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Content developed by: Eliud Mududa

UNIVERSITY OF NAIROBI
COLLEGE OF HUMANITIES AND SOCIAL SCIENCES

SCHOOL OF BUSINESS

In collaboration with

CENTRE FOR OPEN AND DISTANCE LEARNING

BUSINESS ADMINISTRATION

DBA 401: STRATEGIC MANAGEMENT

AUTHOR
©UoN eLearning Materials
ELIUD MUDUDA

INTRODUCTION
Strategic management is a fairly new orientation to organizational management. It is
however an approach to management that takes a holistic view of the workings of the
organization and relates it to the dynamics of its external environment in order to
determine how the two interface in the process of determining performance not only
within its current status but also future perspective.

The subject thus enables the learner to appreciate the impact of external conditions on the
functioning of the organization with a futuristic view, given the fact that organizations are
in essence, going concerns.

It is thus designed to provide the learner with the insight into how the organization
actually operates holistically within the context of its environmental limitations both for
the present and the future.

Broadly, the unit is disaggregated into three broad components, namely, formulation
process, the implementation process, and the evaluation and control process. The first
component is majority concerned with the process of formulating a strategy. Here, an
effort is made to discern the basic elements that are fundamental in the formulation
process. The second broad component of the curse comprises aspects of strategy
implementation while the third component tackles issues relating to strategy
implementation while the third component tackles issues relating to strategy evaluation
and control.

Besides these broad components, it has also been considered pertinent to provide a
general overview of the course within which it has been found necessary to go into the
background of strategic management as a management orientation and also to provide
brief definition of certain key concepts. It has also been found necessary to include
towards the end certain basic models that are used decisions within the organization.

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Included, too, are some useful self-assessment questions which are meant to assist the
learner in self- appraising his/her understanding of the unit. It is strongly advised that the
learner tackles these questions either alone or by way of discussion with other learners in
order to enhance an appropriate grasp of the contents of the unit.

Although not included here, it must be mentioned that the case method is usually a highly
recommended approach for this unit. This approach is considered very instrumental in
simulating typical organizational situations that managers face in the process of
managing their organizations.

OBJECTIVES OF THE UNIT


Broadly, the unit is intended to examine, in reasonable depth, aspects of strategy,
formulation, implementation and control, and to specifically:-

i. Enhance the learner’s understanding of strategic orientation to the


management of the organization.
ii. Make the learner appreciate the functioning of the organization as a corporate
entity
iii. Develop an appreciation of the dynamic and intricate nature of the external
environment within which an organization functions and the need to plan
initiate appropriate response.
iv. Develop and understanding of the intricacies of general management and the
role of the chief executive as well as other lower level managers in the
formation and implementation of appropriate strategies within the
organization.
v. Enhance an integration and application of knowledge gained from other
disciplines and/or general experiences.
vi. Develop a futuristic and proactive orientation to handling organizational
issues rather than a reactive approach.
vii. Foster analytical ability in problem solving and decision-making situations.

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LECTURE ONE

BACKGROUNG AND RATIONALE FOR STRATEGIC MANAGEMENT

Lecture Outline
1.1 Introduction
1.2 Objectives
1.3 Brief Background of Strategic Management
1.4 Strategic as Concept
1.5 The Transformational Nature of the Concept of Strategy.
1.6 Adoption of the Concept of Strategy by Business Organizations
1.7 Necessary Conditions for the Adoption of Strategy
1.8 Summary
1.9 References

1.1 Introduction
This introductory lecture is meant to introduce the learner to the roots of what today is
known as strategic management. It is normally useful to understand as issue from its
original perspective in order to better appreciate its developments, hence the need for this
lecture.

1.2 Objectives
At the end of this lecture, you should be able to:
1. Trace the discipline of strategic management to its roots
2. Clearly understand strategy as a concept.
3. Clearly understand its rationale within the context of business and
management

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In text Question

1. What benefits would you drive from a study of strategic


management?
2. Explain the contention that strategy is a highly multi-dimensional
concept.
3. Identify and clearly explain any three reason for the adoption of
strategic management by business organizations.
4. Identify any three characteristics of strategic management and
briefly explain how the underscore the nature of strategic
management as a discipline.
5. How would you convince strategic management skeptics its value.

1.3 Brief Background of Strategic Management


Strategic management can be traced to the Greek work strategos – the equivalent of a
general or broad approach to issues. First applied within military context, the term was
meant to refer to grand plans relating to what is believed the adversary might or might not
do.

It its military application, therefore, the concept of strategy is a fairly ancient one which
originated in the study of success in war. It thus has a close link to leadership as the
Greek basically saw strategic setting as one of the foremost responsibilities of a leader a
connection that continues into modern thinking.

1.4 Strategic as Concept


Given its background, strategy as a concept has been understood by various people in
very different ways. One such ways can be captured by the phrase: when you run out of
ammunition but keep on firing in order to elude your opponents. The Chinese

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understanding of the concept is, on the other hand, captured by the phrase: if you can win
a war without a fight.

Based on such varied views of the concept, Henry Mitzberg views strategy as:

i. a plan
ii. a ploy
iii. a pattern
iv. a position or perspective

As a plan, strategy is seen as specifying a consciously intended course of action. In this


sense, it is construed to be a deliberate and purposeful undertaking. As a ploy, strategy is
seen as a specific maneuver to outwit a competitor.

As a pattern, strategy is understood to emerge from a stream of actions. It in this sense


develops without specific intentions and without pre-conception. It is thus emergent in
nature, ie. It emerges from the natural growth of an organization working to achieve its
potential or out of necessity- a view taken by Bechtold (1997).

As a position, strategy is understood to be a means of locating an organization within its


environment by achieving an appropriate fit vis a vis its environment. As perspective,
strategy is understood to be phenomenon that gives the organization an identity and
perspective. In this sense, it reveals the way an organization sees itself vis a vis the
outside world.

Ideally, it should, however be views as all these hence its multi-demensional nature.

1.5 The Transformational Nature of the Concept of Strategy.


From its origin, the concept of strategy has undergone a remarkable transformation. This
can be represented as follows:-

“Strategy” (Greek) → Portraying a Grand or General Approach.

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Strategy →Connotating Long Term Planning

Strategic Management → Incorporating the management dimension of Implementation as


well as Evaluation and Control, besides Long Term Planning.

1.6 Adoption of the Concept of Strategy by Business Organizations


Given its background and varied views of it what then led business organizations to adopt
the concept as a management orientation? First it should be pointed out that strategic
thinking infiltration into business and management very recently – as recent as the 1960s.

The reason for this can be attributed to the following:


i. Proliferation of business entities
ii. Increased competition as a result of such proliferation
iii. Increased environmental instability and unpredictability
iv. Need for survival as a result of these.

1.7 Necessary Conditions for the Adoption of Strategy


On the basis of the condition that led to the adoption of strategy by business organization,
it can clearly be seen that the conception of strategy is:-
i. Competition – based
ii. Environmental – based
iii. Survival – oriented, and
iv. Futuristic and proactive in nature

Take Note
Need strategy be competition – related?

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It may, however, be pointed out that for an organization to adopt the concept of strategy,
competitive tendencies may not necessarily apply. Although this may hold true, other
conditions such as need for long term view of things as well as survival may still
necessitate such adoption.

1.8 Summary
In this Lecture, we started by examining the background of the subject of
strategic management by tracing its origin. We then proceeded to look at
the nature of strategy as a concept by looking at its various perspectives
and transformational nature.

This then led us to an examination as to why it was necessary for business


organizations to adopt the concept of strategy and then ended by outlining
the conditions that necessitate the adoption of the concept.

It is now appropriate to proceed by providing a basic model of the


strategic management process.

1.9 References

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LECTURE TWO
A BASIC MODEL OF STRATEGIC MANAGEMENT
Lecture Outline
2.1 Introduction
2.2 Objectives
2.3 A Basic Model of Strategic Management
2.4 Aspects of the Formulation Process
2.5 Aspects of the Implementation Process
2.6 Aspects of Strategy Evaluation and Control
2.7 Summary
2.8 References

2.1 Introduction
It is important at this stage to provide a basic model of the strategic management
process. The purpose for this is to give the broad perspectives that characterize the
process in order to enable the learner have a birds eye view of what the process actually
entails.

2.2 Objectives
At the end of this lecture, you should be able to:
1. Clearly discern strategic management process into its broad
perspectives
2. Identify what each broad perspective of the process entails.
3. Appreciate the manner in which the various elements of each
perspective of the process interface with one another.

2.3 A Basic Model of Strategic Management


Broadly, the strategic management process can very basically be modeled as follows:

The three broad perspectives form what can be described as the three cornerstones of the
process. It is, however, noteworthy that the basic model of the process as provided here
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can be significantly expanded based on the aspects of the process considered. It can thus
transform into a five phase model as we shall see under lecture 6.1 or even into a much
more detailed model comprising several steps.

Intext Question

1. Briefly outline the nature of strategic management in terms of its


broad perspectives

2. Identify any four elements of strategy formulation and another three


of strategy implementation.

3. Briefly describe strategic management process to a layman

2.4 Aspects of the Formulation Process


The formulation perspective of the strategic management process can be disaggregated
into specific elements that together contribute to this particular perspective. Such
elements can be discerned as (i) vision (ii) mission (iii) objectives/goals, (iv) policy, (v)
plans, (vi) environment, and (vii) strategy. In essence, the formulation process starts with
a vision formation through the other elements and eventually ends with a strategy which
portrays a specific plan for the organization.

Clear definitions of these elements will be provided in the next lecture in order to clarify
their significance in the overall formulation process.

2.5 Aspects of the Implementation Process


As a second broad perspective of the strategic management process, implementation can
be discerned into certain specific elements which include: (i) structures, (ii) leadership,
(iii) culture, (iv) resources, (v) support systems, (vi) action plans and short term
objectives, (vii) functional tactics, (viii) personnel empowerment, and (ix) appropriate
budgets.

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The manner in which these aspects facilitate the implementation process will be
elaborated on later under lecture 9 in order to further clarify the need for rationalizing a
strategy before it is actually operationalized.

2.6 Aspects of Strategy Evaluation and Control


Just as in the case of Formulation and Implementation Evaluation and Control as a third
broad perspective of the strategic management process can also be discerned into some of
its basic elements. Such elements include: (i) Premise control (ii) Implementation
Control, (iii) Strategic Surveillance, (iv) Special Alert Control, and (v) Operational
Control.

Similarly, the manner in which these various aspects of Strategy Evaluation and Control
facilitate its undertaking will be dealt with more comprensively under lecture 10.

2.7 Summary
This lecture is primarily concerned with the disaggregation of the broad
perspectives of the strategic management process. As a result, the basic
aspects of such broad perspectives have been identified with a view to
providing the learner with initial knowledge of what the whole process
actually entails.

2.8 References

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LECTURE THREE
DEFINITION OF KEY CONCEPTS
Lecture Outline
3.1 Introduction
3.2 Objectives
3.3 Key Concepts in Strategic Management
3.3.1 Vision
3.3.2 Mission
3.3.3 Objectives/Goals
3.3.4 Policy
3.3.5 Environment
3.3.6 Strategy
3.4 Summary
3.5 References
3.1 Introduction
It is in order at this stage to undertake clear definitions of certain key concepts of
strategic management with a view to provide the learner with clear meanings of such
concepts. Such concepts mainly relate to the formulation process which is the
prerequisite in the overall strategic management process.

It is hoped that by getting clear meanings and significance of such concepts, the learner
will inculcate a much needed confidence in pursuit of a better understanding of the
strategic management process as a whole.

3.2 Objectives
At the end of this lecture, you should be able to:
1. Clearly define certain key concepts of this course.
2. Appreciate the significance of such concepts within the context
of the whole strategic management process.
3. Inculcate the much desired confidence in tackling further
aspects of the course.

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Activity
1. Identify any three fundamentals of strategy formulation
process and briefly explain their significance to the process
2. Choose any three aspects of strategic management and explain
how they determine direction-setting.
3. Clearly distinguish between strategies and policies and explain
why both are important in the strategy development process.
4. Briefly define the following terms: policy, plans and strategy.
How do they interrelate in the strategic planning process?
5. Explain the need for translating organization’s vision and
mission into clear statements.
6. Briefly outline the process of formulating an organization’s
mission

3.3 Key Concepts in Strategic Management


3.3.1 Vision
This is a fundamental concept in strategic management especially in regard to strategy
formulation. Preliminarily, it can be defined as the organization’s image of the future,
i.e what an organization wants or intends to be.

At the basic level, a vision guides those choices that decide the nature and direction of an
organization. It acts as a target for which the organization aims. It should, however,
reflect the organization’s self-assessment in order to avoid developing a hollow or an
unrealistic desire. To this end, it is important to conduct an audit of the organization in
terms of where it stands, what its strengths and competencies are as well as what its
inherent weaknesses are viz a viz the competition.

It should be translated into a clear vision statement which should specifically articulate
the organization’s future and set a focused strategic direction to help realize such a

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desired future. Such a statement is important in clarifying the organization’s desires to
both its internal as well as external stakeholders.

In essence, it is a future-oriented predisposition by the organization which should


integrate the direction of the organization’s future business development (based upon
core competencies); its future product and market scope, emphasis, and mix its capability
or resource requirements; and its growth expectations.

3.3.2 Mission
This is a declaration of organizational purpose, i.e the purpose which the organization
serves by its existence. It thus represents a current posturing of the organization by
explaining what business(es) the organization is in, or what function the organization is
attempting to fulfill in society.

Essentially, a mission defines the organization’s business in terms of its scope of


activities, product range, technologies, needs to be met as well as customer groups to be
served. It should typically be translated into a clear statement that can be easily
understood by both the organization’s insiders and outsiders. Such a statement may vary
in length but should essentially be short – no more than a captivating slogan. It should,
all the same, be inspiring.

A mission statement should evolve out of discussion’s aimed at addressing certain basic
questions such as:
· What kind the organization is and intends to become
· The basic needs the organization exists to meet.
· What the organization does in order to recognize, anticipate and respond to such
needs or problems.
· The manner in which the organization relates or responds to its various
stakeholders.
· Nature of organization’s conduct, philosophy and values.
· What makes the organization distinctive or unique in itself
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It is the manner in which these issues are covered that determines the nature and length of
the statement. It, however, importantly helps guide the organization as to what it should
or should not undertake hence its critical direction providing role.

3.3.3 Objectives/Goals
There are specific performance targets or standards which are normally stated in
quantifiable or measurable terms. Such targets may, for example, take the form of level
of profitability desired, increase in market share, level of social responsibility
involvement, etc.

Take Note

Need objectives always be measurable?

It should, however be noted that there are certain areas of organizational performance that
may not lend themselves to measurable standards, e.g level of employee morale or
motivation. In such cases, objectives may largely be qualitative in nature, determined
mainly through observation and such non-measurable mechanisms.

The fact that objectives are measurable, however, helps a lot in gauging the level of
organization’s performance and provide important triggers for managers. Such triggers
in turn help managers determine how organization’s operations should be varied, hence
their direction – providing role.

Objectives are widely used to complement and clarify policy by expressing policy
statement in quantitative terms. Without such accompanying detail, the policy statement
can offer only limited explanation of top management’s purpose.

Thus quantitative measures as provided by objectives are instrumental in reinforcing


policy statement, yet at the same time, such measures alone may not adequately indicate

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management’s design for reaching the numerical targets, hence their important linkage
with policy.

Activity
Conceive an organization situation in which both policy and objectives
would be applied in a complementality manner.

3.3.4 Policy
This is a broad guide to action that is instrumental in setting operational limits for the
organization. It is important in providing discretionary decision-making while, at the
same time, establishing broad purpose for the whole organization as in the case of what
business to be in what industry(ies) to get involved in etc. In setting such limits, it also
acts as an important direction setting mechanism for the organization.

Essentially, policy portrays top management overall direction of the organization. A


careful structuring of it thus sets the tone for a desirable participation throughout the
organization. In this sense, a weak or unclear statement of purpose at the top
organizational level may impact all the other links in the operational chain.

As a result, in the absence of a clear idea of where to go, the organization may end up
pulled by the ‘gravitational’ force of its combined units without having a deliberate move
as to where it should go and may in this regard waiver like a boat without a sail.

Activity
In a situation of an organization without a clear policy, what would be the
nature of activities undertaken by its various units?

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3.3.5 Plans
These are detailed schedule of activities the organization applies in the process of
achieving its policy and strategy. They are thus the most systematically detailed phase of
the organization’s decision-making process.

Plans are tactical rather than strategic and are focused on specific activities. They are
thus not as dependent on conceptual insight as on careful attention to detail and are
important in providing the final guideposts that enable the organization to get from where
it is to where it wants to be.

Essentially, therefore, even if good policy formulation places an organization in the right
business sectors, and optimum strategy alternatives help the organization exploit its
relative competition advantage, it still requires plans to provide the necessary details
which may enhance successful fulfilment of expectations.

Activity
Imagine engaging in an undertaking to achieve a desired end. How
would you design the necessary details that may ensure its realization?

3.3.6 Environment
This is the context within which the organization operates. It is normally uncertain and
unpredictable and largely beyond the control of the organization.

In its nature, it presents the organization both with opportunities and threats on one hand
and reveals the organization’s strengths and weaknesses on the other. In this sense, it is
normally considered under such categories as:
(i) Internal
(ii) Task or operating, and
(iii)Remote

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The internal category typically represents organization’s internal conditions such as the
capability of its management and personnel work procedures and systems, equipment,
funds, technology, etc. The task environment, on the other hand, is a composite of such
factors as competitors, customers, suppliers, creditors, governments etc. with which the
organization constantly interacts, while the remote environment comprises such highly
uncontrollable external conditions in form of the general economic condition as well as
such other factors as political, legal and regulatory, socio-cultural, ethical, and
technological.

3.3.7 Strategy
This is a concept that has been defined in fairly varied ways. Some of such ways in
which it has been defined include:
1. A general plan which outlines critical courses of action towards achieving the
organization’s objectives
2. A commercial logic for an organization that defines how it can attain a
competitive advantage.
3. What an organization does and how it actually positions itself commercially in
order to engage in the competitive battle.
4. The game plan desired by management for positioning the organization in its
chosen market arena, competing successfully, pleasing its customers and
achieving good business performance.
5. Patterns of moves and approaches of an organization to produce the targeted
outcomes and position the organization appropriately.
6. The directions and scope of an organization over the long term which achieves
advantage in a changing environment through its configuration of resources and
competencies with the aim of fulfilling stakeholder expectations.
7. A master plan that delineates critical courses of action towards the attainment of
the organization’s objectives and a blue-print that defines the means of deploying
the resources to exploit present and future opportunities and counteract present
and future threats.

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Arising from such varied definitions, some basic characteristics of strategy are
discernable. These include:
1. A plan of a general nature
2. A mechanism for achieving organization’s objectives and competitive
advantage
3. A mechanism for positioning an organization within its environment
4. A mechanism for providing the organization with the direction over the
long term.
5. A tool to facilitate a configuration of organization’s resources and
competencies.
6. A mechanism for exploiting organization’s present and future
opportunities and counteracting present and future threats.

3.4 Summary

Throughout this lecture, definitions of certain basic concepts in


strategic management have been provided and their relevance for the
process delineated. Such concepts defined include vision, mission,
objectives/goals, policy, plans, environment, and strategy.

It is now in order in the next lecture to look at the nature of a typical


organizational strategist so as to facilitate the learner’s understanding
of the sort of role such an individual plays within the organization.

3.5 References

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LECTURE FOUR
THE TYPICAL ORGANIZATIONAL STRATEGIST
Lecture Outline
4.1 Introduction
4.2 Objectives
4.3 The Typical Organizational Strategist
4.4 Nature of a Strategist’s Job
4.5 Skills Necessary for a Strategist
4.6 Summary
4.7 References

4.1 Introduction
At this stage, it is now in order in this chapter, to look at what the typical organizational
strategist is like by examining the nature of the job within the organization in order to
delineate what a strategist actually does within the organization and the abilities or skills
that are necessary for such individual.

4.2 Objectives

At the end of this lecture, you should be able to:

1. Explain the role of a strategist within the organization

2. Determine the actual nature of the strategist’s job.

3. Explain why certain skills are necessary for a strategist.

4.3 The Typical Organizational Strategist


The strategist typically is any manager that may be found at any of the levels within the
organization. As far as his/her preoccupation is concerned, he/she may be a staff
manager solely concerned with issues of strategy within the organization or a line
manager such as a departmental head who may have other roles apart from issues
pertaining to strategy.

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Such a manger is not necessarily unique compared to other managers within the
organization. His/her role may, however, be unique due to the requirements of strategy

4.4 Nature of a Strategist Job


Broadly, a strategist’s job within the organization may be looked at in two dimensions:
(i) as a strategist, and
(ii) as an organization builder.

The two dimensions of the job are, however, highly interwoven as they closely relate to
one another in a supportive way.

As a strategist, his/her main preoccupation should be to define the organization’s


corporate purpose. As organization builder, however, he/she should undertake the design
of appropriate structure within which the demands of a strategy are realized.

The two sets of requirements of a strategist’s job have unique and important challenges
that places such an individual in a special position within the organizational set-up. In
his/her involvement in the second perspective of the job, such individuals, for example,
should provide the necessary leadership by managing effectively. In doing so, the job
entails dealing with the human element within the organization which in turn makes the
task a highly political one.

The political nature of the job of a strategist thus makes organizational aspects of the job
most challenging and difficult. This is essentially because it involves dealing with
people, their ambitions, as well as their relationships. Given this nature of the strategist’s
job, what skills are then necessary in order to perform the job effectively?

4.5 Skills Necessary for a Strategist


These may be identified as:
1. Identification skills

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2. Analytical skills
3. Judgmental skills
4. Diagnostic skills
5. Prediction skills
6. Innovation skills
7. Decision-making skills
8. Leadership skills

All these varied skills are important for a strategist and brief explanations as to why each
is necessary is in order.

4.5.1 Identification Skills


By the nature of his/her job, a strategist requires considerable identification skills. This is
because of the fact that a strategist typically deals with a host of variables whose nature
needs to be clearly identified and not merely assumed. Such variables normally exist
both within and without the organization.

Internally, a strategist needs to clearly identify such organizational variables as the type
and number of employees as well as their skills, facilities available, funds available,
equipment, etc. Externally, he/she also needs to identify certain critical variables which
may include competitors, suppliers, customers, substitute products, etc.

A clear identification of all these is important as they form a critical input into the
development of a strategy.

4.5.2 Analytical Skills


There mere identification of the various variables may not be adequate. This is because
in the identification process, a strategist may end up with long lists of relevant variables
but which may not necessarily reveal the relative importance of each.

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Beyond such identification, therefore, the strategist needs to analyse such variables in
order to establish their relationships. It is through such analysis that the more and less
critical variables may be determined. Similarly, it is through such analysis that it may be
possible to determine which variables depend on the others.

4.5.3 Judgmental Skills


The identification skills of the variables in their current status may not serve any useful
purpose for a strategist as such variables are never constant in their form. It is therefore,
proper to note that the status and nature of various variables as identified and analysed
may not remain the same as time passes by. They will keep on changing in their form
and nature. Such changes, therefore, need to be considered. But since the future cannot
be determined with certainty, the strategist can only apply his/her judgment in an attempt
to reflect such changes.

Besides, judgmental skills also become handy for a strategist in the process of
establishing the big picture as presented by the variables as identified and analysed. An
appropriate determination of such big picture can only be accomplished through sound
judgment on the part of a strategist.

4.5.4 Diagnostic Skills


Equally important for a strategist is to try and establish the cause and effect relationships
among the variables, for example, as in the case as to what is responsible for a decrease
or increase in an organization’s profitability.

This sort of scenario can only be accomplished through a diagnostic as in the process the
case in which a doctor diagnoses the actual cause of an ailment in order to prescribe a
suitable remedy.

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4.5.5 Prediction Skills
As seen earlier under lecture one, strategic management is characteristically a futuristic
orientation. Many facts that are considered in it thus have futuristic implications, e.g in
the case of how factors affecting the organization would behave in the future. A
strategist thus has to do his/her work today by considering the effects of future conditions
that are likely to impact on the organization.

Since future conditions cannot be determined with precision, they can only be predicted.
Such a prediction, however, must not take the sooth-saying form. They must be rational,
based probably on past or current trends. A strategist has, therefore, to be an expert in the
mastery of relevant techniques that may enable him/her predict the future with an
acceptable measure of certainty.

Luckily for him/her, there are established statistical techniques that may be very handy to
a strategist in this requirement. All manner of such techniques such as trend analysis,
probability, simulation, etc., have been adequately developed and may importantly aid a
strategist prediction requirements in a real and useful way.

4.5.6 Innovation Skills


Innovation is a term that closely land itself to creativity – the development of new and
unique ideas that are distinct from what is already known. In matters of strategy
development, the creativity of a strategist is very critical for purposes of novelty.

For example, coming up with a novel rather than an imitative strategy may be very
advantageous to the organization. This is essentially why innovation skills for strategist
may be the critical line of difference between an ordinary idea and a unique one. The
uniqueness with which a strategist approaches his/her work may, therefore, be highly
determined by the level of his/her innovative predisposition.

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4.5.7 Decision-making Skills
Strategic management is essentially a decision-making process. Decision-making is
indeed the hallmark of the strategic management process as in the end, a decision has to
be made on the choice of the most viable strategic option for the organization.

Indeed, the long and winded strategy development process ends up with the need to make
a decision. Yet strategic decisions are not any ordinary decisions. They normally
involve major commitments in form of resources that may determine the direction and
fate of the whole organization. Making such decisions are, therefore, a matter of life and
death for a strategist as he/she must first and foremost put his/her career on the line.
They thus require nerves of steel and a strong stomach.

This is why many managers shy away from making critical decisions for their
organizations due to the risks involved and because of the fact that it is a highly lonely
affair. Yet decisions have still to be made if the organization is to progress.

Within this sort of scenario of being between a rock and a hard place, managers typically
require courage, patience, determination, rationality, and a very good sense of evaluation-
qualities which must be carefully developed , and nurtured by any accomplished
manager. Once developed, such qualities transform into important skills that are crucial
in the work of a strategist.

4.5.8 Leadership Skills


As explained under 4.4, a strategist is essentially a leader. As such, he/she has not only
to influence those within the organization but has also to inspire them in order to enage in
certain undertakings.

For a strategist to be able to fulfill this, he/she must of necessity master all manner of
techniques for directing people. Such techniques normally relate to leadership,
communication and motivation.

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A strategist must in essence, apply appropriate leadership styles, communication
techniques as well as motivation techniques in order to perform his/her tasks
satisfactorily. All these are the hallmarks of leadership in an organization, hence the
necessity of such skills in the performance of a strategist’s job, especially in regard to the
implementation of a strategy which may not only require mobilization of all the people
within the organization to be supportive of a chosen strategy but also to be enthusiastic in
whatever they do.

4.6 Summary

This lecture started by looking at what a typical organizational


strategist is like and then proceeded to look at the actual nature of
his/her job. Based on this, it was necessary to go through the various
skills that a strategist typically require, explaining in the process the
rationale for such skills within the context of strategic management.

Intext Questions

1. Briefly outline the nature of a strategist’s job and explain why


certain aspects of the job are more challenging than others.

2. Identify any three skills necessary for a strategist and explain


how they facilitate his/her work.

3. Explain the manner in which any three skills of a strategist


relate to the strategic management process.

26
LECTURE FIVE

PURPOSE/IMPORTANCE OF STRATEGIC MANAGEMENT

Lecture Outline

5.1. Introduction

5.2 Objectives

5.3 Purpose/Importance of Strategic Management

5.4 Factors that may make Strategic Management appear unimportant

5.5 Reasons that explain the importance of Strategic Management

5.6 Summary

5.7 References

5.1 Introduction
It is appropriate in this lecture to now carry out an assessment as to why strategic
management is considered important, not only for those organizations that subscribe to it
as a management orientation but also those ones that may not. An attempt to try and
underscore its importance is necessary in order to examine whether it is indeed useful for
managers to embrace strategic management in the process of managing their
organizations.

5.2 Objectives
At the end of this lecture, you should be able to:
1. Explain to any skeptic of the discipline why it should be advisable
for managers to embrace strategic management
2. Identify some of those factors that may make strategic management
appear not to be an important management orientation.
3. Clearly explain the reasons that actually help explain the importance
of strategic management

27
5.3 Purpose/Importance of Strategic Management
The purpose of strategic management is something that has solicited varied reactions.
While some skeptics have held reservations about its importance, others clearly attest to
its invaluable application under conditions of environmental change.

Generally, however, in order for one to assess how important strategic management is or
otherwise, one needs to address the question as to whether analytical approach to
management is of any value. The importance of strategic management thus calls for a
consideration as to whether a conscious, analysis-based approach to management is more
superior to that that is the outcome of intuition, ”gut-feel”, and/or “muddling through?”
In a sense, should management be practiced through trial and error or as a well-designed,
purposive undertaking?

A related issue that may also need to be addressed in the assessment of the importance of
strategic management is whether managers and organizations that subscribe to this sort of
orientation do any better than those who do not? Is their performance noticeably superior
in any way?

The answers to such questions may, however, not be unequivocally certain in form of a
Yes or No but may require a further consideration as to whether we can identify cases in
which managers that have not bothered about strategic management indeed appear to do
just equally as well as those who do, or even better?

This can be likened to certain instances whereby certain individuals that have engaged in
operating business entities have tended to do very well without necessarily going to a
business school to first learn about techniques of running a business enterprises. This is
indeed quite real as there are such individuals who may be considered as success stories
in the operation of business enterprises without having any formal requisite techniques
for the same. But would this form a reasonable basis in concluding that managers that
are not strategic management-compliant would also be successful in managing their
organizations?

28
A critical examination may help us to rationally determine why or why not strategic
management may be critical for the success of organization. This may call for a
consideration of both conditions that may tend to convince anybody in either way before
we can actually draw a definite conclusion as to the importance or relevance of strategic
management in the managing of an organization.

Indeed, there are organizations that have apparently performed relatively well for other
reasons other than their adoption of strategic planning. It is, therefore, pertinent to
examine certain factors that may account for this.

5.4 Factors that may make Strategic Management appear unimportant


There are a number of considerations that may indeed make strategic management appear
not to be an important orientation to management. The fact that some organizations may
perform well even without embracing strategic management may be as a result of such
factors as:-
(i) Their being in possession of certain key raw materials or resources over which
they may have a good measure of control.
(ii) Their superior finances and or labour skills compared to other organizations.
(iii) Their possession of key patents and proprietary technical know-how.
(iv) Their superior learning or experience in their lines of operation.
(v) Their outstanding location, or even,
(vi) Just the sheer luck and coincidence of having been in the right place at the right
time.

Hence, under such circumstances, doing or not doing a good job of strategic management
may certainly seem to be secondary. Nonetheless, there is credible evidence that
thorough strategy analysis and effective strategic management practices, have a positive
impact on organization performance.

29
5.5 Reasons that explain the importance of Strategic Management
Despite the apparent lack of importance of strategic management, the advantage of first-
rate strategic thinking and a deep commitment to the strategic management process is
quite real. This can be underscored by the following:
(i) The guidance or “radar” that it provides to the management and the entire
organization by steering the organization toward a desired direction.
(ii) The focus it provides for the organization in the pursuit of its objectives or
mandate.
(iii) The facilitation it provides to the organization in recognizing and responding to
the changes confronting the organization, identified peripheral opportunities as
well as any threatening developments that the organization may face.
(iv) The rationale it provides for management in the allocation of available resources
(v) The facilitation of coordination of activities throughout the organization.
(vi) The preactive rather than reactive posture that it avails to the organization.

Over and above these benefits, strategic management enables the management to act
“with full knowledge” about conditions surrounding the organization rather than succumb
to surprises. It is in a way like a man walking with his eyes wide open unlike a blind-
folded man.

5.6 Summary
In this chapter it has been clearly explained that although there are
certain circumstances that may render strategic management
unimportant, it is all the same and, on account of the stated reasons,
very critical for superior organization performance. On the whole,
therefore, it is a management orientation that should not be taken for
granted by shrewd organization managers.

30
Activity
1. Identify and briefly explain any two factors that may make
strategic management appear to be unimportant.
2. Explain the importance of strategic management in relation to the
guidance it may provide to the organization and the coordination it
may provide for organizational activities.
3. Clearly distinguish between preactive and reactive organization
posture within the context of strategic management.
4. Briefly demonstrate your understanding of the overall importance
of strategic management.

5.7 References

Thompson Jnr., Arthur A. and A.J. Strickland (2006), Strategic


Management: Concepts and Cases (14th Ed.), BPI Irwin,
Homewood, Illinois.

Pearce II, John A and Richard B. Robinson Jnr. (1997), Strategic


Management: Formulation, Implementation and Control (6th
Ed), Irwin, Chicago.

31
LECTURE SIX
OVERVIEW OF STRATEGIC MANAGEMENT PROCESS
Lecture Outline
6.1 Introduction
6.2 Objectives
6.3 Elements/Components and Modelling of Strategic Management Process
6.4 Nature of Strategic Management Process
6.5 Distinction between Strategic Planning and Strategic Management
6.6 Challenges involved in Strategic Management Process
6.7 Some basic characteristics of Strategic Management Process
6.8 Summary
6.9 References

6.1 Introduction

Let us now proceed to have a general overview of the strategic management process.
This overview is intended to capture the process in a fairly broad but precise manner and
to clearly explain what the process actually involves and also to identify some of its basic
characteristics.

6.2 Objectives
At the end of this lecture, you should be able to:
1. Identify the basic elements/components of strategic management
process.
2. Distinguish between strategic planning and strategic management
3. Describe the nature of the strategic management process
4. Identify some of the basic characteristics of the strategic
management process.

32
6.3 Elements/Components and Modelling of Strategic Management Process
The nature of strategic management process can be conceptualized through its various
elements which include:
(i) Vision determination
(ii) Business definition and establishment of a strategic mission
(iii)Setting of strategic objectives and performance targets
(iv) Formulation of a strategy to achieve the target objectives and performance targets.
(v) Implementation and execution of the formulated strategy, and
(vi) Evaluation and Control of strategy.

These elements can be modelled as follows

1 2 3 4 5 6

A B C D E F

Revision Loop

Fig 6.1: Strategic Management Process

- Adapted from Pearce II, and John A. and Richard B. Robinson Jnr., Strategic
Management: Formulation, Implementation and Control.
In this model,
1 6 represent various action stages, while
A F represent the various elements, ranging from Vision determination all through to
Evaluation and Control

33
Take Note
It should be noted that the model is purposely for identifying the
various elements. They are in practice never so neatly divided as
indicated in the model.

6.4 Nature of Strategic Management Process


Although it lends itself to such modeling, the stages of the process are hardly clearly
divided and performed as such in actual practice as a result of typical overlaps between
the various stages. In this sense, the process does not usually proceed through its various
stages in such a neat and orderly fashion.

Apart from the overlaps that characterize the process, there is usually a constant interplay
forward and backward as indicated by the revision loop in the model. This loop basically
indicates the fact that at any given stage, there may be a need to carry out revisions,
depending on whether things are working as earlier expected or not.

For example, in case the objectives of the organization appear not to be quite achievable,
it may be necessary to revisit the manner in which the business of the organization had
initially been defined. Similarly, as managers set the organization’s objectives, their eyes
may at the same time be on the possibility of formulating a strategy to achieve such
objectives most effectively.

Thus each component of the strategic management process necessitates a determination


as to whether things should continue the way they are or whether it may be appropriate to
make certain changes as may be appropriate. This is essentially why the task of
managing a strategy is a highly dynamic process in the sense that at any given pint, any
decision may require some form of modification. Naturally, this is occasioned by the
changing nature of the organization’s both internal as well as external conditions.

34
6.5 Distinction between Strategic Planning and Strategic Management
Both strategic planning and strategic management are important perspectives of the
strategic management process. Thus, the process can be broadly categorized into these
two.

Typically, strategic planning ends at the stage when a desirable strategy for the
organization is actually developed or formulated and includes the other previous stages of
setting strategy objectives and performance targets, defining the organization’s business
and establishing a strategic mission as well as a determination of the organization’s
vision. Hence, all these components, in combination, are what constitute a strategic plan
and provides the organization with a clear direction to pursue.

Beyond this, the process transforms itself into the actual strategic management process
when the implementation and subsequent evaluation and control of the strategic plan are
undertaken. This transformation of the process raises all manner of managerial
challenges, especially during the stage of actual implementation of the strategic plan.

6.6 Challenges involved in the Strategic Management Process


The characteristic challenges associated with the process normally arise due to the
various administrative activities that become necessary in order to translate the strategic
plan into reality. It is normally a much more complex undertaking due to the fact that it
may require time-consuming orchestration of the activities of various functional areas.
Besides, it usually also necessitates mobilization of all kinds of resources, some of which
the organization may not readily have.

Along with these, it typically requires the commitment of all organizational managers,
units as well as their ownership of the strategic plan. This may in turn call for such
leadership skills like motivation, effective communication across various ranks of the
organization as well as appropriate leadership for things to move and implementation of
the plan to be realized.

35
Eventually, evaluation and control of how things are working become critical. This may
necessitate constant monitoring of all types of activities and if need be, corrective action
undertaken on a timely basis. Thus such evaluation and control may either determine
whether the process proceeds to its full fruition or whether certain revisions are
undertaken. In essence, the component of evaluation and control may mark either the end
and a new beginning or an analytical assessment in order to undertake the necessary
corrective measures.

Quite often, changes in both external and internal conditions may necessitate varying
corrective measures. Most of such measures may only be of the fine-tuning type but
occasions may arise where major overhaul in certain parameters may be appropriate in
order to ensure effective functioning of the strategic plan.

Thus the whole process which incorporates both the formulation and implementation of a
strategy as an on-going one, constantly evolves and is quite often transformational in
nature. The basic idea in all this is to appropriately realign the strategy with any changes
in an organization’s internal situation and external conditions.

The need to realign the strategy with such requirements thus makes the process a highly
dynamic one, involving decisions that have to be made over a long period of time rather
than as a once-and –for-all affair as decisions to initiate new strategic moves are mooted
from time to time.

There are occasions of course when the process may evolve in a fairly predictable and
orderly manner. Sometimes, however, it may be crisis-driven, necessitating major
decisions to be made suddenly.

Strategy implementation, on the other hand, may require incremental improvements in


the various organizational activities and may also call for constant adjustments in the
actions and behavioural tendencies of various members of the organization. It is thus not

36
something that can be undertaken as a one-shot activity. Besides, it may require
considerable time as well as novel orientation to doing things in order to succeed.

6.7 Some basic characteristics of the Strategic Management Process

Arising from its nature, certain basic characteristics of the strategic management process
can be derived. The process can thus be characterized as:
(i) Ongoing
(ii) Overlapping
(iii)Interactive
(iv) Dynamic
(v) Evolving
(vi) Cyclic, and
(vii) Incremental

6.8 Summary
In this lecture, we have clearly examined the nature of strategic management
process and established that it comprises of various stages which can be
distinctly identified mainly for learning purposes. Otherwise, the process is
fairly fluid in actual practice, complicated, and highly dependent on various
internal as well as external conditions.

In addition, it is a process that can be broadly distinguished into both strategic


planning and strategic management and which have varied characterizing
features.

Intext Questions
1. Clearly distinguish between strategic planning and strategic management
2. Identify any two components of the strategic management process and
explain how they facilitate direction setting for an organization
3. Select any three pertinent characteristics of the strategic management
process and explain how they actually characterize the process

37
6.9 References

Pearce II, John A. and Richard B. Robinson Jnr., (1997) Strategic Management:
Formulation, Implementation and Control, (6th Ed.), Irwin, Chicago.

Thompson Jnr., Arthur A. and A.J. Strickland (2006), Strategic Management:


Concepts and Cases (14th Ed.), BPI Irwin, Homewood, Illinois.

38
LECTURE SEVEN
LEVELS OF STRATEGY
Lecture Outline
7.1 Introduction
7.2 Objectives
7.3 Typical Organizational Levels
7.4 Various Levels of Strategy
7.4.1 Need for Strategy Internalization of Various Levels of Strategy
7.4.2 Typical Strategy Managers Within The Organization
7.4.3 Need to Understand the Dynamics of Strategy at Various Levels of The
Organization
7.5 Role of Managers at Various Strategy Levels
7.6 Summary
7.7 References

7.1 Introduction
It is now appropriate for us in this lecture to examine the various levels of strategy. This
perspective of strategic management is important because although strategic management
is usually undertaken at such various levels, strategy has been construed to largely a top-
level management concern

Moreover, it should be clear that strategy undertaking at various organizational levels


serves fairly specific purposes at such levels as will be illustrated hereafter. Such levels
of strategy also relate very closely to the way in which a particular organization is
designed.

39
7.2 Objectives
At the end of this lecture you should be able to:
1. Specify the typical organizational levels
2. Identify the various levels of strategy
3. Explain the purpose strategy undertaking serves at various levels of
the organization
4. Explain why managers at various levels of organization need to be
strategic management literate.
5. Explain why strategic management is essentially an all-manager
preoccupation within the organization.

7.3 Typical Organizational Levels


Before embarking on an examination of various levels of strategy, it is useful to clarify
some of the typical levels of an organization. This is because of the fact that the various
levels of strategy closely relate to such organizational levels.

Such typical organizational levels can be illustrated as follows:


The top level of the organization normally overarches all the other lower levels of the
organization and it is the level usually associated with top decision makers within the
organization. Such decision-maker typically comprise Board of Directors, the Chief
Executive Officer such as the President or Managing Director and such other top level
managers. Their concern is usually with policy issues governing the manner in which the
entire organization operates.

This being so, however, it is important that such top-level management group seeks
inputs from other management cadres at the other levels of the organization as well as
from outside in order to design sound and relevant policies for the organization.
The middle level of the organization, on the other hand, is occupied by various cadres of
managers that range from functional departmental managers to divisional managers.
Such managers are usually in charge of various units within the organization such as
sections, departments and much larger ones such a divisions.
40
The bottom or supervisory level which is also referred to as operating management are
typical first-line or front-line managers within the organizational context. They form a
hands on cadre in the management hierarchy as far as work is concerned and are
normally in charge of day-to-day activities within the organization. But although they are
at the bottom of the management ladder, they can add real value to decision making
within the organization as they are constant touch with the goings-on within and without
the organization. This management cadre is usually most familiar with all sorts of
conditions surrounding various operations within the organization. Typically, they
comprise of supervisory personnel within the various units of the organization.

7.4. Various Levels of Strategy


The various levels of strategy are typically designed on the basis of the existing
organizational levels. They usually closely relate to organizational levels as illustrated in
figure 7.2. hereunder.

Levels of Strategy

Top level Corporate

Middle Divisional,
Level
Functional/Departmental
Bottom/Supervisory
Level Business, Sectional Product,
etc

Fig. 7.2. Relationship between Organizational Levels and Levels of Strategy

As illustrated, the corporate level strategy relates to top-level management while other
lower level strategies such as Divisional Functional/Departmental, Business Sectional,
Product, etc, related to the other two lower organizational levels below the top-level. In
essence therefore, managerial positions with strategic management responsibility are
scattered all over the organization and is not an issue for only top level managers.

41
The number of such levels of strategy, however, depends on the nature and size of
particular organizations. They can be fewer or more depending on the composition of the
organization.

The emphasis placed on strategic issues at these levels also depends a lot on the nature
and compensation of particular organization. For example, there are organizations that
may place a lot of emphasis on the product-level strategy. This is usually true for such
multi-product organizations that may find it necessary to generate specific strategies for
particular products.

Hence, matters of strategy within an organization is not necessarily an issue of top-level


management but for all cadres of managers within the organization. Comprising
Corporate, Divisional Line-of Business, Functional area as well as major operating
departmental levels.

7.4.1 Need for Strategy Internalization at various levels of strategy


Given the spread of the levels of strategy within an organization it is incumbent on
managers at such various levels of internalize the respective strategies in order to ensure
their commitment to strategic issues within the organization. This is particularly so far
those aspects of the strategy to be operationalized in their areas of responsibility. They
must, therefore, actively get involved in the development of such strategic plans.

On this basis, strategic issues are not simply an enclave of top level management within
the organization. Indeed other lower level managers should not be mere passive
observers and recipients of strategic proposals generated at the top and thus mere foot
soldiers for top level managers as far as matters of strategy are concerned. They must be
actively involved from the beginning to the end. This is particularly so when it is
considered that it is the managers run the various units of the organization that are
responsible for strategic results within those units.

42
Indeed, assigning strategy responsibility and authority to such managers who eventually
must operationalize the organization’s strategy makes them accountable for the results
associated with their specific units. The success or failure of strategy can then be
determined on the basis of such results producing organizational units and accountability
for such success or failure operated accordingly.

7.4.2 Typical Strategy Managers within the Organization


On the basis of such emphasis on the various strategy levels within the organization,
there are different types of strategy managers within the organizations. These can be
typically identified as follows:
i) The Chief Executive Officer and other corporate level managers who are
normally in charge of organization wide strategy and therefore have
responsibility and authority for major strategic decisions that embrace the whole
organization.
ii) Divisional or General Managers in charge of certain large areas of the
organization who have responsibility for the performance of such areas.
iii) Functional or departmental managers who may have responsibility for such
production and operations, finance, Marketing and Sales, Human Resource
Management, Research and Development etc., and who are normally expected
to develop and implement appropriate strategies for their specific functional
areas.
iv) Managers of various operating organizational units such as Procurement,
Inventory Control, Distribution, etc., who equally have important frontline
responsibility in such areas.

7.4.3 Need to Understand the Dynamics of Strategy of


Various Levels of the Organization
The need to understand the dynamics of strategy at various levels of the organization
is thus quite real. It is a fundamental requirement of managing and is not something
that is unique or exclusive to the top level managers of the organization. The scope

43
may vary according to the individual manager’s position within the organization but
the requirements are inevitable.

Any unit within the organization should, therefore, be regarded as strategy relevant or
strategy responsive “organizations” in its own right. Such units may take the form of
whatever unit a managers in charge of whether this may refer to the whole
organization a specific business unit, a departmental or functional are or any other
relevant operating unit that may be based on a specific product or service.

7.5 Role of managers at various strategy levels


The spread of strategy managers throughout the organization implies important
strategy related roles for such managers. Such roles can specifically be identified as:-
i) That of actual formulation and implementation of unit based strategies.
ii) That of operational zing higher level strategies that are cascaded downwards to
their units.
iii) That of providing important inputs in the process of formulating higher level
strategies

7.6 Summary
In the process of our examination of various levels of strategy within the
organization, it has been clearly demonstrated that strategy related
positions within an organization are quite widespread. Managers
occupying various positions within the organization, therefore dynamics
of strategy development and implementation but also have some very
important roles that they play as far as strategic issues within the
organization are concerned as such, issues of strategy encompass all
levels of managers within the organization and are therefore not only a
matter for top level managers.

44
Activity
1. Clearly identify the various levels of the organization to which
matters of strategy are relevant.
2. Explain the contention that other level managers in the organization
are also relevant players as far as strategic management is
concerned.
3. Explain the assertion that strategy relevant “organizations” are
quite widespread throughout the organization.
4. Clearly illustrate why it is important for all managers in the
organizations to be strategic management literate

7.7 References
Thomson Jnr. Arthur A. and A.J. Strickland (2006), Strategic
Management: Concepts and Cases (14th ed.) BPI Irwin,
Homewood Illinois.

Pearce II, John A and Richard B. Robinson Jnr., (1997), Strategic


Management: Formulation, Implementation and Control, (6th
Ed.) Irwin, Chicago.

Craig James C. and Robert M. Grant (1993), Strategic Management,


Kogan Page, 120 Pentonville Road, London.

45
LECTURE EIGHT
STRATEGY FORMULATION
Lecture Outline
8.1 Introduction
8.2 Objectives
8.3 Strategy Formulation Process
8.3.1 Definition of the Organizations Business
8.3.1.1 Relationship between the Organization’s Business and its Mission
8.3.1.2 Importance of a Clear Mission
8.3.2 Establishing Strategic Objectives
8.3.2.1 Importance of Strategic Objectives
8.3.2.2 Nature and Purpose of Realistic Performance Targets
8.3.3 The Need to Consider Policy and Plans
8.3.4 Environemtal or Situational Analysis
8.3.4.1 Underlying Facts about the Environment
8.3.4.2 A Framework for Analyzing the Organization’s Environment
8.3.5 Strategy Determination Framework
8.3.5.1 External Factors
8.3.5.2 Internal Factors
8.3.5.3 Determination of Strategic Fit, Generation and Evaluation of Strategic
Alternatives and Eventual Strategic Choice
8.3.5.4 Criteria for Weeding out Less Optimal Strategic Options
8.3.5.5 Categorization of Typical Strategic Options
8.4 Summary
8.5 References

8.1 Introduction
As explained earlier in our lecture two, strategy formulation is one of three broad
perspectives of strategic management, usually considered as the three cornerstones of

46
strategic management. It is now necessary in this lecture to undertake a more
comprehensive explanation of the various aspects of strategy formulation

8.2 Objectives
At the end of this lecture you should be able to:
1. Identify various aspects of strategy formulation
2. Explain why strategy formulation is the basis for organizational
direction setting.
3. Describe how to arrive at a desirable strategy for the organization.
4. Specify some basis strategic alternatives

8.3 Strategy Formulation Process


This is essentially the direction-setting mechanism for an organization. The undertaking
of how strategy formulation is undertaken is very important as it helps in highlighting the
basic elements and requirements of strategy formulation.

The manner in which strategy development is carried out requires a combination of the
basic elements which are applied at various stages for which certain skills become quite
necessary. Perhaps a demonstration of such skills as earlier elaborated on in our lecture
four is necessary here in order to clarify the relevance of some of them in the process of
formulating a strategy. This can be diagrammatically illustrated as follows:

Fig. 8.1

47
As shown in the foregoing figures, strategy formulation goes through the basic elements
of formulation to the skills that are necessary in the application of those lements. As
demonstrated, the first step in strategy formulation requires a consideration of the
organization’s strategic profile which underscores the manner in which the organization’s
business is analysed which requires the skills of identification. It is important at the on
set to clearly identify the various internal parameters which underly such a profile in the
form of its products, employees and their skills, systems and procedures of work,
facilities, etc.

The process then moves to the second step which is concerned with a consideration of the
organization’s environmental factors such as its competitors, customers, suppliers,
substitute products, various economic factors, political, legal and regulatory factors,
technological factors, etc. All these factors must also be clearly identified, hence the
need for skills of identification.

The conditions of the organization as defined by both its trategic profile and
environmental situation should then be put into a futuristic perspective leading to
strategic forecast which necessitates considerable prediction skills.

Once this is done, then an assessment of organization’s resources becomes necessary as a


fourth step. Such an assessment requires clear identification of the various resources as
well as their evaluation skills. The evaluation of such resources is critical in order to
determine their levels, availability, as well as the most critical resources the organization
may require and also how they relate with one another.

All these then lead to generation of alternative strategies that the organization may
pursue, and undertaking which calls for considerable innovation skills. Such alternatives
then have to be subjected to a test of their consistency in order to determine how each
strategic alternative generated is consistent with the basic elements. Each of those

48
alternatives are thus evaluated in order to determine their suitability, an undertaking that
requires the application of evaluation skills.

It is on the basis of such evaluation that the most appropriate alternative is chosen. Such
a choice fundamentally involves decision-making, hence the need for decision-making
skills as step seven and the final step.

The whole scenario can be translated into a more precise framework that involves four
basic stages, namely:
(i) Definition of the organization’s business
(ii) Establishment of strategic objectives
(iii)Environmental assessment or analysis, and
(iv) The actual formulation of the strategy.

These four basic stages have various requirements and involve important considerations
that relate to the organization itself.

8.3.1 Definition of the Organization’s Business


This first step of strategy formulation has its prerequisite in the form of a clear
determination of the organization’s vision. Such a vision helps determine the sort of
future the organization desires for itself.

It is on the basis of such a desired future that the current business in which the
organization engages should be assessed. In the process of assessing the organization’s
business, a number of considerations become necessary. Such considerations may
comprise:
(i) Whether the organization should concentrate on a single business or pursue the
path of a diversified portfolio
(ii) In case of the latter, then a subsequent consideration as is to whether such
diversification should be of the related or unrelated type.

49
(iii)The type of products as well as industries the organization should participate in
(iv) The type of customers as well as their specific needs the organization should
endeavour to fulfill.
These considerations should in turn be based on certain fundamentals such as the
organization’s past experiences, its current situation, the forecast of its future conditions,
available opportunities, the sort of threats that the organization faces, as well as what the
management feels is most desirable for the organization.

On the basis of all these, the organization’s business can then be determined to reflect
such parameters as:-
(i) The sort of products or services the organization should provide
(ii) The type of technology most appropriate in its operations
(iii)The type of customers it should serve
(iv) The needs of its customers it is able to meet
(v) The degree of relatedness of its business, and
(vi) The degree of unrelatedness of its businesses which may render it as a multi-
industry conglomerate.

8.3.1.1 Relationship between the Organization’s Business and its Mission


It is on the basis of how the organization defines its business that its mission is evolved.
In a sense, the manner in which the organization defines its mission is what governs the
nature of its mission and how it should pursue such a mission, hence the close interface
between the organization’s business and its mission. The organization’s mission is thus
established on the basis on which it defines its business.

Such a mission is what then governs what sort of activities the organization should
engage in and which activities it should not engage in, hence the importance of the
mission as a mechanism for guiding the organization in its scope of activities. It should
be noted, however, that whatever form such a mission takes, it is important that it be
made as clear as possible for the purpose of guiding the organization in its operations.

50
8.3.1.2 Importance of a Clear Mission
Depending on the manner in which the mission is determined, it may unintentionally turn
out to be either very broad or narrow. It may be broad in the sense of embracing several
distinct types of products, industries, customer groups, technologies, and needs to be
served, yet narrow in the sense of limiting the scope of the organization’s activities to an
understable, meaningful arena.

Perhaps an illustration would be appropriate in order to emphasize this dichotomy.

Fig. 8.2: Broad Versus Narrow Mission


Organization ‘A’: Education Higher Education

Organization ‘B’: Transportation Road Transportation

Organization ‘C’: Banking Retail Banking

Organization ‘D’: Farming Horticultural Farming

To the left, organizations designated as ‘A’, ‘B’ ‘C’ and ‘D’ may state their missions as
those of Education, Transportation, Banking and Farming, respectively. In this case, they
are certainly not clear as to whether they provide all forms of such undertakings. It may
thus be construed that they provide all forms of such undertakings which are broad in
scope indeed. If they do not then their missions would be quite misleading. Besides,
their strategies meant to achieve such missions must similarly match such broadly stated
missions.

On the contrary, if the same organizations were more specific on their missions and
stated them as those of higher education, road transportation, retail banking, and

51
horticultural farming, the missions would be much narrower, clearer and more
understandable. Their strategies for achieving them would also be more focused.

It may, however, appear that a more specific or narrow mission is more preferable than a
broad one. This, in essence, is not necessarily the case as what is important is that the
manner in which an organization states its mission should be functionally useful to a
particular organization.

When missions are made overly specific or narrow, the organization may run the risk of
foregoing any opportunities available in the environment. On the other hand, broadly
stating the organization’s mission can obscure its actual operating scope and may offer it
no sense of direction or identity. The broadern the mission, therefore, the less focus it
may provide an organization in relation to its customer groups, customer needs, types of
products and applied technology It is thus essential that the mission be made as clear as
possible in order to appropriately facilitate managerial decisions and actions.

8.3.2 Establishing Strategic Objectives


Fundamentally, strategic objectives help in clarifying the competitive market position
that an organization seeks to have and the specific performance targets that management
seeks to achieve in the pursuit of the organization’s mission. Strategic objectives are
typically either externally-oriented or internally-oriented.

Externally-oriented objectives may be in the form of:-


(i) The attractiveness and mix of industries the organization desires to be in,
(ii) The competitive position the organization aspires to within its industry.
(iii) The reputation or image it wishes to have with its customers and the general
public, etc.

Internally-oriented objectives, on the other hand, normally relate to ogranization’s


financial results and overall performance.

52
The most common strategic objectives, however, revolve around such areas as:-
(i) Organization’s market share
(ii) Organization’s growth in revenues and earnings
(iii)Return on investment
(iv) Competitive strength
(v) Technological capability or superiority
(vi) Leadership within the organization’s industry
(vii) Organization’s reputation or image, etc

Whatever nature of strategic objectives the organization sets for itself, however, they
should be in the form of long-term and short-term as both facilitate the realization of each
other. Long-term objectives, for example, help in appropriately focusing management’s
attention to what should eventually be achieved. Short term objectives, on the other
hand, importantly contributes to determining the nature of activities that should be
undertaken by various units of the organization as well as indicating whether things are
working as desired, especially both in the short and medium term.

8.3.2.1 Importance of Strategic Objectives


Generally, strategic objectives are important because of the fact that unless the direction
the organization is headed is transformed into specific performance targets, it may be
difficult to know the extent to which the organization’s mission is being realized. They
are thus important in activating the mission and serves as important indicators for its
attainment. Besides, strategic objectives help in the prioritization of various activities
undertaken in the different organizational units as providing useful benchmarks for
gauging how well the organization is doing. Despite being such critically important,
however, strategic objectives should be as realistic as possible.

53
8.3.2.2 Nature and Purposes of Realistic Performance Targets
Strategic objectives as performance targets should not be set merely on the basis of their
hig-sounding nature or appeal. Rather, they must meet the important criterion of being
challenging but achievable at the same time.

To meet this criterion, the objectives should be set on the basis of a number of important
“inside – outside” considerations. Such considerations include:-
(i) The sort of performance levels economic, industry, and competitive conditions
may realistically allow
(ii) Whether financial resources measure up to the set objectives
(iii)The sort of targets the organization can realistically aspire to
(iv) The level of performance the organization is capable of.

Thus, setting challenging but achievable objectives requires managers to fairly accurately
judge what performance is possible to attain given the dynamics of the organization’s
external conditions as opposed to evaluating possible basis of internal circumstances of
the organization.

Further, the setting of strategic objectives must be broadly internalized within the
organization and subscribed to by the various organizational units. Besides, they must
also measure up to such general requirements of good objectives. Such requirements are
that:-
(i) Objectives must be measurable
(ii) Acceptable to those responsible for their attainment
(iii)Motivating by way of being appealing
(iv) Flexible in the sense that they can easily be modified to match changed
circumstances or conditions
(v) Consistent with the other objectives
(vi) Vision and mission-compliant
(vii) Real, not abstract, and can thus be translated into concrete actions

54
(viii) Closely relate to factors discovered through the SWOT analysis.

8.3.3 The Need to Consider Policy and Plans


In the process of formulating a strategy, the need to consider both policy and plans is
quite real. As explained earlier in lecture three, policy acts as an important direction
setting mechanism for the organization as it portrays top management’s overall direction
of the organization

Plans, on the other hand, help in the laying out of detailed schedule of activities the
organization should apply in the process of its strategy realization. They provide
important guideposts that enable the organization to steer its desired course.

8.3.4 Environmental of Situational Analysis


This is a fundamental undertaking in strategy development. Its importance is traceable to
the fact that it helps reveal the contextual imperative in which the organization operates.
In this regard, it has certain basic facts underlying it vis a vis the organization as well as a
framework for going about its assessment.

8.3.4.1 Underlying Facts about the Environment


These are as follows:
1. It is a contextual reality for all organizations
2. It is largely uncontrollable
3. It critically affects the operations of an organization
4. It has continuum ranging from the munificent to the turbulent-munificent in the
sense that the environment of certain organizations may be fairly stable while
others in the case of the turbulent environment may operate in fast-changing
environments.
5. It provides the organization with opportunities and threats (as well as strengths
and weaknesses in the case of the internal environment).

55
6. It is a critical input or element in strategy development, but is also relevant in
strategy implementation as well as evaluation and control.

8.3.4.2 A Framework for Analysing the Organization’s Environment


Steps:
1. Environmental categorization
2. Identification of various factors/facets of each category
3. Identification of various elements of each factor
4. Prioritization of the factors and elements into the most critical and the less critical
5. Relating or comparing such factors or elements to those of competitors or rivals
6. Determination of SWOT in order to reveal the organization’s strengths and
weaknesses as well as opportunities and threats

On the basis of the foregoing analytical framework, environmental assessment can be


depicted in the following diagram:-

56
ENVIRONEMTNAL
ANALSYIS

EXTERNAL INTERNAL
ENVIROMENT ENVIRONMENT

MACRO-REMOTE INDUSTRY/TASK/ Management


ENVIRONNMENT OPERATING Personnel
ENVIRONEMNT Financial
Position
Political/legal Competitors/ Technology &
Regulatory Rivals R&D Capability

Economic Buyers Equipment


Facilities

Socio-Cultural Suppliers Systems

Technological Potential entrants Procedures

Ethical Structure

Physical/ ecological Substitute products Culture

Reveal Opportunities Reveal Organization’s


and Threats Strengths and
Weaknesses
Fig 8.3: Environmental Analysis Framework

57
It should be noted that while the internal environment is reflective of the organization’s
characteristics and is specific to particular organizations, industry environment, on the
other hand, is specific to particular industries. The macro-or remote environment is
general to all organizations and industries.

8.3.5 Strategy Determination Framework


Strategy development is essentially choosing how to achieve the objectives. An
organization’s strategy thus represents the pattern of choices management has made
among the available alternative courses of action. It should, however, be noted that each
organization’s situation is unique and a strategy must, therefore, be custom-tailored by
management to fit all of the relevant internal and external circumstances that constitute
the organization’s situation. It should also be noted that the organization’s circumstances
keep on changing and its strategy must thus be alive to this reality. It has, therefore, to be
constantly fine-tuned or even overhauled as conditions necessitate.

Many factors normally enter into the process of determining an organization’s strategy.
These include a variety of both internal as well as external factors. The goal is essentially
to achieve a good match between the two sets of factors. This is captured in the
following diagram (which represents an alternative version of Fig. 8.3):-

58
EXTERNAL FACTORS

Societal, Competitive Opportunities


Political, Conditions and and Threats
Regulatory and Overall Industry
Community Attractiveness
Citizenship
Considerations

Strategic Fit: Generation Strategy


THE MIX OF CONSIDERATIONS THAT How external and that fits
DETERMINE AN ORGANIZATION’S STRATEGIC and internal evaluation of overall
SITUATION factors strategy situation
interface alternatives

organization Personal Shared


resource ambitions, values and
strengths, business, organization
weaknesses, philosophies, ational
and and ethical
competitive - considerations
capabilities

INTERNAL FACTORS

Fig. 8.4: Situational Analysis (adapted from Thompson Jnr. Arthur and A.J. Strickland,
Strategic Management: Concepts and Cases)

59
The interplay of the factors as depicted in Fig 8.4 and the influence that each has on the
strategy determination process vary from situation to situation. Indeed very few strategic
choices are made in the same situational factors differ considerably from one
organization to another such that the strategies of rivals may turn out to be quite
distinguishable rather than initiative, hence the need to carefully consider all the various
situational factors, both external and internal, as a fundamental consideration in the
determination of strategy

8.3.5.1 External Factors


As illustrated in Fig. 8.4, these comprise:-
(i) Societal, political, regulatory and community citizenship considerations
(ii) Competitive conditions and overall industry attractiveness
(iii)Opportunities and threats

Normally, what an organization can and cannot do in relation to its strategy is highly
constrained by what is legal, by what is politically acceptable, and by what is in line with
societal expectations and the standards of good community citizenship. Equally
important is a consideration of what is technologically practical, physically and
ecologically appropriate and also economically feasible. In essence, the task is one of
making an organization’s strategy socially responsible, technically possible, and
economically compliant.

An industry’s competitive conditions and overall attractiveness are equally very


important strategy – determining factors. An organization’s strategy must of necessity be
aligned to the nature and mix of competitive factors in play such as price, product quality,
performance features, service, warranties, etc. What this implies is that when competitive
conditions change significantly then a reconsideration of the organization’s strategy may
be necessary in order to re-align it with such changes. Such realignment may even
necessitate a strategy of disinvestment or even industry abandonment. A strategist has,
therefore, to be a continuous student of industry and competitive conditions.

60
Thus, particular opportunities available to an organization as well as threatening external
developments influence its strategy in a real way. An organization’s strategy has to be
deliberately aimed at exploiting available opportunities, especially those that may enable
it develop real sustainable competitive advantage and enhance its profitability. At the
same time, a strategy should provide the organization with defence mechanisms against
external threats that may adversly affect its well-being and future performance. An
appropriate strategy must thus be well-matched to available market opportunities and
threatening external developments.

8.3.5.2 Internal Factors


These essentially comprise:-
(i) Organization resource strengths, competencies and competitive capabilities.
(ii) The personal ambitions, business philosophies, and ethical beliefs of managers
(iii)The influence of shared values and organization culture on strategy.

An important cornerstone that shapes an organization’s strategy is whether it has or can


acquire the resources, competencies, and capabilities necessary to execute the strategy
proficiently. An organization’s resources, competencies, and competitive capabilities are
important strategy – determining considerations because of the fact that they:-
(a) Provide the organization with competitive strengths that may enable it capitalize
on particular opportunities, and
(b) May give the organization a competitive edge in the market place.

The most feasible way for an organization to achieve competitive advantage is when an
organization has competitively valuable or superior resources and competencies, where
rivals do not have matching or offsetting resources and competencies, and where rivals
cannot acquire comparable capabilities except at high cost and/or over an extended period
of time. Even if an organization has no outstanding competencies and capabilities (and
many usually do not), managers must still tailor the strategy to fit the organization’s
identifiable resources and capabilities. Indeed it is unwise for managers to develop a

61
strategic plan that cannot be realized through the resources and capabilities at the disposal
of the organization, hence the need to match the organization’s strategy with its resources
strengths and weaknesses and to its competitive capabilities. Winning strategies typically
aim at capitalizing on organization’s resources strengths and neutralizing its resource
deficiencies and skills gap. Indeed an organization’s resource strengths may make some
strategies and market opportunities quite attractive to pursue. Conversely, its resource
deficiencies , its gaps in important skills and know-how, and the weaknesses in its
competitive market position may make the pursuit of certain strategies or opportunities
risky or even out of the question. In essence, the type of resources, competencies, and
capabilities an organization has and how competitively valuable they are is a critical
strategy – determining consideration. Thus, an organization’s strategy must necessarily
be grounded in its resource strengths and in what it is good at doing, i.e. its competencies
and competitive capabilities. As such, it may prove a risky undertaking to develop a
strategy whose success is dependent on resources and capabilities that an organization
lacks.

Beyond this, it is quite often the case that managers are never dispassionate about the
strategic course for an organization as their personal ambitions, business philosophies,
and ethical beliefs tend to hold them captive. Their decisions are often influenced by the
desire as to how to compete and how to position their organizations as well as by the type
of image and standing they desire for their organization. It is on this basis that the
managers’ ambitions, values, business philosophies, risk predisposition, and ethical
beliefs under in their strategic considerations. Quite often, this may be conscious and
deliberate yet in certain cases it may simply be unconscious.

Of no less significance is the role of organization’s culture. Such cultural variables as


values, attitudes, traditions and practices combine in an important way in determining the
sort of strategic options an organization may opt to pursue. This is more so since culture
is a conditioning radar which largely controls how an organization may respond to

62
external events. An organization’s culture can thus have a dominant role in the kinds of
strategic moves it embraces or rejects.

8.3.5.4 Determination of Strategic Fit, Generation and Evaluation of


Strategic Alternatives and Eventual Strategic Choice
It is on the basis of both external and internal considerations that the organization’s
strategic fit is determined. This sort of fit relates to how both sets of considerations
converge to provide guidance as to the sort of corridor or tunnel within which appropriate
strategies for the organization can be considered. It is within this context that the
organization’s strategic options are generated. Whatever options are generated, each
must be critically evaluated on the basis of its relevance to both the external and internal
conditions of the organization.

It is as a result of such evaluation that the option that best fits the organization’s
circumstances is chosen. It should be noted in this regard that the option or strategy of
choice may not necessarily be the best but the most optimal or viable. In the process of
evaluating the various options, however, certain criteria should be applied.

8.3.3.5 Criteria for Weeding out Less Optimal Strategic Options


In weeding out candidate strategic options, the merits and demerits of each should be
considered. This consideration should be based on:-
(i) The goodness of fit for each option which is a requirement that a good strategy
should appropriately fit the organization’s internal and external situation.
(ii) The competitive advantage criteria – a requirement that good strategy should
provide the organization with sustainable competitive advantage
(iii) The performance criteria – a requirement that a good strategy should boost the
organization’s performance by way of:-
(a) gains in profitability, and
(b) gains in the organization’s competitive strength and long-term market
position.

63
8.3.5.6 Categorization of Typical Strategic Options
Choice of an organization’s strategy may fall into one of the categories of recognized
strategic options. Such categories include:

A. Generic Competitive Strategies


1. Low-Cost Leadership
2. Differentiation
3. Best-cost Provider
4. Focused – based on a Market Niche
5. Focused – based on Differentiation

B. Integration Strategies
1. Vertical Integration
2. Horizontal Integration

C Cooperative Strategies
1. Mergers
2. Acquisitions
3. Alliances

D. Diversification Strategies
1. Related diversification
2. Unrelated Diversification

E. Exit Strategies
1. Divestiture
2. Liquidation

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F. Corrective Strategies
1. Turnaround
2. Retrenchment
3. Portfolio restructuring
8.4 Summary
This lecture set out to explain the strategy formulation process. In doing
so, the departure point has been an explanation of the need for the
definition of the organization’s business, how it is done as well as its
interface with the mission statement. It has also been clearly explained
why it is important to state the mission of the organization not only in
the most understandable manner but also in the manner in which such a
mission is functionally useful to the organization. The place of strategic
objectives, policy and plans in strategy formulation have also been fairly
elaborately examined environmental analysis.

Finally, it has been appropriate to clearly explain the strategy basis of


situational analysis, strategic fit, generation and evaluation of various
strategic options and the eventual choice of strategy. Incorporated in
this has also been the bsic criteria that guide the choice of a strategy. At
the end, certain typical strategic options have also bee provided.

Activity
1. Provide a brief outlines of the strategy formulation process

2. Elaborate on the basic features of organization’s mission and examine


whether it is more preferable to have a broad or narrow mission.

3. Clearly elaborate on the nature of strategic objectives.

4. Explain the significance of environmental analysis as a fundamental


of strategy development.

5. Identify and briefly explain the basic features of the process leading
to the eventual strategic choice.

65
8.5 References

Pearce II, John A. and Richard B. Robinson Jnr. (1997), Strategic


Management: Formulation Implementation and Control (6th Ed.),
Irwin, Chicago.

Thompson Jnr., Arthur A. and A.J. Strickland (2006), Strategic Management:


Concepts and Cases (14th Ed.), BPI Irwin, Homewood, Illinois

Uyterhoeven, Hugo, et al., Strategy and Organization: Text and Cases in


General Management, Richard D. Irwin, Inc.

66
LECTURE NINE
STRATEGY IMPLEMENTATION
Lecture Outline
9.1 Introduction
9.2 Objectives
9.3 The need for Strategy Implementation
9.4 The Challenges of Strategy Implementation
9.5 Strategy Implementation Framework
9.5.1 Organizational Variables that Underly Strategy Consistency
9.5.2 The Essentials of Operationalizing a Strategy
9.6 Summary
9.7 References

9.1 Introduction
Strategy implementation is strategic management process through which the strategy of
choice is realized. Following the development of a strategy, it is only implemented that
such a strategy is implemented as a back-up to strategy development.

9.2 Objectives

At the end of this lecture you should be able to:

1. Describe the process of implementing the organization’s


strategy

2. Explain the need for strategy implementation

3. Explain the challenges of strategy implementation

4. Illustrate the logical manner in which strategy implementation


should be carried out.

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0.3 The Need for Strategy Implementation
Once a strategy is developed, it is necessary that it is implemented. It is important that a
strategy is put into action in order to enable the organization achieve its intended results.

Any strategy must be executed well if the organization expects to obtain success in its
operations. It is thus of critical importance that the organization’s activities and work
effort are geared toward accomplishing the strategic plan.

Specifically, the reasons that underscore the importance of strategy implementation can
be identified as follows:
1. Achievement of organizational objectives
2. Justify the resources used in developing a strategy, and
3. Translation on intellectual, abstract strategy into action by making the strategic
plan a reality
Strategy implementation is the mechanism through which the organization’s objectives is
implemented, therefore, the organization’s objectives will remain just what they are mere
statements of desired achievement.

Further, unless a strategy is implemented, the management cannot justify the resources
used in its development. This would portend undue wastefulness of resources for which
the management should rightly be surcharged

It is the implementation of a strategy that would actually transform an intellectual,


abstract strategy into reality. Indeed, it is through the implementation process that a
strategy gets auctioned.

9.4 The Challenges of Strategy Implementation


Although important, strategy implementation has its challenges which make it quite a
tricky affair for managers. It is usually not an easy undertaking. Indeed many excellent
strategies fail when attempts to implementation are made.

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This is why many managers shy away from implementing very good strategies because
of such a possibility, real or perceived. The difficulty of implementing a strategy
basically revolves around certain reasons which include:
(i) The risk involved in implementing a strategy
(ii) The amount of resources required to enable implementation to succeed.
(iii)The complexity involved in undertaking the implementation of a strategy.

Usually the implementation of a strategy portends fairly high risk predisposition for
managers concerned. Managers are always wary as to whether the strategy would
succeed or fail. Failure of the strategy in charge as far as their judgement is concerned.
It may even mean a disaster for such mangers in terms of their careers, hence the need for
a manager to first put his or her career in line on account of undertaking such
implementation. This can be compared to the situation in which a coach of a football
team finds himself or herself in case his or her team loses an important match. He or she
must be prepared for the sack. It is because of such fear of possible failure and its
ramifications that mangers tend to shy away from implementing strategies.

Besides such risks involved, there is usually the other aspect of resources that are
necessary for the implementation of a strategy. Quite often, the organization may not
even have some of the necessary resources and governing them, especially in the case of
those that have to be sought from outside the organization, normally entails a real feat for
the mangers concerned.

Further, strategy implementation is usually a very complex undertaking. As earlier noted


in lecture six, there are characteristic challenges associated with the translation of the
strategies plan into reality. Such challenges normally arise due to the various
administrative activities that became necessary in the process much more complex
undertaking due to the fact that it may require time consuming orchestration of the
activities of various functional areas apart from the need for the commitment of all
organizational managers, units, as well as their ownership of the strategic plan. This is

69
essentially why strategy implementation is normally regarded as five times more time-
consuming than the strategy development process.

9.5 Strategy Implementation Framework


Many challenges associated with strategy implementation can largely be mitigated if an
appropriate approach to the implementation process is adopted. Such an approach
involves a framework which disaggregates the implementation process as follows:

STRATEGY IMPLEMENTATION
FRAMEWORK

INTERNALIZATION OF OPERATIONALIZATION
STRATEGY OF STRATEGY

Structure Action plans and


Short term objectives

Leadership Functional tactics

Resources Personnel
empowerment

Support systems Budgets

Fig. 9.1 Strategy Implementation Framework

It is advisable in undertaking the implementation to first ensure that the strategy is


internalized before it is actually operationalized. Internalization of strategy essentially
requires that it is made consistent with the various organizational variables such as
structure, leadership, culture, resources and support systems. This is important in order
to make a strategy organization compliant.
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9.5.1 Organizational Variables that underly Strategy Consistency
The importance for first ensuring strategy consistency cannot be under-estimated. It
arises from the need to achieve a fit between the strategy and the internal components or
variables of the organization. This is necessary because internal inconsistencies can
considerably raise operational costs or even make implementation of a strategy
impossible.

Foremost among such internal components is the organization’s structure. Any changes
in the organization’s strategy usually require a new structure. The organization structure
has to be significantly revised or even overhauled failure to which it may be a matter of
trying to fir a square peg into a round hole. Realigning the structure to the strategy thus
becomes a fundamental perquisite for strategy implementation. An inconsistency
between structure and strategy may lead to disorder, friction and not performance.

It is also equally necessary that the organization’s leaders have unity of purpose so that
they subscribe to the strategy. Such unity ensures that everyone in the organization pulls
toward the same direction. The chief executive and those around him or her must be at
the forefront in providing the necessary leadership through a common vision, initiative,
motivation, commitment and inspiration. They should also cultivate team spirit and act
as a catalyst in the whole strategy process.

The organization culture also needs to be compatible with the strategy being
implemented. Such cultural variables such as values, attitudes, philosophy, behavior,
etc., must be in consonance with the strategy. When culture is supportive of strategy,
implementation is highly boosted, hence the importance for the organization to realign its
culture with strategy and to ensure that it is not at variance with strategy.

Resources are equally critical in ensuring successful implementation. Availability of the


needed resources must be ensured. Such resources comprise physical, human and

71
financial resources. It is normally not possible to implement a strategy which requires
more resources than can be available by the organization. Deliberate attempts must be
made to acquire such resources that are critical for the strategy’s success but which may
not be available within the organization.

Apart from the foregoing four components, support systems are also highly necessary.
These comprise all manner of routine activities that are performed within the organization
to keep it running smoothly and include transportation, information network,
reprographics, secretarial services, security, messengerial services, cleaning services, etc.
these activities used to be carried out efficiently as they are in force the implementation
of strategy in an important way.

It is thus after ensuring such consistency that the actual operationalization of strategy
would make sense.

9.5.2 The Essentials of Operationalizing a Strategy


As outline in Fig. 9.1, these comprise actions plans and short term objectives, functional
tactics, personnel empowerment, and budgets.

Normally, strategic objectives tend to be long term in nature. It is thus necessary to


translate them into shorter time frames. When this is done, it is possible to establish
milestones which would act as a basis of gauging the progress as to how the strategy is
being implemented. Such short term milestones and action plans lead to the effective
implementation of long term goals.

Functional tactics, on the other hand, are the key routine activities that must be
undertaken in each functional area such as Production and Operations, Marketing,
Finance, Human Resource Management, etc. they may entail facilities location and
layout, procurement and inventory control procedures, pricing and distribution
techniques, sales techniques, capital acquisition, dividend distribution, human resource

72
deployment, etc. the tactical manner in which these activities are performed within the
organization can boost strategy implementation in a real way.

Functional tactics should be augmented by empowering operating personnel to do their


job effectively. Since supervisors and other personnel on the ground are the “front line”
of the organization’s effort, they should be empowered to make decisions by pushing
decision making down to their level and also to apply the available resources
appropriately. This, however, should be within certain policy guidelines that should
facilitate and guide their actions.

Usually implementing a strategy transforms managing into the budget – making process.
Organizational units need big enough budgets to carry out their bits of the strategic plan.
Such units, especially those charged with performing strategy – critical activities have to
be staffed with enough of the right kinds of people, be given enough operating funds to
do their work proficiently, also have the funds to invest in necessary operating systems,
equipment, and facilities. At the same time, strategy implementers must be willing and
courageous enough to shift resources from one area to another in order to support new
strategic initiatives and priorities. Thus, how ell strategy implementers link budget
allocations to the needs of strategy can importantly either promote or inhibit the
implementation process. Too little funding can slow progress and impede the ability of
organizational units to execute their bits of the strategic plan while too much funding, on
the other hand, may end up wasting organizational resources and reducing financial
performance.
9.6 Summary
This lecture has elaborately examined strategy implementation in its
various perspectives. It started by examining the need for the
implementation in relation to strategy formulation. If then proceeded to
examine the challenges involved in the strategy implementation process
and ended up by providing an appropriate approach for implementing a
strategy which disaggregates implementation its most suitable facets.

73
Activity
1. Explain the importance of implementing a strategy
2. Examine the challenges involved in the implementation of a
strategy.
3. Identify and briefly explain the various perspectives of the
strategy implementation framework

9.7 References
Thompson Jnr. Arthur A. and
Pearce II, John A. and……..

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LECTURE TEN
STRATEGY EVALUATION AND CONTROL
Lecture Outline
10.1 Introduction
10.2 Objectives
10.3 The Need for Strategy Evaluation and Control
10.4 The Nature of Strategy Evaluation and Control
10.5 Mechanisms for Evaluating and Controlling Strategy
10.5.1 Premise Control
10.5.2 Implementation Control
10.5.3 Strategic Surveillance
10.5.4 Special Alert Control
10.5.5 Operational Controls
10.6 Summary
10.7 References

10.1 Introduction
As a third broad perspective of strategic management, strategy evaluation and control is
generally concerned with tracking the manner in which things are working within the
context of organization’s strategy. Its relevance is based on the need to ensure that
various activities undertaken within the organization do not spin out of control in a
manner that may derail the overall strategic effort and expectations within the
organization.

10.2 Objectives
At the end of this lecture you should be able to:
1. Describe the nature of strategy evaluation and control
2. Explain the need for evaluating and controlling strategy
3. Identify and explain the mechanisms for evaluating and
controlling a strategy

75
10.3 The Need for Strategy Evaluation and Control
By their nature, strategies are forward-looking, designed to be accomplished into the
distant future and usually based on management assumptions about numerous events that
have yet to occur. It is thus necessary to track a strategy in order to keep it on the right
course. Strategy evaluation and control is, therefore, concerned with this need to track a
strategy to ensure its continued appropriateness. But how do managers achieve this?
Before this question can be addressed, it is probably necessary to underscore the nature of
strategy evaluation and control.

10.4 The Nature of Strategy Evaluation and Control


Unlike the conventional approach to control where actual results are compared to pre-set
standards, such post-performance evaluation does not lend itself to strategy evaluation
and control. Although it has its place, it is inappropriate for controlling a strategy. This
is because the full execution of a strategy often takes a long time, often five or more years
during which time many changes occur that have major reunifications for the strategy’s
ultimate success. Consequently, the conventional approaches to control must be replaced
by an approach that recognizes the unique control needs of long-term strategies.
Strategic control is thus concerned with tracking a strategy as it is being implemented,
detecting problems or changes in its underlying premises, and making necessary
adjustments as activities proceed.

In contrast to post-action control, strategic control is concerned with guiding action as


that action is taking place and when the end result is still a long time away into future.
The control of strategy can thus be compared to a form of “steering control” as in the
case of controlling a vehicle as it is being driven or piloting a plane whereby all manner
of indicators have to be monitored constantly. Unless such close monitoring is correctly
done, the vehicle or plan may simply crash before it gets to its destination.

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Managers responsible for the success of a strategy are thus typically concerned with two
sets of considerations – those relating:-
(i) A strategy’s premises, and
(ii) The organization’s performance levels.

Considerations relating to a strategy’s premises may comprise:-


(i) Whether the organization is moving toward the right direction
(ii) Whether manager’s assumptions about major trends and changes are correct
(iii)Whether key expectations are turning out to be right
(iv) Whether the organization is engaged in the critical things that need to be done
(v) Whether, on the basis of the outlook of things, the strategy should be adjusted or
even aborted altogether.

Considerations relating to organization’s performance, on the other hand, may comprise:-


(i) Whether objectives and schedules are being realized
(ii) Whether costs, revenues, and cash flows are matching projections.
(iii)Whether there is need to make operational changes

Ordinarily, a good deal of time elapses between the initial implementation of a strategy
and achievement of its intended results during that time, investments are made and
numerous projects and actions are undertaken to implement the strategy. Also during that
time, changes are taking place in both the environmental situation and the organization’s
internal situation. Strategic controls are thus necessary to steer the organization through
such numerous events. They must provide the basis for adapting the organization’s
strategic actions and directions in response to such developments and changes.

But how exactly should managers go about this kind of task? The answer to this question
can be found in the various mechanisms that have been put forward to enable managers
achieve that kind of task.

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10.5 Mechanisms for Evaluating and Controlling Strategy
Various mechanisms have been identified as appropriate in the process of evaluating and
controlling a strategy. Pearce and Robinson (1997) have classified such mechanisms into
four categories, namely:-
(i) Premise control
(ii) Implementation control
(iii)Strategic surveillance, and
(iv) Special alert control

10.5.1 Premise Control


The departure point for this is that every strategy is based on certain planning premises
which comprise various assumptions or predictions. Premise control is thus designed to
check systematically and continuously whether such premises on which the strategy is
based remain valid. If it is discovered that a vital premise is no longer valid then it may
be appropriate to revise the strategy. The sooner an invalid premise can be recognized,
the timely the necessary action can be taken to revise the strategy.

The relevant premises to be monitored are those planning-oriented ones that are primarily
concerned with environmental and industry factors. Environmental factors may include
inflation, technology, interest rates, regulations, demographic/social changes, etc.
industry factors however, differ considerably from industry to industry and an
organization should be aware of the factors that are unique to its particular industry.
Generally, however, competitors, suppliers, product substitutes and barriers to entry are
some of the industry factors which strategic assumptions are made.

Strategies may often be based on all manner of premises, some of which may be major
and some minor. Tracking all of them may thus be unnecessarily and time consuming. It
is thus advisable that managers zero in mainly on premises whose change is likely and
also which would have a major impact on the organization’s strategy. The emphasis
should, therefore, be place on the monitoring of key premises. Such premises should be

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updated and new predictions made on the basis of the updated information. Further, the
manner in which such premises impacts on strategy should be assessed with a view to
making the necessary adjustments and revisions.

10.5.2 Implementation Control


This mainly relates to strategy implementation. Strategy Implementation is normally
undertaken in the form of a series of steps, programs, investments and other activities that
ae undertaken over an extended period. In the process, special programs are initiated
functional areas devise strategy-related activities, personnel levels are boosted or
rationalized and various kinds of resources are mobilized. In essence, managers
implement strategy by converting broad plans into the concrete, incremental actions and
results of specific units and individuals. Implementation control must thus be exercised
as those events unfold. It is normally designed to assess whether the overall strategy
should be changed in light of the results associated with the incremental actions that
implement the overall strategy.

On this basis, implementation control can be dichotomized thus:-


(i) Monitoring strategic thrusts, and
(ii) Milestone reviews

Normally strategies are implemented in form of specific projects that further energize the
implementation process and which provide managers with important information that
helps them determine whether the overall strategy is progressing as required.

It should, however, be noted that the utility of such thrusts may not readily be apparent
for control purposes. This is because of the fact that initial experience may not
necessarily reflect eventual accomplishment, hence the need to treat such thrusts with a
good measure of caution. They should, therefore, be singled out and applied carefully.
Alternatively, they may be applied as “stop-go” ,easures that are linked to certain

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thresholds in terms of time, costs, accomplishments, etc., which reflect the viability of
particular thrusts.

Milestone reviews also facilitate implementation control considerably. Milestones may


be in the form of benchmarks that help in the judgement of the overall position. They
may comprise critical events, major resources allocations, or simply the passage of a
certain amount of time which show how things stand. In this sense, they may be
important turning points that can be used to carryout a full-scale reassessment of the
strategy and of the advisability as to continue or refocuse the organization’s direction.

10.5.3 Strategic Surveillance


By their nature, premise control and implementation control are focused control.
Strategic surveillance, however, is unfocused and is designed to monitor a vroad range of
events inside and outside the organization that are likely to affect the course of its
strategy.

The basic idea behind strategic surveillance is that important yet un anticipated
information may be uncovered by a general monitoring of multiple information sources.
This is why it must be kept as unfocused as possible to be useful. It should be of a loose
“environmental scanning” type which may make managers stumble on information
critical to a strategy. It thus works on such premises as media, trade conferences,
conservations, political statements and both intended and unintended observations.
Despite its looseness, however, strategic surveillance provides an ongoing, broad-based
vigilance that may help uncover information relevant to the organization’s strategy.

10.5.4 Special Alert Control


This is yet another type of strategic control which involves a thorough, and often rapid,
reconsideration of the organization’s strategy because of a sudden, unexpected event such
as sudden change in regulation, abrupt exit or entry into the industry of a leading
competitor, unexpected invasion of the industry by formidable competitors, etc. Such an

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event should trigger an immediate and intense reassessment of the organization’s strategy
as well as its current strategic situation.

In many organizations, crisis teams may handle the organization’s response to such
unforeseen events that may have an immediate impact on its strategy. There is, however,
an increasing tendency for organizations to develop contingency plans along with crisis
teams to respond to circumstances of sudden nature.

Strategic control mechanisms are thus designed to continuously and proactively question
the basic direction and appropriateness of strategy. Each works on a common purpose
and that is to assess whether the strategic direction should be altered in light of unfolding
events.

Besides such control mechanisms, however, operational controls are also necessary in
guiding the strategic management process.

10.5.5 Operational Controls


These are also quite useful in aiding the strategic management process. They guide,
monitor, and help evaluate progress especially in meeting short term objectives.

While the foregoing strategic control mechanisms are applied to steer the organization
over an extended period– usually five years or more, operation controls provide post-
action evaluation and over short and medium terms lasting upto one year. To be
effective, therefore, they must incorporate such requirements which are characteristic of
conventional controls such as_;
(i) Setting standards of performance
(ii) Measuring actual performance
(iii)Identifying deviations from the set standards, and
(iv) Initiating corrective action

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Among such controls are budgets and schedules. As a forerunner of strategic planning, a
budget is a resource allocation plan that helps managers in coordinating operations and
also facilitates managerial control of performance. A schedule, on the other hand, is a
timing mechanism which assesses the success of a strategy on the basis of allocated time
and the actual time taken to accomplish an activity. Scheduling also contributes a lot to
the sequencing of interdependent activities and thus offers a useful mechanism with
which to plan for, monitor, and control such interdependencies in an organization. One
of such commonly used scheduling technique is the Critical Path Analysis.

Yet of recent, performance contracting has also featured prominently in organizations as


a form mechanism for evaluating and controlling performance.

10.6 Summary

10.7 References

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