STRATEGIC PLANNING(MNG3701)

Topic 1 (Explain what strategic management is and how it fits into the contemporary business environment)

Question 1Explain what is meant by the concept strategic management (5)

• A set of managerial decisions and actions that determines the long term performance of an organisation.

• It includes environmental scanning, strategic formulation, strategy implementation, evaluation and control.

• To create sustain competitive advantages and to achieve the organisation objectives.• It is about maximization of all stakeholders’ wealth and not only profit maximization.• It creates new and different opportunities for tomorrow.

Question 2Diagrammatically depict and explain the strategic planning process (10)

Explanation of the strategic planning process

The strategic planning process is a thinking stage.It starts with the strategic direction (vision & mission statements and strategic intent).Internal and external environmental analyses are conducted to identify strengths, weaknesses, opportunities and threats.The long-term goals are formulated and then strategy selection takes place.

Question 4

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Differentiate between the three phases of the strategic management process (10)

3 Step Strategic planning process

1. The strategic planning is a thinking stage. It starts with the vision and mission statements. Internal and external environmental analyses are done to identify strengths, weaknesses, opportunities and threats. The long-term goals are formulated and then strategy selection takes place.

2. Strategy implementation is the action stage of the strategic management process. This is where the chosen strategies are implemented through different drivers and instruments.

3. Strategic control- The last stage of the strategic management process is strategic control. This can be seen as the checking stage. In this stage, management would evaluate the success/failure of the chosen strategies against strategic objectives.

Question 5With reference to the different strategic planning champions, explain who is involved in the strategic management process. (5)

Social craftsperson (SC) has to do with the ability to integrate different expectations from different groups together. An SC also has the ability to be sensitive to tension that might arise in the process of reaching a common ground.

Artful interpreter (AI) has enough understanding of the local norms, routines and positions of other role players to be able to adjust the strategic planning process according to the rules of the local game. It follows that there should be an acknowledgement that there is no one universal strategic planning practice that works in all contexts.

Known strangers (KS) are associated with maintaining a balance between closeness and distance to the other role players in the strategic planning process.

Question 6In tabular format, explain the different views of strategic management. (5)

Question 7Differentiate between the different levels of strategy. (5)

Corporate strategy is strategy for guiding a firm's entry into and exit from different businesses, for determining how a parent company adds value to and manages its portfolio of businesses, and for creating value through diversification.

Business level strategy is more concerned about developing and sustaining a competitive advantage for the goods and services that are produced. It is strategy for competing against competitors within a particular industry.

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Traditional View Emerging View

View Strategy as fit with resource 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

Functional level, decisions involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively

Question 8Discuss the benefits of strategic management (10)

Benefits of strategic management

Higher profitability – Organisations that engage in strategic planning typically have higher profitability results, and have shown an improvement in turnover and profits.

Higher productivity – These organisations also tend to have higher productivity because better planning and utilisation of resources enable them to produce and deliver more products at a lower cost.

Improves communication – Strategic planning improves both internal and external communication across the various functions, divisions and stakeholders of an organisation, and employees of the organisation understand the goals and objectives of the organisation much better.

Empowerment of employees – Strategic planning can also increase the empowerment of employees when managers involve employees in developing strategies and give employees ownership of implementing strategies.

Discipline and a sense of responsibility – It evokes discipline and a sense of responsibility when the management team takes full responsibility for strategic planning and implementation.

Better time management – Time management is more effective because the implementation of strategic plans needs to be completed by specific dates.

Better allocation of resources – When resources are allocated based on the strategies that are implemented; the strategic management approach also facilitates more effective resource management.

Encourages proactive thinking – The strategic management approach provides a framework or process for each employee to see how the strategy progresses and it encourages the proactive thinking of employees, which in turn lessens resistance to change.

Question 9Discuss the risks of strategic management (10)

If strategic planning and strategic management are executed incorrectly, it could negatively affect an organisation's productivity, profitability and competitive advantage.

Time - Strategic planning requires time, and in today’s complex business environment, managers are often too busy solving short-term problems to focus on long-term strategic planning.

Unrealistic expectations of managers and employees – Engaging in strategic planning activities sometimes creates unrealistic expectations in managers and employees.

The uncertain chain of implementation – Strategic planning takes place at top management level, whilst strategy implementation takes place at all levels of the organisation.

Negative perception of strategic management – The strategic management approach might sometimes suffer from a lack of buy-in by potential participants.

No specific objectives and measurable outcomes – Without measurable outcomes, it will be difficult to determine if strategy implementation is going according to plan.

Culture of change – Generally people in the organisation may be resistant to change. Success groove – Today’s success is no guarantee of tomorrow’s competitive advantage.

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Topic 2 (EXPLAIN AND INTERPRET THE STRATEGIC DIRECTION OF AN ORGANISATION.)

Question 1Identify and explain any five components of strategic leadership (10)

-This is necessary to set strategic direction.

Determining the company’s purpose and visionLeaders must articulate the vision and provide guidelines as to where the company wants to go and what are the key steps that need to be taken in order to reach that position.

Exploiting and maintaining core competenciesCore competencies (which include resources and capabilities that ensure a competitive advantage) have become the basis of the new competitive landscape.

Developing human capitalHuman capital entails knowledge and skills of the organisation’s entire workforce. Leaders should therefore drive the investment in human capital in order to derive the full competitive benefit.

Sustaining an effective organisational cultureStrategic leaders who are capable of learning how to shape the organisational culture in a competitively relevant way will become valued sources of competitive advantage.

Emphasising ethical practicesEthical practices refer to the moral filter that evaluates a potential course of action.

Establishing balanced organisational controlControls are needed to guide work in such a way that performance goals are reached.

Question 2Identify and explain the five tasks of strategic leadership (10)

Recognise the dual nature of strategy (short term as well as long term)Companies should balance the focus of tomorrow with its current realities.

Start with vision, mission and distinctive profileA clear sense of mission and distinctive profile is necessary to create a clear-cut framework for strategy definition and action.

Replace “resource-based” strategy with a new basis of strategy formulation.In today’s changing markets competencies and resources have to be closely aligned with future opportunities.

Focus on strategy as being the alignment between the external and the internal worlds of the companyLeaders have to work on both upstream perspective (competitive industry) and downstream perspective (in changing core strategy).

Competing through business systems, not through businessesThe coordination between all the elements in the value-creating process will then lead to the creation of higher value-creation, but will also lower costs.

Recognise that there is an owing decentralisation of strategy-making and leadership.The decentralisation of leadership must be accompanied by new managerial frameworks and assistance from the top.

Question 3Differentiate between mission, vision and strategic intent (9)

Vision Mission Strategic intent

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Vision statement is a roadmap of the organisation.

Statement of purpose that distinguishes organisation from similar ones.

Often used to set strategic direction and also as a basis for resource allocation.

It is a dream that focuses on the desirable future of the organisation, an enduring promise.

Identifies the scope of an organisation’s operation in terms of products, market and technology.

Establishes the criterion the organisation will use to chart its progress.

Answers the question what do we want to become?

Answers the question what is our business?

Entails the setting of ambitions, overarching goals for position of leadership for the company in the long term.

Question 4Discuss any ten components of the mission statement (10)

Products or services that the organisation offers or plans to roll out in future form part of the mission statement components

Markets–have to do with where the organisation does its business Technology–how the organisation does its business Survival issues–how the organisation plans to expand in future and markets it may want to

serve Growth–what the organisation perceives to be important to it inrelation to growth initiatives Profitability–this may include immediate and future profits and market share and market

impact Philosophy, self-concept–this has to do with what the organisation believes in and also its

values Concern for public image–how the organisation wants to be perceived by its market and by

society Concern for employees–how the organisation treats its employees given that they are its

internal clients Concern for customers–this has to with the identification of customers, their needs as well

as the organisation’s capacity to satisfy these needs Quality issues–are related to customer requirements and degree of satisfaction of their

various needs by the organisation

Topic 3 (EXPLAIN CORPORATE GOVERNANCE AND ITS ROLE TO STRATEGIC MANAGEMENT)

Question 1Explain what success means in strategic terms (5)

Success should be measured in wealth maximisation, and not in profit maximisation. Wealth maximisation is a long-term focus on wealth creation for all stakeholders. As strategists, we need to focus on survival in the long-term, that is, sustainability. Profitability alone is a weak indicator of success. Organisations need to equally focus on

profitability, market share and new product development. •Profitability measures must be complemented by a continuous and thorough environmental

scan for threats and exploit opportunities in the changing environment.

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Question 2Explain the concept "responsible leadership" (6)

Responsible leadership is defined as the “act of ethical, values-based leadership in pursuit of economic and societal progress and sustainable development”.

It provides the mind-set within which corporate governance should take place. It also suggests that the organisation should take ownership of the consequences of their business activities on an economic, social and environmental level.

It follows that business has two main responsibilities in the form of corporate social responsibility (CSR) and corporate sustainability.

Question 3Discuss the concept of corporate governance (6)

Refers to the formal system of accountability of the board of directors to all shareholders Formal and informal relationships between the corporate sector and its stakeholders and

the impact of the corporate sector on society in general King III Report

Question 4Explain the importance of corporate governance to strategic management (5)

Corporate governance has to do with formal and informal relationships between the board of directors and other stakeholders. It concerns how the organisation conducts itself within the context of good business practices. Good corporate governance has the following characteristics: accountability, discipline, fairness, independence, social responsibility and transparency.

When planning takes place, strategic leaders have to adhere to good corporate governance practices. The King II Report is generally used by leaders since it gives guidelines to the board of directors on how they should hold office. It identifies the following characteristics of good corporate governance: accountability, discipline, fairness, independence, social responsibility and transparency.

In the strategic management context, the King II Report states that an inclusive approach should be followed when formulating a mission statement.

Furthermore, corporate governance characteristics have to be considered when planning takes place.

The legitimate claims of the stakeholders must be considered. The plans must also be communicated to all stakeholders, as well as the organisation’s values.

As many managers as possible should be involved in this process. Joint planning with due consideration for the environment is thus necessary.

Question 5Describe the impact of the King Report on Corporate Governance for Southern Africa (2009) (King III Report) on strategic planning (10)

Boards and directors remuneration to be fixed by shareholders Risk-based approach to be adopted, as to a pure legal compliance Internal audit to have a role in assessing the controls to be adopted Sustainability reporting Relations and communication among stakeholders and Integrated reporting needed

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Topic 4(ANALYSE AND INTERPRETE THE RESULTS OF AN ASSESSMENT OF THE INTERNAL ENVIRONMENT)

Question 1Discuss the limitations of the SWOT analysis (5)

Despite still being regarded as one of the useful tools for assessing the environment, SWOT analyses maybe associated with the following limitations:

The focus on the external environment maybe too narrow. Such analyses maybe perceived to be a static assessment – a one-shot view of a moving

target. The strengths identified may not always lead to an advantage. Such analyses may lead to an overemphasis of a single feature or strength and disregard

other important factors that might lead to competitive success.

Question 2Diagrammatically depict and explain where internal assessment fits into the strategic planning process (10)

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Internal Environment Analysis –Once the Strategic direction has been determined the environments in which the organisation interacts needs to be analysed. The internal environment refers to variables inside the organisation, the resources, the assets, the employees, the mission and vision, the board of directors, etc. The strengths and weakness are determined within this environment which can be controlled by the organisation.

Question 3Identify and differentiate between the main resources of an organization (6)

Tangible Resources Intangible Resources Capabilities Cash Products Movable property Immovable property Equipment

Patents and Copy rights Reputation Brand Image Appeal to Market

Skills Knowledge Experience

Question 4Explain what the resource-based view of an organisation encompasses (6)

What is resource-based view (RBV) all about?

It stems from the idea that: an organisation’s resources are more important than the industry structure in an attempt to gain and keep its competitive advantage.

RBV looks at the role of key resources within an organisation. These resources are generally divided into tangible and intangible assets and capabilities. They enable the organisation to gain a competitive advantage. The other perspective on key resources is to explore the value they provide to the

customer. The skills and experience of staff could fall under capabilities. These, however, differ from

one organisation to the next.

Question 5Diagrammatically depict and explain the value-chain method of assessing an organisation’s internal environment (10)

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Question 6

Explain the steps involved in conducting a value-chain analysis (16)

Steps in Value Chain Analysis Identify and classify activities: The first step is to identify various primary and secondary

activities of an organisation. Allocate costs: Allocate cost for each activity, as each activity ties up time and costs.

Activity-based costing can be used in this step. Identify the activities that differentiate the organisation: A VCA helps to determine the

activities that differentiate it from its competitors and serves as a source of competitive advantage.

Examine the value chain: The last step is to classify activities as strengths or weaknesses of the organisation.

Question 7

Differentiate between primary and secondary activities (4)

Primary activitiesPrimary activities are those activities involved in the physical creation of the product. They generally depend on the nature of the core business.

Primary activities typically include the following: Input or inbound logistics operations output or outbound logistics marketing and sales Customer service

Secondary activities (also referred to as support activities)

Provide infrastructure or inputs to allow the primary activities to take place on an on going basis. These activities literally support the primary activities and the performance of the primary activities depends on the support activities.

Support activities include the following:

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procurement technological development human resource management general administration and infrastructure financial management

Question 8Explain what the functional approach entails (5)

The functional approach is a simple approach to conduct an internal audit.

The audit can be done by analysing the organisation's functional activities, using a list of internal audit questions. (Also makes extensive use of ratio analysis.)

There is no comprehensive list of questions, and each organisation has to determine its own internal audit questions.

The main aim is to determine how well or poorly functions are being performed and what resources these areas actually need to perform effectively.

The disadvantage of this approach is that the focus is on the functional areas (silo effect), and not on whether a specific functional area makes an important contribution to the organisations competitive advantage.

Topic 5(ANALYSE AND INTERPRETE THE RESULTS OF AN EXTERNAL ENVIRONMENT ASSESSMENT)

Question 1

Explain what external assessment means in strategic planning terms (5)

An organisation is an open system, and will both affect and be affected by the environment. The organisation also draws its inputs from the environment, and thus has to be aware of the available resources, as well as opportunities and threats. Several sources are used to obtain information with a view to assessing the external environment (market, industry and macro environment) of the organisation.

External assessment thus focuses on identifying key trends and events beyond the control of a single organisation. This is a continuous process of four inter related activities: scanning, monitoring, forecasting and assessing.

Question 2

Describe the components of, and process involved in, conducting a macro environmental analysis (10)

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Question 3

Diagrammatically depict and explain the position of external environmental assessment in the strategic planning process (10)

External environment analysis: Once the Strategic direction has been determined the environments in which the organisation interacts needs to be analysed. The external environment refers to variables outside the organisation, the market, the industry, and macro environment. The opportunities and threats are determined within these environments which are beyond the organisation’s control.

Question 4

Identify and explain the macro-environmental variables that impact on an organisation (12)

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PESTEI

Political/ Legal Environment (BEE, legislation and government) Economic Environment (Monetary and fiscal policy, Taxes and Interest rates) Socio-cultural Environment (Demographics, social responsibility and charity initiatives) Technological Environment (Product development, design and innovation) International Environment (Global warming, WTO and terrorism) Ecological/ Physical Environment (Green marketing, pollution and natural resources)

Question 5

Discuss the use of forecasting techniques in strategic management (5)

Forecasts are educated assumptions about future trends and events. Forecasting helps the organisation to be proactive. The choice of a suitable forecasting

technique depends not only on the availability of historical data, but also on factors such as costs, time and the accuracy of the forecast information that is needed.

In deciding which forecasting technique to use one has to strike a balance between many factors. Perfect information is very expensive and finding it is very time consuming.

One therefore has to find a technique that suits the needs of a strategic planner, and this means that the strategic planner has to understand the benefits, limitations and applicability of the different forecasting techniques.

Question 6

Diagrammatical depict and explain how Porter’s five forces model is used in assessing the industry environment (10)

Threat of new entrants: the extent to which new entrants are a threat depends on the existence and level of barriers to entry into the industry, where barriers give existing companies an advantage over new entrants.

Rivalry between existing organisations: level of rivalry between existing firms in an industry

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The bargaining power of buyers: Buying power, that is the relative power of buyers with regard to their suppliers

The bargaining power of suppliers: Relative power of the supplier with regard to their buyers

Substitutes: The threat of substitutes or alternative products or services tends to increase in respect of their relative price and performance.

Question 7Give guidelines on how to perform a competitor analysis (6)

It is important for an organisation to understand who its competitors are, and their strengths and weakness relative to the organisation’s strategic position.

Compare the future objectives of competitors with the organisation’s own objectives Determine current strategies of competitors What assumptions are competitors making in terms of the future status of the industry What are the strengths and weakness of competitors Decide on how the organisation will respond to competitors

Question 8Describe the limitations of Porter’s five forces analysis (5)

The model claims to assess the profitability of the industry. There is however, strong evidence that organisation-specific factors are more important to the individual organisations success than industry factors are

The model implies that the 5 forces apply equally to all competitors in an industry. The truth is that the strength of the forces differs from organisation to organisation

Product and resource markets are not adequately covered by the model The model can never be applied in isolation. It was accepted by Porter that the outcomes of

the model’s application were only relevant where the macro environment remained constant and stable

The model assumes that the relationship between the competitors is always hostile

Question 9

Explain the importance of assessing the industry environment as part of an external environmental assessment (8)

Industry = A group of organisations that produces products which are close substitutes for one another or which customers perceive to be substitutable for one another and which influence one another in the course of competition

Suppliers (provide input resources)

Customers (purchasers of organisation’s products)

Competitors (producing goods and services similar to those of the organisation)

Intermediaries (bridge gap between manufacturers and consumers)

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Topic 6INTERPRETE THE ORGANISATION'S STRATEGIC GOALS (LONG TERM GOALS)

Question 1Diagrammatically depict the position of long-term goals in the strategic planning process (10)

Long Term Goals: After the strategic direction has been decided on and the environmental analysis has been done on both internal and external environments Long term goals can be formulated. These should be

should be measurable, realistic-but challenging, understandable and congruent Provide direction Allow synergy Aid in evaluation Establish priorities Reduce uncertainty Minimise conflicts Aid in allocation of resources and jobs S.M.A.R.T.

Question 2Differentiate between long- and short-term goals (4)

Difference Long-term goals Short-term tactical objectives or

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between: goals

Strategic importance

Relatively high Relatively low

Nature Strategic (providing strategic direction)

Operational (i.e. to be directly implemented as part of the operations of the organisation)

Time frame Long term (3-5) Short term (annual, quarterly, monthly or weekly

Management involvement

High-level managers Lower-level managers

Specificity Low High (generally detailed)

Quantity Few high-level objectives Numerous low-level objectives associated with a long-term goal

Question 3Explain how the mission statement is translated into strategic goals (long-term goals) (5)

Question 4Explain what is meant by “long-term goals” (5)

Long Term Goals: After the strategic direction has been decided on and the environmental analysis has been done on both internal and external environments Long term goals can be formulated.

Long terms goals state exactly what should be attained, and when is should be attained.

These should be

should be measurable, realistic-but challenging, understandable and congruent Provide direction Allow synergy Aid in evaluation Establish priorities Reduce uncertainty Minimise conflicts Aid in allocation of resources and jobs S.M.A.R.T.

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Question 5Draw a diagram showing the four dimensions of the balanced scorecard (8)

Question 6Comment on the criteria used to judge whether a long-term goal is well formulated or not (8)

It is essential that long term goals be well formulated, as they should be cascaded down to the smaller departments, sections, and individuals in the organisation.

Well formulated goals should be acceptable to managers and employees in the organisation. They should be understood by everyone in the organisation. It should be clear to everyone how long term goals contribute towards the achieving its mission. The goals should be specific, measurable, achievable, realistic and time-bound: SMART. There should also be flexible enough to be reformulated – simply because the premises on which they are based may well change.

should be measurable, realistic-but challenging, understandable and congruent Provide direction Allow synergy Aid in evaluation Establish priorities Reduce uncertainty Minimise conflicts Aid in allocation of resources and jobs S.M.A.R.T.

Question 7Explain what is meant by a “competitive advantage” (6)

The “competitive advantage” of an organisation is an answer to the question: What competency/advantage should the organisation use to distinguish itself from its competitors? It

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should focus on the organisation’s strengths, resources and competencies. In essence, a competitive advantage should elevate the organisation above its competition. A competitive advantage should fulfil the following criteria:

It must relate to an attribute with value and relevance to the targeted customer segment. It must be perceived by the customer as a competitive advantage. It must be sustainable and not easily imitated by competitors.

Question 8Comment on the factors that impact on strategic choice- (5)

A change in any of the strategic planning process components may have an impact on the choice of strategy.The major factors that have an impact on the choice of strategy are as follows:

Appropriateness, which refers to the needs of the environment, the resources available and needed, and the organisation's values and current mission

Feasibility, which refers to timing ,the availability of finances and other resources, and meeting key success factors

Desirability, which refers to the ability of the strategy to satisfy the organisation's objectives, its synergy, certain inherent risk factors, and shareholders' needs and preferences

Question 9Diagrammatically depict the position of strategy choice in the strategic planning process (10)

Strategy choice is done after long term goals are formulated,

Question 10Explain what the generic strategies entail (10)

Competitive strategy is about formulating a strategy that enables the organisation to compete with other organisations in its industry or sector

The generic strategies were developed by Michael porter An organisation can strive to supply a product or service in 3 distinct ways:

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1. by being more cost-effective than its competitors: Cost leadership2. by adding value to the product of service through differentiation and command higher

prices: differentiation3. by narrowing its focus to a special product market segment which it can monopolise:

Focus 4. by combing the cost and differentiation advantage, the organisation can offer the lowest

prices compared to rivals offering products with comparable attributes: best-cost

Question 11Differentiate between the four generic strategies – (12)

Cost-leadership

the products are highly standardized and appeal to a broad target market two ways to accomplish lower cumulative costs than competitors:

1. out-manage rivals in the efficiency with which the value-chain activities are performed and in controlling the factors that drive the costs of the value-chain activities

2. revamp the organisations overall value chain to eliminate or by-pass some cost-producing activities

some associated cost drivers that need to be managed:o economies of scale arise whenever activities can be performed more cheaply at

larger volumes than smaller volumes and from the ability to spread out certain fixed costs over a greater sales volume

o Experience and learning-curve effects costs of organisations can decrease as employee experience increases. This leads to higher productivity, better application of technology etc.

o The % of capacity utilization increased capacity utilization leads to fixed costs being spread over a large unit volume which lowers fixed costs per unit especially in capital-intensive organisations

o Technological advances investment in cost-saving technologies can enable organisations to reduce the unit cost of their products or service significantly

o Improved efficiencies and effectiveness through supply chain management an organisations value chain is directly linked to the value chain of its suppliers and customers

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Differentiation

Consists of creating differences in the organisations product or service offering by creating something that is perceived as unique and valued by customers

Prestige or brand image, technology, innovation, features, customer service, product reliability, a unique taste, speed and rapid response through activities such as prompt response to customer complaints

Sustainable differentiations is usually linked to core competencies, unique competitive capabilities and superior management of the value chain activities that competitors cannot readily match

Focus

Is based on the choice of a narrow competitive scope within an industry A focus strategy based on cost leadership aims at securing a competitive advantage by

serving buyers in the target market niche at a lower cost and price than competitors A focus strategy based on differentiation as at securing a competitive advantage by

offering niche members a product they perceive as well suited to their unique tastes and preferences

Best-cost strategy

An integrated strategy enables an organisation to provide value in terms of differentiated attributes as well as lower prices

the objective becomes to provide unique products and services more efficiently than competitors do

although immediately differentiation increase unit costs, the costs will decrease as volume increases

Topic 7Defend the choice of a strategy, or strategies, on the basis of the strategic planning process

Question 1

Indicate the position of strategic control in the strategic management process (10)

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Question 2

Explain what the grand strategies entails (10)

Grand strategies, also referred to as business strategies, alternative strategies, or master strategies, are the specific “game plans” that explain, in detail, how the organisation will compete in the marketplace.

Grand strategies provide the basic direction for strategic actions. A grand strategy can be described as a comprehensive general approach that guides a firm’s major actions.

Fourteen principal grand strategies are defined and classified under four broad categories, namely:

1. External growth strategies;2. Internal growth strategies;3. Decline strategies; and4. Corporate combination strategies.

Question 3

Explain and differentiate between growth, decline and corporate combination strategies (12)

Growth strategies: can be divided into internal and external growth strategies. Internal growth strategies focus on the organisation’s internal environment.

Internal Growth strategies Market penetration (concentrated growth)

Market development

Product development

Innovation

External Growth strategies: Related or concentric diversification Unrelated or concentric diversification Vertical integration (backward and forward vertical integration) Horizontal integration

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Decline strategies: when a company finds itself in a vulnerable position, also known as “defensive Strategies”

Include: Retrenchment or turnaround strategies Divestiture Liquidation Bankruptcy

Corporate combination strategies: corporate powers could be increased by joining and working together to achieve objectives.

Involve: Joint Venture Strategic alliances Consortia

Question 4

Describe functional strategies and how they are related to grand strategies (6)

The grand strategies that organisations identify for achieving their objectives have to be implemented at both financial and operational level. These strategies have also been referred to as annual tactics, associated with a specific business unit.

Functional strategies and action plans have to be formulated to ensure that all organisational units, divisions, departments and project teams do what is required in order to implement the strategy successfully.

The implementation process is not complete until short-term goals and action plans have been formulated for each of the functional strategies identified.

The balanced scorecard management system was developed to assist organisations with clarifying their strategies and translating them into action, and to provide meaningful feedback with regard to

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their performance. The balanced scorecard enables managers to evaluate the organisation from four perspectives:

1. Financial performance;2. Customer knowledge;3. Internal organisation processes; and4. Learning and growth.

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