Msit Strama Report

8/6/2019 Msit Strama Report

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Reporter Reporter

RonelRonel N.N. DadulaDadula

The Decision StageTopics:

CulturalAspects of Strategy Choice

The Politics of Strategy Choice

Governance Issues



The Decision Stage



The Decision Stage

Analysis and intuition provide a basis for

making strategy-formulation decisions. The

matching tec

hniq

ues j

ust disc

ussed revea

l feasible alternative strategies.

Many of these strategies will likely have

been proposed by managers and

employees participating in the strategyanalysis and choice activity.



Quantitative Strategic

Planning Matrix

(QSPM)

Stage 3: Decision Stage



The Quantitative Strategic Planning Matrix (QSPM)

QSPM is the only one analytical technique in theliterature designed to determine the relative attractiveness

of feasible alternative actions other than ranking strategies

to achieve the prioritized list.

The QSPM is a tool that allows the strategist toevaluate alternative strategies objectively , based on

previously identified external and internal critical success

factors

Like other strategy-formulation analytical tools, theQSPM requires good intuitive judgment.



The Quantitative Strategic Planning Matrix (QSPM)

The QSPM comes under the third stage of strategy formulation which is called ³The Decision

Stage´ and also the final stage of this process.

The best thing about QSPM is that it never

insist the strategist to enter the information on

assumptions, it extract the information from Stage 1

The Input Stage and Stage 2 The Matching Stage.



Format of Quantitative Strategic Planning Matrix




Weight

(r elative impor tance

of the factor)




Attractive Score

(AS)




TotalAttractive

Score

(TAS)



Steps to develop QSPM

1. List the firm¶s key external opportunities &threats; list the firm¶s key internal strengthsand weaknesses (EFE Matrix and IFE Matrix). A minimum of 10 exter nal & inter nal c r itical success factor s should be taken.

2. Assign weights to each external and internal critical success factor .

3. Examine the Stage 2 (matching) matrices andidentify alternative strategies that the

organization should consider implementing.




4. Determine the Attractiveness Scores (AS),defined as numerical values that indicate therelative attractiveness of each strategy in agiven set of alternatives. The range for

Attractiveness Scores is 1 = not attractive, 2 =somewhat attractive, 3 = reasonablyattractive, and 4 = highly attractive.

5. Compute the Total Attractiveness Scores. Total Attractiveness Scores are defined as theproduct of multiplying the weights (Step 2) bythe Attractiveness Scores (Step 4) in each row.




6. Compute the Sum Total Attractiveness Score. Add Total Attractiveness Scores in each strategy column of the QSPM.

The Sum Total Att r activeness Scor es r eveal which st r ategy is most attractive in each set of alter natives. Higher scores indicate moreattractive strategies, consider ing all ther elevant exter nal and inter nal factor s that could affect the st r ategic decisions.



Limitations of QSPM

A limitation of the QSPM is that it can be only as

good as the prerequisite information and matching

analyses upon which it is based. Another limitation

is that it requires good judgment in assigning

attractiveness scores.

Also, the sum total attractiveness scores can be

really close such that a final decision is not clear.

Like all analytical tools however, the QSPM shouldnot dictate decisions but rather should be

developed as input into the owner¶s final

decision.



Advantages of QSPM

AQSPM provides a framework to prioritize the

strategies, it can be used for comparing strategies

at any level such as corporate, business and

f unctional.

The other positive feature of QSPM that it integrate

external and internal factors into decision

making process. AQSPM can be developed for

small and large scale profit and non-profitorganizations.



Cultural AspectsCultural Aspectsofof

Strategy ChoiceStrategy Choice



Cultural Aspects of Strategy Choice

All organizations have a culture. Culture includes

the set of shared values, beliefs, attitudes, customs,

norms, personalities, heroes, and heroines that describe

a firm.

Culture is the unique way an organization does

business. It is the human dimension that creates solidarity

and meaning, and it inspires commitment and

productivity in an organization when strategy changes

are made.




It is beneficial to view strategic management from a

cultural perspective because success often rest upon

the degree of support that strategies receive from a

firm¶s culture.

If firm¶s strategies are supported by cultural

products such as values, beliefs, rites etc., then managers

often can implement changes swiftly and easily.

However, if a supportive culture does not exist and is not

cultivated, then strategy changes may be ineffective or even counterproductive.




A firm¶s culture can become antagonistic to new

strategies, and the result of that antagonism may be

confusion and disarray.

Strategies that require fewer cultural changes maybe more attractive because extensive changes can take

considerable time and effort. Whenever two firms merge, it

becomes especially important to evaluate and consider

culture-strategy linkages.




Culture provides an explanation for the difficulties a firm

encounters when it attempts to shift its strategic direction,

as the following statement explains:

N ot only has the ³ r ight´ cor por ate cultur e becomethe essence and foundation of cor por ate excellence, but

success or failur e of needed cor por ate r efor ms hinges on

man-agement¶s sagacity and ability to change the fi r m

d r iving cultur e in time and in tune with r equi r ed changes in

st r ategies.



The PoliticsThe Politicsofof

Strategy ChoiceStrategy Choice




All organizations are political. Unless managed,

political maneuvering consumes valuable time,

subverts organizational objectives, diverts human

energy, and results in the loss of some valuable

employees.

Sometimes political biases and personal

preferences get unduly embedded in strategy

choice decisions. Internal politics affect the choiceof strategies in all organizations.




The hierarchy of command in an organization,

combined with the career aspirations of different

people and the need to allocate scarce

resources, guaranties the formation of coalitions

of individuals who strive to take care of

themselves first and the organization second,

third or fourth.

Coalitions of individuals often form around keystrategy issues that face an enterprise.




Major R esponsibilities of st r ategists.

to guide the development of coalitions

to nurture an overall team concept

to gain the support of key individuals and

groups of individuals




In the absence of objectives analyses, strategy

decisions too often are based on the politics of

the moment. With development of improved

strategy-formation tools, political factors become

less important in making strategic decisions.

In the absence of objectivity, political factors

sometimes dictate strategies, and this is

unfortunate. Managing political relationships isan integral part of building enthusiasm and esprit

de corps in an organization.




Tactics used by politicians for centuries that can

aid strategists:

Equifinality

Satisfying

Generalization

Focus on Higher-Order Issues

Provide Political Access on Important

Issues



Governance IssuesGovernance Issues



Governance Issues

Director ± one of a g r oup of per sons ent r usted with

the overall di r ection of cor por ate

enter pr ise.

Board of Directors ± a g r oup of individuals who ar eelected by the owner ship of a cor por ation

to have oversight and guidance over

management and who look out for

shar eholder s¶ inter est.

The act of over sight and di r ection isr eferr ed to as Governance.



Governance ± the char acter istics of ensur ing that long-ter m st r ategic objectives and plans ar e established

and that the pr oper management st r uctur e is in

place to achieve those objectives, while at the same

time making sur e that the st r uctur e functions tomaintain the cor por ation¶s integ r ity, r eputation, and

r esponsibility to its var ious constituencies.

sour ce: The N ational Association of Cor por ate Di r ector s

Governance Issues



Board of Directors Duties and Responsibilities

Control and oversight over management

Ad

herence to legal prescriptions

Consideration of stakeholders¶ interest

Advancement of stockholders¶ rights

Governance Issues




- C ontrol and oversight over management.

Select the Chief Executive Officer (CEO).

Provide t

heC

EO with

a for u

m. Ensure managerial competency.

Evaluate management¶s performance.

Set management¶s salary levels, including fringe benefits.

Guarantee managerial integrity through continues auditing.

Devise and revise policies to be implemented by mgmt.

Governance Issues




- Adherence to legal prescriptions.

Keep abreast of new laws.

Ens

ure t

he entire organization f

ulfillslega

lprescriptions. Pass bylaws and related resolutions.

Select new directors.

Approve capital budgets.

Authorize borrowing, new stock issues, bonds, and so on.

Governance Issues




- C onsideration of stakeholders¶ interest.

Monitor product quality.

Faci

litate

upward progression in emp

loyee q

uality of worklife.

Review labor policies and practices.

Improve the customer climate.

Keep community relations at the highest level.

maintain good public image.

Governance Issues




- Advancement of stockholders¶ rights.

Preserve stockholders¶ equity.

Gu

ard against equ

ity dilu

tion. Inform stockholders through letters, reports and meetings.

Declare proper dividends.

Guarantee corporate survival.

Governance Issues



Good governance is acknowledged to be essential

for the success of any organization and is now more

important than ever.

Members of boards play a vital role in serving their causes and communities and bring passion and

commitment as well as skills and experience to the

organizations they lead. They provide long term vision and

protect the reputation and values of their organizations.

Governance Issues



Today, boards of directors are composed mostly of

outsiders who are becoming more involved in

organizations¶ strategic management.

The trend in the U.S. for example, is toward much

greater board member accountability with smaller boards,

now averaging 12 members rather than 18 as they did few

years ago

Governance Issues



Principles of Good Governance

³ An effective board will provide good governance and leadership

by:´

Understanding their role Ensuring delivery of organizational purpose

Being effective as individuals and a team

Exercising control

Behaving with integrity and

Being open and accountable.

Governance Issues



Being a member of a board of directors todayrequires much more time , is much more difficult, and

requires much more technical knowledge and financial

commitment than in the past.

Just as directors are beginning to place more

emphasis on staying informed about an organization¶s

health and operations, they are also taking a more active

role in ensuring that publicly issued documents are

accurate representations of a firm¶s status.

Governance Issues



Thank You forThank You forlistening.listening.

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