Chapter -1

What is strategy?
Strategy is the pattern of activities followed by an organization

in pursuit of its long-term purposes.

Strategy is critical to the relative success of an organization in its

business over time

Strategy is the art of war, especially the planning of movements

of troops and ships etc, into favorable positions.

Strategies are actions those determine whether an organization
survives, prospers, or dies. ስትራቴጂ አንድ ድርጅት የረዥም ጊዜ ዓላማውን ለማስፈጸም የሚከተላቸው
ተግባራት ዘይቤ ነው።በጊዜ ሂደት ለድርጅት አንፃራዊ ስኬት ወሳኝ ነው ስትራቴጂ የጦርነት ጥበብ ነው በተለይም የወታደር እና የመርከብ

1 እንቅስቃሴ ወዘተ.
 Con’t…

What is Business policy?

 A policy is a broad guideline for decision making that links the formulation of
a strategy with its implementation.
ፖሊሲ የስትራቴጂ ቀረፃን ከአፈፃፀሙ ጋር የሚያገናኝ የውሳኔ አሰጣጥ ሰፊ መመሪያ ነው።

 A business policy is a set of rules defined by the owner or leadership of the

company. Some policies are defined by regulations, such as federal privacy
laws, while others are designed by corporate leadership to make sure that
things are done by certain standards.
የንግድ ፖሊሲ በኩባንያው ባለቤት ወይም አመራር የተገለጹ ደንቦች ስብስብ ነው. አንዳንድ ፖሊሲዎች እንደ ፌዴራል የግላዊነት ህጎች ባሉ ደንቦች
የተገለጹ ናቸው፣ ሌሎች ደግሞ ነገሮች በተወሰኑ ደረጃዎች መከናወናቸውን ለማረጋገጥ በድርጅት አመራር የተነደፉ ናቸው።

 Business policies are generally found in the operations manual or in the

employee handbook. Although different businesses may have different
policies, any business policy has the same seven features.
የንግድ ፖሊሲዎች በአጠቃላይ በኦፕሬሽኖች መመሪያ ወይም በሠራተኛ መመሪያ መጽሃፍ ውስጥ ይገኛሉ.

 A business policy must be specific, clear, uniform, appropriate, simple,

inclusive and stable.
2 የንግድ ፖሊሲ የተወሰነ፣ ግልጽ፣ ወጥ፣ ተገቢ፣ ቀላል፣ አካታች እና የተረጋጋ መሆን አለበት።

 1.1 The Study of Strategic Management
Strategic management is a set of managerial decisions and actions that help

determine the long-term performance of an organization. የስትራቴጂክ አስተዳደር የድርጅቱን

የረጅም ጊዜ አፈፃፀም ለመወሰን የሚያግዙ የአስተዳደር ውሳኔዎች እና ድርጊቶች ስብስብ ነው።

It includes

1. environmental scanning (both external and internal), የአካባቢ ቅኝት (ውጫዊ እና ውስጣዊ)፣

2. strategy formulation (strategic or long-range planning), የስትራቴጂ ቀረጻ (ስትራቴጂካዊ

ወይም የረጅም ጊዜ እቅድ)፣

3. strategy implementation, andየስትራቴጂ አተገባበር እና

4. evaluation and control. ግምገማ እና ቁጥጥርን ያጠቃልላል።

The purpose of strategic management is to exploit and create new and

different opportunities for tomorrow; and to optimize for tomorrow the

trends of today. የስትራቴጂክ አስተዳደር ዓላማ ለነገ አዲስ እና የተለያዩ እድሎችን መጠቀም እና መፍጠር ነው;

3
 Benefits of Strategic Management

1. A clearer sense of strategic vision for the firm. ለድርጅቱ የበለጠ

ግልጽ የሆነ የስትራቴጂክ እይታ ስሜት።

2. A sharper focus on what is strategically important.

በስትራቴጂካዊ ጠቀሜታ ላይ የበለጠ ትኩረት ማድረግ።

3. An improved understanding of a rapidly changing

environment በፍጥነት ስለሚለወጥ አካባቢ የተሻሻለ ግንዛቤ

4. Exploit and create new and different opportunities for

tomorrow ለነገ አዲስ እና የተለያዩ እድሎችን ይጠቀሙ እና ይፍጠሩ

4
 1.2 Globalization, Innovation, and Sustainability: Challenges to
Strategic Management ግሎባላይዜሽን፣ ፈጠራ እና ዘላቂነት፡ የስትራቴጂክ አስተዳደር ተግዳሮቶች
 Today, everything has changed. Globalization, the integrated

internationalization of markets and corporations, has changed the

way modern corporations do business. ግሎባላይዜሽን፣ የገበያ እና
ኮርፖሬሽኖች የተቀናጀ አለማቀፋዊ አሰራር፣ የዘመናዊ ኮርፖሬሽኖች የንግድ
እንቅስቃሴን ለውጦታል።
 Strategic management is becoming an increasingly important way

to keep track of international developments and position a company

for long-term competitive advantage የስትራቴጂክ አስተዳደር ዓለም
አቀፍ እድገቶችን ለመከታተል እና ኩባንያን ለረጅም ጊዜ ተወዳዳሪ ጥቅም

5
ለማስያዝ በጣም አስፈላጊው መንገድ እየሆነ ነው።
 Con’t…

 Innovation is meant to describe new products, services, methods,

and organizational approaches that allow the business to achieve

extraordinary returns ፈጠራ አዳዲስ ምርቶችን፣ አገልግሎቶችን፣
ዘዴዎችን እና ድርጅታዊ አቀራረቦችን ለመግለጽ ሲሆን ይህም ንግዱ
ያልተለመደ ትርፍ እንዲያገኝ ያስችለዋል።
 Innovation is the machine that generates business opportunities in

the market; however, it is the implementation of potential

innovations that truly drives businesses to be remarkable. ፈጠራ
በገበያ ውስጥ የንግድ እድሎችን የሚያመነጭ ማሽን ነው; ቢሆንም፣ የንግድ
ሥራዎችን ወደ አስደናቂነት እንዲሸጋገር የሚያደርገው እምቅ ፈጠራዎች
ትግበራ ነው።
6
 Con’t…

 Sustainability refers to the use of business practices to manage

the triple bottom line ዘላቂነት የሶስትዮሽ የታችኛውን መስመር ለማስተዳደር የንግድ ልምዶችን
መጠቀምን ያመለክታል

 That triple bottom line involves

1. the management of traditional profit/loss;

2. the management of the company’s social responsibility; and

3. the management of its environmental responsibility

 The company that pursues a sustainable approach to business

has a responsibility to its employees, its customers, and the

community in which it operates ለንግድ ስራ ቀጣይነት ያለው አካሄድ የሚከተል ኩባንያ
ለሰራተኞቹ፣ ለደንበኞቹ እና ለሚሰራበት ማህበረሰብ ሀላፊነት አለበት።
7
1.3 Theories of Organizational Adaptation
Globalization,

innovation, and

sustainability present real challenges to the strategic

management of businesses.
How can any one company keep track of all the changing

technological, economic, political–legal, and socio-cultural

trends around the world in order to make the necessary
adjustments? This is not an easy task.
Various theories have been proposed to account for how

8 organizations obtain fit with their environment.

A. The theory of population ecology

 The theory of population ecology suggests that once an organization is

successfully established in a particular environmental niche, it is

unable to adapt to changing conditions. Inertia prevents the
organization from changing in any significant manner. የስነ-ህዝብ ሥነ-ምህዳር
ፅንሰ-ሀሳብ እንደሚያሳየው አንድ ድርጅት በተሳካ ሁኔታ በአንድ የተወሰነ የአካባቢ ጥበቃ ውስጥ ከተመሠረተ ከተለዋዋጭ ሁኔታዎች
ጋር መላመድ አይችልም. ድርጅቱ በማንኛውም ጉልህ መንገድ እንዳይለወጥ ይከላከላል።

 The company is thus replaced (is bought out or goes bankrupt)

by other organizations more suited to the new environment. ስለዚህ

ኩባንያው ለአዲሱ አካባቢ ይበልጥ ተስማሚ በሆኑ ሌሎች ድርጅቶች ተተክቷል (ተገዛ ወይም ይከሰረ)።

 Although it is a popular theory in sociology, research fails to support

the arguments of population ecology. ምንም እንኳን በሶሺዮሎጂ ውስጥ ታዋቂ ጽንሰ-ሀሳብ
ቢሆንም, ምርምር የስነ-ህዝብ ሥነ-ምህዳርን ክርክሮች መደገፍ አልቻለም.
9
B. Institution theory
 Institution theory, in contrast, proposes that organizations can

and do adapt to changing conditions by imitating other

successful organizations.
 Many examples can be found of companies that have adapted

to changing circumstances by imitating an admired firm’s

strategies and management techniques.
 The theory does not, however, explain how or by whom

successful new strategies are developed in the first place.

10
 C. The strategic choice perspective
 The strategic choice perspective goes a significant step further
by proposing that not only do organizations adapt to a
changing environment, but they also have the opportunity and
power to reshape their environment. የስትራቴጂካዊ ምርጫ እይታ ድርጅቶች ከተለዋዋጭ
አካባቢ ጋር መላመድ ብቻ ሳይሆን አካባቢያቸውን የመቅረጽ እድል እና ሃይል እንዲኖራቸው ሀሳብ በማቅረብ ትልቅ እርምጃ
ይሄዳል።

 This perspective is supported by research indicating that the

decisions of a firm’s management have at least as great an
impact on firm performance as overall industry factors. ይህ አተያይ
የአንድ ድርጅት አስተዳደር ውሳኔዎች እንደ አጠቃላይ የኢንደስትሪ ሁኔታዎች ቢያንስ በድርጅታዊ አፈጻጸም ላይ ትልቅ ተጽእኖ
እንዳላቸው በሚያሳይ በጥናት የተደገፈ ነው።

 Because of its emphasis on managers making rational strategic

decisions, the strategic choice perspective is the dominant one
taken in strategic management ምክኒያታዊ ስልታዊ ውሳኔዎችን በሚያደርጉ አስተዳዳሪዎች ላይ
11 አፅንዖት ስላለው፣ የስትራቴጂክ ምርጫ እይታ በስትራቴጂክ አስተዳደር ውስጥ ዋነኛው ነው ።
 D. Organizational learning theory
 Organizational learning theory, which says that an
organization adjusts defensively to a changing environment and
uses knowledge offensively to improve the fit between itself and
its environment. ድርጅታዊ የመማሪያ ቲዎሪ፣ አንድ ድርጅት የመከላከያን ሁኔታ ከተለወጠ አካባቢ ጋር
በማስተካከል እና ዕውቀትን በአጥቂነት በመጠቀም በራሱ እና በአካባቢው መካከል ያለውን መጣጣምን ያሻሽላል ይላል።

 This perspective expands the strategic choice perspective to

include people at all levels becoming involved in providing

input into strategic decisions ይህ አተያይ የስትራቴጂክ ምርጫ እይታን ያሰፋዋል በየደረጃው ያሉ
ሰዎችን በስትራቴጂካዊ ውሳኔዎች ላይ ግብአት በማቅረብ ላይ እንዲሳተፉ ያደርጋል

12
 1.4 Creating a Learning Organization
 Organizational learning is a critical component of competitiveness in a

dynamic environment. It is particularly important to innovation and new

product Development. ድርጅታዊ ትምህርት በተለዋዋጭ አካባቢ ውስጥ የውድድር
ወሳኝ አካል ነው። በተለይ ለፈጠራ እና ለአዲስ ምርት ልማት አስፈላጊ ነው።

 Learning organizations are skilled at four main activities:

1. Solving problems systematically

2. Experimenting with new approaches

3. Learning from their own experiences and past history as well as

from the experiences of others

4. Transferring knowledge quickly and efficiently throughout the

13
organization.
 1.5 Basic Model of Strategic Management
Strategic management consists of four basic elements:

1. Environmental scanning

2. Strategy formulation

3. Strategy implementation

4. Evaluation and control.

14
 1. Environmental Scanning
 Environmental scanning is the monitoring, evaluating, and

disseminating of information from the external and internal

environments to key people within the corporation. የአካባቢ ቅኝት ከውጫዊ
እና ውስጣዊ አከባቢዎች በኮርፖሬሽኑ ውስጥ ላሉ ቁልፍ ሰዎች መረጃን መከታተል ፣ መገምገም እና ማሰራጨት ነው።

 Its purpose is to identify strategic factors—those external and

internal elements that will assist in the analysis of the strategic

decisions of the corporation.

-SWOT & PESTE analysis

15
 2. Strategy formulation
 Strategy formulation is the process of investigation, analysis, and

decision making that provides the company with the criteria for
attaining a competitive advantage. የስትራቴጂ ቀረጻ ለኩባንያው ተወዳዳሪ ጥቅም ለማግኘት
መመዘኛዎችን የሚያቀርብ የምርመራ፣ የመተንተን እና የውሳኔ አሰጣጥ ሂደት ነው።

 It includes defining the competitive advantages of the business,

identifying weaknesses that are impacting the company’s ability to

grow, crafting the corporate mission, specifying achievable
objectives, and setting policy guidelines.

16
 3. Strategy implementation

 Strategy implementation is a process by which strategies and

policies are put into action through the development of programs,

budgets, and procedures. የስትራቴጂ ትግበራ ስልቶች እና ፖሊሲዎች
ፕሮግራሞችን ፣ በጀት እና ሂደቶችን በማዘጋጀት ወደ ተግባር የሚገቡበት
ሂደት ነው።
 This process might involve changes within the overall culture,

structure, and/or management system of the entire organization.

17
 4. Evaluation and Control
 Evaluation and control is a process in which corporate activities and

performance results are monitored so that actual performance can

be compared with desired performance.
ግምገማና ቁጥጥር የኮርፖሬት እንቅስቃሴና የአፈጻጸም ውጤት ክትትል የሚደረግበትና ትክክለኛ አፈጻጸም ከሚፈለገው አፈጻጸም ጋር
የሚወዳደርበት ሂደት ነው።

 Managers at all levels use the resulting information to take

corrective action and resolve problems.

 Although evaluation and control is the final major element of

strategic management, it can also pinpoint weaknesses in previously

implemented strategic plans and thus stimulates the entire process

18 to begin again.
 1.6 Initiation of Strategy: Triggering Events

 A triggering event is something that acts as a stimulus for a

change in strategy. Some possible triggering events are: ቀስቅሴ ክስተት

ለስልት ለውጥ እንደ ማነቃቂያ ሆኖ የሚሰራ ነገር ነው።

 New CEO: By asking a series of embarrassing questions, a new

CEO cuts through the veil of complacency and forces people to

question the very reason for the corporation’s existence.
 External intervention: A firm’s bank suddenly refuses to approve

a new loan or suddenly demands payment in full on an old one. A

key customer complains about a serious product defect የውጭ
ጣልቃገብነት፡ የአንድ ድርጅት ባንክ በድንገት አዲስ ብድርን ለመቀበል አሻፈረኝ አለ ወይም በድንገት አሮጌውን ሙሉ ክፍያ ይጠይቃል።

19
 Con’t…

 Threat of a change in ownership: Another firm may

initiate a takeover by buying a company’s common stock.

 Performance gap: A performance gap exists when

performance does not meet expectations. Sales and profits

either are no longer increasing or may even be falling.
 Strategic inflection point: is what happens to a business

when a major change takes place due to the introduction

of new technologies, a different regulatory environment, a
change in customers’ values, or a change in what
20 customers prefer.
 1.7 Strategic Decision Making
 Strategic decisions deal with the long-term future of an entire

organization and have three characteristics:

1. Rare: Strategic decisions are unusual and typically have no

precedent to follow.

2. Consequential: Strategic decisions commit substantial

resources and demand a great deal of commitment from
people at all levels.

3. Directive: Strategic decisions set precedents for lesser

decisions and future actions throughout an organization
21
 Con’t…

According to Henry Mintzberg, the three most typical

approaches, or modes, of strategic decision making are

entrepreneurial, adaptive, and planning (a fourth mode,
logical incrementalism, was added later by Quinn):

እንደ ሄንሪ ሚንትዝበርግ፣ ሦስቱ በጣም የተለመዱ የስትራቴጂያዊ ውሳኔ አቀራረቦች ወይም
ሁነታዎች ሥራ ፈጣሪ፣ መላመድ እና ማቀድ ናቸው (አራተኛው ሁነታ፣ ምክንያታዊ ጭማሪ፣ በኋላ
በኩዊን ተጨምሯል)

22
 A. Entrepreneurial mode

 Strategy is made by one powerful individual. The focus is on

opportunities; problems are secondary.

 Strategy is guided by the founder’s own vision of direction and

is exemplified by large, bold decisions.

 The dominant goal is growth of the corporation. E.g
Amazon.com,

23
 B. Adaptive mode

This decision-making mode is characterized by reactive

solutions to existing problems, rather than a proactive

search for new opportunities. Much bargaining goes on
concerning the priority of objectives.
Strategy is fragmented and is developed to move a

corporation forward incrementally.

This mode is typical of most universities, many large

hospitals, a large number of governmental agencies, and a

24
surprising number of large corporations
 C. Planning mode

This decision-making mode involves the

systematic gathering of appropriate information
for situation analysis, the generation of feasible
alternative strategies, and the rational selection of
the most appropriate strategy.
 It includes both the proactive search for new

opportunities and the reactive solution of existing

25
problems.
 D. Logical incrementalism:

 In this mode, top management has a reasonably clear idea of the

corporation’s mission and objectives, but, in its development of

strategies, it chooses to use “an interactive process in which the
organization probes the future, experiments, and learns from a series of
partial (incremental) commitments rather than through global
formulations of total strategies.”
 Thus, although the mission and objectives are set, the strategy is allowed

to emerge out of debate, discussion, and experimentation.

 This approach appears to be useful when the environment is changing

rapidly and when it is important to build consensus and develop needed

resources before committing an entire corporation to a specific strategy
26
Strategic Decision-Making Process: Aid to Better Decisions

There are eight steps strategic decision-making process to

improve the making of strategic decisions

1. Evaluate current performance results in terms of

(a) return on investment, profitability, and so forth, and

(b) the current mission, objectives, strategies, and policies.

2. Review corporate governance—that is, the performance of

the firm’s board of directors and top management.

3. Scan and assess the external environment to determine the

27 strategic factors that pose opportunities and threats
 …

Scan and assess the internal corporate environment to

Con’t

4.
determine the strategic factors that are strengths
(especially core competencies) and weaknesses.
5. Analyze strategic factors to
(a) pinpoint problem areas and
(b) review and revise the corporate mission and
objectives, as necessary.
6. Generate, evaluate, and select the best alternative strategies
in light of the analysis conducted in the previous step.
7. Implement selected strategies via programs, budgets, and
procedures.
8. Evaluate implemented strategies via feedback systems, and
the control of activities to ensure their minimum deviation
28
from plans.
 Thank you
Questions and Comments

29