Study Notes

SU1 - T1
SU 1: Introduction to Strategic Management
1.4 Origins and Evolution of Strategy SG 3

1.1. Origins of Strategic Management TB 3
Strategic Management:
- focus on competition as driving force in business environment & profit maximising
Characterised
as the primary goal
Focus : Michael Porter up to 1990
- determine how org could tap into sources of profit through industry positioning
RBV 1990's
- how org achieve competitive advantage
- org's internal resources & capabilities are NB sources of profit & competitive advantage
Current
- focus on responsible & ethical corporate behaviour
Strategic Decisions:
1.5 The concept of strategy SG 4

1.2. The traditional strategic management process TB 3
Strategic management
- traditionally is the perspective that management tasks consist of planning, organising, leading
and controlling
Strategic tasks of top management:

1. formulating strategy - planning with the help of middle managers & org
2. implementing strategy - organising and leading
DEF: - rational approach that orgs use to achieve strategic competitiveness & competitive advantage
Strategy formulation / strategic planning:

- thinking part of strategic management process
- top management set strategic direction of org, analyse internal & external environment, set strategic
goals, choose strategies that will help them achieve strategic goals
Elements of strategy formulation:

■ Est strategic direction = mission & vision statement
■ strategic direction leads to more specific strategic objectives - long term (3-5 years) & have
measurable outcomes
■ external environmental analysis = identify opportunities & threats outside of the org that may influence
ability to meet strategic objectives
Venter, P. (ed), Jansen van Rensburg, M, Davis, A, Nieuwenhuysen, C, Van Zyl, J, Meyer, J, Singh, C Brevis, T. 2014. Practising Strategy: A Southern African context. Cape Town: Juta.
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■ internal analysis = identify and value resources and capabilities of org to identify & value resources &
capabilities of org to identify key strengths and weaknesses that may affect the ability of org to achieve
strategic objectives
■ strategic choice = selection of specific robust strategies lead org to achieve strategic objectives
effectively
Strategy implementation:
- doing part of strategic management process
NB elements of strategy implementation:

■ leadership and culture - ensuring culture of org is aligned is time-consuming, complex, takes effort &
change does not happen quickly
■ competencies - org needs right mix of knowledge, skills, attitudes to support strategy
■ systems - procedures support strategic direction
■ structure - appropriate
■ cascading - by cascading strategic objectives into short-term, function strategies & policies, org can
ensure that functional objectives & strategies & co policies support strategic direction
Purpose of Strategic Control :

- formulated strategy = valid & implementation stays on track
- provides feedback to the formulation & implementation phases = org can adapt plans / react to threats &
ops
Characteristics of traditional perspective on Strategic Management

- clear separation between 'thinking' (strategy formulation) & 'doing' (strategy implementation)
- clear separation of responsibility (top management = formulation, middle = implementation)
- process is neat, cognitive (rational), logical & sequential process
- roots in microeconomics & is interested in understanding how competitive advantage can be Est &
maintained
- interested how orgs can develop & maintain competitive advantage
See Fig 1.1 The traditional strategic management process TB 6
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1.6 Strategic planning SG 5

1.2. The traditional strategic management process
Strategic planning process (Bateman & Snell 2013:133–135): SG 6

‘‘Strategic planning involves making decisions about the organisation’s long-term goals and strategies.
Strategic planning becomes an ongoing activity in which all managers are encouraged to think strategically
and focus on long-term, externally- oriented issues as well as short-term tactical and operational issues.’’
1.7 Strategic Management: The traditional process perspective SG 6

1.2. The traditional strategic management process
strategic management is about how organisations achieve a competitive advantage, superior performance
and sustainability.
DEF
‘‘Strategic management involves managers from all parts of the organisation in the formulation and
implementation of strategic goals and strategies. It integrates strategic planning and management into a
single process’’ (Bateman & Snell 2013:138).
‘‘Strategic management consists of the analyses, decisions, and actions an organisation undertakes in
order to create and sustain competitive advantages’’ (Dess, Lumpkin & Eisner 2008:8).
‘‘The art and science of formulating, implementing, and evaluating cross-functional decisions that enable
an organisation to achieve its objectives’’ (David 2013:35).
Structure of traditional process approach to strategic management: SG 7

Strategic planning or strategy formulation
- Deciding on the organisation’s strategic direction and its long-term objectives
- Analysing the organisation’s external and internal environments
- Selecting appropriate competitive strategies strategic choice
Strategy implementation or execution requirements

- Leadership and culture
- Implementation competencies
- Learning organisation
- Systems, policies and procedures
- Organisational architecture and structure
Strategy review, feedback and control

- Control measures ensuring that strategies are on track
Governance, sustainability and ethics = entire strategic management process
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1.8 The Practice Perspective of Strategic Management SG 8

1.3 New perspectives on strategic management TB 7
1.3.1 Strategy is what people do, not what orgs haveTB 7
- strategising = human activity
Strategy exists in 3 places :
1. heads of managers
2. in the talk & docs they produce observable
3. in their actions
1.3.2 Strategy is not solely the domain of top management TB 7

Incl non-executive directors, strategic planners, middle managers, consultants = influence resource
allocation
1.3.3 Strategic management is not a neat rational process TB 8

Social integrations inside & outside org influence activities & decisions
Strategy is:
- what people do, not what organisations have.
- not solely the domain of top and executive management.
- not a neat and rational process. SG 10
- is a conversation and involves dialogue and communication.
1.3.4 Strategy is a conversation

- verbal & written communication
- emphasis on conceptual & verbal skills
- documents = strategic plans, operational plans, strategy presentations = can influence strategic decision
making
1.4 Strategic management today TB 8

1.4.1 What does it mean to be 'strategic'?
Being strategic involves:
- not business as usual - not keep doing what we're doing ≠ strategic
- reaches across all business functions
- not a quick-fix / small change = large, sustained change effort over a long period of time
- large commitment of resources = not cheap & easy
- not top management only, influenced by other people = top man responsible for ultimately achieving
strategic goal
1.4.3 Defining strategy

direction provided by the actions & decisions of strategists in pursuit of org's goals'
1.4.4 Strategic management

Purpose of strategic management is to apply 4 key elements:
1. clear & consistent long-term strategic direction of what org wants to achieve in the future
2. understand competitive environment to align with ops & deal with threats
3. key resources & capabilities used to build & develop CA
4. align org structure, systems, culture, functional & operational management = effective implementation
Fig 1.3
Strategic direction - long-term goals of org expressed as mission & vision
Ext consistency - extent org aligned to ops & threats
Dynamic consistency - strategy consistent with key resources & capabilities of org
Int consistency - extent org's resources aligned to strategy
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1.8.2 New perspectives on strategic management: strategy-as-practice SG 9

Organisations’ strategies :
- Planned strategies are termed intended strategies, and when realised, are termed deliberate strategies.
- Intended strategies that fall by the wayside and are not realised are termed unrealised or abandoned
strategies.
- Strategies that are not explicitly intended, are unplanned and emerge over time, often because of
changing environments or competitive circumstances, are termed emergent strategies.
- If emergent strategies are realised, they become deliberate strategies together with realised intended
strategies.
1.9 Relevant concepts in Strategic Management SG 10

1.9.1 Strategic alignment
Alignment of the process, both internally and externally, is important and manifests through alignment
between:
- the organisation and its external environment

- the organisation’s strategy and its vision, mission strategic intent and long-term objectives
- the organisation’s strategy and its focus on financial, customer, internal business processes and learning
and growth dimensions, the typical balanced scorecard approach to alignment
- the organisation’s strategy and its organisational architecture, including its organisational structure
- the organisation’s strategy and its leadership, culture and key people in the organisation
1.9.2 Strategy and the quest for a sustainable competitive advantage

DEF:
A competitive advantage occurs when an attractive number of buyers prefer the company’s products or
services over those of its competitors, when the basis for this preference is durable over the long term
Competitive Advantage to be sustainable =
- valuable
- rare
- too difficult / costly to imitate
- nontradable
- durable
Important sources of competitive advantage:

- a cost-leadership strategy
- a differentiation strategy
- a focus strategy, based on either cost leadership or differentiation
- a best-cost provider strategy, based on optimal customer value creation
1.9.3 Business models

Thompson et al (2012:59–60),
an organisation’s business model is ‘‘management’s blueprint for delivering a valuable product or service
to customers in a manner that will generate ample revenues to cover costs and yield an attractive profit’’
two critical factors:

(1) the organisation’s customer value proposition (2) its profit formula
1.10 The nature of Strategic Decisions SG 12
1.4.5 Strategic decisions
Influenced by two factors:
■ cognitive and ration aspects - relevance of ‘‘bounded rationality’’
■ political processes - implications for strategic decisions
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IF fast strategic decision making is required:

■ develop more than one alternative
■ get real-time information
■ rely on experience & trusted advisors
■ try to reach consensus, but not at all cost
DEF:
‘‘Strategic decisions are those decisions that affect the long-term performance of an organisation and
which relate directly to its vision, mission and objectives.’’
Characteristics:
- at higher organisational levels
- contribute to and are directed by the organisation’s vision
- impact directly on an organisation’s long-term direction, performance and sustainable success
- optimally exploit the links between the organisation’s internal and external environments
- require large amounts of the organisation’s resources
- are usually irreversible once made
- are entirely future oriented and likely to affect the whole organisation
- are shaped by the values and expectations of stakeholders
- usually have multifunctional or multibusiness consequences
Tactical decisions - middle management level impact in the medium term

Operational decisions - occur on a daily basis lowest organisational level
1.11 Levels of Strategy in Orgs SG 13

1.4.6 The levels of strategy TB 12
Corporate Level Strategy Business Level Strategy
- Highest level - business unit
- decisions about growth path of the org - achieve competitive advantage
- made by board of directors / gov bodies - supports corporate level
- ensures success in markets
Functional Strategies
- hr & marketing strategies
- developed to support implementation of business strategies
See Table 1.1 The different levels of strategy TB 12
TABLE 1.1: Levels of strategy and decision-making roles in multibusiness and single business orgs SG 14
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1.12 Importance of Strategic Management: Benefits and Risks SG 14

1.4.2 The importance of strategy TB 9
- strategy = narrative about future direction of org
- provides framework to guide decision making
- verbalisation of the org's aspirations & inspires, unites & motivates
- provides for cohesive strategic thinking and an innovative and future-oriented decision framework for the
organisation.
- pools the contributions by organisational members, thereby facilitating the communication of strategy to
all.
- verbalisation of the organisation’s aspirations and serves as a source of motivation for everyone in the
organisation.
Strategic risk DEF

‘‘an array of external events and trends that can devastate a company’s growth trajectory and shareholder
value’’.
Seven major categories

1. industry 5. customer
2. technology 6. project
3. brand 7. stagnation
4. competitor
1.13 Tests for a winning strategy TB 15

Grant and Jordan (2012:10–12) identify the following four common requirements for strategy success:
(1) goals that are consistent and long term
(2) an in-depth understanding of the competitive environment
(3) an objective appraisal of resources
(4) effective implementation
Three tests
- The goodness of fit test measures how well the strategy fits the organisation’s situation in matching the
organisation to the industry and competitive conditions.
- The competitive advantage test measures whether the strategy can help the organisation achieve a
sustainable competitive advantage.
- The performance test measures performance of the strategy in terms of profitability, financial strength,
competitive strength and market standing.
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SU 2: Strategic management : the process and practice perspectives of strategy
2.4 Strategic thinking SG 20

Chartrand (2012)
Strategic thinking occurs at three successive hierarchical levels in organisations
■ lower level: self-awareness, critical thinking, intellectual curiosity and openness
■ intermediate level: exercising good judgement and understanding the business – problem solving,
decision making, business acumen and customer focus
■ higher level: successfully creating ‘‘new and different’’ – dealing with ambiguity, innovative management
and perspective taking
Characteristics
focus on strategic intent a systems perspective
long-term orientation the ability to seize unanticipated opportunities
consideration of past and present a scientific approach
2.5 Strategic management : the Process Perspective SG 21

4.1 A process perspective of strategic management TB 64
Strategy formulation
First stage in strategic management process
Strategy crafting / Strategic planning
Conceptual process that consists of enviromental analysis and
formulation of strategies
Strategy implementation
Second stage & action phase
Strategy execution
All staff tasked with implementing the formulated strategies
Strategic Control
Third stage & control / monitoring phase
Strategy review
Strategy review phase is aimed at monitoring progress and
providing feedback
2.5.1 Intro SG 21
Decisions and actions to achieve co objectives - formulation, implementation & control:
(1) formulating the company’s strategic intent, vision and mission, including broad statements about its
purpose, philosophy and goals
(2) analysing the company’s external environment, including the macroenvironment and industry and
market environments
(3) analysing the company’s internal environment in terms of its strengths and weaknesses relating to its
resources and capabilities
(4) analysing the company’s strategic options by matching resources and capabilities with opportunities
and threats in the external environment to develop optimal strategies
(5) identifying the most desirable strategic options by evaluating each option against the company’s vision,
mission and strategic intent
(6) selecting a set of long-term objectives and strategies that will achieve these long-term objectives
(7) developing annual objectives and short-term functional strategies and tactics that are compatible with
the selected set of long-term objectives and strategies
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(8) implementing the selected strategies and tactics by means of budgeted resource allocations and by
matching and aligning tasks, people, structures, technologies, culture and reward systems in the
(9) evaluating the success of the strategic management process continuously as an input for future
decision-making
1-6 strategic planning / strategy formulation

7-8 strategy implementation
9 strategy evaluation, review & control
2.5.2 Strategy formulation or strategic planning SG 22

4.1.1 Strategy formulation TB 64
- analysis takes place & management gather info about the operations, resources, capabilities of org
- scans environment
- identify potential opportunities & threats & collect info on competitors
- all info collected & analysed = management considers strategic options
Three main decision stages: SG 22

(1) deciding on the organisation’s future – setting strategic direction
(2) analysing the organisation’s external and internal environments
(3) selecting appropriate competitive strategies – strategic choice
2.5.2.1 Deciding on the future of the org : Strategic direction setting SG 22

4.4.1 The Strategic direction of the org TB 69
Strategic direction : - clarifies the overarching purpose & goals of org

- indicates to external stakeholders what org is about
Table 4.1 Advantages of having clear strategic direction TB 70

1. provides direction
2. guides org efforts towards achieving same goals
3. org work together
4. communicates int & ext stakeholders = org achieve in long run
5. guides decision making
6. distinguishes org
7. promotes shared expectations
8. contributes to synergy = managers & employees
Vision statement
- dream of org
- identify the direction and future of org
Guidelines to vision statement:
■ present a clear picture of desirable future, org & members aspire to
■ guide decision making & flexible to allow the org to respond to change in enviro
■ easy to communicate, explain, understand
Mission statement
- purpose statement of org
- what org does & why it exists
- builds on vision, internal & external statement
Core components of mission statement

1. product - indicates product / service the org offers
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2. market - market it hopes to serve

3. technology - method
Also, can contain:

■ commitment to stakeholders
- how important customers are, how org invests in employees / builds relationships with bus
partners
■ org's orientation towards survival & growth
- achieved through stating commitment to economic objectives
■ org's values
- how org plans to do business
■ org's philosophy
- how org plans to do business
The process of formulating a mission statement

Strategic direction
- long term = unchanged extended period
Method - how to create a strategic direction

1. orient what constitutes a well formulated mission statement
2. brainstorming
3. collate all ideas & distribute to team
4. continue until agreement on mission
Strategic goals
- from mission statement = translate overarching direction into GOALS
- shorter time frame than vision & mission statements (5 - 10 years)
Table 4.2 A comparison of well and poorly formulated goals TB
Formulate good strategic goals:

S specific
M measurable
A achievable
R realistic
T time
Using the balanced scorecard to set strategic goals

- Kaplan & Norton
- Strategic planning stage = guides org & management to turn strategic direction into strategic goals
4 perspectives
1. FINANCIAL - financial performance
2. CUSTOMER - how customers perceive org
3. LEARNING AND GROWTH - sustainable growth, value creation & innovation
4. BUSINESS PROCESS - core capabilities to excel at to be competitive
Center = Strategic Growth (incl)

vision
mission
other statements
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A successful application of the balanced scorecard incl 2 to 3 to 5 goals in each perspective & each goal
linked to performance target indicates if goal achieved, as part of review
Table 4.3 The balance scorecard TB 74
Financial Perspective Business process perspective

Goals Goals
To satisfy shareholders & customers,
Metrics To succeed financially, how should we Metrics
what business processes must we excel
Targets appear to our shareholders? Targets
at?
Initiatives Strategic Initiatives
Customer Perspective Learning & growth perspectives
Goals Goals
To achieve our vision, how will we
Metrics To achieve our vision, how should we Metrics
sustain our ability to change and
Targets appear to our customers? Targets
improve?
Initiatives Initiatives
Table 4.3 Examples of goals, metrics, targets and initiatives for a balances scorecard TB 75
SG 22
Vision
Excellent vision statements are crisp, clear and unambiguous in terms of the message they convey to
internal and external stakeholders as well as the community at large. Vision statements form the basis for
developing relevant mission statements.
Mission
DEF ‘‘The unique purpose that sets a company apart from others of its type and identifies the scope of its
operations in product, market and technology terms.’’
Long-term objectives
- low from the organisation’s mission statement
use to operationalise the mission statement, are specific, cover a well-defined timeframe and provide
guidance on how the organisation can work towards pursuing its mission and vision.
Table 2.1 Financial and strategic objectives SG 2
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Financial and strategic objectives clearly measure different activities and outcomes.
Financial objectives are mostly quantifiable, strategic objectives are less
Strategic
Strategic intent
‘‘when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources
and competitive actions on achieving that objective’’
industry leader, or at best to outperform their closest competitors
Value Statement and org values

An organisation’s overarching values are the beliefs, traits and behavioural norms that guide the
organisation in pursuing its vision and mission and include factors such as fair treatment, integrity, ethical
behaviour, loyalty, innovativeness, teamwork, pursuing excellent quality and superior customer service,
more powerful the more they are ingrained in the organisation’s leadership and culture.
2.5.2.2 Analysing the organisation’s external and internal environments SG 25

external environments (macroenvironment, industry environment and market environment)
= external opportunities and threats (O and T)
organisation’s internal resources, capabilities and competencies
= strengths and weaknesses (S and W).
determine how best to match and capitalise on an organisation’s opportunities and strengths, to counter
external threats and even improve internal organisational weaknesses
2.5.2.3 Selecting appropriate competitive strategies: strategic choice SG 26

single business organisation it would mean deciding on an optimal competitive business level strategy or
strategies to compete in its specific industry environment.
2.5.3 Strategy Implementation SG 26

- second stage of strategic management
- most challenging stage in strategic management process
- once strategies of org selected by senior management team = PUT INTO ACTION
- involves everyone in org
- selected strategies and rationale for selecting them should be communicated
Senior management team
- ensure understanding & buy-in = greater chance of success
Org members
- told what strategies & overarching objectives of org are
- motivated and energised towards achieving goals
Operationalising strategies
= translate overarching and strategic objectives into specific tasks and activities
Middle and lower management

- oversee
- translate strategic goals / long term objectives into shorter term goals and activities = org members
become aware of their roles in strategic success of org
- can use reward to drive strategy implementation
- rewarding actions, tasks and behaviour that contribute towards successful implementation, managers
enhance chances of success
- should devise rewards strategies and systems that align with strategic direction
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Strategy implementation is action (doing) stage

to successfully implement strategies, drivers like leadership, management and culture are needed
Org culture = 'the way we do things around here' and how things are done will impact on success
Org culture Negative Org culture Positive
- little support for strategies - wide buy-in
- strategy implementation challenging - efforts coordinated
- can fail - greater chance of success
Organisation's structure
- impacts on strategy implementation
i.e. IF strategy requires quick decision making ≠ bureaucratic structure will not help
- indicates lines of authority and reporting & process and lines for strategy implementation
Org's systems, processes and policies

- used to direct the execution efforts
- should be aligned with overall
Leaders and managers

- should empower and enable employees to carry out task to implement strategies
- requires allocation of finance, human, physical and info resources
- resources = lacking = failure
2.5.4 Strategy review and control SG 27

Strategy review and control
third stage = final stage continuous process
Involves - monitoring progress of strategy implementation
- identifying problems
- corrective actions
Strategy review
- continuous environmental scanning : provides feedback on changes in the environment
- implementation control : deviations from plans identified, addressed as they occur
- corrective measures taken during the strategy implementation process ensure strategic management
process continues successfully
- balanced scorecard can be used to review strategies
- senior and middle managers involved in strategy review
- feedback from review serves as input in the amendment of existing strategies and goal
- continuous feedback forms foundation of strategic management process
Strategic surveillance
- environmental scanning, not focused, opens opportunity for managers to consider a whole range of factors
Strategic control involves monitoring the extent to which a strategy is achieving the desired long-term
objectives, and taking the required corrective action where necessary.
Continued strategy review and control demand special managerial attention, including revisiting strategic
assumptions.
operational control
- focuses on the short term and has fewer financial implications, and where deviations are generally easily
corrected.
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2.5.5 Operationalising Strategy SG 27

Organisational efforts to operationalise strategy are guided by specific actions :
- translating long-term objectives into short-term achievable objectives for functional areas
- developing functional tactics and short-term operational plans based on the short-term objectives;
- developing organisational policies and procedures to guide ongoing operations.
Prerequisite
- strategies should be communicated to members at all organisational levels
Functional tactics to translate strategy to operational actions:

- entire workforce knows the overall direction, and what needs to be done daily, weekly and monthly
- middle management translate strategic goals into specific, measurable, achievable, realistic goals
achievable in a year or less
Strategic goals = specific and measurable focused on the long term

- translate into shorter terms = operationalised
Shorter-term goals
- set in functional areas of org : marketing, operations, hr, finance, purchasing
- balanced scorecard 4 perspectives
- each perspective, balanced scorecard used to specify goals, measures, targets and initiatives
Functional tactics
- developed to support the short term goals
- more specific and wider participation
- focus : tasks and activities required to operationalise the strategy & what needs to be done immediately
and on a daily basis
Organisational policies
- detailed guidelines and rules that direct org
- standard operating procedures
- documented, written, made available to org members
- guide org members in the control and coordination or org activities
2.6 Criticising the process perspective on Strategic Management SG 28

Major criticisms
 It is viewed as a rational and linear process, comprises consecutive phases and does not effectively
embrace new competitive realities.
 Because it is a linear process, the effects of the complex and dynamic nature of the external
environment are not fully considered.
 Strategy formulation and strategy implementation are seen as separate phases.
 It supports the notion that it is only the top management team or senior managers who develop
strategy, thus ignoring potentially valuable contributions by all levels of staff.
It essentially ignores the development of strategy through dialogue, conversation and inputs from all
organisational levels, and on occasion, external expertise.
2.7 Deliberate and emergent strategies SG 28

Intended strategies = planned strategies
Real world, strategies are:

- Planned strategies are termed intended strategies, and when realised, are termed deliberate strategies.
- Intended strategies that realised are termed unrealised or abandoned strategies.
- Strategies that are not explicitly intended, are unplanned and emerge over time because of changes in
environment, competition = emergent strategies
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- If the organisation’s original intended strategies and its emergent strategies are realised, they are both
termed deliberate strategies.
Planned strategies work well in stable business environments

Do not work is dynamic, turbulent & unpredictable environments
Deliberate strategies are implemented and realised as intended

Three conditions for this to happen:
1. management team must know precisely what they wish to achieve & what intend for future before
actions taken
2. org means collective action = all members believe in strategy and work towards it
3. strategy realised as intended = no interference
- Deliberate strategies still have a definite place in an organisational context.

- Emergent strategies typically have to do with the actions of middle managers
- Emergent strategies imply learning tactics that work
- Emergent strategising often precedes the full understanding of situations
- Emergent strategies open the way for collective action and convergent behaviour
- Emergent strategies can influence intended strategies during their implementation
- Managers at all organisational levels and employees have specific roles to fulfil
2.8 Strategic Management and new realities : the process vs practice perspective SG 29
Traditional process perspective:

- strategic management = rational process with clearly delineated phases the orgs use to achieve strategic
competitiveness and competive advantages
Criticism:
- limited
- out of touch with complexities of strategy in practice and in the real world
- regards strategies as being formulated through formal structures and systems
- no emphasis on effects of interpersonal relations and political processes
Process perspectives
- 1980's
- process is sequence of individual and collective events, actions and activities developed over time
- criticised as not going far enough to look at micro-practices (acts of strategists) & every strategy crafting
routines
- more in touch with reality, humanising strategy research
Practice approach
- 'strategy-as-practice' perspective
- strategy work (strategising) relies on org & practices affecting the process and outcome of strategies
- scope is wider than the strategy formulation
- focus on social practices as the basis of explaining strategy emergence
- identifies the strategic activities by people interacting in an org context
- detailed aspects of strategising
= how strategiest think, talk, reflect, act, interact, emote, embellish, politicise, which tools they
use, implications of different forms of strategising for strategy as an org activity
- focus on micro-activities, and context within which these take place (i.e. every day activities)
- builds on process perspective = strategy is a situated, social activity = done by people influenced by their
context
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Strategy-as-practice:
Strategy Praxis : the work
Strategy Practioners : the workers
Strategy Practices : the tools
Praxis
Situated, socially accomplished
flows of activity that are
strategically consequential for
the direction and survival of the
group, organisation or industry
A
Practitioners
Practices B C
Actors who shape the
Cognitive, behavioural,
construction of practice through
procedural, discursive,
who the are, how they act and
motivational and physical
which resources they draw upon
practices that are combined,
coordinated and adapted to
Fig 5.1 A conceptual framework for analysing strategy as a practice TB 85
Strategising occurs at the nexus between A,B,C = interconnections depending on research problem
Praxis : linked to human action and encompasses ' all the various activities involved in the
deliberate formulation and implementation of strategy'
everyday actions meeting, consulting, talking, calculating, writing, presenting,
communicating
Practices : social, symbolic and material tools through which strategy is done
construct strategy practice
include theory i.e. Porter's five forces, SWOT, resourced-based view & value chains
no one approach to strategy formulation & implementation is correct
Practitioners : interrelated with practices and praxis

use of practices = ways of behaving, thinking, knowing and acting within society,
combining, coordinating and adapting to suit needs and influence
2.9 The concept of strategising SG 31

Strategising = what strategists do, devising / influencing strategies
- influence allocation of orgs resources & control / influence key actions
2.10 Managers at different org levels and consultants as strategists SG 31

2.10.2 Strategists SG 32 TB 88
Strategist = 'doer' of strategy

Hodgkinson and Clarke : individual strategists fall into four broad types
Table 5.1 Categories of strategies TB 88 - 89
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Strategist Description
- highly analytic and driven by the available date, little / no regard for
Detail-conscious intuition.
'- Approach problems in a step-by-step, systematic fashion
- can become preoccupied with gaining an overview of the problem at the
expense of the details.
Big-picture conscious
'- highly intuitive in orientation with little / no regard for analytic approaches
to problem solving and decision making
- minimal cognitive resources in order to derive strategic insight, being
disinclined to process the detail / extract a bigger picture from detail
Non-discerning
'- rely on opinion / wisdom from others, relieve themselves of the burdens
of analytic and intuitive processing
- equal amounts of being inclined to attend to analytical detail and cut
through the detail, when required
Cognitively versatile
'- able to switch more readily between analytic and intuitive processing
strategies
2.10.3 Top managers as strategists SG 32 TB 89

Role top management :
- set overall strategic direction of the org by formulating the strategy,
- gathering info from int & ext environment
- allocating resources and reviewing the strategic success
- choosing strategies and actions = help org gain competitive advantage
- review strategies & reflect upon their decisions & actions = new decisions & actions
Strategic planning champion (SPC) - responsible for guiding the strategic planning of org
- expert at strategic thinking, with specific analytical & technical skills
Three roles :
1. social craftsperson - integrates expectations from groups & individuals to ensure buy-in
- create a positive common ground
- deals with tensions & conflicts, changes volatile = positive
2. artful interpreter - adjusts general strategic planning practices to align with local routines
- contextualises so others can identify own roles
3. known stranger - balance between distance & closeness
- cultivate trust
2.10.4 Board of directors as strategists SG 32 TB 90

- influences the overall direction and monitors the relationship between management & stakeholders
ensure org sustainability over long-term
- Kings III report on Corporate Governance = principles to oversee the functions and role of the board of
directors
- responsible for the appointment of a chief executive officer
- more aligned to the monitoring and reviewing strategies
2.10.5 Middle managers as strategists SG 33 TB 91

Four strategic roles of middle management :
1. Implementing deliberate strategy:
- managerial interventions, actions & tasks align org with strategic intentions of top management
- understand, anticipate, manage processes
- implement strategy by translating corp strategy into action plans
2. Synthesising information
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- interpret and evaluation of info

- provide info of int & ext events to top managers
- responsible for passing info to subordinates
3. Reshaping the strategic thinking of top management by selling to them strategic initiative that
diverge from their current conception of strategy
- influence corp management to adjust current strategy
- DEF: persistent and persuasive communication of strategic options of top management
- provide NB contributions to an org strategic direction & influence org effectiveness
4. Managing change and facilitating adaptability

- downward influence, support, guide & alleviate the concerns & fears of subordinates
- change processes by adapting & amending work practices to align with changing environment
- required to deal with conflict
- have authority & responsibility to facilitate change
2.10.6 Consultants as strategists SG 33 TB 93

- management consultants are practitioners who are knowledgeable about the business environment & org
- guidance outside org is sought, esp when internal managers lack expertise & no decisions are made
- long & short term staffing issues = consultants fill full-time employees role
- consulting firms pool resources, knowledge and expertise across industries & advise on best practices
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SU 3: Strategic analysis: analysing the external enviroment
3.3 Intro SG 37
8. Intro TB 138
Three levels of analysis that influence org's strategic direction (vision & mission) & strategic actions:
1. analysis of the broad enviroment enviromental trends
2. analysis of the task enviroment key role players, factors & conditions influencing an
3. analysis of the strategic groups and industry's profit potential
competitors predicting competitor's actions, responses and
intentions
3.4 Structure and Strategic importance of the external enviroment SG 38

8.2 The importance of understanding the external enviroment in strategic planning and decision making
TB139
Strategic decions making and planning, managers must understand the context of their current
competitive enviroments & future competitive enviroments.
8.2.1 The need for identifying opportunities and threats originating from the enviroment TB 139
Competive threats and opportunities in external enviroment SWOT

All orgs have inherent strength and weaknesses
Strengths - internal org resources and capabilities can lead to competitive advantage
Weaknesses - internal resources and capabilities firm not possess but necessary, resulting in a
competitive disadvantage until firms acquire them
Opportunities - conditions in external enviroment to allow firm to take advantage of org strengths,
overcome weaknesses, and/or neutralise enviromental threats
Threats - conditions in ext environment that may stand in the way of org compeitiveness /
achievement of stakeholder satisfaction
8.2.2 Understanding of ext environment provides a foundation for strategic direction & management
Strategic decision making and planning should:
- take advatage of internal strengths and identified opportunities from ext enviro
- overcome weakenesses / neutralise threats found in ext environ
- strategic 'fit' between ext & int enviro
8.3 Analysing the broad environment TB 141

See: Figure 8.1 The organisation and its environment
8.3.1. The identification of broad environmental forces and the implications they hold for the industries and
orgs
PEST framework
Political
Economic
Social PESTLE
Technological
Legal
Enviromental
1. Political legal forces

e.g. gov, political parties, legislation & competitive policies
- no org is fully exempted from gov, legislation & regulations
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- not all laws & regulations apply equally to orgs

- i.e. some are industry specific - smoking laws, legislation cut across all industries (labour relations &
affirmative action
2. Economic forces
e.g. economic growth, inflation, interest rates & employment
- independent with sociocultural forces = ageing population impact unemployment & salaries of younger
- org should model their bus environments by evaluating different scenarios = help managers make better
decision
3. Sociocultural forces
e.g. social values, culture, lifestyles and demographics
- stakeholder groups = products of society
- orgs gain if managers identify and asses the effects and ops of sociocultural forces & sustaining
relations & reputations with stakeholder groups
4. Technological forces
e.g research & development, new products & processes & new tech
- innovation & tech drive development of new products and services
- org should monitor developments in neighbouring / related industries
8.3.2 Global tectonics TB 142
PESTLE / G = ↑ + Global factors
12 Global trends potential to affect & challenge leaders in the next 30 years
1. increasing population
2. increasing urbanisation
3. spread of infectious disease
4. natural resource crises
5. environmental degradation
6. economic integration
7. knowledge dissemination
8. info tech
9. biotechnology
10. nanotechnology
11. increasing conflict
12. goverance
8.3.3 Evaluating an org strategic response to ext factors in the broad environment TB 143
Tool for identifying the strategically relevant and significant factors in the broad environment is the
external factor evaluation (EFE) matrix
Assist in summarising and evaluating PESTLE /G
See Table 8.1 TB 144
8.4 Role players in the ext environment and their effects on strategy TB 145
Role players in the task environment
"Stakeholders are the individuals, groups & orgs who can affect the firm's vision & mission, they are
affected by the strateguc outcomes achieved, have enforceable claims on the company's performance
e.g. ext stakeholders = customers, suppliers, competitors, gov agencies & ext groups
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Stakeholders = stake the claim & influence they exert

ownership stake - shareholders & directors = formal power
economic stake - suppliers, creditors, customers & employees = economic power
social stakeq - regulators, activist groups & local communities = political power
8.4.1 How external stakeholders affect strategy TB 146

New set of rules
1. Size means scrutiny
- bigger the company = more attention & demand it faces
- performance in ethical behaviour, good governance, enviro management, support for communities,
honest marketing
2. Cutting costs raises compliance risks
- cutting costs = non-compliant ethical practices
3. Strategy must involve society
- social and environmental problems represent the growth opportunities of the future
4. Reducing risks means building trust
5. Satisfying shareholders means satisfying stakeholders
6. Producitivity requires sustaininability
7. Differentiation relies on reputation
8. Good governance needs good representation
3.5 Analysing the macroenviroment: Factors and forces that affect industries and orgs SG 39
3.5.2 Political-legal factors
From a business perspective, the extent of political stability and a government’s ability to ensure a stable
business environment are possibly the two main political considerations for business. The most important
legal considerations from a business perspective are the appropriateness of a country’s legal system, the
effectiveness of law enforcement and whether the country adheres to the rule of law.
A positive factor in a market economy would include the privatisation of state-owned enterprises (SOEs).
A negative factor nationalising an industry
3.5.3 Economic factors

Four economic factors
(1) the growth rate of the economy
(2) the level of interest rates
(3) the currency exchange rates
(4) price inflation
gross national product (GNP) and gross domestic product (GDP),

Other factors that play a role
income levels in a country;
evels of disposable income
levels of savings
unemployment rates
stock market indices and trends over time
3.5.4 Sociocultural factors
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3.5.5 Technological factors
3.5.6 Factors relating to the natural environment
3.5.7 Global tectonics: factors relating to the global environment

8.3.2
3.5.8 Evaluation of an organisation’s strategic response to external environmental factors and forces
8.3.3 EFE matrix = NB
3.6 Analysing the industry environment SG 43
Grant and Jordan (2012:55–56), the purpose of external analysis should be to identify those
macroenvironmental factors that are likely to have an effecton shaping industry conditions
Reasons why:
1. to make a profit, it must create value for customer = understand customers & their needs
2. creating value, the organisation acquires goods and services from suppliers and manages relationships
with them.
3. to generate profits depends on the intensity of competition between rival organisations that compete for
the same value-creating opportunities – hence the need for the organisation to understand its competition
Core of org business environment based on relationships with three sets of role players
Customers Suppliers Competitors
3.6.2 Defining an industry SG 44

8.5.1 TB 147
Sector - a group of closely related industries
Industry - group of companies offering products and services that are close substitutes for each other
i.e. products / services that satisfy the same basic customer needs
Market - distinction should be made between an org's industry it belongs to and a market it serves
3.6.3 Analysing industry attractiveness SG 44

8.5.2 TB 148
Porter's primary determinants of industry competition
- customers
- suppliers
- competitors existing competitors - incumbent rivals
potential competitors - new entrants
subsitute providers - alt products & services from other industries
See Fig 8.2 Model of industry stakeholder and competitive forces TB 148
5 forces of industry attractiveness (nature of competition in an industry & profitability)
1. Customers
- some customers exert greater economic power & have ability to dictate prices & contract terms as the
negotiate with sellers
- power of buyers
= high - few in number / ability to buy in bulk
- product / service being offered is similar, easier to switch to alternative suppliers
- value of buyer's purchase is significant portion of sellers total income
- buyers can move backwards into the supply chain by acquiring / developing ability to produce
themselves
2. Power of suppliers
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- suppliers provide all the required inputs to the org, incl materials, capital & labour
- power of suppliers
= high - few major suppliers & highly concentrated in relation to the industry they serve
- supplies to industry are not similar, difficult to switch to alternative
- few / no alternatives/ substitutes
- suppliers can move forwards in the supply chain
- value of the industry's purchases represents a small portion of the suppliers total income
3. Existing competitors
- rivalry amoung firms
- characterised by strategic manoeuvring & retaliatory countermoves
- degree dependent on the industry growth rate & number of players, their relative size & competitive ability
= high - large number of rivals equal in size and power
- industry growing slower, vying for existing customer support not seeking new customers
- incumbents carry huge fixed costs
- rivals have excess capacity
- existing players cannot leave the industry due to the high costs / high exit barriers
4. Potential competitors
- treat of entry
- existing players want to retain market share & do not want new entrants
- org create barriers to keep potential out and protect existing industry
6 barriers - capital required
- access to distribution
- cost disadvantages not related to size
- economics of scale
- gov legislation & regulation
- high switching costs
5. Substitute providers
- threat to industry = place a cap on industry pricing
- affect profitability
- strategic perspective = substitutes that show improvements in price performance relative to industry
average = scrutiny
6. 6th force?
- regulators / gov intervention
* could be enhancing (e.g. deregulation) or constraining (e.g. nationalisation, competition policy).
* It could affect the structure, competitiveness and profitability of industries, especially where interventions
are industry specific
- complementors
* products that enhance an industry member’s own products
* e.g. apps for a smart phone
Three basic steps to follow when using the five forces model
1. for each of the five forces, identify the different parties involved & specific factors that bring competitive
pressures
2. evaluate how strong pressure from each 5 are (strong, moderate to normal, weak)
3. determine whether the collective strength of the 5 competitive forces (overall) is conducive to earning
attractive profits in the industry
3.6.4 Industry structure, dynamics, competitiveness and profitability SG 45

3.6.4.1 Industry structure
Table 8.2 Types and features of industry structure TB 151
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1. Monopoly
- state-owned enterprise, serving in a closed domestic market will have total advantage while it retains gov
support
- no competition
- org's market will be stable & predictable
- managers adopt a defensive approach to strategy to maintain barriers to prevent market entry
2. Oligopolistic
- characterised be few large orgs with substantial market share
- try maintain their own long-term competitive advantage through defensive strategies
3. Monopolistic competition
- more rivals of a similar size result in less stability & short-term competitive advantage
- aggressive strategic approaches and more intense competition
4. Perfect competition
- aggressive strategic approach
- frequent entry & exit players
3.6.4.2 Industry dynamics SG 46

Rate of competitive and structural changes in an industry over time.
Change can be due to external factors such as technological change or a change in one or more of the
industry forces, or internal factors such as new product and/or process development, or some other
3.6.4.3 Industry evolution SG 46

A useful tool for analysing the effects that industry evolution has on competitive forces =
Industry Life Cycle
- Industries proceed sequentially through the four stages over time, from inception or introduction to
growth, to maturity, and ultimately to decline.
- methodology analyses the level of competitive intensity in each stage , it can also help to predict what to
expect in a subsequent stage, information that could be of real strategic significance.
- task of management is to anticipate how competitive intensity will change as the industry evolves
through the four stages over time, and formulate appropriate strategies with these changes in mind.
3.6.4.4 Drivers of industry change

Common industry drivers:
- changes in industry's long-term growth rate
- globalisation
- who buys product & how it's used
- tech
- new internet capabilities & applications
- product & marketing innovations
- entry / exit of major firms
- regulatory influences and gov policy changes
- changes in societal concerns, attitudes and lifestyles
3.6.4.5 Limitations of industry analysis SG 47

Porter’s five forces model has been criticised for being static, and for not accommodating other relevant
factors.
The industry lifecycle provides a useful analytical framework, but is seen as not reflecting the real world of
business.
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Table 8.3 Conditions over the life cycle of a service firm TB 153
3.7 Strategic Group Analysis SG 47

8.5.5 TB 156
Strategic group = industry members with similar competitive approaches and positions in the market
Strategic group analysis, providing further information on industry competitiveness, occurs at an
intermediary level between the industry and the organisation.
purpose of strategic group analysis is to provide information that will help to explain the characteristics and
current behaviour of these groups in an industry and to predict the future behaviour of such groups for
strategic decision-making.
Fig 8.3 Example of a strategic group map for the local airline industry TB 156
3.7.2 Strategic groups: analysis and forecasting SG 47

A strategic group map is a three-dimensional diagram.
First two dimensions are the axes representing two good variables / any of the competitive dimensions
Third dimension depicted by the size of the circles which is proportional to the combined sales/market share
This allows the map to reveal the position and relative size of each strategic group
3.7.3 Strategic space and industry dynamics SG 48

Groups are not static and change over time
orgs need to proactively alter their strategy
this underlies the notion of strategic space
Strategic space = captures the open areas of opportunity within an industry as indicated on the strategic
group map
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3.7.4 Key success factors SG 48

. What do our customers want?
. What does the organisation need to do to survive competition?
information is for management to formulate appropriate strategies, or adapt existing strategies, and to
ensure that the necessary resources and capabilities are available
3.7.5 Competitor analysis

Two issues
. identification of the organisation’s competitors
. prediction of competitor behaviour
3.7.6 Competition versus cooperation SG 51 TB 159

Competition = zero sum game / head-on conflict
- one party wins at the expense of the other
Collaboration = non-zero-sum game
- all parties to the collaboration may gain some benefit
Benefits
- each partner contribute something distinctive i.e. basic research, product development skills,
manufacturing capacity / access to distribution
Aim
- create advantage over outside companies
- prevent transfer of core skills to partner
- good way to reduce uncertainty from economic / political power of stakeholders
3.7.7 The CPM SG 51 TB 159

Competitive Profile Matrix
- identifies a firm's major competitors and strategic strengths and weaknesses
David (2013:103–104), the following seven characteristics describe most competitive organisations:
(1) Market share matters.
(2) Understand and know exactly what business you are in.
(3) Even if it is not broken, fix it – continuously improve products, processes and the entire organisation.
(4) Innovate or evaporate – particularly in technology-driven businesses.
(5) Acquisitions lead to growth – moving into related or niche markets.
(6) People do make a difference.
(7) There are no substitutes for quality or cost effectiveness
3.8 The External Environment: Change, Uncertainty and Risk SG 51
3.8.2 The changing and uncertain environment SG 52

8.6.1 Difference between certainty and uncertainty TB 160
Continuum of states ranging from certainty to risk to uncertainty
1. Under conditions of certainty
- accurate, measurable information available about each outcome of each alternative considered
- formal analysis
2. Event is risky
- cannot predict outcome with certainty, have enough info to assess probability
3. Uncertainty
- little is known about alternatives & outcomes
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- unique problems and challenges in terms of analysis
8.6.2 Analysing uncertainty TB 161

Degree of uncertainty associated with events
Speed with which changes likely to occur
Possible outcomes they foreshadow
Focus: degree of residual uncertainty present in strategic environment
Four-levels of uncertainty
1. Level 1: a clear-enough future

- some environments are transparent & stable so a single forecast can be made with a reasonable degree
of confidence
- conventional analysis = trend & standard techniques of industry & competitor analysis
2. Level 2: alternative futures

- future can be seen as a small number of discrete scenarios
- not possible to forecast with precision by set of outcomes fully understood
- standard techniques used to analyse each outcome, different analysis needed for different scenarios,
thus difficult to compare
3. Level 3: a range of futures

- higher level of uncertainty, only identify key variables likely to shape the future
- cannot reduce to discrete plausible outcomes
- range of continuous outcomes possible
- techniques i.e. scenario planning
4. Level 4: true ambiguity

- driving forces of the future hard to identify
- no scenarios predicted
- rare = do exist
- qualitative analysis = analyse comparable, past environments and extract the strategic lessons learned
8.6.3 Strategic implications of uncertainty

Strategic posture - company's strategic intent = strategic moves
1. Shapers
- drive industry towards a structure that is to their benefit
- change rules
- try control direction of market
2. Adapters
- reactive
- gradual, evolutionary change
3. Reserving the right to play

- reactive
- preserve their options until strategic environment becomes easier to read and less uncertain
See TB 162 for application of the Shapers, Adapters and Reserving the right to play to the four levels of
uncertainty
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3.8.3 Scenarios and scenario planning SG 52

Scenarios = possible or plausible futures of events'
Rationale behind scenario planning
eliminate two common errors in decision making of change:
underprediction overprediction
Apart from its predictive value, scenario planning can assist with strategic decision-making by providing
valuable insights into the direction and potential impacts of plausible future macroenvironmental and
industry developments.
3.8.3.2 Building scenarios SG 52

Three themes underpin effective scenario planning:
(1) identifying what a business can and cannot change
(2) not disregarding what appear to be even trivial considerations
(3) exploring multiple, plausible scenarios.
Different types of scenarios that can be developed:

1. Inductive - emerge from the discussion & exploration of drivers and trends
2. Deductive - choose two or more of those drivers to structure a scenario
3. Incremental - similar to official future = one written in strategic plans of org
- different enough to move the org in a diff direction & require new thinking
4. Normative - realm of visioning - futures we believe should happen
See FIG 8.4 A classification of the different types of scenarios TB 164
3.8.3.3 The test for and limitations of scenario planning SG 53

- the real test for scenario planning is whether or not it changes the way managers think and do their
business, and not whether the scenario is right or wrong.
- Limitations of scenario planning are that it may be expensive and time-consuming, and mainly
appropriate for large, resource-rich organisations in relatively turbulent external environments
3.9 Tools and techniques for analysing the external environment SG 53

NB
See Table 8.5 Suitable concepts and tools for external environmental analysis TB 166
Four important techniques when analysing the external environment

1. Scanning
- involves detecting and identifying early signals of potential environmental changes and trends
- studying all segments in the environment & reveals ambiguous, incomplete, unconnected data
- software can be used
- enable managers to forecast changes in the expected profitability & adjust strategies
2. Monitoring
- detection of meaning through ongoing observations of environmental changes and trends
- analyst observe environmental changes when monitoring to see if an important trend is emerging
- NB for industries with high tec uncertainty
3. Forecasting
- feasible projections of what might happen, and how quickly
- challenging task
4. Assessing
- determining the timing and importance as well as the implications of environmental changes and trends
- Without, date = interesting & unknown competitive relevance
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SEE 8.9 Responding to the external environment TB 169 - 170

8.9.1 Limitations of the traditional planning process
8.9.2. Strategic agility
8.9.3 Strategic ambidexterity
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SU 4: Strategic analyis: analysing the internal environment
4.3 Intro SG 56
7.1
Strategy = link between org and environment
Consistency between the ext industry environment - incl competitors, customers, suppliers
with opportunities and threats
and internal environment - incl mission, goals, values, resources, capabilities, structure & systems
with strengths & weaknesses
4.4 Importance of the internal analysis of the org SG 57

Primary objective = gain a sustainable competitive advantage in satisfying one’s customers’ needs
better than one’s rivals, which should result in superior profitability and
growth.
Jones and Hill (2013:83), an organisation has a competitive advantage over its rivals when its profitability is
greater than the average of all the organisations in its industry.
Internal analysis aims at identifying the sources of an org's competitive advantage
Based on mission, vision and long-term objectives; outcomes of the internal analysis combined with orgs
external analysis = info for managers to devise and select the competitive business level strategies
Internal analysis = three steps

1) Managers need to understand the process by which organisations create value for customers and profit
for the organisation, and the role of resources, capabilities and competencies in this regard.
(2) Managers need to understand the importance of superior effectiveness, efficiency, innovation, quality
and customer responsiveness in the process of creating value and generating above-average profitability.
(3) Managers must be able to identify and analyse their organisation’s sources of competitive advantage to
know what drives the profitability of the organisation and where opportunities for further improvement might
lie
Two questions:
1 = What are the sources of competitive advantage?
2 = What is the link between competitive advantage, strategy and profitability?
4.5 Identifying Resources, Capabilities and Core Competencies SG 58

Resources, capabilities and competencies of an organisation are linked
Jones and Hill (2013:84–85), a competitive advantage is based on core competencies
‘‘Firm-specific strengths that allow a company to differentiate its products from those offered by rivals,
and/or achieve substantially lower costs than its rivals’
two complementary sources: resources and capabilities
4.5.2 Identifying resources SG 58

Resources are the productive assets owned by an organisation and can be grouped into the following five
categories:
(1) financial capital resources - generate funds, internally / loans and investments
(2) physical capital resources - operational & manufacturing plant & equipment, location, access to mat
(3) human capital resources - knowledge, management, employee insight
(4) organisational capital resources - reporting structure & management
(5) technological capital resources - ICT
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Not all orgs have the same amount of the 5 resources

Not all resources are strategically relevant
How orgs use their resources differ between orgs
Org should focus on their unique resource strengths = competitive advantage
Some resources an org will posses, even if they are similar in industry, will be differentiating, valuable, rare
& inimitable
Resources can include individual, social & org factors
To determine resources = inventory developed
Further classification of resources:
4.5.2.2 Tangible resources

Physical resources that include
physical infrastructure vehicles computer hardware
land, plant manufacturing equipment physical inventory and money
relate to any of the five types of resources
Organisations find it relatively easy to identify tangible resources
4.5.2.3 Intangible resources

knowledge and know-how of managers and employees gained through experience
intellectual property of the organisation, patents, trademarks and copyrights
software brand names
human capital reputation of the organisation.
Kristadl and Bontis (2007:15–18) TB 119
Intangibles are strategic firm resources that enable an org to create sustainable value, but are not available
to a large number of firms (rarity). They lead to potential future benefits which cannot be taken by others
(appropriability) and are not imitable by competitors, or substitutable using other resources. They are not
tradeable or transferable on factor markets (immobility) due to corporate control. Because of their
intangible nature, they are non-physical, non-financial, are not included in financial statements, these
resources need to be clearly linked to a company's products and services, identifiable from other resources
and become traceable results of past transactions.
Three types
1. Human resources - knowledge, trust, managerial capabilities
2. Innovation resources - ideas, scientific capabilities, capacity to innovate
3. Reputational resources - brand name, reputation with customers, perceptions of product quality &
reliability
When dealing with Human Knowledge it can be:

- Explicit = taught or conveyed easily
- Implicit = gained through experience, insight or intuition, difficult to share / record, cannot duplicate or sell
= very valuable and can lead to competitive advantage
4.5.3 Identifying capabilities SG 60

Capabilities are the capacity of an org to deploy resources for a unique end result
They are org-specific clusters of activities developed through complex interactions between tangible and
intangible resources over time
They are what an org excels at compared to other orgs
They are information based
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Key Characteristics
- valuable across various products & markets, in routines & tacit
- what an org can do exceptionally well
Capabilities can be:

- within business functions
- linked to technologies / product design
- involve ability of org to manage linkages of value chain
- capacity of org to deploy resources through processes
Capabilities are:
" high level routine(s) that, together with implementing input flow, confers upon an orgs management a set
of decision option for producing significant outputs…"
Dynamic capabilities:
geared towards effecting and driving org change, essentially strategic in nature and define the orgs path of
evolution and development.
capabilities that help orgs learn new capabilities they require to adapt to environmental changes
Absorptive capacity example of a dynamic capability

the ability to acquire, assimilate and use external information
Marketing and branding capability
Marketing budget Marketing experts Brand

(financial resources) (human resources) (intellectual property)
FIG 7.1 The link between resources and capabilities
Jones and Hill (20013:84), ‘‘capabilities refer to an organisation’s resource coordinating skills and
productive use ... More generally, a company’s capabilities are the product of its organisational structure,
processes, control systems and hiring systems.’’
4.5.4 Identifying core competencies SG 60

Core competencies distinguish an organisation from others in the industry.
An important characteristic of core competencies is that they are difficult to imitate
Tangible and intangible Core competencies Strategy Differentiation/

resources low cost
Capabilities Competitive advantage
Value creation
Excellent profitability
FIG 7.2 Link between resources, capabilities, strategy and competitive advantage
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Core competencies involve combing the various resources and capabilities.

Development takes place over a period in time
Process is accumulating and learning how to combine resources & capabilities
Involves communication & commitment across org boundaries, coordination of diverse production skills and
integration of multiple streams of technology
Example : SAB Miller - TB 122
4.6 Appraising resources, capabilities and core competencies SG 61

Resources and capabilities have the potential to become core competencies that can result in a
competitive advantage, provided certain conditions are met.
Resource-based framework for analysis of org will determine the resources and capabilities that will result
in core competencies
VRIO Framework for appraisal

- ability org transform a resource into a product or service at a lower cost / with higher
value to the consumer
- capabilities are valuable when they enable an org to implement strategy that
improves efficiency and effectiveness
- to be valuable, capability must either increase efficiency regarding outputs/inputs
Value OR increase revenue
- examples Mango airlines = lower cost
City Lodge Group = different customer-market segments
City Lodge
Town Lodge
Road Lodge
- valuable resource that other orgs do not have / not available in open market
Rarity - example pharmaceutical manufacturer’s patent for a specific proprietary medicine
- resources and capabilities should in some way be protected against imitation to be
valuable
- capabilities and core competencies are valuable, unique and complex resources
- includes = intangible resources : culture, skills and experience
= difficult for competitors to copy
Inimitability = results in sustained competitive advantage
Imitation by competitors prevented IF:
- they do not understand the reason for success
- they do not have the same unique historical conditions
- cause of effectiveness uncertain due to social complexity (e.g. trust, teamwork)
- non-substitutability = no equivalent resources, duplicates, substitutes / imitations
- org's structure and systems should be suitable for a specific competitive advantage
- org cannot exploit its resources, capabilities and core competencies, they will be of
little value.
Organisation - way in which leadership, org culture, strategies, policies, systems and procedures
are executed should result in the optimal deployment of the organisation’s resources,
capabilities and core competencies, leading to effective strategies, superior customer
value creation and excellent performance.
4.7 The Resource-based View SG 62

- RBV is a model for analysing the internal strengths and weaknesses of org, in terms of its resources and
linking them to opportunities in ext environ
- determines where org can build competitive advantage, superior performance and customer value
- assessment of org starts with an internal evaluation to determine its strengths in its industry
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Important considerations:
= strategic direction conveyed in vission, mission, purpose and values
= key internal stakeholders, incl managers, their experience, strengths, weaknesses &management style
= operational issues : sales, assets, location
#NAME?
Management's strategic role
- Key resources identification
- Key resources development and protection
Key Resources
Tangible Assets Intangible Assets Capabilities
embodied in the culture of org
recognised in the results from reputation and
Value and knowledge & skills of the
balance sheet client trust
employees
Easy for rivals to
Barriers to Unique and complex Tacitness and casual ambiguity
identify and
duplication resources create inimitability create inimitability
duplicate
Value remains within the firm
Ownership structure reinforces
Fully appropriated due to resource inimitability
Appropriability inimitability enabling the firm to
by the firm and success in retaining key
appropriate value
personnel
Sustainable competitive advantage

Value to client - consistently high performance
Superior performance
Market performance - rate of return
FIG 7.3 A RBV of customer value and its relationship to sustainable competitive advantage TB 125
Resources and capabilities determined by the value chain activities of org:

- supply chain & operational management
- financial management
- research and development
- people management
- marketing management
- intangible resources = rep, patents, brand names, networks
Limitations with RBV:

- not tested empirically
- does not address how to increase profitability / further development competitive advantage / new ones
- lack of future orientation & inability to differentiate between valuable and less valuable resources and
capabilities = lack of predictability
The RBV is a model for analysing the strengths and weaknesses of an organisation which can then be
linked to environmental opportunities and threats as inputs to the formulation of competitive business level
strategies. Combining external opportunities and threats with internal strengths and weaknesses is the
basis for SWOT analysis
4.8 Identification of capabilities and core competencies to create value SG 63

Basis for effective org strategy = identification and assessment of capabilities and core competencies
Either a value-chain analysis OR RBV can be used for identification
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Identifying and assessing capabilities & core competencies will enable org to determine:
- how components of value chain add worth to its performance
- hour resource and capabilities contribute to competitive advantage
- how fin performance compares to competitors
- how customers and employees benefit
Five stages of strategy formulation (Grant and Jordan) & RBV of strategy:
1. identification and classification of org resources
2. identification of the capabilities of org
3. appraisal of the rent-generating potential (value) of resources and capabilities
4. selection of a strategy that exploits resources and capabilities relative to the ops in ext environment
5. Identify resource gaps
Orgs resources, capabilities and core competencies can be identified, classified and analysed:
1. according to functional areas
2. through an analysis of its value chain
4.8.2 Classification of capabilities and core competencies according to the functional areas of the
organisation SG 64
A functional analysis identifies capabilities and core competencies according to functional areas in org:
- marketing function: brand, management, reputation
- sales and distribution: customer service, after-sales, promotion
- corporate functions: financial control, management development
- management information function: linking comprehensive, integrated management info system with
managerial decision making
- ops function: continuous improvement
- R&D innovative new product development
4.8.3 Classification of capabilities and core competencies through value chain analysis SG 64
Main functions of an org is to add value successfully in the process of producing products/service delivery
SEE FIG 7.4 The value chain - TB 127

Primary activities & capabilities:
Inbound logistics - receiving, storing and distributing inputs for manufacturing
- capabilities : purchasing, material & inventory control systems
Operations - activities that transforms inputs into final products
- e.g facility operations, machines and assembly
- capabilities: design, product dev., quality control, component manufacture
Outbound logistics - collecting, storing & dis. Products & services to customers
- capabilities: distribution coordination, processes relating to warehousing
Marketing & sales - marketing, sales and purchasing of products & services
- capabilities: innovative promotion & advertising
Customer services - everything with improving & maintaining value of a product
- capabilities: parts, warranty, servicing arrangements, quality, training
Support activities & capabilities:

Admin & infrastructure - support the entire value chain & incl general management, planning, fin
management, info systems, legal issues, quality management
- capabilities: inventory and database management
HR management - appointment, development, retention of employees, compensation, all
matters relating to employment
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- capabilities: training, skills dev, staff recruitment, retention

Procurement - purchasing function
- capabilities: inventory & database management
Tech development - all tech related to ops & management of org
- capabilities: integrated management info systems & tech-managed design
4.8.4 The contribution of resources, capabilities and core competencies to competitive advantage SG 66
Competitive advantage exists when an org is more profitable than its competitors
This is achieved in one of two ways:
1. It can produce products & services that are superior in value to competitors, allow it to charge premium
prices / retain customers for longer (differentiator)
e.g. Apple Inc
2. It can produce products/services at a significantly lower cost than competitors (cost leadership)
For differentiators, competitive advantage is achieved through combining resources, capabilities and core
competencies to produce products & services of superior quality
For cost leaders, production efficiency is NB
Positions can be achieved through different capabilities:

* Ability to produce high quality products
- products perceived as high brand value / more reliable / more durable
- eg Harley Davidson
* The ability to innovate

- innovation is experimentation & creative processes aimed at developing new products,services,processes
- to innovate, co spend more than competitors on R&D
e.g. Apple Inc
* Responsiveness to customers
- identify & satisfy the needs and wants
- e.g. Discovery Insure's Vitality drive
* Efficiency
- involves the transformation of inputs (raw materials, production methods, labour, knowledge, expertise,
tech) into outputs (products & services produced).
𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 =
An efficient org requires less input to produce desired output
Production efficiency achieved through:

Economies of scale - producing larger quantities at lower prices
Economies of learning - org gain more experience, cost of production will go down
Designing products for more economical production
Designing production lines in a way that allows cheaper production, new tech = reduce cost
Reducing unnecessary cost
Leveraging location advantages - locating to an area where costs are lower
4.9 Sustainable competitive advantage SG 67

Sustainable competitive advantage is determined by the durability of the relevant resources & capabilities,
& how inimitable they are
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Imitability - how easy or difficult it is to duplicate

Transferability - how easy or difficult it is to acquire or buy a resource
Replicability - ability to use thre resource in other settings
4.9.2 Capturing the value generated by resources, capabilities and core competencies SG 67
Organisations need to develop dynamic capabilities
Apart from complying with the VRIO requirements for resources, capabilities and core competencies to
achieve a competitive advantage and superior profitability, it is crucial that the organisation’s market
segments should be large enough to generate sufficient profits (L), and that the unmet needs of customers
are satisfied (U), criteria that extend the VRIO framework to VRIOLU. This extended framework now allows
analysis from the following three perspectives:
(1) the organisation perspective
(2) the perspectives of rarity, inimitability and availability of resources, capabilities and core competencies
in a competitive environment
(3) the perspectives of customers and market size
Appropriability - org must capture sufficient value to justify investment
The value of resources and capabilities is indirectly determined by:

1. ext environment, incl demand and potential market
2. changes in the ext market, incl tech, structure of the industry & customer preferences
3. value determined by lower production cost / increased revenues
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SU 5: Strategy in context: exploring business opportunities in Africa
5.3 Intro SG 71
2.1 Africa today
SEE Table 2.1 African Union SWOT analysis TB 21
Extend our thinking on strategy and strategic management to the international arena and accordingly
explore the following broad themes in this regard:
. assessing the external environments for doing business in Africa
. evaluating the institutional environment of Africa as part of the external environment
. identifying opportunities, threats and constraints for doing business in Africa
. identifying viable strategies for competing in the African context
Global perspective, strategies are invariably found at the following levels

. at global level, strategies of global or supranational institutions such as the United Nations (UN), World
Bank (WB), International Monetary Fund (IMF), International Labour Organisation (ILO) and the World
Trade Organisation (WTO)
. at continental and regional levels, the strategies of institutions or those emanating from multilateral or
other agreements, such as the African Union (AU), European Union (EU), North American Free Trade
Agree- ment (NAFTA), Free Trade Area of the Americas (FTAA), Association of Southeast Asian Nations
(ASEAN), the Association of BRICS countries (Brazil, Russia, India, China and South Africa) and the
. the strategies or national strategic development plans of individual countries, through their governments
. the strategies of state, provincial and local authority entities in a country

. private sector organisations, public sector organisations, state-owned enterprises (SOEs),
nongovernmental organisations (NGOs) and public- private partnerships (PPPs)
Strategies as indicated above will, at the very least, differ in terms of level, context, scope, purpose,
complexity and timeframe.
5.4 The Context And Institutional Environment Of Africa SG 73

2.1.1 Lack of infrastructure TB 22
Lack of infrastructure (roads, harbours, electricity, ICT networks & railways) = damper investment
poor infrastructure, governments that are unwilling or unable to maintain or improve existing infrastructure,
let alone providing new, much needed infrastructure, are a significant damper on investment and
business in Africa. For the economic activity of a country in general and business in particular, lack of
infrastructure invariably translates into inadequate supply chains which adversely affect the sourcing of
strategic raw materials for production as well as the distribution of much-needed products to markets,
especially those in rural areas.
2.1.2 Lack of industrial development TB 23

- need to improve and increase manufacturing capability
- most African countries apply primary resource development (mining/harvesting) and then export raw
product for secondary & tertiary economic processing
- tertiary economic products then need to be brought back for local consumption.
- development in secondary & tertiary industrial activities would negate this
- result in a greater creation of wealth (strategic goal) & independence of imports
2.1.3 Political instability TB 23

- political instability in Africa is due to unpredictable gov decision making = volatility / armed conflict
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- this makes foreign investment risky

- nationalisation of industries or expropriation of property and assets of business organisations, all of which,
for investors and business alike, translate into uncertainty and risk.
- Zimbabwe and land-grabbing act (2007 Act requiring all foreign business to have 51% partner
- uncontrolled exploitation of wealth (blood diamonds)
- African conflict & effects = 53 countries, 15 involved in war / post-war tension
- over natural resources i.e. land, oil, diamonds
2.1.4 High levels of poverty TB 23

- most African countries, significant proportion of population fall in economic bracket = Bottom of the
pyramid (BOP)
- BOP = less than $2 a day R 900 per month
- BOP = poor living conditions
= susceptible to diseases (malnutrition, cholera, TB)
= no access to healthcare
= lack education
- social welfare drains taxes
2.1.5 Corruption TB 25
- corruption in Africa is massive
- CPI on African countries, 90% scored less than the 'pass mark' 50%
- Transparency International:
" corruption is a major threat facing humanity. Destroys lives and communities and undermines countries &
institutions. Generate anger that destabilise societies and violent conflicts"
2.1.6. An inefficient public sector TB 25

- disappointing economic growth of the African economy in recent years can be largely attributed to an
inefficient public sector.
2.1.7 Lack of key skills

- Countries in Africa have generally been characterised by a lack of key business and especially
managerial skills, and an ample and often over-supply of a semi-skilled and unskilled workforce.
5.5 Background To And Strategy Of The SADC SG 74

Familiarise yourself with the structure of the SADC.
2.2. The Southern African Development TB 27
SADC = Southern African Development Community
- group of countries within the African Union
- SADC countries have existing trade & political assistance treaties in place between them
- also have strategic alliance = countries compile policies from them
Table 2.2 SADC member countries

Angola Malawi South Africa
Botswana Mauritius Swaziland
DRC Mozambique United Republic of Tanzania
Lesotho Namibia Zambia
Madagascar Seychelles Zimbabwe
SADC member countries face same strategic issues facing Africa

examples: Problems
Mozambique and DRC armed resistance battle
Madagascar and Zimbabwe internal challenges of existing gov & international scrutiny & sanctions
Swaziland political & social strife = due to king overspending
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5.5.2 Background to strategy in the SADC SG 75

2.2.1 Background to strategy in SADC TB 28
Strategy in Africa aimed at eradicating poverty & achieving regional integration
- attuned to further socio-economic cooperation, growth and integration whilst ensuring political security &
milary stability in amongst member states
Key issues:
- basic human needs
- derived from the AU declaration
- economic development
- peace & security
- growth
- alleviation of poverty
Table 2.3 SADC Common Agenda items TB 29

1. Promote sustainable and equitable economic growth and socio-economic development that will
ensure poverty alleviation with the ultimate objective of its eradication, enhance the standard &
qualify life of people of southern Africa & support the socially disadvantaged through regional
integration
2. Promote common political values, systems and other shared values which are transmitted
through institutions that are democratic, legitimate and effective
3. Consolidate, defend and maintain democracy, peace, security and stability
4. Promote self-sustaining development on the basis of collective self-reliance, and the
interdepence of member states
5. Achieve complementarity between national & regional strategies and programmes
6. Promote & maximise productive employment & utilisation of the resources of the region
7. Achieve sustainable utilisation of natural resources and effective protection of environment
8. Strengthen & consolidate the long-standing historical social & cultural affinities & links among
the people of the region
9. Combat HIV & AIDS & deadly & communicable diseases
10. Ensure that poverty eradication is address in all SADC activities and programmes
11. Mainstream gender in the process of community building
Table 2.4 AU strategic objectives TB 29

1. Reduce conflicts to achieve continental security and stability
2. Achieve necessary continental security and stability as a prerequisite for Africa's development
and integration
3. Promote sustainable economic development
4. Promote sustainable social and human development
5. Formulate frameworks for developing and sharing Africa's statistics and research &
development capacitates
6. Enhance continental integration
7. Build and foster continental & global cooperation
8. Promote good governance, democracy and human rights
9. Strengthen the Africa-wide humanitarian response and action
10. Promote inter-African solidarity
11. Promote African Cultural Renaissance and the protection of African's cultural heritage
12. Promote the active participation and contribution of all segments of African society in Africa's
development and integration
13. Promote the ratification and entry into force of all outstanding legal instruments adopted by the
assembly of the union
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14. Promote gender equality

15. Strengthen the capacity and enhance the operational efficiency & effectiveness of the AUC
16. Promote synergies, linkages and good working relations with the AU
17. Promote effective cooperation and collaboration with member states and the RECS
18. Promote strategic partnerships for leveraging sustainable sources of funding & comparative
advantages
Strategic objectives are stated to ensure ' an integrated, prosperous and peaceful Africa, driven by its
own citizens and representing a dynamic force in global area'
Table 2.5 Critical actions (NDP South Africa) TB 30

1. A social compact (agreement between parties) to reduce poverty and inequality, and raise
employment and investment
2. A strategy to address poverty and its impact by broadening access to employment,
strengthening the social wage, improving public transport and raising rural incomes.
3. Steps by state to professionalise the public service, strengthen accountability, improve
coordination and prosecute corruption
4. Boost private investment in labour-intensive areas, competitiveness and exports with
adjustments to lower the risk of hiring younger workers.
5. Education accountability chain, with lines of responsibility from state to classroom
6. Phase in national health insurance = focus on upgrading public health, facilities, producing more
health professionals & reducing cost of private health care
7. Public infrastructure investment at 10 per cent of GDP, finance through tariffs, public-private
partnerships, taxes and loans and focused on transport, energy & water
8. Interventions to ensure environmental sustainability and resilience to future shock
9. New spatial norms and standards
10. Reduce crime by strengthening criminal justice & improving community environments
Key issues
- relate to economic growth, education, health and regional integration :
■ poverty alleviation
■ improved political and military stability
■ economic growth incl increase in exports
■ improved education and health service & service delivery
■ improved public-private partnerships
■ improved infrastructure development
Planning - complicated by employment equity rations

Organisational disposition = cross-skilling is required
Implementation (leading) - plan for internal pricess of development within
Control - internal = maintain economic, remain competitive & contribute to economy
- external = comply with legal & legislative restrictions (National Dept of Trade & Industry)
5.6 Strategy And Strategic Management In The Context Of Africa SG 75

2.3 The impact on strategy and strategic management in business
5.6.2 Emerging market environments in a global and African context

Formulate strategies for emerging markets = PESTLEG
Challenges : - conflict
- underdeveloped infrastructure
Opportunities: popular business destinations
Why: 1. attractive market ops for international companies wishing to expand (nat. & int)
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2. currently reflect potential for increasing demand for internationally recognised brands
3. serve as manufacturing bases & destinations for outsourcing activities
4. destinations for sourcing materials and commodities
Benefits: higher economic growth and higher income levels,
a better quality of life
improved skills
increased technology transfer
more competitive consumer markets.
Problems self-serving governments
weak institutions
ethnic and religion induced civil wars
weak property rights
low productivity
bureaucratic red tape and corruption
5.6.3 Strategies at the BOP - Bottom of the Pyramid
FIGURE 5.1: Four-tiered structure of markets SG 78

valuable basis for thinking about and contemplating other strategic options for emerging markets in general
and SSA markets in particular
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Considerations:
four distinct tiers
- A ‘‘global’’ customer segment that wants products of global quality and with global features – offerings
with the same qualities and attributes that goods in developed countries have – and customers willing to
- a ‘‘glocal’’ segment that demands products of global quality but with local features at less-than-global prices
- a ‘‘local’’ segment that wants local products with local features at local prices
- a BOP segment that can afford to buy only the most inexpensive products
Challenges for foreign MNCs & local orgs:

- emerging markets differ in structure compared to developed country markets
Institutional voids = lack of specialised intermediaries

- regulatory systems
- adequate distribution systems
-skilled market research firms
- pools of skilled managerial talent
Resultant in:
. a general lack of market research organisations and absence of reliable market intelligence which make it
difficult for MNCs to identify and understand local customers’ preferences and tastes
. the generally poor distribution networks that make it largely impossible to serve customers in rural areas
effectively
. the MNC’s deficient knowledge about the local talent pool (at least initially) and inability to attract
competent local employees at the four different market levels, which poses an enormous challenge
MNC = global tier

Local = local & BOP tiers
Glocal = battleground
Glocal :
Local cos - superior knowledge of local conditions, local companies tend to serve glocal customers
(requiring global products with local features) better than their foreign counterparts.
- circumvent institutional voids
- tailor strategies to local markets better than foreign MNCs
- can tap into talent and capital markets
= competitive edge
unfavourable perceptions of the BOP segment = misconceptions

. The poor cannot afford their products and services.
. The poor do not have use for the products sold in developed countries.
. Only developed country customers appreciate and pay for innovations.
. Because of low income levels, BOP markets are not critical for the long-term growth of MNCs.
. It is difficult to recruit managers for BOP markets.
5.6.4 Key success factors (KSFs) for business operations in emerging markets SG 79
KSFs are those competitive factors that affect industry members’ ability to survive and grow
TWO Categories
Strategic KSFs
. choosing the appropriate strategies and organisational architecture
. making trade-offs in order to share benefits
. partnering with government
. bulking up for critical mass
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. investing ahead of demand

. preparing to capture the opportunity at the BOP
Operational KSFs
. using expatriates effectively
. executing strategies and operations flawlessly
2.3.1. Strategy at the bottom of the pyramid TB 33

Multinationals & orgs operating in BOP markets = 3 challenges resulting from maximum price-performance
ratio
Capital intensity: serving BOP means org must minimise their capital tied up in plant, equipment and
working capital
innovation is needed to maximise the return on capital
Sustainable dev: two thirds of world's pop fall in the BOP segment
importance on 'total cost of ownership' to BOP markets, provides an opportunity for
experimentation in sustainable development
e.g. sustainable energy / enviro friendly packaging
Innovations for providing the price performance required by the BOP = innovation in product & process
BOP:
5.6.5 Investing in Africa SG 80
5.6.5.2 Local customs and customer preferences

Investors & orgs must remember that African countries are diverse and differ in:
- their political stability
- legal system
- size of their economy as indicated by GDP and GNP levels
- level of economic development
- rate of economic growth
- size of the country
- population size
- levels of disposable and discretionary income
- sophistication of infrastructure
- industry characteristics
- market size and consumer needs
- and culture as well as customs and especially religious traditions.
Comprehensive country analysis =

- country risk analysis
- info from Human Development Index
- info from orgs e.g. Transparency International
* see e.g. textbook page 35
5.6.5.3 Legislation SG 81
- aware of the legal dispensation of the country
- knowledge of a country’s legal system, laws and regulations as well as the extent to which the rule of law
and effective law enforcement = very important
Issues include:
- relating to ownership - labour relations
- taxation - customs and excise
- direct investment - securities exchange and listing requirements
- repatriation of profits and dividends to parent organisations in the home country
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- foreign exchange controls and transfer pricing rules.
5.6.5.4 Political considerations TB 81

circumvent or overcome complexities including
. partnering with local stakeholders for a number of reasons, including ease of entry into the country,
shared ownership (international joint ventures) or involvement by agreement (strategic alliances) as a
source of local market knowledge, potentially favourable government relations, and sharing risks,
especially in the early stages of a venture where uncertainty is high
. responding positively to an awareness of community, cultural and social needs in terms of customised
products (e.g. adapted packaging of beer by Diageo); certain human resource management practices and
an awareness of political events and national priorities could enhance organisation-government relations.
See the experience of SABMiller below.
5.6.5.5 Creative supply chain management c

underdeveloped infrastructure in many of the countries in Africa, organisations have to devise their own,
innovative supply chain solutions, especially in terms of logistics relating to procurement and inbound
transportation as well as the distribution of products to their markets.
following ways in which these challenges can be addressed:
- investing in own infrastructure (in part explained in the example of SABMiller)
- product innovation to meet specific market needs (Promasidor’s unique powdered milk product; MTN’s
inexpensive prepaid mobile phone fees)
- developing local suppliers to ensure consistent supply of raw materials (see the example of SABMiller)
- developing distribution channel strategies that are sufficiently flexible to cope with both formal and
informal distribution via wholesalers and retailers to serve their markets effectively
land-locked countries = nightmare

Not only could customs clearance at a country’s nearest port take relatively long, but cross-border customs
clearance en route could cause further delays, while poor infrastructure, especially roads and ineffective
rail transport, add to already existing time delays that all translate into higher costs, potential production
delays and getting products to market. All of these are ingredients of competitive disadvantages.
5.6.5.6 Investing heavily in talent 5.6.5.6 Investing heavily in talent

lack of skills, and especially key managerial skills, remains a drawback in African countries
Organisations doing business in Africa need to identify, attract and retain talent, but also invest in training
and development, including mentorship.
5.7 The role of Governments in enhancing business strategies in the context of AfricaSG 76
Governments can enhance or deter economic growth and development through their strategies, policies
and investment decisions, but their main purpose, apart from ensuring political stability is, inter alia, to
create an environment conducive to economic growth, foreign investment, export promotion, job creation
and poverty alleviation, especially in the context of countries in Africa.
* See TB 37
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bal prices
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SU 6: Sustainable organisations
6.3 Intro SG 87
Sustainability:
ability to endure and continue over a long period of time.
Business sustainability:
ability of the organisation to endure and survive in the long run
E.g.
- SABMiller (formerly South African Breweries) was founded in 1895.
- The University of South Africa (Unisa) was founded in 1873 (as the University of the Cape of Good Hope).
- Nestle was founded in 1866 in Vevey, Switzerland.
- Coca-Cola was founded in 1886 in Atlanta in the United States of America.
Problem:
- business fold = bankrupcy / liquidated
- public orgs = SOE perform badly and bailed out by government with taxpayers money
Corporate sustainability has four pillars
FIGURE 6.1 : The evolution of corporate sustainability
6.4 Sustainable development SG 89
Triplebottom line
1. economics
2. environment
3. society
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Sustainable business = 3 main factors

1. ethical profits = economic bottom line
2. healthy physical environment = environmental bottom line
3. healthy communities = social bottom line
Holistic model of sustainable business = 6 elements

1. enviromental context
2. social context
3. economic context
4. organisational context
5. stakeholders
6. strategic fit
3.1 What is sustainabile strategy? TB 47 Ethical Profits
Business strategy = balancing economic

objects (profit), with the welfar of
communities (social dimension) and Healthy Healthy
protecting the environment (physically Environment Communities
exists)
- profits generated legally and ehthically = sustainable

≠ CSR which looks at past actions of a company
= Sustainability forward looking by changing the nature of the company to be more successful long term
Purpose
= generate max increase in outputs, turnover and other aspects of company, consumers & employee value
by embracing opportunities in the macro and market environment & managing risks from environ & social
developments.
3.2 Sustainability and competitive advantage

Competitive advantage = profitability
Sustainability = survival in the long term
What are the greatest benefits to org in addressing sustaibability issues?

- company / brand image
- cost savings
- competitive advantage
- employee satisfaction, moral / retention
- product, service / market innovation combined to strive for sustainable competitive
- business model / process innovation advantage
- new sources of revenue / cash flow
- effective risk management
- enhanced stakeholder relations
3.2.1 Evaluating the sustainability of strategies

6 elements of sustainable strategies
1. environmental context - not harm physcial environment in which org operates
2. social contect - contribute positively to the communities in which they operate
3. economic context - financial measures e.g. profits, return on equity and economic value added
4. org context - internal functioning of the org
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- relate to strategy implementation & internal role of directors,

management, employee effectiveness, corporate governance
5. stakeholders - key = creditors, directors, employees,gov, owners (shareholders),
suppliers, unions, community
≠ satisfy all, develop strategies that balance demands of multiple
6. strategic fit - strategies aligned with internal & ext enviornment, processes and
capabilities adapt to changes in the environ
See Figure 3.2. Holistic business movel for sustainable strategies - TB 49
6.5 Corporate social responsibility (CSR) SG 92

3.2.3 Social context
- contribution org makes to the general welfare of communities & broader society
DEF : corporate social responsibility
- continuing commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the workforce & families as well as the local community & society
CSR
- used by business to address societal & environmental issues
-planning = NB
- company must know all details of specific environment in order for CSR to succeed
Aspects of:
- design of project
- outcome CSR dept wants
- how project will fit in locally with needs of community
- support from different role players
6.6 Stakeholder relationships SG 94

DEF ‘‘those entities that can affect or be affected by the organisation’s actions’’
categorise stakeholders into three broad classes: Power
latent stakeholders
expectant stakeholders
salient stakeholders.
3.2.6 Stakeholders TB 54 Stakeholder

Salience
Key stakeholders:
- creditors Legitimacy Urgency
- directors
- employees
- gov FIG 3.3 The drivers of stakeholder salience TB 54
- owners (shareholders
- suppliers
- unions
- environment & community
Stakeholder salience model :

Determining factors
Stakeholder power
- determined by the extent to which stakeholders control the resources required by the org
- more resources = higher degree of control = more powerful stakeholder
- e.g. employees & unions have direct control over HR of org / community ≠ similar control
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Stakeholder legitimacy
- determined by extent the stakeholders are affected by decisions of org
- more affected = higher legitimacy
- e.g. employees affected by org's decisions & have higher level of legitimacy
Stakeholder urgency
- time sensitivity of stakeholder's claim & level of importance to the stakeholder
- the more urgent & important the claim = higher level of urgency
Attributes classify stakeholders into three broad classes:

1. Latent stakeholders
- only one attribute (power, legitimacy OR urgency)
- e.g. environment = stakeholder, has legitimacy, as is affected by org but not power or urgency
2. Expectant stakeholders
- has two attributes (power, legitimacy AND / OR urgency)
- e.g. gov has power (legislation) & urgency but not high level of legitimacy (not directly affected by org)
3. Salient stakeholders
- strongest claim & MOST NB to org
- unions & shareholders = deadlock
6.7 Ethical business SG 96

Unethical business practices guidelines:
- behaviours that are illegal / contravene regulations or legal contracts
- e.g. disposing of toxic water in rivers = illegal and dangerous
- discriminatory & unfair practices
- discrimination on the base of gender, race or religion
- misleading stakeholders
- not disclosing harmful ingredients in products
- deliberately behaving in ways that are detrimental to stakeholders
- failing to recall products quickly may lead to death
- being influenced
- accepting bribes
NB have a code of conduct guide the actions of management

Corporate governance process attempts to create a code of conduct for conducting business ethically &
sustainably
TABLE 6.3: Guidelines for the ethical behaviour of executives SG 97

1. Be honest in all communications and actions. Ethical executives are, above all, worthy of trust and
honesty is the cornerstone of trust.
2. Maintain personal integrity. Ethical executives earn the trust of others through personal integrity. Integrity
refers to a wholeness of character demonstrated by consistency between thoughts, words and actions.
3. Keep promises and fulfil commitments. Ethical executives can be trusted because they make every
reasonable effort to fulfil the letter and spirit of their promises and commitments.
4. Be loyal within the framework of other ethical principles. Ethical executives justify trust by being loyal to
their organisation and the people they work with.
5. Strive to be fair and just in all dealings. Ethical executives are fundamentally committed to fairness.
6. Demonstrate compassion and a genuine concern for the well-being of others.
7. Treat everyone with respect.
8. Obey the law.
9. Pursue excellence all the time in all things.
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10. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership
and seek to be positive ethical role models.
11. Build and protect the organisation’s good reputation and the morale of its employees.
12. Be accountable. Ethical executives acknowledge and accept personal accountability for the ethical
quality of their decisions and omissions.
6.8 Corporate governance and the board of directors SG 98

3.4 Corporate governance
DEF: system by which corporations are directed and controlled
Functions:
- specifies the distribution of rights & responsibilities among participants
- specifies rules & procedures for making decisions
- provides a structure set & pursue objectives, reflectant the context of social, regulatory & market environ
- mechanism for monitoring actions, policies, decisions
- mechanism for aligning the interests of different stakeholders
SA = King Code of Corporate Governance of 2009 (King III)

Governance guidelines are voluntary compliance = comply or explain
Guides
- boards & directors
- accounting & auditing
- risk management
- integrated sustainability reporting
- compliance & stakeholder relationships
- IT gove
- alternative dispute resolution
PFMA = Public Finance Management Act of 1999

Objectives:
- modernise the system of financial management in public sector
- enable public sector managers to manager & be accountable
- ensure timely provision of quality info
- eliminate water & corruption of public assets
King III and the Companies Act

The new Companies Act requires all companies, whether public or private, to establish a Social and Ethics
Committee. In the light of King III, this can have dramatic implications for companies and good corporate
governance.
The similarities between the requirements of King III and the Companies Act are obvious. Unfortunately,
many companies are unaware of the implications of the Act, particularly in the area of social responsibility
and ethics.
Companies are not only required to establish a Social and Ethics Committee. They also have to establish a
Social and Advisory Panel to assist the committee.
The King III recommendations cannot be legally enforced, but the Companies Act is legally binding and
must be adhered to.
Role of the board of directors

generally responsible for:
- developing, formulating and monitoring corporate strategies
- formulating policies
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- enhancing the public image of the organisations they represent

- reviewing and monitoring managerial activities and performance
- reporting to stakeholders
- employing, evaluating, providing advice to and rewarding top executives
- ensuring organisational compliance with related legislations and governance guidelines
- managing financial resources
- developing a risk management plan
- conducting self-assessments (i.e'- measuring board performance)
- initiating board development activities, such as director training
FIG 3.4. Pillars of sustainable business TB 59

Sustainable development
Stakeholder relationships
(Economic, social,
Corporate social
Ethical Business
environmental)
responsibility
Organisation
Strategic fit
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SU 7: Selecting optimal business level strategies
7.4 Levels of strategy SG 104

The levels and strategies are as follows:
. corporate level strategies
. business level strategies
. functional level or tactical strategies
. operational level strategies
7.5 Long-term objectives and strategic choice SG 105
Background:
- The primary objective of strategy is to achieve a sustainable competitive advantage that results in above-
average profitability and wealth creation for all relevant stakeholders, based on an optimal fit between
organisational competencies and opportunities in the external environment.
- Well-conceived strategic direction for an organisation in terms of a vision, mission, strategic intent and
long-term objectives as a basis for viable strategies should greatly enhance the future success of an
organisation.
- To achieve long-term objectives, managers and key employees need to make optimal strategic decisions,
particularly at corporate, business and tactical or functional levels.
9.1. Strategic goals and strategic choices TB 176

- strategy formulation = assess situation
- findings = goals of org with overall goal of creating strategic fit between org resources & capabilities &
opportunities in ext environment
Primary objective of business strategy = achieve sustainable competitive advantage which leads to above-
average returns
To achieve this objective, strategic managers need to make decisions on three levels:
1. Decisions are taken about the overall purpose, scope, range & diversity of org
- decisions CEO / MD, the board of directors & senior directors
- outcome is corporate strategies, purpose of corporate strategy should be maximise shareholder value
2. General managers of each line of business / strategic business unit determine which business (or
competitive strategies) most suitable to achieve sustainable competitive advantage.
- decision = business level strategies
3. managers lower down (functional heads / operational sections) make decisions about how to best
support business-level strategies by performing strategy-critical activities
FOCUS: corporate & business level strategies
Corporate head office

Value added by
through
Value created
the corporate
Strategic Business Unit

FIG 9.1 The relationship between the corporate centre and the strategic business units TB 177
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Corporate centre is typically head-office of multi-business org, manages a portfolio if businesses with a
view to maximise the value of the portfolio for the benefit of stakeholders
- corporate head office will add value to strategic business units (SBUs) through specific capabilities /
shared corporate services
- SBUs = organisational units that exercise control over most of the resources they require to be successful
(autonomous)
- own set of competitors, can be internal to org or external
7.6 Business level strategies SG 107

9.3 Business-level strategic options: creating and sustaining competitive advantage TB 186
Corporate-level strategies
- deal with the number of products & services that company will offer & markets which they will pursue
- business-level or competitive strategies consider how to compete successfully in these markets
- focus on how to position the company within an industry in such a way that it has a competitive advantage
Differences among competitive strategies are:

- whether org's target market is broad or narrow
- whether the org's is pursuing a competitive advantage linked to low cost or product differentiation
- combination of above
Four distinct generic competitive strategy approaches:

1. A cost leadership strategy
- lowest cost org (w.r.t. production cost)
- strategy target a broad spectrum of buyers
- cost leadership ≠ low price
- low production & low price = average returns & no real competitive advantage
2. A differentiation strategy
- uniqueness along some dimension that is sufficiently valued by customers to allow a price premium
- strategy focus on either a broad section of buyers / narrow buyer segment
3. A focus strategy
- strategy involves a narrow segment / domain activity and tailors its products / services to needs that
specific segment to the exclusion of others
4. A best cost provider strategy

- hybrid strategy involves giving customers more value for their money by offering upscale product
attributes at a lower production cost than rivals
Cost Leadership strategy Broad differentiation strategy
Best Cost
provider strategy
Target market
Focused low-cost strategy Focused / niche differentiation
Competitive advantage
FIG 9.4 Business-level strategies TB 187
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- strategies relate to how org's deliberate decisions on how to meet its customers' needs
- how to counter the competition
- how to cope with existing market conditions
- how to sustain / build competitive market
7.6.2 Cost leadership strategy SG 108

AIM: underprice competitors by building and sustaining their competitive advantage through the
reduction of costs, or keeping lower than those of their competitors, while providing products
and services that customers want, at the same or a higher quality than their competitors.
Most - situations characterised by large markets that allow high production volumes of standardised
suitable products for customers that are price-sensitive and have low switching costs.
Achieved through
- selling cost-effective products and services that satisfy customer needs, resulting in higher market share
than that of rivals
- enhancing profit margins through economies of scale, lower unit costs and organisational efficiencies
- basing cost effectiveness on the organisation’s core competencies
Advantages
- an increasing in competitiveness and market share through sustainable cost advantages
- protection for the organisation against competition as a result of its durable cost advantage
- protection against powerful suppliers because of large-scale purchases and the resultant potential of
discounts
- protection against the power of buyers because of the low-cost advantage and competitive pricing
possibilities
- durable cost advantages serving as barriers to imitation, barriers to the threat of
- substitute products and barriers to the threat of new entrants to the market, which should be evident from
analysis of the organisation’s competitors
Disadvantages
- not keeping up with changes in the external environment, for example, where core competencies relate to
and are sensitive to changes in technology which are not recognised (e.g'- the fuel-efficient aircraft of
Mango Airlines that have put other lowcost airlines that have not adapted at a competitive disadvantage)
- not being aware of changing consumer needs and preferences with regard to products and services in the
low-cost market sector that could seriously affect competitive market position
- not being aware of industry dynamics, changing industry competitive forces, and the actions of
competitors as far as imitating, or even worse, improving on an organisation’s low-cost core competencies,
is concerned the so-called ‘‘curse of complacency’’.
7.6.3 Differentiation strategy

AIM - produce products and services that are unique
- customers that are not price sensitive and are willing to pay a premium
- products and services with unique, differentiated features that they desire.
Uniqueness achieved:
. based on dimensions widely valued by customers in an effort to achieve higher market share than one’s
rivals, demonstrating how product or service functions and features better meet customer needs compared
to those of competitors
. basing differentiation on the organisation’s own core competencies that could lead to a sustainable
competitive advantage
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Success depends on:

. clear identification of customers and their needs
. understanding what customers value and what they are willing to pay
. clear identification of competitors
. understanding the globalisation of markets
. having effective barriers to imitation
Advantages
. They could safeguard an organisation against competition as a result of brand loyalty.
. They could enhance profit margins by slightly higher pricing than their competitors.
. Powerful suppliers are rarely a problem.
. Differentiators are unlikely to experience problems with powerful buyers.
. Threats of substitute products really depend on competitors’ products to meet or exceed customer needs
before customers would be willing to switch products.
. Effective differentiation and brand loyalty could act as barriers to entry.
Disadvantages
- relate to the organisation’s inability to maintain uniqueness from a customer perspective
- not fully responding to the durability challenge of competitive advantage
- design or physical features of a product, which are much easier to imitate than uniqueness
- stems from intangible sources like innovation, quality of service, reliability, brand and prestige.
7.6.4 Focus low-cost leadership and differentiation strategies SG 109

- neither low-cost strategy nor a true differentiation strategy is feasible
- focus strategy
Best if the following conditions exist
- the existence of a relatively small target or niche market
- successfully avoiding industry leaders as a result of the relatively small market
- the existence of effective barriers to the entry of multisegment competitors
- the possible existence of a multiplicity of niches
- few rivals and acceptable profit potential, notwithstanding the small market
- the organisation’s ability to resist challengers
Advantages
. protection from competitive rivals owing to the uniqueness of product(s) or service(s)
. power over buyers because of significant uniqueness and exclusivity
. passing supplier price increases on to customers
. customer loyalty as a protection against substitute products as well as new entrants
Disadvantages
- high production costs, basically because of the inability to realise economies of scale
- not being aware of changing technology and consumer preferences
- not being able to effectively ward off an attack by rival differentiators
7.6.5 Best-cost provider strategy TB 112

- a lower price than competitors while trying to keep the value of the product or service at the same level as
competitors,
- provide greater value at the same price as competitors
Cost advantage stems from:

- market size and economies of scale
- specialised equipment and facilities
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- the ability to keep overhead costs low

- the intention to relentlessly pursue exceptional quality
Advantages:
- stem from the implications of Porter’s five forces model for industry analysis
- recap five forces are threats from competitors, powerful suppliers, powerful buyers, and the threat of
substitute products and new entrants
- Differentiation strategies will be successful when the variety of products offered meets customer needs
better than those of competitors in a sustainable way
- distinguishing feature of a best-cost provider strategy is that it uniquely combines low cost and
differentiation, while maintaining quality and providing good value at a reasonable price compared to
competitors
Disadvantages:
- hybrid best-cost provider could result from not being aware of a changing competitive industry
environment, and the risk that the cost leadership and/or differentiation features that underlie this strategy
do not measure up to market expectations, leaving this strategy ‘‘stuck in the middle’’, and therefore
uncompetitive
7.6.6 Combining business level strategies TB 112

- combination of business level strategies to serve different market segments in the same industry or
industry sector.
* See Unilever in textbook pages 188 - 189
* See City Lodge in study guide 112 - 113
7.6.7 Internal growth strategies - 114

- Market penetration' The aim of this strategic option is to increase market share by selling more of the
organisation’s existing products and services in its existing markets
- Market development' The purpose of this strategy is to sell the organisation’s existing products in new
markets
- Product development' The purpose of this strategy is to sell the organisation’s new products and services
in its existing markets.
9.2.1 Internal growth strategies TB 180

Market penetration
- e.g Woolworths loyalty programme
- customers who participate earn rewards based on a tiered system determined by annual spend of retailer
- in order to participate & benefit from, customers need to accept marketing material
- company directs carefully selected promotions to market segments based on customer history
- effective database marketing = increased market spend per customer
Market development
- Woolworths expanded its stores in areas where there where less stores / no stores by opening at petrol
stations
Product development
- Woolworths Financial Services launched in 1993 offers in-store card and credit facilties
- includes in-store credit, credit cards, personal loans and insurance
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7.7 Evaluating Business Level Strategies SG 114

- Suitability This is the degree to which an organisation’s strategy deploys its core competencies to exploit
external opportunities and overcome external threats and internal weaknesses'- Methods that are available
to test suitability include SWOT analysis, the five forces industry analysis, and scenario analysis and
- Acceptability This requirement relates to the ability of the strategy to produce the expected results over
both the short and the long term in line with stakeholder expectations'- It also considers the evaluation of
factors such as benefits, risks and stakeholder reactions'- Sensitivity analysis, financial analysis and break-
even analysis, inter alia, can be used to assess acceptability.
- Feasibility Feasibility implies that the organisation is capable of executing the strategy.
The following questions need to be answered:
– Can the strategy achieve the set objectives?
– Can the strategy be implemented effectively and efficiently?
Feasibility measure= the organisation’s financial and human resources as well as resource integration need
to be evaluated.
* See 9.4. Evaluating strategic choices - TB 189 - 190
7.8 Evaluating Business Level Strategies SG 114 TB 183 - 184

- Strategic alliances. Strategic alliances are formal agreements between two or more organisations to
work together in predetermined areas to share resources, distribution channels and systems, such as code
sharing in airline reservation systems. While the purpose is to share costs and risks, alliance agreements
typically make provision for the responsibilities of each alliance partner and how the alliance should be
managed. Alliance agreements normally have a limited duration, no ownership ties and can be terminated
by mutual agreement between the relevant parties.
- Joint ventures. A joint venture between two organisations involves a new, legally formalised entity that is
formed by joint equity ownership on a predetermined basis. The purpose, as in strategic alliances, is to
cooperate in strategically important areas, to share costs and risks and to share control. Joint ventures are
legal entities, and as such they are permanent until such time that management decide to dissolve the
entity.
- Turnaround and exit strategies. For various reasons, some organisations may perform poorly over
extended periods of time, with no or few prospects for growth. Survival then becomes the main objective,
and failing that, exiting the industry is the only other option. Study the turnaround options discussed in this
section in the prescribed book with reference to the case study, ‘‘South African Airways’ turnaround
strategy’’. Turnaround expertise is often required, and apart from cost cutting and reducing noncore assets,
divestiture could be a viable strategy in such a case. As mentioned above if all else fails, an exit strategy
should be adopted.
- Outsourcing. Outsourcing involves a conscious decision by an organisation not to perform certain value
chain activities internally but instead to contract them out to outside specialists (McIvor 2008:24–34). By
outsourcing certain value chain activities, organisations could derive benefits in the following ways:
(1) Activities can be performed more efficiently or more cheaply by outside experts
(2) The outsourced activity is not critical for the organisation to gain a competitive advantage and will not
adversely affect the organisation’s core competencies.
(3) Outsourcing provides opportunities for improving organisational flexibility and time-to-market.
(4) It reduces the organisation’s risk exposure to changing technologies and consumer preferences.
(5) It allows the organisation to concentrate on its core business, leverage its competencies and
concentrate its efforts on what it does best (Thompson et al
Outsourcing also has inherent risks which include the following:

(1) Outsourcing the wrong kinds of activities that could adversely affect an organisation’s own capabilities
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(2) Outsourcing certain activities may weaken the organisation’s ability to develop innovative new products
(3) There may be a lack of direct control over outside parties as far as quality and meeting deadlines are
concerned.
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SU1 - T1

SU 1: Introduction to Strategic Management

1.4 Origins and Evolution of Strategy SG 3

1.5 The concept of strategy SG 4

Strategic tasks of top management:

Strategy formulation / strategic planning:

Elements of strategy formulation:

NB elements of strategy implementation:

Purpose of Strategic Control :

Characteristics of traditional perspective on Strategic Management

See Fig 1.1 The traditional strategic management process TB 6

1.6 Strategic planning SG 5

Strategic planning process (Bateman & Snell 2013:133–135): SG 6

1.7 Strategic Management: The traditional process perspective SG 6

Structure of traditional process approach to strategic management: SG 7

Strategy implementation or execution requirements

Strategy review, feedback and control

Governance, sustainability and ethics = entire strategic management process

1.8 The Practice Perspective of Strategic Management SG 8

1.3.2 Strategy is not solely the domain of top management TB 7

1.3.3 Strategic management is not a neat rational process TB 8

1.3.4 Strategy is a conversation

1.4 Strategic management today TB 8

1.4.3 Defining strategy

1.4.4 Strategic management

1.8.2 New perspectives on strategic management: strategy-as-practice SG 9

1.9 Relevant concepts in Strategic Management SG 10

- the organisation and its external environment

1.9.2 Strategy and the quest for a sustainable competitive advantage

Important sources of competitive advantage:

1.9.3 Business models

two critical factors:

IF fast strategic decision making is required:

Tactical decisions - middle management level impact in the medium term

1.11 Levels of Strategy in Orgs SG 13

1.12 Importance of Strategic Management: Benefits and Risks SG 14

Strategic risk DEF

Seven major categories

1.13 Tests for a winning strategy TB 15

SU 2: Strategic management : the process and practice perspectives of strategy

2.4 Strategic thinking SG 20

2.5 Strategic management : the Process Perspective SG 21

1-6 strategic planning / strategy formulation

2.5.2 Strategy formulation or strategic planning SG 22

Three main decision stages: SG 22

2.5.2.1 Deciding on the future of the org : Strategic direction setting SG 22

Strategic direction : - clarifies the overarching purpose & goals of org

Table 4.1 Advantages of having clear strategic direction TB 70

Core components of mission statement

2. market - market it hopes to serve

Also, can contain:

The process of formulating a mission statement

Method - how to create a strategic direction

Table 4.2 A comparison of well and poorly formulated goals TB

Formulate good strategic goals:

Using the balanced scorecard to set strategic goals

Center = Strategic Growth (incl)

Table 4.3 The balance scorecard TB 74

Financial Perspective Business process perspective

Table 2.1 Financial and strategic objectives SG 2

Value Statement and org values

2.5.2.2 Analysing the organisation’s external and internal environments SG 25

2.5.2.3 Selecting appropriate competitive strategies: strategic choice SG 26

2.5.3 Strategy Implementation SG 26