strategic management are for discussion purposes only. In reality, these different sets of action allow the firm to achieve its desired strategic outcomes only when they are carefully integrated. It is also important to acknowledge the importance of leadership throughout the strategic management process. It is through effective strategic leadership that organisations are able to use the full potential of the strategic management process. Effective leaders influence the behaviour, thoughts and feelings of those with whom they work and thus guide the organisation in ways which facilitate the development and implementation of appropriate strategies. A central task of leadership is to shape the internal environment of the organisation. In other words, strategic leaders need to pay a great deal of attention to the culture of their organisation. Organisational culture consists of a complex set of core values and beliefs which are shared throughout the organisation and which have a strong influence on the way the business is conducted. To achieve successful outcomes from a strategic management process, the culture of an organisation must be in close alignment with its strategies. A strong fit between organisational culture and strategy promotes strategy implementation, and managers have to rely less on policies and rules to enforce what employees should and should not do. Effective organisational cultures are grounded in principles which enforce social responsibility and ethical business behaviour. Hence leadership includes consideration of the way the organisation does business and reinforcing ethical behaviour throughout the organisation. From the above discussion it should be clear that there is an important difference between strategic planning and strategic management. Strategic planning constitutes only one small part in the strategic management process, namely strategic analysis and the formulation of vision, mission, objectives and strategies, often embodied in a document called a strategic plan. In contrast strategic management is a wider more complex task. It deals with the management of the organisation as a whole and hence includes the implementation and evaluation processes of strategic management. Read Chapter 1 of the text.
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the nature of strategic decisions

There are three main characteristics associated with strategic decisions: > Strategic decisions are concerned with the long-term direction of an organisation. They are not about day-to-day or operational decisions. Long-term decisions deal with questions such as Which business are we in or should we be in? and Which geographic markets should we serve?. Strategic decisions aim to search for effective positioning within the competitive landscape to give the organisation advantage over its rivals, for example through offering products or services which are unique. Strategic decisions affect several or all areas of the organisation. Strategic decision making requires a good understanding of the different functions and activities within the organisation and how they relate to each other.
>
>
adapting strategic management to an organisation

This Unit Guide and its prescribed text provide a comprehensive process for strategic management. However, it is unlikely that all the issues raised by this process will be relevant to a particular organisation. Most organisations will find that some of the issues raised are extremely important, others only of minor importance whilst others may even be irrelevant. Thus, the application of strategic management requires the art of adapting, or translating, from this comprehensive process. An example of this translation is with not-for-profit organisations which include many public sector organisations. A good starting point is to identify the numerous stakeholders and their relationship with the organisation. For example an organisation may raise money from a number of sources, such as government funding but also membership payments and donations. Thus, the competitors are other organisations that compete for time and money from these stakeholders. And for each of these stakeholders there is the need to consider the benefits of the product and costs of its production, as in so many other businesses. This includes the need to understand which stakeholders are most likely to switch to and why. As such these issues are the same as those considered by private sector organisations.
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aCtIvIty
Of the four components of strategic managementstrategic analysis, formulation, implementation and evaluationwhich is usually the most difficult to achieve and why?
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guIde to aCtIvIty
The most difficult component in strategic management is usually the implementation of the strategic plan. You might work in an organisation which has a formalised planning system and an elaborate strategic plan, but you might find that this plan never gets implemented. Why? Maybe the organisational culture in the organisation is not supportive of the strategies that have been developed. Maybe the human condition has not been taken into consideration. Maybe the politics in the organisation are not conducive to the strategic plan. Maybe the organisation lacks the necessary leadership to get the strategies implemented. Maybe the policies and systems do not support your strategic plan. In other words, there are many possible reasons why some of the best plans are not implemented. Throughout the course, we will address these issues and, hopefully, by the end you will have a good knowledge of how to improve the calibre of strategy implementation.
topIC 2: strategIC analysIs: external envIronment Industry
learning objectives
At the end of this topic, you should be able to: > explain the importance of studying and understanding the external environment; and > identify the five competitive forces and explain how they determine an industrys profit potential.
Introduction
The aim of strategic analysis is to understand the various influences which affect the organisation and hence its strategic situation. We will be looking at two different areas in strategic analysis: > > the external environment (Topics 2 and 3); and the internal environment of the organisation (Topic 4).
A major aim of the analysis is to identify the opportunities and threats which exist in the external environment, whereas the internal analysis aims to identify strengths and weaknesses of the organisation.
analysing the external environment

Trying to understand the external environment is not an easy task. The environmental conditions which organisations face can change. For example, deregulation has removed protective barriers from certain industries and requires organisations to meet world standards. Moreover, many organisations now compete in global rather than domestic markets. Technological changes have altered the way of doing business and require the development of more timely and effective competitive actions.
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It is vital for decision makers to have an accurate understanding of this turbulent and complex environment. Managers are challenged to deal with uncertainty and ambiguity and to find ways to respond to the environmental changes in ways that increase their operational efficiency and enhance their competitive position in the market place. Read Chapter 3 of the text. A sound environmental analysis consists of the following tasks: 1. 2. 3. 4. 5. 6. definition of the industrys dominant economic features analysis of competitive forces in the industry (Porters 5 forces model) identification of forces driving industry change analysis of strategic groups analysis of strategic moves of individual competitors identification of key factors for success.
All of these tasks are relevant in strategic analysis, however, due to the importance of Porters 5 forces model it will be discussed in detail.
analysis of competitive forces in the industrythe porter model

Analysis of the competitive forces in the industry helps to determine the intensity of competition and the profit potential of the industry. A sound understanding of the industry structure is essential to identify the basis for possible competitive advantage and to develop appropriate long-term strategies. The analysis of industry structure is based on the framework of Michael Porter. His model focuses on the stable, underlying characteristics of an industry, it is not concerned with short-term factors such as fluctuations in economic conditions. According to this model, the state of competition in an industry depends on five competitive forces: > > > > > potential entrants suppliers buyers substitutes the intensity of rivalry among competitors.
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The threat of new entrants

The likelihood that firms will enter an industry depends on two factors: barriers to entry and the expected retaliation from firms within the industry. Entry barriers exist when it is difficult to enter into a new industry or when firms entering a new industry are at a competitive disadvantage. Porter differentiates between the following six major sources of barriers to entry: > > > > > > economies of scale product differentiation capital requirements cost and experience advantages of existing firms access to distribution channels government regulations.
With economies of scale, unit costs decline with increases in the absolute volume produced during a given time period. Thus new entrants must either invest in large-scale production or start small with considerable cost disadvantage. Starting small may mean that the firm faces losses for a number of years before it can build up its size to reap the economies of scale. Product differentiation is another means by which firms in an industry can build up barriers to entry. Established firms in many industries have loyal customers with strong brand identification. Typically, new entrants must allocate significant resources over a long period of time to overcome these customer loyalties. Competing in a new industry requires resources for physical facilities, inventories, marketing activities and other business functions. The larger the capital requirement needed to enter the market, the more limited the number of potential entrants. Established companies in the industry might also have cost and experience advantages independent of economies of scale which are difficult for new entrants to duplicate. Such advantages include proprietary technology, patents, access to raw materials and location. Another barrier to entry is access to distribution channels. Loyal dealers and retailers can offer substantial advantages to existing firms and it may be difficult for a new entrant to establish a competitive distribution network.
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Governments can limit entry into an industry with controls such as licence requirements, standards for air and water pollution, standards for product testing and safety regulations. In international markets, foreign investment applications need to be approved by the host government. New entrants also need to consider possible reactions from existing competitors. Potential entrants might pursue entry into the market if only passive resistance is anticipated, whereas they might decide against entry if incumbent firms are expected to aggressively defend their market positions.
Bargaining power of suppliers

Suppliers can exert power over firms competing within an industry by increasing prices and reducing the quality of their products and services. If unable to recover cost increases, a firms profitability is reduced by the suppliers actions. A supplier group is powerful when: > > > > > > it is dominated by a few large companies and is more concentrated than the industry to which it sells; substitutes are not available; the industry is not important to the supplier group; suppliers goods are critical to the industrys success; the effectiveness of suppliers products has created high switching costs for the firms; and suppliers are a threat to integrate forward into the buyers industry.
Bargaining power of buyers

Buyers can bargain for higher quality, greater levels of service and lower prices. They are powerful when: > > > > > the buyers are concentrated or purchase in large volumes; substitutes are available and the buyers can switch to another product at little or no cost; the product being purchased from the industry accounts for a significant portion of the buyers costs; the industrys product is unimportant to the quality of the buyers products or services; and the buyers pose a credible threat to integrate backward into the sellers industry.
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Threat of substitutes
Substitutes are different products or services that perform the same or a similar function as the original product or service. The threat of substitutes is strong when customers face few or no switching costs, when the price is lower and quality is equal or better than the industrys product.
Intensity of rivalry among competitors

The final competitive force is rivalry among existing firms. Rivalry occurs when one firm seeks to improve its position at the expense of others through price cuts, product innovation, unique advertising campaigns, or extended product warranties. The intensity of competitive rivalry among firms is a function of the following factors: > > > > > numerous or equally balanced competitors slow industry growth lack of differentiation or low switching costs high fixed costs high exit barrier, for example the existence of specialised assets. Reading 2.1 (Porter 1980) discusses the five forces model in great detail. Reading 2.2 (Porter 1996) examines the above issues in great detail. Porter places particular emphasis on the difference between strategic and operational effectiveness, the need for strategies which are based on unique activities and the importance of fit between the different activities of an organisation. In general, the stronger the competitive forces, the lower the profit potential for firms in the industry. An unattractive industry has low entry barriers, suppliers and buyers with strong bargaining power, strong threats from substitutes and intense rivalry among competing firms. Alternatively, an attractive industry has high entry barriers, suppliers and buyers with little bargaining power, few threats from substitutes and relatively moderate rivalry.
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Limitations of the Porter Model

Porters five forces model makes a relevant contribution to our ability to analyse the industry. However, it is important to be aware of its limitations. The two main limitations are: firstly, it provides a static picture of competition and hence does not explicitly include the potentially major role that innovation may have; and secondly, it de-emphasises the significance of individual organisation differences.
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aCtIvIty
A fundamental assumption underlying the use of the Porters 5-Forces model is the identification of an industry in which the organisation operates. Select an organisation that you are familiar with and provide a detailed discussion of its industry. This should include identification of those organisations that are competitors, that is, those in the same industry, as well as those organisations that act as suppliers and buyers to the industry.
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guIde to aCtIvIty
The key starting point in relation to answering the question is the definition of the industry in which the organisation exists. Often the revolutionary strategies and hence successful organisations are those that take different views on where industry boundaries lie. These organisations generate different views on their relationship to customers and who are their competitors. For example, Cannondale is a leader in what is generally referred to as the mountain bike industry. However, a Porters 5-Forces analysis would provide a very different picture if the industry was defined differently, such as outdoor recreation, or leisure, or fashion, or bicycles, or self propelled transport, or Such alternative industry definitions would lead to different, and perhaps more relevant, strategic conclusions.
topIC 3: strategIC analysIs: external envIronment CompetItors
learning objectives
At the end of this topic, you should be able to: > define strategic groups and describe how they influence a firms competitive action; and > describe key sucess factors for a variety of industries.
Introduction
This is the second of two topics which consider analysis of the external environment. The previous topic considered analysis of competitive forces in the industry in detail. This topic considers strategic groups and key success factors. Reread pp. 7582 in Chapter 3 of the text.
strategic groups
A strategic group analysis is used to analyse competition within an industry. It is based on the assumption that some organisations are more significant, from a competitive point of view, to a particular organisation than others. The strategic group analysis should be carried out as follows: Identify the two major competitive characteristics that differentiate organisations in the industry. Plot individual organisations on a two-dimensional graph by using the two variables as the vertical and horizontal axes. Vary the size of the circle for each organisation in proportion to the groups share of the total industry revenue.
It is important to note that there may be a number of variables that could be used and hence a number of different strategic group mapseach offering a relevant strategic perspective.
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Strategic group analysis is useful to strategists because it enables them to gain a better understanding of the competitive rivalry. Strategic group analysis helps to identify the most direct competitors and the basis on which competitive rivalry is likely to take place. Strategic group analysis also raises the question of how possible it is for an organisation to move from one strategic group to another, especially if the current strategic group is adversely affected by strong competitive pressures. Finally, strategic group analysis might be used to identify strategic opportunities, in particular if the strategic group diagram suggests a number of vacant spaces in the competitive landscape.
key factors for competitive success

Key factors for competitive success are commonly referred to as key success factors (KSFs). They arise out of the observation that there are only a limited number of competencies, that is, things an organisation is competent at, in each industry. Thus, in order to last for the long term in an industry an organisation must have, or develop, competencies in these areas. The organisation may have competencies in other areas, however, these will only enhance competitive success, they will not ensure it. Key success factors vary widely. For example, a technology company may require competency in Research and Development whilst a manufacturer of retail products will require competency in relation to managing distribution channels. Study Reading 3.1 (Foster & Bradach 2005).
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aCtIvIty
Choose an industry you are familiar with and identify the strategic groups existing in that industry. Draw a strategic group map. What distinguishes them from each other? What strategic conclusions can you draw?
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guIde to aCtIvIty
The answer to this question depends on the industry you have chosen. In general, it is important that you have identified all the major players in the industry and that you have selected variables for the horizontal and vertical axes which are not correlated with each other. From the resulting diagram it should become clear what distinguishes the strategic groups from each other. The strategic conclusions depend very much on how your diagram looks. Perhaps the blank spaces in the diagram indicate areas of opportunity, alternatively they may indicate alternatives where it is impossible to create a sustainable competitive position.
topIC 4: strategIC analysIs: Internal envIronment organIsatIon sItuatIon analysIs
learning objectives
At the end of this topic, you should be able to: > explain the importance of analysing the internal environment of an organisation; > identify and analyse the potential of competencies and resources; and > apply the analytical tools of value chain analysis and benchmarking within an organisation and between competitors.
Introduction
The last two topics have underlined the importance of analysing and understanding the external environment in which an organisation operates. This environment creates both opportunities and threats for strategy development; it determines what an organisation might choose to do. However, successful strategies are also dependent on the internal situation of the organisation itself. Through an analysis of the internal environment, an organisation decides what it can do that is, the competitive actions permitted by its unique strengths in terms of resources, capabilities and core competencies. An internal analysis centres around the following issues: analysis of the organisations competencies and resources analysis of the organisations cost structure using value chains and benchmarking. Read Chapter 4 of the text.
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examination of the organisations resources and competencies

An analysis of resources sometimes called audits identifies the resources available to the organisation and provides a framework for the study of their potential. In addition, it stimulates managerial thinking about how these resources may be exploited strategically. Examples of resources include financial resources (e.g. borrowing capacity), physical resources (e.g. equipment, access to raw materials), human resources (e.g. training and experience of employees), organisational resources (e.g. formal planning, controlling and coordinating systems), technological resources (e.g. patents, copyrights and trade-secrets) and reputation with customers, for example brand name and perceptions of product quality. Individually, a resource is typically not a source of competitive advantage. However, when they are integrated with other resources they may create a competitively valuable asset. The unique combination of the organisations resources are often referred to as capability or competence. A competence is something that the organisation is good at, whilst a core competence is a competence that is critical to the competitiveness of the organisation and, finally, a distinctive competence is a core competence that the organisation performs better than its competitors. Study Reading 4.1 (Miller, Eisenstat & Foote 2002).
Investigation of the organisations cost competitiveness

An important part in the internal analysis for an organisation is to look at its cost position in comparison to its rivals. This is done by performing a strategic cost analysis. The primary tool of this analysis is the value chain. A value chain analysis is a systematic way of examining the costs of activities performed by the organisation. In addition, interactions between the organisations activities and those of its suppliers, distributors and customers are considered. The value chain divides the organisation internally into strategically relevant activities. The aim is to understand the individual costs in performing these activities and to locate potential sources of competitive advantage. The value chain is divided into primary and support activities. Primary activities are concerned with a products creation, its
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sale and distribution to buyers, and its service after the sales. Primary activities are purchased supplies and inbound logistics, operations, outbound logistics, sales and marketing, and service. Support activities provide the support necessary for the primary activities to take place. They consist of product R & D, technology and systems development, human resources management and general administration. A significant aspect of the value chain analysis is the examination of its various components as well as the links between the value chain of the organisation and the value chains of its suppliers, distributors, customers and indeed the whole industry. The concept of a value chain may also be applied to a whole industry. This involves inclusion of both the suppliers value chain and the buyers value chain. Consideration of the value chain for the entire industry may assist in a number of ways. For example, opportunities to reduce costs for more than one organisation in the value chain through some cooperative efforts may be identified. Further, in addition to focussing attention on both buyers and suppliers (such as from the Porters Five Forces model) this enables consideration of the issue of vertical integration in both the forward and backward direction. This analysis may lead to identification of areas for gaining competitive advantage. Finally, it should be noted that competitive advantage is relative. Thus value chain analysis allows for a comparative analysis of the value chains of other organisations competitors. Such a comparison (or benchmarking) will indicate whether the organisation is performing particular activities in an efficient way.
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aCtIvIty
It is interesting to ponder the value of resources in terms of competitive success. From your own experience provide examples of unique resources that have provided organisations with sustained competitive success.
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guIde to aCtIvIty
Although in Strategic Management we place a big emphasis on resources that an organisation is able to create, there are examples of organisations where their resources are unique. These organisations are in a somewhat shielded competitive position, they have a head start in the competitive race. The mining industry provides examples of the value of unique resources. Success is, to a large extent, determined by having access to the raw material. Why is there a town in western New South Wales, named Broken Hill, and why was a company called Broken Hill Proprietary Limited the largest company in Australia for many yearsbecause of a mine that at its peak supplied 30% of world silver production.
topIC 5: alternatIves to strategIC analysIs
learning objectives
At the end of this topic, you should be able to: > discuss differences between emergent and deliberate strategies; and > discuss the contribution of paralysis by analysis and extinction by instinct to the strategic management process.
Introduction
The strategic management approach we have discussed so far assumes that strategies are derived from a fairly formalised process of strategic analysis. However, this approach has been criticised as being inadequate for the development of strategies. Observation of strategic management in organisations has identified a less defined approach, often operating in conjunction with the formal activities associated with strategy.
emergent strategies
Mintzberg (1987) argues that most of the strategic management literature describes strategy-making as a deliberate process which follows a stepby-step approach: First we think, then we act. We formulate, then we implement (p. 68). He considers this view as restrictive and introduces the concept of emergent strategies to describe strategies which appear without clear intentions or in spite of them (p. 69). These strategies can show up in the strangest places and develop through the most unexpected means (p. 70), for example as a response to a particular situation. He argues that deliberate and emergent strategies may be conceived as two end points of a continuum along which real world strategies lie. Strategists must be able to use both approaches or in his words they need to walk on two feet, one deliberate, the other emergent (p. 69). This involves a recognition of the importance of emergent strategies, the creation of an organisational culture within which a variety of strategies can grow, the ability to recognise them and to use them for the benefit of the organisation.
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Reading 5.1 (Mintzberg 1987) explores the concept of emergent strategies and shows their relevance for organisational learning. In one of his more recent publications, Mintzberg (1994) goes a step further and contends that strategic planning has fallen from its pedestal (p. 107), because it confuses strategic planning with strategic thinking. He argues that strategic planning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers (p. 107). In his view, strategic planning is about analysis which tends to depend on the preservation and rearrangement of established categories (p. 109), whereas strategic thinking is about synthesis which involves intuition and creativity and tends to invent new categories. Mintzberg contends that the development of strategy should be the task of business-unit managers. Planners, on the other hand, should: 1. 2. 3. assist managers to find patterns and strategies within the organisation; carry out formal analyses and supply the hard data; and question conventional wisdom and assumptions and encourage managers to think strategically.
Reading 5.2 (Mintzberg 1994) discusses the above issues in great detail. These alternative approaches highlight an important aspect of strategic management, namely that there is no one best way to develop strategies. Different organisations require different approaches. For example an organisation which operates in a highly turbulent environment might need a totally different approach compared to an organisation operating in a stable environment. Similarly, an organisation in a growing industry might need to approach its strategy development processes differently from an organisation in a mature or declining industry. Hence, it is important for managers to be aware of the different ways strategies can be formed and to create the conditions in their organisations to facilitate an appropriate approach towards strategy formulation and implementation.
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aCtIvIty
Choose an organisation you are familiar with and explore to what extent it uses the emergent approach towards strategy development.
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guIde to aCtIvIty
The answer to this question depends on the organisation you have chosen. However, experience indicates that strategies tend to be created from a combination of formal analytical processes working in conjunction with ideas that emerge from various parts of an organisation on an ad-hoc basis.
topIC 6: strategy formulatIon: developIng a vIsIon/ mIssIon and settIng objeCtIves
learning objectives
At the end of this topic, you should be able to: > explain why vision/mission statements are important for an organisation; and > understand the difference between financial and strategic objectives and explain their importance in the strategy-making process.
Introduction
This topic looks at two issues which are important for strategy formulation, namely the development of a vision or mission and the setting of objectives. Read Chapter 2 of the text.
developing a strategic vision and mission

Mission and vision statements are popular. However, their quality is extremely variable. This is a pity, because vision and mission statements can be very important in providing an overall direction for the organisation. Study Reading 6.1 (Chatterjee 2005). There are a number of different definitions for vision and mission statements in the literature. Some authors make a distinction between what constitutes a vision statement versus a mission statement. This distinction is not of importance in this subject. What is important is that the strategic management process generates words, phrases or even a few short sentences that fulfill
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the role of a vision/mission statement. This statement has the potential to make a major contribution to the organisation by setting the direction for strategy and hence all organisational activities. Although pyramids are not built from the top down, the top stone of the pyramid sets the direction for all of the stones that are below it. In the same manner a good vision/mission sets the direction for the organisation.
setting objectives
The vision/mission of the organisation needs to be translated into action. Objectives, which are measurable performance targets, is the term used in strategy for this. As performance measures, objectives need to be quantifiable areas of activity and to include a time for completion. Hence they measure what and by when. Organisations need both financial and strategic objectives. Financial objectives relate to the financial performance of the organisation and typically focus on measures such as earnings growth, return on investment, and cash flow. In contrast strategic objectives are concerned with strengthening an organisations overall business and competitive position. A good example of a strategic objective is superior product quality within five years. Objectives should be set for all organisational units. Strategic issues exist at many levels in an organisation. At the top level in a multibusiness organisation there are corporate strategic issues, below this are the business unit strategies which interact with the functional and operational strategies. The goal is to achieve consistency with the strategies and objectives set at all these levels of the organisation. The greater the harmony between these, the more efficient the organisation will be in achieving its overall strategic direction. Reading 6.2 (Sawhill & Williamson, 2001) discusses the importance of relating vision and objectives in non-profit organisations.
levels of strategy
It is possible to think of strategy at a number of levels in the organisation. The four levels proposed are: corporate strategy, business strategy, functional strategy, and, finally, operating strategy. This concept, whilst not universally applicable, does give a relevant framework for thinking about the numerous components of strategy. At the highest
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level, that of corporate level strategy, the issues considered concern the allocation of resources between the different business units in the organisation. The next level, business strategies, relates to the managerial plan for a single business, or strategic business unit as used in some areas. This is where emphasis is given to the external environment for the business and its internal resources resulting in the pursuit of sustainable competitive advantage. The next level, that of functional strategy, relates to the managerial game plan for a particular functional activity or business process. For example, marketing or human resource strategies represent examples of functional strategies. The final level of strategy is that of the operational strategy. The operating strategy concerns activities within the functional strategies. The advertising campaign and its associated strategy is, for example, an operating strategy within the broader functional strategy of marketing. These four levels of strategies typically exist in large diversified organisations. For single businesses, corporate strategy and business strategy are the same; hence, they have only three levels of strategies.
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aCtIvIty
Choose an organisation you are familiar with and evaluate its mission statement. Do you think it is adequate? If yes, why, if not, why not?
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guIde to aCtIvIty
The answer to this question depends on the organisation you have chosen. In general, the mission statement should avoid banalities and superlatives and comply with the four criteria addressed in this topic. That is: > differentiate the organisation from the competitors > clearly define the business > be relevant for all stake holders > be inspiring.
topIC 7: strategy formulatIon: generIC strategIes and other dImensIons of strategy formulatIon
learning objectives
At the end of this topic, you should be able to: > describe the characteristics of the five generic strategies; > identify which of these strategies is most likely to be sucessful in particular situations; and > understand the potential from vertical integration, outsourcing and internet strategies.
Introduction
This is the first topic in strategy formulation. It takes an in-depth look at the five generic competitive strategies.
generic competitive strategies

Read Chapter 5 of the text. There are five generic strategies. The five generic strategies are broad cost leadership, focussed cost leadership, broad differentiation, focussed differentiation, and a middle position of best cost strategy.
Type of competitive advantage

In the context of generic strategies there are two types of competitive advantage that may be pursued, low cost or differentiation. Low cost strategy Under this strategy the organisation aims to be the overall low cost provider of a product or service while serving a broad cross-section of the market. Typically this involves driving costs down in each activity of the value chain.
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A low cost leadership strategy can be used to compete in almost any industry. However, it is particularly useful if the products are undifferentiated, the buyers are very price sensitive and the competition is fierce. It is the mostand perhaps the onlyappropriate strategy for competing in commodity industries. Differentiation strategy With a differentiation strategy, an organisation aims to offer a unique product or service to its customers, again serving a broad cross-section of the market. To be sustainable, differentiation usually has to be linked to internal capabilities and core competencies which are difficult for competitors to match. Differentiation may provide a lasting competitive advantage when it is based on technical superiority, product quality and comprehensive customer service. Such attributes require considerable skills and expertise and are more difficult to imitate. In addition, customers usually perceive them as adding extra value to the product or service. A differentiation strategy works best when products or services can be differentiated in many ways and customers perceive these differences as being valuable, when the needs of customers are diverse and when few competitors follow a similar approach.
Target market
In the context of generic strategies there are two extremes in terms of the target market: broad or mass market as opposed to narrow or niche market. A broad or mass market strategy is when everyone is a potential customer and is commonly used by organisations that have grown to become dominant in their industry. A focus or niche strategy can be applied in most industries. This strategy targets a narrow segment of the market. The market segments can be defined in terms of geographic location, specialised requirements in using the product or special product attributes. It is particularly useful if the industry consists of many different segments, when multi-segment competitors do not meet the needs of the market niche, and when an organisation lacks the resources to target the whole market.
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Best cost generic strategy

This strategy combines an emphasis on low cost with an emphasis on quality and may be referred to as a best-cost strategy. The best-cost provider strategy is particularly useful in markets with price and value sensitive buyers where product differentiation is the norm. It is a strategy that is very common, as organisations simultaneously pursue cost management as well as elements of differentiation. Further, they service an existing market whilst developing new markets.
other dimensions of strategy formulation

In addition to the 5-Generic strategies there are many other dimensions of strategy that may be used to secure a competitive advantage. This section considers alliance strategies, vertical integration strategies, outsourcing strategies, offensive strategies, defensive strategies and strategies concerned with the timing of strategic moves. Read Chapter 6 of the text.
Strategic alliances and collaborative partnerships

Competition has been an important aspect of many sections of the economy. This relates back to the seminal work of Adam Smith and his notion of the invisible hand of competition and the benefits that it provides. Competition has been introduced to varying levels, and with varying degrees of success, in many industries previously seen as a monopoly. Somewhat in contrast to the perception of the importance of competition many organisations are pursuing strategies that demonstrate aspects of cooperation rather than competition. These cooperative strategies may be termed strategic alliances or collaborative partnerships where the participants implement their own strategic initiatives and strengthen their competitiveness through working with other organisations. This may in part be due to the scale and scope of many new market opportunities such as the desirability to be a global player and the speed at which the technology race is unfolding.
7:4
Reading 7.1 (Wakeam 2003).
Merger and acquisition strategies

Strategic alliances and collaborative partnerships generally exist where fundamentally separate organisations operate together for a relatively small part of their total activities. In situations where there are advantages in having the operations of the two organisations more closely intertwined mergers and acquisitions offer an appropriate strategic alternative. A merger is combination of two organisations of approximately the same size to create one new organisation. An acquisition is where one organisation, the acquirer, absorbs another, usually smaller organisation, into its operations.
Vertical integration strategies

Vertical integration strategies, both forward and backward, extend the scope of the organisation within the industry. They are only useful if they strengthen the organisations competitive position. An interesting aspect of vertical integration is the notion of full versus partial integration. With full integration the organisation totally controls all the suppliers or buyers in the adjacent stage of the distribution channel. The notion of partial integration, or taper integration, suggests that the organisation only participates in select stages or in a select amount of these stages.
Outsourcing strategies
Somewhat the opposite of integration is the notion of disintegration or unbundling strategies. This requires consideration of what activities are core to the organisation and hence what activities are potential candidates to be provided by other organisations or outsourced. The biggest danger with outsourcing is the potential for the organisation to outsource the wrong activities and lose control of them. There is also the danger of outsourcing too many activities and creating organisational anorexia. However, outsourcing is a useful strategy for creating lower costs, higher flexibility and a concentration of particular resources.
Offensive and defensive strategies

It has been suggested that competitive advantage is nearly always achieved by successful implementation of offensive strategic moves. The offensive strategies may be characterised as guerilla offensives which use
7:5
the hit and run principle. Another offensive strategy is the notion of a pre-emptive strike which involves moving to stake out a position that results in competitors being discouraged from duplicating. Obviously a key consideration for pre-emptive strikes is considering who to attack and when to attack them. The opposite of an offensive strategy, that of a defensive strategy, is common; however, defensive strategies normally dont enhance an organisations competitive position, they merely fortify it. Defensive strategies include moves to fortify the organisations present competitive position, for example by signing exclusive agreements with suppliers or distributors. Another approach is to dissuade competitors from attacking by signalling strong retaliation.
Internet strategies
The pervasiveness of the internet and its increasing use by both organisations and individuals has led to another strategic choice for organisations, that is, the extent to which they use the internet. At one extreme the internet may be used as the sole channel for accessing buyers and completing sales transactions. The opposite extreme is using an internet web site only to provide information about the products for sale. Many organisations are using a click and brick strategy, which is between the two extremes, where the organisation maintains the traditional retail outlets and gain additional sales from the internet.
Timing of strategic moves

Finally, it is important to know when to move. Sometimes organisations which move first gain advantages, other times it might be better to be a late-mover.
7:7
aCtIvIty
Consider 10 products and classify them in terms of the 5-Generic strategies.
7:8
guIde to aCtIvIty
For many people the classification of these 10 products will show a relatively high frequency of Best cost provider strategies. The relative absence of products fitting into the other four strategies is not to suggest that the 5-Generic strategies concept is irrelevant. Its value lies in providing a template that highlights directions in which organisations may choose to move in relation to the strategy for their products.
topIC 8: strategy formulatIon: InternatIonal strategIes
learning objectives
At the end of this topic, you should be able to: > explain the main reasons for organisations to pursue international strategies; > describe the characteristics of licensing, exporting, multicountry strategy and global strategy; and > identify the main risks associated with international expansion.
Introduction
This topic discusses the importance of international strategies as a source of strategic competitiveness. It focuses on reasons to internationalise, different international strategies, and the risks in the international environment. In addition this topic reviews the contribution that industry environment and organisation situation make to strategy form Read Chapter 7 of the text.
reasons for moving into international markets

One of the primary reasons for pursuing an international strategy is that international markets yield potential new opportunities. The most obvious of these is access to a larger market. Organisations that are successful in their domestic market and achieve a level of market saturation often move into new overseas markets as a means of sustaining growth. This growth may offer an opportunity to increase the return on a large expense, such as research and development or to achieve economies of scale from a large investment in production infrastructure. In addition, overseas markets may offer location advantages such as lower raw material or labour costs.
8:2
types of international strategies

There are a number of dimensions of international strategies. These include where the product is made which gives rise to licensing versus exporting. Further, where decisions are made gives rise to multi-country versus global strategy.
Licensing and exporting

A licensing agreement allows a foreign firm to purchase the right to manufacture and sell the organisations product within the host country. The licenser is normally paid a royalty on each unit sold. Licensing is a valuable strategy when an organisation with a unique product does not have the organisational capabilities or resources to market the product itself in foreign markets. Its disadvantage is that it provides the organisation with very little control over the manufacture and marketing of its products in other countries. In addition, the licensee may learn the technology and, after the licence expires, produce and sell a similar product. Many organisations start their international expansion by exporting their products or services to other countries. Exporting involves less risks than a multi-country or global strategy. Its disadvantages are the often high costs of transportation and possible tariffs placed on the products. In addition, the exporter has less control over the marketing and distribution of its products in the host countryunless it establishes its own distribution and sales organisations in the foreign market.
Multi-country strategy versus global strategy

In a multi-country strategy, the strategic and operating decisions are decentralised to the business unit in each country in order to customise the products and services to the local market. This is an important strategy when the customers needs and preferences differ significantly from country to country. However, a multi-country strategy does not allow the achievement of economies of scale. In a global strategy, the organisations strategy is similar in all host countries, offering standardised products across all markets. It is centralised and controlled by the head office. Thus, a global strategy can make use of economies of scale and learning experience. However, it lacks responsiveness to local markets and is difficult to manage because of the need to coordinate the strategies across country boundaries.
8:3
Read Chapter 7 of the text. Another dimension to strategy formulation is consideration of the conditions in the industry. The first four of these follow the life cycle concept: > > > > > > emerging industries turbulent high velocity markets maturing industries stagnant or declining industries fragmented industries sustaining rapid company growth.
Further, the relative position of the organisation in that industry impacts upon the types of strategies that are available. The three types of situations an organisation might be in are: > > > industry leaders runner-up organisations weak businesses.
In deciding which strategic alternative to choose, it is important to investigate the industry environment and the situation of the organisation in that industry to identify what strategic alternatives are feasible. Reading 8.1 (Viljoen & Dann 2000) suggests a range of possible strategies for public sector organisations.
8:5
aCtIvIty
Consider an organisation that you are familiar with in relation to its industry environment and specific situation within that industry. How do the results from this analysis influence the strategic choices that are available to it?
8:6
guIde to aCtIvIty
The answer to this question identifies a number of interesting issues. Although the concepts are relatively straightforward, using them is more problematic. For example, the definition of the industry boundary is somewhat arbitrary, which may lead to differing views on the industry environment. Further, many organisations have a range of products that exist in different industries. Hence, the industry environment for each product differs, however, the organisational situation is the same. Thus, the strategic choices for each product may differ.
topIC 9: strategy formulatIon: dIversIfICatIon strategIes
learning objectives
At the end of this topic, you should be able to: > identify the different ways for entering a new business; > identify related and unrelated diversification; and > analyse the advantages and disadvantages of these diversification strategies.
Introduction
This topic begins by discussing the strategies for entering new businesses. This is followed by discussion of related and unrelated diversification prior to consideration of key strategic decisions in a diversified organisation. Read Chapter 8 of the text.
entering a new business

Diversification implies the addition of new activities to the organisation. There are three broad means by which new businesses may be entered. The first of these is by acquisition where the new business is purchased. Execution of this requires an appropriate business and a willing vendor. The difficulty of finding this may lead to undertaking an internal startup or seeking a joint venture. Each of these alternatives has advantages and disadvantages in terms of timing, cost, and control. Study Reading 9.1 (Gopinath 2003).
related and unrelated diversification

The main diversification strategies are related diversification and unrelated diversification.
9:2
Related diversification strategy

Organisations with a related diversification strategy have diversified into businesses with some kind of strategic fit or synergy between them. This strategic fit is a common activity anywhere along the businesses respective value chains.
Unrelated diversification strategy

This strategy involves the diversification into any business that has good profit potential. Unrelated diversification is not concerned with a strategic fit between the organisations core business and the new business. The main focus is only with the potential financial gain of the new business as a stand-alone unit or from the learning that is associated with managing the newly acquired business. The main advantage of this strategy is that business risk is spread over a variety of businesses or industries. Its disadvantages, however, are the difficulty of managing many different businesses in a competent way and of being without the added source of competitive advantage that strategic fit provides.
Combination of related and unrelated diversification strategies

A company may pursue both related and unrelated diversification, and indeed many do this. Many businesses have a range of activities that are related. Often these may be termed their core businesses. The remaining revenue is accounted for from several unrelated groups of businesses.
Managing a diversified organisation

A diversified organisation may be considered as a portfolio of businesses or business units. The allocation of resources between business units is an important strategic issue for managers of these organisations. The industry attractiveness/business unit strength matrix (which is a more sophisticated version of the Boston Consulting Group matrix with its cash cow, star, dog and question mark) is a useful tool for assisting in this task.
9:3
aCtIvIty
Consider two public listed companies. Would you consider them to be single businesses or diversified organisations? If they are diversified, are the business activities related or unrelated?
9:4
guIde to aCtIvIty
It is interesting to look at the financial reporting of the revenue for the organisation and to compare this to the text written in Annual reports and other sources such as reports from Stock Brokers. This will provide information on the extent to which others consider the activities of the organisation to be diversified or not.
topIC 10: strategy ImplementatIon: budgets and struCture
learning objectives
At the end of this topic, you should be able to: > explain the different tasks in strategy implementation; > discuss the importance of appropriate resource allocation via budgets in strategy implementation; and > outline the importance of organisational structure in relation to strategy implementation.
Introduction
After completing the formulation of strategies the next step is to translate them into action. Topics 10, 11 and 12 deal with this strategy implementation. This topic addresses the need to build organisational resources via appropriate budgets and organisational structure. Topic 11 investigates organisational policies, information systems and employee rewards. Topic 12 focuses on the importance of organisational culture and leadership.
the nature of strategy implementation

Strategy implementation deals with the conversion of strategic plans into strategic actions. It is often the most difficult part in the strategic management process. Some of the reasons for this are the wide array of managerial activities that have to be attended to, the many ways managers can proceed, the demanding people-management skills required, and the perseverance it takes to get them done. Study Reading 10.1 (Zagotta & Robinson 2002). Read Chapter 10 of the text.
10:2
organisational structure
The concept of organisational structure relates to the way in which tasks and responsibilities are allocated to individuals and how these individuals are grouped. Its primary manifestation is in the organisational chart. To illustrate with a simplistic example. In a very small organisation one person may perform all the tasks. However, when this organisation takes the first step in expansion, decisions regarding organisational structure are required. Does the organisation have joint managing directors or does it have one managing director and one employee? Obviously complexity increases along with organisational size. The organisation should be structured in a manner that is congruent with the strategy selected. This is necessary to facilitate its execution. Hence, a significantly different strategy may require major changes to the organisational structure. However the chosen organisational structure may be supplemented with special coordinating devices such as project teams, cross-functional task forces, or contact managers in order to improve communication across organisational boundaries.
developing organisational resources via the budgeting process

Budgets are a key source of influence for managers. The financial budget, provided on an annual basis with monthly performance updates in most organisations, directs activities in the organisation. However, budgets for access to human resources and other key scarce resources are also relevant to strategy implementation. An important issue in strategy implementation is the allocation of resources according to the priorities indicated by the strategic plan. It might be necessary to shift resources from one area to another, to downsize or upsize particular areas or to develop new projects and to cancel others. An appropriate allocation of funds and resources signals commitment to implementing the strategic plan and is necessary to provide credibility to the whole strategic management process.
10:3
aCtIvIty
Choose an organisation you are familiar with and analyse to what extent its budgets are aligned with its strategic plan.
10:4
guIde to aCtIvIty
The answer to this question depends on the organisation you have chosen. If there are big gaps between budgets and the strategic plan it indicates that the implementation of the plan may run into difficulties.
topIC 11: strategy ImplementatIon: polICIes, systems and rewards
learning objectives
At the end of this topic you should be able to: > discuss the importance of policies in terms of strategy implementation; > identify the information systems that are required for the strategy; and > outline the relevance of reward systems in relation to implementing strategy.
Introduction
This topic addresses the need to ensure that organisational processes are consistent with the strategy and its implementation. The specific areas are organisational policies and procedures, information support systems and finally, employee reward systems.
organisational policies and procedures

Changes in strategy usually call for changes in organisational policies. Policies clarify what should and should not be done in the organisation. They provide guidance, channel actions, behaviour and decisions and enforce consistency within the organisation. It is difficult to find the balance between too much and too little policy. Too much policy may stifle employee activities and initiative, where as too little policy may lead to uncoordinated and inconsistent efforts across the organisation and a sense of chaos. Often the best policy is to empower appropriate employees. Study Reading 11.1 (Freedman 2003). Read Chapter 11 of the text.
11:2
Information support systems

Organisations also need information support systems in order to carry out successful strategy implementation. An information system that provides the right people with the right information at the right time is very valuable and has the power to generate competitive advantage. Examples of information support systems include customer information systems and organisational intranets, including electronic mail as well as organisation web pages.
Employee reward system

Organisations need motivational practices and reward systems which facilitate strategy implementation. Incentives can be of both monetary and non-monetary nature. These incentives should be linked to the performance targets indicated in the strategic plan. Monetary incentives include salary increases which may include a promotion, performance bonuses, access to participation in the success of the organisation via shares, or retirement benefits. Non-monetary incentives include praise and constructive criticism, interesting assignments as well as more or less responsibility in the organisation. From the strategy implementation perspective it is important to ensure that the rewards are consistent with performance of the strategic goals.
11:3
aCtIvIty
Choose and organisation that you are familiar with and consider the degree of alignment between its strategy and its information support systems. Are there areas in which this could be changed to enhance strategy implementation?
11:4
guIde to aCtIvIty
The importance of information support systems means that they generally receive a lot of attention from senior management and resources from the organisation. However, as they are always evolving to include technological advances as well as to meet changing customer and organisational uses, it is likely that there will continue to be opportunities to improve them.
topIC 12: strategy ImplementatIon and evaluatIon: Culture and leadershIp
learning objectives
At the end of this topic, you should be able to: > explain the importance of organisational culture in strategy implementation; > discuss the importance of evaluating strategy; and > explain the tasks of strategic leadership.
Introduction
This topic focuses on two important strategy implementation and evaluation tasks, namely the need to create a strategy supportive culture and to exert strategic leadership. Read Chapter 12 of the text.
Creating a strategy-supportive organisational culture

Organisational culture is the pattern of how individuals interact in the organisation. It has a profound influence on the communication patterns within the organisation, and hence on the implementation of strategy. Organisational culture consists of a complex set of ideologies, symbols and core values that is shared throughout the organisation and influences the way it conducts business. A close alignment between the chosen strategy and the organisational culture promotes implementation and can be a source of competitive advantage. Thus, shaping the context within which the organisation formulates and implements its strategiesthat is, shaping its organisational cultureis a central task of top management. Different cultures suit different organisations. However, in terms of strategy implementation, a culture that is supportive of change, an adaptive culture, is desirable.
12:2
Companies typically do not have a single culture, but have multiple cultures or subcultures, which might vary significantly by department, geographic location, division or business unit. A sensitive awareness of these subcultures will enhance strategy implementation.
exerting strategic leadership

It has been suggested that implementation is the most difficult task in strategic management. Further, many strategies fail, not because the strategy itself is flawed, but because the leadership required to implement it is not forthcoming. Perhaps the most important leadership characteristic is the determination to complete implementation of the strategy. This determination will force the individual to stay on top of what is happening in the organisation, including its politics, as well as changing conditions in the external environment. Study Reading 12.1 (Finkelstein 2005).
evaluation of strategy
Strategy evaluation is essential in order to receive information about changes in the internal and external environment and potential problems which they might cause. Strategy evaluation should be undertaken on a continuing basis, because it helps strategists to: > > > stay close to what is happening inside and outside the organisation; be aware of the organisations progress, or failure to achieve progress; and undertake corrective action as soon as problems arise.
Taking corrective action is necessary to reposition an organisation in case of external or internal changes or failure to achieve the objectives as spelled out in the strategic plan. This may involve actions such as altering the organisation structure, replacing key individuals, revising objectives or policies, allocating resources in a different way or developing new performance incentives. Study Reading 12.2 (Roxburgh 2003).
12:3
aCtIvIty
Do you agree with the suggestion that many strategies fail due to inadequate implementation?
12:4
guIde to aCtIvIty
Some organisations prosper, other organisations merely survive, whilst others disappear. Strategic management offers some suggestions for how to increase the likelihood that an organisation will prosper. There are many reasons for the failure of an organisation and individuals will differ in views on what the causes were. These differences may range from poor strategic analysis, formulation of unrealistic strategies through to failed implementation.
topIC 13: strategy and ethICs
learning objectives
At the end of this topic, you should be able to: > identify issues that have an ethical dimension and evaluate their impact on business outcomes; > discuss the variation in ethical standards across cultures; and > discuss the importance of social responsibility for organisations and identify examples.
Introduction
The previous 12 topics have provided a sequential process for the undertaking of strategic management in an organisation. This topic provides a brief review of the ethical issues that relate to strategic management. Read Chapter 9 of the text.
business ethics
The concept of business ethics is no different from general ethical standards, it relates to what are the right and wrong things to do. These ethical standards include dealing with honesty, integrity and fairness. However, the difficulty arises when these generally accepted moral standards are in conflict with goals in the organisation. One area in which ethical tradeoffs occur is with respect to the environment. For example, what level of change to the natural environment does society expect from the mining companies? Ethical conflicts and compromises also occur in organisations where there is a cross-cultural element. Employees of an organisation may come from different cultural and religious groups or the organisation may operate in different countries. There are cross-cultural variations in business ethics and these are derived from different historical traditions and social customs.
13:2
Study Reading 13.1 (Skrabec 2003).
social responsibility
The concept of social responsibility goes beyond that of business ethics. Business ethics may be seen as doing the right thing, social responsibility means making a positive contribution to society. It suggests that organisations have a responsibility to minimise harm to all their stakeholders. In addition, they are expected to work towards the betterment of society. Charitable contributions to community service activities is an example of a social responsibility. There are strong ethical reasons for an organisation to take social responsibility seriously, however, there are also strong business reasons. These include the reputation of the organisation with government and employees, both existing and potential. Study Reading 13.2 (Johnson 2003).
13:3
aCtIvIty
What role should moral values and social responsibility play in strategic decision making? Justify your position.
worksheets/ exerCIses
Worksheet 1: Identify the present mission and future vision of the organisation
Organisation mission
Organisation vision
Defines what business the organisation is currently in Defines what business the organisation should be in Who are we? What do we aspire to be?
What do we do?
How will we get there?
Where are we now?
How will we measure our performance?
(Chapter two of the textbook)
worksheets/exercises:2
Worksheet 2: Conduct a cursory financial review
Financial category
Revenues
Analysis
Expenses
Earnings
Assets
Liabilities
(Chapters two and four of the text)
Worksheet 3: What are the industrys dominant economic features?
Economic factors
Market size Scope of competitive rivalry Market growth rate Stage of life cycle Number of companies in the industry Number of customers Degree of vertical integration
Economic factors
Ease of entry/exit Technology/innovation Product characteristics Scale economies Learning and experience effects Capacity utilisation Industry profitability (Chapter three of the text)
Worksheet 4: What is competition like and how strong are each of the competitive forces?
Porters Five Forces model

The rivalry among competing sellers (i) price, (ii) quality and/or (iii) other attributes
The potential entry of new competition (i) barriers to entry, and (ii) the likely reaction of incumbent firms to new entry
Competitive pressure from substitute products (i) price of substitutes, (ii) quality of substitutes, and (iii) ease of substitution among products
Competitive pressure from supplier bargaining power & supplier-seller collaboration (i) number of suppliers, and (ii) tendency for strategic partnerships
Competitive pressure from buyer bargaining power & seller-buyer collaboration (i) number of buyers, and (ii) tendency for strategic partnerships
(Chapter three of the text )
Worksheet 5: What is causing the industrys competitive structure and business environment to change?
What are the major underlying causes of change in the industry?
Step 1:
Assess the impact of these changes will have on the industry.
Step 2:
(Chapter three of the text)
Worksheet 6: What companies are in the strongest/weakest position?
Steps involved in creating a strategic group map

1. Identify the competitive characteristics that differentiate firms in the industry a. Price/Quality range (high, medium, low) b. Geographic coverage (local, regional, national, global) c. Degree of vertical integration (none, partial, full) d. Product-line breadth (wide, narrow) e. Use of distribution channels (one, some, all) f. Degree of service offered (no-frills, limited, full) g. ________________________________________ h. ________________________________________ Plot the firms on a two-variable map using pairs of these differentiating characteristics.
2.
3.
Assign firms that fall in about the same strategy space to the same strategy group.
4. Draw circles around each strategic group, making the circles proportional to the size of the groups respective share of total industry sales. (Chapter three of the text)
Worksheet 7: What strategic moves are rivals likely to make?
Profiling the objectives and strategies of competitors

Competitor Competitive scope Strategic intent Market share Competitive objective position Strategic posture Competitive strategy

Worksheet 8: What are the key factors for competitive success?
Common types of key success factors

Technology-related KSFs
Manufacturing-related KSFs
Distribution-related KSFs
Marketing-related KSFs
Skills-related KSFs
Organisation capability
Other types of KSFs
Worksheet 9: Is the industry attractive and what are its prospects for above-average profitability?
Factors to consider when determining industry attractiveness

The industrys growth potential
Whether competition currently permits adequate profitability and whether competitive forces will become stronger or weaker Whether industry profitability will be favourably or unfavourably affected by prevailing driving forces
The companys competitive position in the industry and whether its position is likely to grow stronger or weaker The companys potential to capitalise on the vulnerabilities of weaker rivals
Whether the company is able to defend against or counteract the factors that make the industry unattractive The degree of risk and uncertainty in the industrys future
The severity of problems confronting the industry as a whole
Worksheet 10: How well is the present strategy working?
Factors to consider in evaluating a companys strategy

Whether the firms sales are growing faster, slower or about the same pace as the market (equating with rising, eroding or stable market share) Whether the company is acquiring new customers at an attractive rate as well as retaining existing customers Whether the firms profit margins are increasing or declining and how well margins compare to rival firms Trends in the firms net profit, return on investment, and economic value added and how these trends compare with other companies in the industry Whether the company can demonstrate continuous improvement in such internal performance measures as unit costs, defect rates, employee motivation and morale, number of stock-outs, customer back orders, and inventory turnover etc . How shareholders view the company based on trends in the companys share price and shareholder value The firms image and reputation with its customers Whether the company is regarded as a leader in technology, product innovation, e-commerce, product quality, short times from order to delivery, having the best prices, getting newly developed products to market quickly, or other relevant factors on which buyers base their choice
Whether the companys overall financial strength and credit rating are improving or on the decline
(Chapter four of the text)
Worksheet 11: What are the companys strengths, weaknesses, opportunities and threats?
Potential resource strengths and competitive capabilities
Strengths
Potential resource weaknesses and competitive deficiencies
Weaknesses
Potential company opportunities
Opportunities
Potential external threats to companys well-being
Threats
Worksheet 12: Are the companys prices and costs comparable?

Identify the key activities in the value chain
Step 1:
Identify the costs of performing each activity
Step 2:
Benchmark the firms activity costs with the activity costs of rival companies
Step 3:

Worksheet 13: How strong is the companys competitive position?
Unweighted competitive strength analysis

Key success factors Company _______ _______ _______ _______ _______ _______
Weighted competitive strength analysis

Key success factors Weight Company ______ ______ ______ ______ ______ ______
Worksheet 14: What strategic issues does the company face?
Questions that can help the identification of the relevant strategic issues
Worksheet 15: Assess the appropriateness of each of the five generic strategies to the case study organisation
The five generic competitive strategies

1. A low-cost producer strategy
2.
A broad differentiation strategy
3.
A best-cost provider strategy
4.
A focused strategy based on lower cost
5.
A focused strategy based on differentiation
(Chapter five of the text)
Worksheet 16: Choose the most appropriate generic strategy for the case study organisation
Appropriate strategy tests

The goodness of fit test a good strategy has to be well matched to industry and competitive conditions, market opportunities and threats, and other aspects of the enterprises external environment. At the same time it has to be tailored to the companys resource strengths and weaknesses, competencies, and competitive capabilities.
The competitive advantage test a good strategy leads to sustainable competitive advantage.
The performance test a good strategy boosts company performance. Two kinds of performance improvements are the most telling of a strategys calibre: (i) gains in profitability and (ii) gains in the companys competitive strength and long-term market position.
(See page 13 of the text)
Worksheet 17: Describe how you would implement the chosen strategy
Things to consider
Financial objectives
Strategic objectives
Who is going to do what and by when?
(Chapter thirteen of the text)

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Contents

Graduate School of Business

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IntroduCtIon: strategIC management for professIonal praCtICe

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assIgnment 1: on-lIne test

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topIC 1: IntroduCtIon to strategIC management

what is strategic management?