Dr Zack Awino, PhD.*University of NairobiBachelor of Commerce

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*THE NATURE AND VALUE OF STRATEGIC MANAGEMENTStrategic management is defined as theset of decisions and actions that result in theformulation and implementation of plansdesigned to achieve a companys objectives.It comprises nine critical tasks:

Formulate the companys mission, including broad statements about its purpose, philosophy, and goals.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Conduct an analysis that reflects th companys internal conditions and capabilities.Asses the companys external environment, including both the competitive and the general contextual factors.Analyze the companys options by matching its resources with external environment.Identify the most desirable options by evaluating each option in light of the companys mission.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Select a set of long term objectives and grand strategies that will achieve the most desirable options.Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies.Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward systems is emphasizedEvaluate the success of the strategic process as an input for future decision making.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*As these nine tasks indicate, strategic management involves the planning, directing, organizing, and controlling of a company's strategy related decisions and actions. By strategy, managers mean their large-scale, future-oriented plans for interacting with the competitive environment to achieve company objectives

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The strategy MakersThe ideal strategic management team includes decision makers from all three company levels

The corporateBusinessFunctional

The Chief executive office (CEO)The product managers (heads of various businesses)

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The heads of functional areas

FinanceMarketingProcurementProductionHuman resource ETC.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*In addition the team obtains input from theoperatives or lower-level managers and supervisors.

Planning departments, often headed by a corporate vice president for planning, in large organizations

Medium sized firms often employ at least one full-time staff member to spearhead strategic data- collection efforts.

In small firms or less progressive larger firms, strategic planning is often spearheaded by an officer or a group of officers designated as a planning committee.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Responsibilities of top management in the strategic planning processShoulders broad responsibilities for all the major elements of strategic planning and management. i.e goals and objectivesIt develops the major portions of the strategic plan and reviews, and it evaluates and counsels on all other portions.They develop environmental analysis and forecastingThey establish business objectivesThey develop business plans prepared by staff groups

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Responsibilities of the chief executive officer (CEO)Plays a dominant role in the role in the strategic planning process

Giving long-term direction to the firm

The CEO is ultimately responsible for the firms success and the success of its strategy

For them to achieve this, they must be strong- willed, company-oriented individuals with self-esteem.They often resist delegating authority to formulate or approve strategic decisions

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The CEO is highly involved in the implementation process together with the managers, they work as a team to drive the process forward.

The CEO provides the required leadership to influence the employees towards the vision and the mission of the organisation

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Dimensions of strategic decisionsStrategic Issues require Top Management DecisionsStrategic Issues require large amounts of the Firms ResourcesStrategic issues often affect the firms long Term ProsperityStrategic Issues are future orientedStrategic Issues usually have multi-functional or multi business consequencesStrategic Issues require considering the firms External Environment

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Benefits of Strategic Management Allow synergy Aid evaluation Establish priorities Reduce uncertainty Minimize conflicts Aid in the design of jobsMeasure of managerial performance

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Help stakeholders understand their role in an organizations future

Facilitate decision making by managers

Strategy acts like a Radar of a ship-without it an organization would drift aimlessly toward some unknown destination Gaps and overlaps in activities among individuals and groups are reduced as participation in strategy formulation clarifies differences in roles.Resistance to change is reduced

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Risks of strategic managementThe time that managers spend on the strategic management process may have a negative impact on operational responsibilitiesManagers must be trained to minimize that impact by scheduling their duties to allow the necessary time for strategic activitiesIf the formulators of strategy are not intimately involved in its implementation, then the plan may not work.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Strategic managers must be trained to anticipate and respond to the disappointment of participating subordinates over unattained goals and objectives.

Sensitizing managers to these possible negative consequences and preparing them with effective means of minimizing such consequences will greatly enhance the potential of strategic planning.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*STRATEGY FORMULATION INTERNAL ANALYSIS

Now we move from looking outside the organization to looking inside

The internal analysis should lead to a clear assessment of the organizations resources such as:-

Financial capital

Technical expertise

Skilled employees

Experienced managers

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Capabilities in performing the different functional activities (such as marketing, manufacturing, information systems, human resources management etc.)

Any activities the organization does well than competitors or any unique resources that it has are called strengths.

Weaknesses are activities the organization does not do well or resources it needs but des not possess

Not all organizations have adequate resources however big or successful

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The internal analysis provides important information about an organizations specific resources and capabilities.

If any of the organizational capabilities or resources are exceptional or unique, they are called the organization's core competencies

Core competencies are the:Organizations major values creating skills

Capabilities

Resources

That determine its competitive weapons

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The combined external and internal analyses are called the SWOT analysis because its an analysis of the organizations strengths, weaknesses, opportunities, and threats

Based on SWOT analysis, managers can identify a strategic niche that the organization might exploit.

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

Identify the Organizations Opportunities

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*SWOT Analysis SWOT is an acronym for the internal strengths and weaknesses of a firm and the environmental opportunities and Threats facing that firm.

It is a tool widely used by managers to create a quick overview of a companys strategic situation

It is based on assumption that for a good organizational strategy to flourish, there must be: a fit between firms internal environment (strengths and weaknesses)

And a firms external environment (opportunities and threats)

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*It advocates for a systems approach tomanagement

Where an organization relates closely with its environment Input-Output Model

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*An open system is desirable since the organization is linked to both the internal and external environment

The fit or linkage enables the managers to maximize on a firms strengths and opportunities and minimizes on its weaknesses and threats

Accurately applied, this simple assumption has powerful implications for the design of a successful strategy

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*The fundamental focus on SWOT analysis Opportunity

An opportunity is a major favourable situation in a firms environment

Market segment

Changes in competitive or regulatory circumstances

Technological changes

Improved buyer or supplier relationships

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Threats

This is a major unfavourable situation in a firms environment

Threats are key impediments to the firms current or desired position.

Entrance of new competitors

Slow market growth

Increased bargaining power of key buyers or suppliers

Technological changes

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*New or revised regulations could representthreats to a firms success

Understanding the key opportunities andthreats facing a firm helps its mangersidentifying realistic options from which tochoose an appropriate strategy and clarifiesthe most effective niche for the firm

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Strengths A strength is a source of advantage relative to competitors a firms serves or expected to serve

It is a distinctive competence when it gives the firm a comparative advantage in the market place

Strengths arise from the resources and competencies available to the firm

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Weaknesses

A weakness is limitation or deficiency in one or more resource or competencies relative to competitors that impedes a firms effective performance

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*FORMULATING LONG-TERM Long-term objectives represent the results expected from pursuing certain strategies

Strategies represent the actions to be taken to accomplish long-term objectives

The time frame for objectives and strategies should be consistent, usually from two to five years

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*THE NATURE OF LONG-TERM OBJECTIVES Objectives should be SMART Specific Measurable Achievable Realistic Time bound Understandable Challenging

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Hierarchical Obtainable Confinement among organizational units Objectives are commonly stated in terms such as: growth in assets, growth in sales, profitability, market share, degree and nature of diversification, degree and nature of vertical integration, earning per share, and social responsibility

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*NOT MANAGING BY OBJECTIVES An unknown education once said, if you think education is expensive, try ignorance

The idea behind this saying also applies to establishing objectives

Strategies should always avoid the following alternative ways to not managing by objectives

MBE (Managing by Extrapolation)

MBC (Managing by Crisis)

MBS ( Managing by subjectives)

MBH (Managing by Hope)

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.* Managing by Extrapolation (MBE)Adheres to the principle If it aint broke, dont fix it

The idea is to keep on doing the same things in the same ways because things are going well

Managing by Crisis (MBC)

Based on the belief that the true test of a manager is the ability to solve problems

This is reacting rather than acting and of letting events dictate the whats and whens of management decisions

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.* Managing by Subjectives Build on the idea that there is no general planfor which way to go and what to do;

Just do the best you can to accomplish whatyou think should be done

In short do your own thing, the best way youknow how

Sometimes referred to as the mystery approach to decision making

Because subordinates are left to figure out what is happening and why!

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Managing by Hope (MBH)Based on the fact that the future is laden with great uncertainty, and if we try and not succeed,

Then we hope our second attempt we will succeed

Decisions are predicted on the hope that they will work and that good times are just around the corner, especially if luck and good fortune are on our side

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*7 SUCCESS FACTORS TO ACHIEVE LONG-TERM OBJECTIVESThe factors below must be keyed into the longterm objectives:

Profitability

Productivity

Competitive advantage

Employee development

Technological leadership

Corporate social responsibility

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*GRAND STRATEGIES Also called master or business strategies

Provide basic direction for strategic actions

They are the basis of coordinated and sustainable efforts

Directed toward achieving long-term business objectives

Grand strategies indicate the time period over which long-range objectives are to be achieved

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Thus a grand strategy can be defined as a comprehensive general approach that guides a firms major actions

The 15 principal grand strategies are as follows:-

(1). Concentrated growth

(2). Market development

(3). Product Development

(4). Innovation

(5). Horizontal integration

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*(6). Vertical integration

(7). Concentric Diversification

(8). Conglomerate diversification

(9). Turnaround

(10). Divestiture

(11).Liquidation

(12). Bankruptcy

(13). Joint ventures

(14). Strategic Alliances

(15). Consortia

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*(1). Concentrated Growth This is a strategy that directs a firms resources to the profitable growth of a single market, with a single dominant technology

The firm thoroughly develops and exploits its expertise in a delimited competitive area

It leads to enhanced performance

The ability to assess market needs,

knowledge of buyer behaviour,

customer price sensitivity,

and effectiveness of promotion are characteristics of a concentrated growth strategy

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

IMPLEMENTING STRATEGIC DECISIONS

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Critical considerationsNature of strategy implementation taskBuilding a capable organizationBuilding core competenceMatching strategy to structure

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*a) NATURE OF THE STRATEGY IMPLEMENTATION TASK Implementing strategy is tougher & more time-consuming than crafting strategy Action-oriented, operations-driven people & systems management activity involving: Leading Motivating Organization change Engineering business processes Creating strong fits between strategy & how organization does things

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Tougher & more time-consuming than strategy-making due to:Variety of managerial activities Many different ways to tackle each activity People management skills required Perseverance & wave-making it takes to launch a variety of initiatives Number of bedeviling issues to be worked through

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Implementing a NEW STRATEGY takes adept managerial leadership to Overcome pockets of doubt & disagreement Build consensus for how to proceed Secure commitment & cooperation of concerned parties Get all implementation pieces in placeResistance to change to overcome

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*CHARACTERISTICS OF STRATEGY IMPLEMENTATION PROCESS

Every manager has an active role No 10-step checklists & few concrete guidelines Its the least charted, most open-ended part of strategy managementBest evidence of dos & donts comes from personal experiences, anecdotal reports, & case studies

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Each implementation situation occurs in a different context, affected by differing factorsBusiness practices & competitive situations Work environments & cultures Policies Compensation incentives Mixes of personalities & firm historiesApproach to implementation should be customized People implement strategies -- Not companies!

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*WHAT IS THE GOAL OF STRATEGY IMPLEMENTATION?

Unite total organization behind strategy See that activities are done in a manner that tightly matches requirements for first-rate strategy execution Generate such a determined commitment at all organizational levels that an enthusiastic crusade emerges to carry out strategy Create a series of strategy-supportive fits

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*WHO ARE THE STRATEGY IMPLEMENTERS?

Implementing strategy is a job for whole management team Persons most responsible for implementation effort Chief Executive Officer Heads of major organizational unitsImplementation involves every organization unit Top management has to orchestrate major implementation initiatives

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*PRINCIPAL TASKS OF STRATEGY IMPLEMENTATIONBuilding a capable organization Allocating ample resources to strategy-critical activities Establishing strategy supportive policies & procedures Instituting best practices & mechanisms for continuous improvementBut they must rely on middle & lower-level managers to get things done

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Installing support systems enabling personnel to carry out their strategic roles successfully Tying rewards & incentives tightly to achievement of key objectives Creating a strategy-supportive corporate culture Exerting strategic leadership

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*WAYS TO LEAD IMPLEMENTATION PROCESSTake active, visible role OR low-key, behind the scenes role Make decisions on basis of consensus OR authoritatively Delegate much OR little Be personally involved in implementation details OR coach others carrying day-to-day burden Proceed swiftly to achieve results OR move deliberately, content with gradual progress over a long time frame

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*FACTORS INFLUENCING THE MANAGER IN LEADING THE IMPLEMENTATION PROCESSHis/her experience & accumulated knowledge about business Whether manager is new to the job or seasoned Managers network of personal relationships Managers own diagnostic, administrative, interpersonal, & problem-solving skills Authority which the manager has been given Leadership style the manager is most comfortable with Managers conclusions about role he/she should play in light of what has to be done Context of organizations situation

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*B) BUILDING A CAPABLE ORGANIZATION

Three key tasks:1. Selecting able people for key positions2. Developing skills, core competencies, & competitive capabilities3. Creating strategy-supportive organization structure

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*SELECTING PEOPLE FOR KEY POSITIONSWhat kind of core management team is needed to carry out strategy Finding the right people to fill each slot Existing management team may be suitable Core executive group may need strengthening Promoting from within Bringing in skilled management talent from outsideImplementation Issues

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Determining mix of backgrounds, experiences, know-how, values, styles of managing, & personalities to Putting together strong management team with right personal chemistry & mix of skills

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*c) BUILDING A CORE COMPETENCEWhen it is difficult to out- strategize rivals with a superior strategy -- Next best avenue to industry leadership is to out- execute them Beat them with superior strategy implementation!

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Building core competencies that rivals cant match is one of the best ways building a competitive advantage.Strategically-relevant core competencies Greater proficiency in product development Better manufacturing know-how Superior cost-cutting skills Better marketing & merchandising skills Capability to provide better after-sale service Ability to respond quickly to changes in customer needs

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Traits Related to Building Core Competencies1. Rarely consist of narrow skill or work efforts of a single department2. Typically emerge from combined efforts of different work groups & departments3. Gaining competitive advantage entails concentrating more effort than rivals on creating or strengthening core competencies4. Bases of competency need to be broad & flexible to react to changes in customers needs

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Creating core competencies is an exercise best orchestrated by senior managers who understand how firms core competence is created and have the clout to enforce necessary networking and cooperation among functional departments!

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*d)MATCHING ORGANIZATION STRUCTURE TO STRATEGYDesign internal organization structure around tasks & activities most criticalto success of a firms strategy Matching structure to strategy requires making strategy-critical activities and organization units the main building blocks in the organizational structure

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Involves: 1. Pinpoint primary activities & key tasks critical to successful strategy execution2. Establish ways to achieve necessary coordination when it doesnt make sense to group all facets of an activity under a single manager3. Determine degree of authority each unit needs to carry out its assignment effectively4. Determine whether non-critical activities can be outsourced more efficiently than performed internally

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Strategy EvaluationMeasuring the outcomeGetting a feedbackIt is the final stage in strategic managementAll strategies are subject to future modification because external and internal factors are constantly changing

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*Three fundamental strategy evaluation activities are:Reviewing external and internal factors that are bases for current strategiesMeasuring performanceTaking corrective actions

Strategy evaluation is needed because success today is no guarantee of success tomorrow.Success always creates new and different problemsComplacent organizations experience demise

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*KEY STRATEGY-EVALUATION QUESTIONS Do you feel that the strategic-management system exists to provide service to you in your day-to-day work? How has it helped you in this respect?

Has the strategic-management system provided the service that you feel was promised at the start of its design and implementation? In which areas has it failed and exceeded, in your opinion?

Do you consider that the strategic-management system has been implemented with due regard to costs and benefits? Are there any areas in which you consider the costs to be excessive

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*4.Do you feel comfortable using the system? Could more attention have been paid to matching the output of the system to your needs and, if so, in what areas?

Is the system flexible enough in your opinion? If not, where should changes be made?

Do you still keep a personal store of information in a notebook or elsewhere? If so, will you share that information with the system? Do you see any benefits in so doing?

Is the strategic-management system still evolving? Can you influence this evolution and, if not, why not?

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

8.Does the system provide timely, relevant, and accurate information? Are there any areas of deficiency?

9.Do you think that the strategic-management system makes too much use of complex procedures and models? Can you suggest areas in which less implicated techniques might be used to advantage?

10.Do you consider that there has been sufficient attention paid to the confidentiality and security of the information in the system? Can you suggest areas for improvement of these aspects of its operation?

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*THE PLANNING PROCESS AUDIT 1. To what extent do you feel top management has been committed to the pursuit of stated corporate strategy?

To what extent do you feel committed to the pursuit of stated corporate strategy?

Has top managements decision making been consistent with stated corporate strategy?

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

Has decision making been more or less centralised than anticipated?

5.Do you feel you have received sufficient resource support (financial and human) to pursue your stated plans?

6.Do everyday, operational plans seem to support the overall corporate strategy?

7.How would you rate the extent and quality of the coordination of plans among functional areas/departments/divisions ?

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*How would you rate the extent and quality of the communication of plans to lower organizational levels?

Does the reward systems (pay, promotions, etc.) seem to be tied to your planning efforts?

Do the written plans seem to adequately represent the actual goals toward which managers seem to be working?

How complex is the present planning process?

12.How formal is the present planning process

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

13.Do you feel you have the types and amounts of external information to fulfill your planning responsibilities?

14.Do you feel you have the right types and amounts of external information to fulfill your planning responsibilities? If not, what other internal information do you feel you need?

15.Would any other training help you do a better job of planning? If yes, what other specific training would help?

16.What are the major problems of the current planning system?

17.How might the planning process be improved upon?

Dr Zack Awino, PhD.

Dr Zack Awino, PhD.*

_____________ END _______________

Dr Zack Awino, PhD.