STRATEGIC MANAGEMENT IV

2023

CHAPTER 1
STRATEGIC MANAGEMENT PROCESS

PRESENTED BY: DR M MAVHUNGU

Prepared by Dr M Mavhungu 2023 1
 Model Of The Strategic Management Process

Prepared by D.J. Louw 2022 2

 Specific Outcomes

After studying this chapter, you should be able to do the following:

• UNDERSTAND THE DEFINITION AND EXPLANATION OF STRATEGIC MANAGEMENT.

• UNDERSTAND THE VUCA WORLD WE LIVE IN.
• IDENTIFY THE PEOPLE INVOLVED IN STRATEGIC MANAGEMENT AND EXPLAIN WHAT STRATEGY
PLANNING CHAMPIONS ARE.
• DIFFERENTIATE BETWEEN QUALITATIVE AND QUANTITATIVE DECISIONS.
• UNDERSTAND THE STRATEGIC MANAGEMENT PROCESS AS WELL AS STRATEGIC VISUALISATION.
• RECOGNISE THE BENEFITS OF STRATEGIC MANAGEMENT.
• RECOGNISE THE RISKS OF STRATEGIC MANAGEMENT.
• UNDERSTAND ALL THE STRATEGIC ISSUES AND CONCEPTS LEADING US INTO THE FUTURE.
• PERCEIVE HOW STRATEGIC MANAGEMENT COULD BENEFIT NOT-FOR-PROFIT AND GLOBAL
ORGANISATIONS. 3

• UNDERSTAND AND DISCUSS THE SHOPRITE CHECKERS CASE AS THE COHESION CASE OF THE
Prepared by Dr M Mavhungu
BOOK. 2023
 1.1 Introduction
• Ever-changing environment we live in

• Where competition is becoming fiercer by the day

• Performance is non-negotiable in both financial and social environmental

terms,

• Organisations have to plan and prepare themselves for a volatile and

uncertain future where only the best will survive.

• Managers should realise that they can influence the competitive landscape.

• Organisations work in a VUCA world:

4

• Volatile, Uncertainty, Complex and Ambiguous

Prepared by Dr M Mavhungu
2023
Four transformations that have influenced business models and work of
strategists

• Business will be global

• Speed will be critical

• Innovation as a new source of competitive advantage.

• Expansion of available strategic space

Prepared by Dr M Mavhungu
2023
 1.2 What is strategic management?
 Strategic management can be defined as the process whereby all the
organisational functions and resources are integrated and
coordinated to implement formulated strategies, which are aligned with
the environment in order to achieve the long-term goals of the
organisation and therefore gain a competitive advantage by adding
value for the stakeholders.

 A strategy can therefore be defined as an effort or deliberate action

that an organisation implements to outperform its rivals.

Prepared by Dr M Mavhungu
2023
What is strategic management?

Prepared by Dr M Mavhungu
2023
 Table 1.1 Modern view of strategy
Traditional view Emerging view

View Strategy as fit with resources Strategy as stretch and leverage

Industry space Strategy as positioning in existing industry space Strategy as creating new industry space

Responsibility Strategy as a top management activity Strategy as a total and continuous organisational
process

Exercise Strategy as an analytical exercise Strategy as an analytical and organisational exercise

Direction Strategy as extrapolating from the past Strategy as creating the future

Prepared by Dr M Mavhungu
2023
 Table 1.2 The missing dimension of strategy
The prevailing approach: strategy as a set solution What is missing: strategy as a dynamic process

A long-term sustainable competitive advantage Goal Creation of value

The CEO and strategy consultants Leadership CEO as chief strategist; the job cannot be outsourced

Unchanging plan that derives from an analytical, left- Form Organic process that is adaptive, holistic and open-
brain exercise ended

Intense period of formulation followed by prolonged Time frame Everyday, continuous, unending
period of implementation

Defending an established strategy through time Ongoing activity Fostering competitive advantages and developing the
company through time

Prepared by Dr M Mavhungu
2023
 Strategy, strategic management and strategic planning
It is important to distinguish between these three topics
 Where is the business trying to get to in the long term – what is the direction?

 Which markets should a business compete in and what kind of activities are involved in
such markets?

 How can the business perform better than the competition in those markets – what is the
advantage?

 What resources (skills, assets, finance, relationships, technical competence, facilities) are
required in order to be able to compete – what resource requirements are there?

 What external, environmental factors affect the business’s ability to compete?

10
 What are the values and expectations of those who have power in and around the
Prepared by Dr M Mavhungu
business? 2023
 Characteristics of strategies
 It takes account of opportunities and threats in the market and
strengths and weaknesses in the organisation.

 It maps out the fundamental and longer-term direction of fields of

activity and ranges of services.

 It can relate to various units (whole organisation, business segments,

functions, products).

 It must be revised if changes are made to the basic external or internal

framework.

 It also means deciding what should not be done 11

Prepared by Dr M Mavhungu
2023
 The people involved in the strategic management process
 Strategic planning champions: refers to strategy practitioners who
“introduce, promote and guide the strategic planning process in an
organisation

 Strategic management is not an exact science, nor is it an easy three-

step process. It involves both quantitative and qualitative assessment
and analysis.

12

Prepared by Dr M Mavhungu
2023
 1.3 The strategic management process
 Strategic visualization
 Organisational direction and environmental analysis (Chapter 2, 4 & 5)
 Strategy formulation (Chapter 6, 7, 8 & 9)
 Strategy implementation (Chapter 11 & 12)
 Contemporary applications of strategic management (Chapter 14)

13

Prepared by Dr M Mavhungu
2023
 1.4 Benefits of strategic management
 Higher profitability
 Higher productivity
 Improved communication across the different functions in the
organisation
 Empowerment
 Discipline and a sense of responsibility to the management of the
organisation
 More effective time management
 More effective resource management 14

 Change management Prepared by Dr M Mavhungu

2023
 1.5 Risks of strategic management
 Culture of change
 Success groove

15

Prepared by Dr M Mavhungu
2023
1.6 Strategic issues and concepts leading us into the future
Figure 1.3 The hierarchy of strategy implementation

16

Prepared by Dr M Mavhungu
2023
Ethics and strategy
 Following many corporate scandals, such as Steinhoff,
 Strategists now function and operate in a much more ethically
sensitive environment and
 Thus cannot ignore or neglect the link between ethics and strategy.
 However, there still seems to be a growing trend of unethical and
fraudulent behaviour in organisations.

17

Prepared by Dr M Mavhungu
2023
Stakeholder management
 Stakeholders play an important part in the creation of organisational
wealth.
List of stakeholders

18

Prepared by Dr M Mavhungu
2023
Stakeholder management
 Those individuals or groups that depend on an organisation to fulfil their
own goals and on whom, in turn, the organisation depends.
There are four types of external stakeholder:
 Economic (e.g. suppliers, shareholders, banks)
 Social/political (e.g. government agencies)
 Technological (e.g. standards agencies)
 Community (e.g. local residents)

19

Prepared by Dr M Mavhungu
2023
 Innovation economy and knowledge management
 Knowledge management (KM) is often defined in a very broad sense
because there is no universal definition yet.
 Knowledge can be tacit or explicit. Tacit knowledge is the knowledge that
cannot be explained properly, even by an expert. More effective time
management
 Explicit knowledge, on the other hand, is relatively easy to communicate and
resides in formulae, textbooks or technical documents.
 Innovation management (IM) is a field of discipline that deals directly with
issues relating to how the innovation process may be managed effectively.
 IM has become an integral function of the organisation, because
technological innovations are regarded as the mainstay of today’s business.
20
 The necessity to constantly improve innovation strategy is one of the major
difficulties facing organisations that Prepared
are involved
2023 in KM activities.
by Dr M Mavhungu
 Innovation economy and knowledge management
 Knowledge innovation (KI) is defined as “the creation, evolution,
exchange and application of new ideas into marketable goods and
services, leading to the success of an enterprise, the vitality of a nation’s
economy and the advancement of society” (quoted in Goh, 2005: 7).

21

Prepared by Dr M Mavhungu
2023
 Innovation economy and knowledge management
 Corporate entrepreneurship
 Intangibles such as knowledge, innovation and entrepreneurial leadership
are assets that help companies to gain a competitive advantage and
ultimately to keep it.
 Entrepreneurial leadership activities are needed to succeed in the
knowledge economy and companies should make deliberate efforts to
develop and stimulate their entrepreneurial activities as they become more
established.
 Entrepreneurial activities and entrepreneurship in companies are known
as “corporate entrepreneurship”.

22

Prepared by Dr M Mavhungu
2023
 Innovation economy and knowledge management
 The three dimensions of an entrepreneurial orientation
 Innovativeness, the first dimension, refers to the ability to generate ideas that
will result in the production of new products, services or technologies.
 Risk taking, willingness to make resources available to pursue opportunities that
may fail, but at the same time taking precautions
 Proactiveness, reflects a managerial orientation of initiative, competitive
aggressiveness and boldness in pursuing opportunities.

23

Prepared by Dr M Mavhungu
2023
 Innovation economy and knowledge management
 Change management
 Knowledge management, innovation management, knowledge innovation
and corporate entrepreneurship will inevitably lead to change. “He who
rejects change is the architect of decay.
 Strategic leadership
 Leadership’s task is strategic in the sense that it has to move the company
towards the future.
 It therefore involves much more than just the “softer” tasks of mobilising people in
teams. Instead it includes the full circle of vision, mission and profile, to strategy,
to action, and to results.
 Strategic leadership is therefore the process of influencing an organisation
24
in its
pursuit of the company’s vision, mission and goals.
Prepared by Dr M Mavhungu
2023
 Table 1.4 Themes of change
Five themes of change Important ingredients

Theme 1: There must be an atmosphere of open communication, participation and cross-training.

The role of leadership in change

There must be alignment of executive and departmental levels. Executives control strategy and resources and middle management coordinates deployment of resources to accomplish strategic

goals.

A vision of change must be embraced at all levels.

Communication throughout is critical for stakeholder support.

Change progress should be tracked and publicised.

Theme 2: A project management approach is the most successful approach when implementing change.

Project management
Clear definition of success measures is important.

Provision should be made for the contingency of having to recover from barriers hindering the project.

Tactics to revitalise stalled projects should be defined.

The emphasis in planning should be on keeping the change manageable.

The implementation plan should provide for the replacement of key players.

Theme 3: Measurement is key to success.

Processes
Use process mapping as a mechanism to chart and understand the complex business processes involved. The systematic nature of mapping methodology keeps people focused and acts as a

meeting point.

Be wary of “I have arrived” syndrome; rather keep in mind that change is continuous and is never over.

Theme 4: Remember that people are the essential contributors and managing change within the culture is important.

People
Actual implementation should be carried out from the bottom up.

Process mapping provides a comprehensive blueprint that identifies opportunities for improvement.

People should be trained, facilitated and nurtured.

The challengers (unbiased team or individual who pushes the organisation and line functions to find new innovative processes) should be able to implement the changes without barriers from

functional managers.

Theme 5: Organisational learning is key in managing change successfully.

Learning
25
Some organisations use external consultants who provide industry expertise, skilled resources and change management knowledge and experience. After completion of change, organisations

capture the learning that took place.

Successful change happens in organisations that have a propensity to learn from best practices and customer needs.
Prepared by Dr M Mavhungu
2023 They also learn from employees’ individual and collective reflections on past experiences.
 QUESTIONS

Prepared by D.J. Louw 2022 26