Strategic Management

Dr Amir Raslan Abu Bakar

What is Strategic Management?
The big picture of what your
agency is doing and where it is going
Helps determine where your
organization is going over the next
year or more
Why is this important?
Takes you outside the day-to-day
activities of your organization or
project and helps give you clarity
about what you actually want to
achieve and how to go about
achieving it rather than a plan of
action for day-to-day operations.
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 Definition of Strategic Management

A disciplined effort
to produce
fundamental
decisions and actions
that would help to
shape what an
organization is and
what it serves to do
Ring and Perry
(1985)
3
Definition of Strategic Management

A method for organizations

to focus on maximizing their
efforts using scarce resources
available to them and exploit
potential opportunities
Poister and Streib (1994)

4
 Definition of Strategic Management

A disciplined effort, which provides

a systematic process to capture
relevant information, which is
crucial for setting up long-term
directions delineated by specific
goals, objectives and actions
Bryson (1995)

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Definition of Strategic Management

Explicit guide for future

behaviour of the
organization
Mintzberg (2001)

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Fundamental Objectives

Effective planning: identifying what to do

and ensuring that these are the right
things to do

Efficient resource management: deciding

how to do things and who will do them
and ensuring that people do things right

Control and evaluation: ensuring that

people are accountable and take
responsibility for what is being done using
structures, processes and performance to
monitor
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 Dimensions to Strategic Management

Content

Addressing
Process
Context People
Processes / System
Technology

8
Comprehensive Strategic Management Model

Perform
External
Audit

Generate
Develop Establish Measure and
evaluate and Implement
Vision and long term Evaluate
select strategies
Mission objectives Performance
strategies
Statement
s
Perform
Internal
Audit

Strategy
Strategy Formulation Strategy Implementation 9
Evaluation
Background of Strategic Management

Strategic planning has been practised by private organizations much longer

than public organizations (Poister and Streib, 2005). Only from the early
1980s, after some public organizations especially in the western countries
(Hansen, 2007) have undergone many modernization initiatives and
transformed themselves into what is known today as New Public
Management (NPM) (Pollitt and Bouckhart, 2004), strategic planning
started to be commonly incorporated by public organizations (Hood, 1991).
Public organizations that adopt the NPM concept would be using strategic
planning for various reasons and one of them is to shape their future
directions (McBain and Smith, 2010).

Examples of their expectations would be to achieve public value creation

(Moore, 2000; and Bryce, 2000), efficiency in the processes (Bryson, 1995;
and Hammer and Champy, 1993), significant contribution and impact to the
society (Koteen, 1989), excellent service quality (Parasuraman, 2002), good
corporate governance (Dalton and Croft, 2003) and etc. 10
Background of Strategic Management

Many researchers have attempted to define the meaning of strategic

planning. Most of the definitions focus on aligning the environment that
the organization faces by assessing internal and external factors that it is
being exposed to (Healey, 1992).

Hines (1991) suggest that the internal and external factors are critical
aspects and they need to be analysed and addressed appropriately so
that a relevant strategic planning can be developed (Nutt and Backoff,
1992).

This is also consistent with Hines (1991) findings suggesting that internal
and external factors are critical issues, which are very complex to
analyzed, however because their criticality, they need to be addressed
appropriately in the development of organization strategic planning.

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Background of Strategic Management

Meanwhile, Ethridge et.al. (1997) explains strategic planning as a disciplined effort

to produce fundamental decisions and actions that would help to shape what an
organization is and what it serves to do. Researchers such as Poister and Streib
(1994) describe strategic planning as a method for organizations to focus on
maximizing their efforts using scarce resources available to them and exploit
potential opportunities.

Bryson (1995) defines strategic planning as a disciplined effort, which provides a

systematic process to capture relevant information, which is crucial for setting up
long-term directions delineated by specific goals, objectives and actions. Thus,
strategic planning saturates the culture of the organization dictating where it is
heading to (Osborne and Gaebler, 1992), what is important to achieve (Wildavsky,
1979) and maintain a favourable balance for the organization within the
environment it faces over the long-run (Eadie, 2000).

Finally, Mintzberg (2001) explains that strategic planning in the form of an explicit
guide for future behaviour of the organization.
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 Strategic Management Theory
Firstly, a unlike private organizations that use strategic planning to gain
competitive advantage (Porter, 1985) in order to maximise profit in the long-term,
the same cannot be said about public organizations. Most of the public
organizations operates as monopoly (Tilley, 1993; and Clarke et.al. 1994). They are
established to fulfil certain mandates for the benefit of the public (Nutt and
Backoff, 1992).

This is also in line with the research findings by Moore (2000) and Bryce (2000)
that suggest the special characteristics of public organizations would be to create
public value and achieve social mission / mandate for the stakeholders.

This is consistent with the suggestion made by Nutt and Backoff (1992) that public
organizations should be vary of using private sector approaches that assume
clear goals, profit or economic purposes, unlimited authority to act, secret
development, limited responsibility for actions, and oversight through market
mechanisms that signal financial results.
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 Strategic Management Theory
Secondly, Brunsson (1989) suggests it is the tasks of public
organizations to deal with inconsistent demands i.e. their
work should involve the articulation of on-going and
irresolvable debates. Walker and Ruekert (1987) propose
that public organizations to develop enduring patterns of
demands that seek to align them to their environment.

Dealing with instability in strategic planning proves to be

ironic because the concept of strategic planning itself is
based on stability (Mintzberg, 1987). The dilemma here is to
have a strategic planning to create some form of stability but
trying to apply it in environment that changes from time to
time.
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 Strategic Management Theory

Thirdly, in the case of private organizations, their management

teams are able to develop strategy to meet their expected goals
(Boyne and Walker, 2004). As for public organizations, Boschken
(1988); Bozeman and Straussman (1990); and Ring and Perry
(1995) argue that strategy contents are most likely to be imposed
on them.

This is often the case because, they are funded for example by
government (Boyne, 1998), parties for specific intentions (Hood
et. al., 1999), public scrutiny of all transactions (Nutt and Backoff,
1992) and etc. Based on this argument, DiMaggio and Powell
(1983) suggest that public organizations are more likely to be
subject to pressures of coercive isomorphism and that would
greatly influence their strategic planning. 15
 Strategic Management Theory
Fourthly. Mintzberg (1987), suggest that in developing strategic planning, it is
important to combine the holistic perspective blending the aspects of future,
present and past i.e. strategy is the anticipation of the future but it must be
understood from patterns of the past. In management studies, strategy could be
classified into two i.e. deliberate (intended) and emergent (realized) (Mintzberg
and Waters, 1985).

In the case of pure deliberate strategy, it would preclude any learning process in
deriving to the strategy. On the other hand, a pure emergent strategy would
preclude the element of control. In reality, when trying to cope with the dynamic
changes in the environment, neither pure deliberate strategy nor pure emergence
strategy could be implemented (Mintzberg and Waters, 1985).

Therefore, it is essential for public organizations to blend the two approaches in

developing their strategic planning i.e. combined deliberation and control with
flexibility and organizational learning.
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 Strategic Management Theory
Fifthly, there are two decision-making approaches to help public organizations to
develop their strategic planning i.e. rational and incremental. In rational decision-
making, the best decision will be implemented in order to achieve the defined
objectives set by the public organizations (Rainey, 2003).

Examples of rational approach for decision-making would be. bounded rationality

(Simon, 1997) and muddling through (Lindblom, 1959). While rational decision-
making seems to be ideal in real life, the incremental decision-making is considered
to be more practical (Lindblom, 1959).

The characteristics of incremental decision-making would include no effort at

comprehensiveness i.e. all policies should be derived in relation to the past and
current practices (Lindblom, 1959).

Examples of incremental approach for decision-making would be logical

incremental (Quinn, 1980) and satisficing (Mayhew, 1974; and Simon, 1956).
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 Strategic Management Theory
Finally, in developing the strategy for public organizations, it is
extremely important that all factors affecting the environment of
the organizations been taken into considerations.

There are various tools and techniques that could be used to asses
a public organizations external environment such as PESTLE
analysis, competitor analysis, Four-Link model (Lynch, 2006) and
gap analysis. Some useful tools and techniques that could be used
to assess a public organizations internal environment would be
stakeholder analysis and benchmarking.

Failure to acknowledge the significant influences that external and

internal factors have towards the environment of the public
organization could seriously pose threats to the relevance of the
organization in the industry. 18
 WHAT IS VISION?
Vision statement:
WHAT DO WE WANT TO BECOME?

Getting agreement on organization basic

vision to achieve in the long run is
important

Clear vision can provide:

Foundation for comprehensive
mission statement
Strategy development starting
point

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WHAT IS MISSION STATEMENT?
Mission statement:
WHAT IS OUR BUSINESS?
A form of declaration, an
organisations reason for being

Should be enduring statement of

purpose allows similar
organisation to be distinguished
from another
Mission statement should reveal
What organisation wants
to be and;
Whom it wants to serve
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WHAT IS STATEMENT OF VALUES?
Growing number of organisations
producing a statement of values rather
than publishing vision & mission
statements

Importance of Mission Statement

derives to give organisation:
Unanimity of purpose
Basis for allocating resources
Starting point for organisational
culture & climate
Focal point for ideas
(future strategy & direction)
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Strategic Plans At All Organisation Level
Process of developing longer-term
organisational objective

Organisations operational plan or business

plan usually have 1 or 2 year life span for
medium term and 3 to 5 year for long term

Strategic plans need to be developed at various

level. Second part of the unit looks at different
between
Corporate level
Business unit level strategy plans

Strategic plans are necessary to organisation

with all division working to the same overall
goals
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 Public Sector Roles
Roles and responsibilities of Government
It possesses diverse roles
and responsibilities,
ranging from those with
potential commercial
focus to boost up country
economy to those that
are socially oriented such
as welfare programs,
education and public
health campaigns
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 Public Sector Involvement

Science and
Education Utilities Legal
Technology

Postal Land Finance Transportation

Health Security Environment Housing

Economic
Welfare Tax Development
Planning

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Need of Strategic Management in Public Sector

Managing complexity of issues

Efficient allocation of resources

Effective managing goals

Client centric
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Need of New Public Management

More systematic efforts to make

public administrations more
accountable, efficient, client
centric and responsive.

The ideology borrowed from the

managerial methods of the
private sector

Still addressing social values

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 Tenets of New Public Management

Employment of professional managers

Explicit standard to measures
performance
Greater emphasis on consistency of
services
Decentralization
Increased competition between
organizational and subunits
Emphasis on private sector management
styles
Increased accountability and prudence in
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resource use
Agendas of New Public Management

Privatization
Quasi-market competition
Performance orientation
Results-oriented
Empowerment in decision
makings
Decentralization
Specialization
Client centric 28
 Strategic Analysis: Internal Audit

Value Chain

Stakeholder
Activity A C Analysis
Map
Analysis

E D Internal Audit
Benchmarking
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 Generic Strategies
Borrowing from private sector, Porter (1998) developed series of generic
strategies for Strategic Business Unit (SBUs):

Cost Leadership
Not originally intended to imply lowest cost but instead
referred to ability of large international organisation to
determine price levels in different market

Differentiation Strategies
Based on distinguishing product or service from competitor

Focus
Identify market for product or service and ensure
organisational strategy focused on serving that market
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SWOT Analysis

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 TOWS MATRIX
Strengths - S Weaknesses - W

List Strengths List Weaknesses

Opportunities O SO Strategies WO Strategies

Use strengths-take Overcome weaknesses -take

advantage of opportunities advantage of opportunities
List Opportunities

Threats T ST Strategies WT Strategies

Use strengths-avoid threats Minimise weaknesses-avoid

List Threats threats

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TOWS Matrix Analysis for MIDA
Internal
Factors
External
Factors
Opportunities :
- Relocation of companies operations
to Asia
- IP acquisitions
- External seminars/conferences/
training for capacity building
- Gaps in current Ecosystems
Threats :
- Stiff competition with other
countries
- Incentive substitution by other
agencies e.g. Regional Corridor
- Political intervention
- Perception Cheap Labour
Strengths :
-
-
Strong Financial Support
MIDAs strong position & brand
- Wide Network (Overseas & State offices)
- Clear & Transparent Policies
- Sufficient Human Capital
- Central investment promotion agency
- Abundant natural resources
- Malaysias strategic location
1. To undertake SPMs to targeted
companies relocating their operations to
Asia
2. To formulate policies that encourage IP
creation/development/acquisition
3. To explore new competitive edge as
selling points during missions
1. To leverage on MIDAs brand and wide 1.
network to further promote Malaysia as
an investment destination
2. To strengthen coordination with other
IPAs
3. To optimise human capital utilisation on
promotion activities
4. To review and enforce policies on labour
intensive industries
Weaknesses :
-
-
Complicated approval procedures
Unclear new divisions roles and
functions
- Investor care needs to be enhanced
- Lack of experienced officers
- Lack of guidance from superior/seniors
- Lengthy & unproductive
meetings/activities
- Weak financial management
- Incomprehensive CBA
1. To assign an account manager for each
potential investor
2. To replace unproductive meetings
with trainings/attending seminars
3. To analyse ROIs on programmes
carried out vis--vis investments
targets
To simplify business processes
2. To formulate job descriptions for all
divisions
3. To be more focused in promoting
targeted subsectors
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BCG Matrix Growth Market Share

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 BCG Matrix Growth Market Share

STAR
high growth market, dominant market share
requires additional resources for continued growth

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 BCG Matrix Growth Market Share

Cash Cow
low growth, dominant market share
generates surplus resources for allocation to other business units

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 BCG Matrix Growth Market Share
Question Mark
high growth market, low market share represents a high-risk/cost
opportunity requiring a large commitment of resources to build
market share

37
 BCG Matrix Growth Market Share

Dog
low/declining market, subordinate market share
has diminished prospects and represents a drain on the portfolio

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Internal Factor Evaluation

Internal Factor Evaluation (IFE) matrix is a

strategic management tool for auditing or
evaluating major strengths and weaknesses in
functional areas of a business.

IFE matrix also provides a basis for identifying and

evaluating relationships among those
areas. The Internal Factor Evaluation matrix or
short IFE matrix is used in strategy formulation.

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 How can I create the IFE matrix?
The IFE matrix can be created using the following five steps:

Key internal factors

Conduct internal audit and identify both strengths and weaknesses

in all your business areas. It is suggested you identify 10 to 20
internal factors, but the more you can provide for the IFE matrix, the
better. The number of factors has no effect on the range of total
weighted scores (discussed below) because the weights always sum
to 1.0, but it helps to diminish estimate errors resulting from
subjective ratings. First, list strengths and then weaknesses. It is
wise to be as specific and objective as possible. You can for example
use percentages, ratios, and comparative numbers.
40
 IFE matrix
Weights

Having identified strengths and weaknesses, the core of the IFE matrix, assign
a weight that ranges from 0.00 to 1.00 to each factor. The weight assigned to
a given factor indicates the relative importance of the factor. Zero means not
important. One indicates very important. If you work with more than 10
factors in your IFE matrix, it can be easier to assign weights using the 0 to 100
scale instead of 0.00 to 1.00. Regardless of whether a key factor is an internal
strength or weakness, factors with the greatest importance in your
organizational performance should be assigned the highest weights. After
you assign weight to individual factors, make sure the sum of all weights
equals 1.00 (or 100 if using the 0 to 100 scale weights).

The weight assigned to a given factor indicates the relative importance of the
factor to being successful in the firm's industry. Weights are industry based.
41
 IFE matrix
Rating

Assign a 1 to X rating to each factor. Your rating scale can be per your preference. Practitioners
usually use rating on the scale from 1 to 4. Rating captures whether the factor represents a
major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a
major strength (rating = 4). If you use the rating scale 1 to 4, then strengths must receive a 4 or
3 rating and weaknesses must receive a 1 or 2 rating.

Note, the weights determined in the previous step are industry based. Ratings are company
based.

Multiply

Now we can get to the IFE matrix math. Multiply each factor's weight by its rating. This will give
you a weighted score for each factor.

Sum

The last step in constructing the IFE matrix is to sum the weighted scores for each factor.
42
This provides the total weighted score for your business.
IFE matrix

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IFE matrix
What values does the IFE matrix take?
Regardless of how many factors are included in an IFE Matrix, the total
weighted score can range from a low of 1.0 to a high of 4.0 (assuming you
used the 1 to 4 rating scale). The average score you can possibly get is 2.5.

Why is the average 2.5 and not 2.0? Let's explain using an example. You have
4 factors, each has weight 0.25. Factors have the following rating: 1, 4, 1, 4.
This will result in individual weighted scores 0.25, 1, 0.25, and 1 for factors 1
through 4. If you add them up, you will get total IFE matrix weighted score
2.5 which is also the average in this case.

Total weighted scores well below 2.5 point to internally weak business.
Scores significantly above 2.5 indicate a strong internal position.

What if a key internal factor is both a strength and a weakness in IFE

matrix?
When a key internal factor is both a strength and a weakness, then include
the factor twice in the IFE Matrix. The same factor is treated as two
independent factors in this case. Assign weight and also rating to both
44
factors.
 Strategic Analysis: External Audit

External Audit Layers of

External
Environment PESTLE

Four
Links Analysis
Model

Competitor

GAP

45
Layers of External Environment

4. Macro-environment

3. Industry / Sector

2. The market / competitors

1. The Organization

46
 PESTLE Analysis

Political

Economy

PESTLE Socio-cultural

Technology

Legal

Environment
 PESTLE Analysis

Political
Issues to consider include government policy and ideology,
taxation and social insurance policy, social welfare policies,
foreign trade regulations and regulatory agencies

Economic
Issues might include business and economic growth cycles,
interest rates, inflation rates, average disposable income,
levels of unemployment and deprivation

Socio-cultural
Issues will be particularly important for many public sector
organisations and could include such issues as demographic
trends, increased cultural diversity, the distribution of income,
social mobility, life style, education and etc
 PESTLE Analysis

Technological
Issues may link to technology capabilities and
computerisation, automation, internet, mobile phone
technologies and etc

Legal
Issues can and do have a big impact on public sector
organisations including employment law, health and safety
legislation, regulatory systems and product safety rules

Environmental
Issues are prominent in public sector for example
environmental protection legislation, waste disposal policies,
energy consumption regulations
Competitor Analysis: Porters Five Forces

50
 Four Link Model

1. Informal cooperative links and networks

2. Formal cooperative links

3. Complementors

4. Government links and networks

External Factor Evaluation
The EFE matrix is very similar to the IFE matrix.

While the IFE matrix deals with internal factors, the

EFE matrix is concerned solely with external factors.
How can I create the EFE matrix?
List factors
The first step is to gather a list of external factors. Divide
factors into two groups: opportunities and threats.

Assign weights
Assign a weight to each factor. The value of each weight
should be between 0 and 1 (or alternatively between 10
and 100 if you use the 10 to 100 scale). Zero means the
factor is not important. One or hundred means that the
factor is the most influential and critical one. The total
value of all weights together should equal 1 or 100.
How can I create the EFE matrix?
Rate factors
Assign a rating to each factor. Rating should be between
1 and 4. Rating indicates how effective the firms current
strategies respond to the factor. 1 = the response is poor.
2 = the response is below average. 3 = above average. 4
= superior. Weights are industry-specific. Ratings are
company-specific.

Multiply weights by ratings

Multiply each factor weight with its rating. This
will calculate the weighted score for each factor.
How can I create the EFE matrix?
Total all weighted scores
Add all weighted scores for each factor. This will
calculate the total weighted score for the company.
How can I create the EFE matrix?
 Detailed Analysis of Case Study
Analyze the company's history, development, and growth
A convenient way to investigate how a company's past strategy and structure affect it in
the present is to chart the critical incidents in its history - that is, the events that were the
most unusual or the most essential for its development into the company it is today.
Some of the events have to do with its founding, its initial products, how it makes new-
product market decisions, and how it developed and chose functional competencies to
pursue. Its entry into new businesses and shifts in its main lines of business are also
important milestones to consider.

Identify the company's internal strengths and weaknesses

Once the historical profile is completed, you can begin the SWOT analysis. Use all the
incidents you have charted to develop an account of the company's strengths and
weaknesses as they have emerged historically. Examine each of the value creation
functions of the company, and identify the functions in which the company is currently
strong and currently weak. Some companies might be weak in marketing; some might be
strong in research and development. Make lists of these strengths and weaknesses.
The SWOT checklist gives examples of what might go in these lists.
 Detailed Analysis of Case Study
Analyze the external environment

The next step is to identify environmental opportunities and threats. Here you should
apply all information you have learned on industry and microenvironments, to analyze
the environment the company is confronting. Of particular importance at the industry
level is Porter's five forces model and the stage of the life cycle model. Which factors
in the microenvironment will appear salient depends on the specific company being
analyzed. However, use each factor in turn (for instance, demographic factors) to see
whether it is relevant for the company in question. Having done this analysis, you will
have generated both an analysis of the company's environment and a list of
opportunities and threats. The SWOT checklist lists some common environmental
opportunities and threats that you may look for, but the list you generate will be
specific to your company.
 Detailed Analysis of Case Study
Evaluate the SWOT analysis

Having identified the company's external opportunities and threats as well as its
internal strengths and weaknesses, you need to consider what your findings mean.
That is, you need to balance strengths and weaknesses against opportunities and
threats. Is the company in an overall strong competitive position? Can it continue to
pursue its current business- or corporate-level strategy profitably? What can the
company do to turn weaknesses into strengths and threats into opportunities? Can it
develop new functional, business, or corporate strategies to accomplish this change?
Never merely generate the SWOT analysis and then put it aside. Because it provides a
succinct summary of the company's condition, a good SWOT analysis is the key to all
the analyses that follow.
 Detailed Analysis of Case Study
Analyze corporate-level strategy

To analyze a company's corporate-level strategy, you first need to define the company's
mission and goals. Sometimes the mission and goals are stated explicitly in the case; at
other times you will have to infer them from available information. The information you
need to collect to find out the company's corporate strategy includes such factors as its
line(s) of business and the nature of its subsidiaries and acquisitions. It is important to
analyze the relationship among the company's businesses. Do they trade or exchange
resources? Are there gains to be achieved from synergy? Alternatively, is the company just
running a portfolio of investments? This analysis should enable you to define the corporate
strategy that the company is pursuing (for example, related or unrelated diversification, or a
combination of both) and to conclude whether the company operates in just one core
business. Then, using your SWOT analysis, debate the merits of this strategy. Is it
appropriate, given the environment the company is in? Could a change in corporate
strategy provide the company with new opportunities or transform a weakness into a
strength? For example, should the company diversify from its core business into new
businesses?
 Detailed Analysis of Case Study

Other issues should be considered as well. How and why has the company's strategy
changed over time? What is the claimed rationale for any changes? Often it is a good idea
to analyze the company's businesses or products to assess its situation and identify which
divisions contribute the most to or detract from its competitive advantage. It is also useful
to explore how the company has built its portfolio over time. Did it acquire new businesses,
or did it internally venture its own? All these factors provide clues about the company and
indicate ways of improving its future performance.
 Detailed Analysis of Case Study
Analyze business-level strategy

Once you know the company's corporate-level strategy and have done the SWOT analysis,
the next step is to identify the company's business-level strategy. If the company is a single-
business company, its business-level strategy is identical to its corporate-level strategy. If
the company is in many businesses, each business will have its own business-level strategy.
You will need to identify the company's generic competitive strategy - differentiation, low
cost, or focus - and its investment strategy, given the company's relative competitive
position and the stage of the life cycle. The company also may market different products
using different business-level strategies. For example, it may offer a low-cost product range
and a line of differentiated products. Be sure to give a full account of a company's business-
level strategy to show how it competes.
 Detailed Analysis of Case Study
Identifying the functional strategies that a company pursues to build competitive advantage
through superior efficiency, quality, innovation, and customer responsiveness and to
achieve its business-level strategy is very important. The SWOT analysis will have provided
you with information on the company's functional competencies. You should further
investigate its production, marketing, or research and development strategy to gain a
picture of where the company is going. For example, pursuing a low-cost or a differentiation
strategy successfully requires a very different set of competencies. Has the company
developed the right ones? If it has, how can it exploit them further? Can it pursue both a
low-cost and a differentiation strategy simultaneously?

The SWOT analysis is especially important at this point if the industry analysis, particularly
Porter's model, has revealed the threats to the company from the environment. Can the
company deal with these threats? How should it change its business-level strategy to
counter them? To evaluate the potential of a company's business-level strategy, you must
first perform a thorough SWOT analysis that captures the essence of its problems. Once you
complete this analysis, you will have a full picture of the way the company is operating and
be in a position to evaluate the potential of its strategy. Thus, you will be able to make
recommendations concerning the pattern of its future actions. However, first you need to
consider strategy implementation, or the way the company tries to achieve its strategy.
Detailed Analysis of Case Study
Analyze structure and control systems

The aim of this analysis is to identify what structure and control systems the company
is using to implement its strategy and to evaluate whether that structure is the
appropriate one for the company. Different corporate and business strategies require
different structures. For example, does the company have the right level of vertical
differentiation (for instance, does it have the appropriate number of levels in the
hierarchy or decentralized control?) or horizontal differentiation (does it use a
functional structure when it should be using a product structure?)? Similarly, is the
company using the right integration or control systems to manage its operations? Are
managers being appropriately rewarded? Are the right rewards in place for
encouraging cooperation among divisions? These are all issues that should be
considered. In some cases there will be little information on these issues, whereas in
others there will be a lot. Obviously, in analyzing each case you should gear the
analysis toward its most salient issues. For example, organizational conflict, power,
and politics will be important issues for some companies. Try to analyze why
problems in these areas are occurring. Do they occur because of bad strategy
formulation or because of bad strategy implementation?
Detailed Analysis of Case Study
Organizational change is an issue in many cases because the companies are
attempting to alter their strategies or structures to solve strategic problems. Thus, as
a part of the analysis, you might suggest an action plan that the company in question
could use to achieve its goals. For example, you might list in a logical sequence the
steps the company would need to follow to alter its business-level strategy from
differentiation to focus.
Detailed Analysis of Case Study
Make recommendations

The last part of the case analysis process involves making recommendations based on
your analysis. Obviously, the quality of your recommendations is a direct result of the
thoroughness with which you prepared the case analysis. The work you put into the case
analysis will be obvious to the professor from the nature of your recommendations.
Recommendations are directed at solving whatever strategic problem the company is
facing and at increasing its future profitability. Your recommendations should be in line
with your analysis; that is, they should follow logically from the previous discussion. For
example, your recommendation generally will centre on the specific ways of changing
functional, business, and corporate strategy and organizational structure and control to
improve business performance. The set of recommendations will be specific to each
case, and so it is difficult to discuss these recommendations here.
Detailed Analysis of Case Study
Such recommendations might include an increase in spending on specific research and
development projects, the divesting of certain businesses, a change from a strategy of
unrelated to related diversification, an increase in the level of integration among
divisions by using task forces and teams, or a move to a different kind of structure to
implement a new business-level strategy. Again, make sure your recommendations are
mutually consistent and are written in the form of an action plan. The plan might
contain a timetable that sequences the actions for changing the company's strategy and
a description of how changes at the corporate level will necessitate changes at the
business level and subsequently at the functional level.

After following all these stages, you will have performed a thorough analysis of the case
and will be in a position to join in class discussion or present your ideas to the class,
depending on the format used by your professor. Remember that you must tailor your
analysis to suit the specific issue discussed in your case. In some cases, you might
completely omit one of the steps in the analysis because it is not relevant to the
situation you are considering. You must be sensitive to the needs of the case and not
apply the framework we have discussed in this section blindly. The framework is meant
only as a guide and not as an outline that you must use to do a successful analysis.
 Strategy Clock: Johnson et.al (2006)
4
differentiation
3 5
High
hybrid focused
differentiation

Perceived 2 6
product low price
/ services
benefits

Strategies
7 destined
1 for ultimate
Low no frills 8
failure

Low Price High

Balance Scorecard
Financial
How should we appear to
our stakeholders?

Customer Internal Business

How should we appear to
Vision and Processes
our customer?
Strategy
What business processes must
we excel at?

Learning and
Growth
How will we sustain our
ability to change and
improve
 Development of Strategy Map

SWOT analysis
Strategy Map

Stakeholder Mapping
Addressing

External and
internal environment

Learning
Financial Customer Internal and
Perspectives Perspectives Perspectives Growth

Best practices
and benchmarks

70
Strategy Map

71
Thank You

72