Strategic Management: Developing Objectives and

StrategiesDr. Fred Mugambi Mwirigi

Introduction

• The world is increasingly getting complex• So are organizations, with multiple dynamic

and competing factors coming into play• There is need to put in place effective

strategic management systems and processes to meet modern management challenges

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Definition

• Strategy is the process of achieving competitive advantage through being different – delivering a unique value added to the customer and having a clear and enactable view of how to position yourself uniquely in your industry

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Definition Contd.

• …goal directed decisions and actions in which capabilities and resources are matched with opportunities and threats to get goals achieved

• …Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages

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What Makes Japanese Firms’ Success Stories?

• Japanese firms are very good in strategy development and implementation

• In a 1982 study, Tom Peters and Robert Waterman identified 8 characteristics of very successful companies:

1. A bias for action 2. Customer focus3. Entrepreneurship4. Productivity through people

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Contd.

5. Value oriented CEOs — The CEO should actively propagate corporate values throughout the organization.

6. Doing what you know well. 7. Keeping things simple and lean8. Having tight centralized control while also

allowing maximum individual autonomy.

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Key Attributes of Strategic Management

• Directs the organization toward overall goals and objectives.

• Involves the inclusion of multiple stakeholders in decision making.

• Needs to incorporate short-term and long-term perspectives.

• Recognizes tradeoffs between efficiency and effectiveness.

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Components of Strategic Management

• Strategic management comprises five key facets:

1. goal-setting, 2. analysis, 3. strategy formation,4. strategy implementation 5. strategy monitoring

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Strategies, Goals and Policies

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Vision

Medium term objectives

Mission

Strategic Objectives

Short term objectives

Operational Policies

Grand Strategy

Tactical Policies

Strategic Policies

Tactical Strategies

Operational Strategies

C.Vs C.Vs

Vision Answers the question: What will success look like

in future? A mental perception of the kind of environment is

to be created within a broad time horizon A shared image/ dream of what an org. wants to

become – resonates with all & helps them feel proud, excited & part of something bigger…

Vision is more emotional than analytical – a dream…– It is the pursuit of the dream, share image of success or

shared perception of the future environment that really motivates people to work together

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Examples of vision

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

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Mission An elaboration of the vision statement Captures the broad purpose and functions

of the organization• Contents of a mission statement:

– Purpose statement – Why do we exist? What is the ultimate result of our work?

– Business statement – What activities do we do to accomplish the purpose?

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Example of a Mission

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

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Policies

• Strategy implementation requires that management prepares concise policies and effectively communicates these policies to their staff.

• Policies are directives designed to guide the thinking, decisions and actions of managers and their subordinates in implementing a firm’s strategy.

• Policies provide guidelines for establishing and controlling ongoing operations in a manner consistent with a firm’s strategic objectives.

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Policies Contd.

• Policies are also called standard operating procedures.

• Policies increase managerial effectiveness in that they standardize many routine decisions and control the discretion of managers and subordinates in implementing strategies.

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Importance of Policies

1. Policies establish indirect control over independent action2. Policies promote uniform handling of similar activities3. Policies ensure quicker decisions4. Policies institutionalize basic aspects of organizational

behavior5. Policies reduce uncertainty in repetitive and day-to-day

decision making6. Policies counteract resistance to or rejection of chosen

strategies by the organization’s members7. Policies offer predetermined answers to routine problems8. Policies help mangers to avoid hasty and ill conceived

decisions in changing operations16

Core Values

• Other names: core values, corporate philosophy or guiding principles

• They define the character of relations with stakeholders, and set management style and corporate culture

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

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Examples of CVs:

– integrity–fairness and justice–excellent and friendly customer service–team work– innovation–professionalism, etc

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Strategy

• A corporate road map for its future • A game plan adopted to guide performance • Must be effective and efficient

What makes a good strategy?

• capable of obtaining the desired objective • a good fit between the external environment and an

organizations resources • capable of providing the organization with a

sustainable competitive advantage- should be unique and sustainable

• dynamic, flexible, and able to adapt to changing situations

• sufficient on its own - ie.: valuable without cross-subsidization

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Strategic Management Process

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Goal Setting Analysis

Strategy Formulation

Strategy monitoring

Strategy Evaluation

Strategy Implementation

Strategic Management

Levels of strategy

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Corporate level

Competitive/ Business unit

Functional/ operational

What direction do we want to take as a company?

What are the next steps?

How are we going to translate the direction into actions?

Strategic planning• Good planning is an important cornerstone in

strategic management • Planning is about anticipating the future and

working backwards to fill the gaps • This involves:- Setting goals- Allocating resources- Implementing strategies

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Why do Strategic Planning?

• Defines the organization’s direction• Communicates the overall corporate thinking • Ensures effective use of resources • Serves as a framework for decisions or for

securing support• Sets the framework for monitoring progress and

evaluating results• Stimulates change • Avoids wastage of time and other resources

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Key Concerns in Strategic Planning

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StageStage OutputsOutputs

Where are we?Where are we? External environmental analysisExternal environmental analysis Internal environmental analysis Internal environmental analysis

Where do we want to go?Where do we want to go? New vision, mission & core valuesNew vision, mission & core values Strategic objectivesStrategic objectives

HOW do we get there?HOW do we get there? StrategiesStrategies Results and operational plansResults and operational plans Required resourcesRequired resources

What practical next steps must be What practical next steps must be made to get there?made to get there?

Short-term budgetsShort-term budgets Short-term organizational, Short-term organizational,

managerial, HR, etc. decisions and managerial, HR, etc. decisions and

actions (“actions (“Quick Wins”Quick Wins”))

How do we monitor & evaluate the How do we monitor & evaluate the plan?plan?

M&E planM&E plan

Key approaches to Strategic Planning

• Strategy as logical incremental steps

• Strategy as revolution

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Strategy as logical incremental steps

4 steps: • analysis • strategy development• strategic plan including strategy specification and

resource allocation – GTSM (Goals, Targets, Strategies, Measures) -

the setting of goals, targets, and measurable objectives

• implementation, monitoring, adjustment, and control

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Strategy as revolution/ transformation

– identify the unquestioned beliefs in your industry and challenge them - Look for opportunities to re-write the rules of the industry

– look for major discontinuities in technology, lifestyle, habits, and geopolitics, and embrace the change wholeheartedly - Do not waste time making small incremental adjustments - Be prepared to create a completely new business model

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Why does strategic planning sometimes fail?

1. Failure to understand the reason for the plan- the customer

2. Inability to predict environmental reaction 3. Over-estimation of resource competence 4. Failure to coordinate 5. Failure to obtain senior management commitment 6. Failure to obtain employee commitment 7. Under-estimation of time requirements 8. Failure to follow the plan

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Transition from Planning to reaping

The transition comes with challenges…..

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StrategicGoal

Setting

Strategy Development

and Implementation

Activities Results

Transition Challenges

• Structures• Systems• Processes• Politics• People (staff) • External dynamics (shifts)• Resources

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Thank you

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