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EBUS2715

Unit 1

THE STRATEGIC MANAGEMENT PROCESS

Learning Outcomes:
A • Understand the definition and explanation of strategic management
B • Differentiate between the key elements of strategy
C • Identify the people involved in strategic management
D • Understand the characteristics of strategic planning
E • Understand the strategic management process as well as why strategy
is important
F• Recognise the benefits of strategic management
G • Recognise the risks of strategic management
It• Understand all the drivers of the organisation’s environment

x• Perceive the link between strategy and ethics

 Strategic Management

- The ultimate objective is to position the organisation optimally for the future.
- There are different definitions of strategic management.
- “Competitive Advantage”

④
Definition
A process whereby the internal and external environments are analysed to identify
strategic goals and to develop strategies in line with the organisation’s vision and
mission, that must be implemented through a coordinated and integrated effort of
different functional areas in order to achieve these strategic goals of the organisation
with the ultimate purpose of gaining a competitive advantage.

Different Tasks:
• Formulating a strategic vision, mission and values, indicating the long-term
direction of the organisation.
• Identifying resources and capabilities through internal environmental analysis.
• Analysing the external environments to identify the challenges and opportunities
for the organisation.
• Identifying the long-term goals and the most applicable strategies to deliver value
to the stakeholders.
• Coordinating and integrating the effort of people, structures, technologies and
allocated resources to implement the identified strategies.
• Evaluating the success of the strategic choices and implementation through
strategic control and evaluation.

Why is strategy important

• The entire organisation is involved in the strategy process.
• It helps the organisation not only to survive, but also to add value to stakeholders.
• Strategy helps the organisation to develop a relationship with its environment.
• An organisation can only develop a sustainable competitive advantage through
an appropriate strategy.
• Good corporate governance requires an effective strategic management process
to be in place.
⑦Benefits of strategic management
• In general, the benefits can be grouped as:
o Financial – organizations experience an improvement in their financial
performance.
o Non-financial benefits – an increased awareness in the external
environment with respect to threats and opportunities, an increase in
productivity and reduced resistance from employees because they have a
clearer understanding of what is happening in the organisation.
• Prevention of problems.
• Group-based decisions are better than individual decisions.
• Higher productivity.
• Improved communication across the different organisational functions.
• Gaps and overlaps in activities are reduced.
• Resistance to change is reduced.
• Improved commitment.
• Forward thinking.

④ Risks of strategic management

• Time.
• Avoid responsibilities.
• Unattained expectations.
• Negative perception of strategic management.
• Success groove.
• Not involving key employees.

Key Elements of Strategy

Sustainability Strategic decisions must be maintained over a long time.

Competitive advantage The purpose of strategy is to achieve a sustainable competitive

advantage.

Alignment with its The internal environment must be aligned with the challenges
environment and opportunities from the external environment.

Process development to Business processes must be developed to answer the question

deliver strategy on how to outsmart competitors.

Value add Strategy must add value for all the different stakeholders.
 Strategic Management Process

② People involved in the strategic management process:

• Environmental analysis - is the responsibility of every manager from top
management to middle management and down to the supervisory level.
• Strategy formulation - is mainly the responsibility of top management.
• At the implementation phase - all the employees are important and they must
realise the vital role they play in implementing the strategy.
• Strategy review and evaluation - must be done by top management.

⑭ Characteristics of strategic planning (6)

A well-written strategic plan plays an important role in an organisation’s growth and
success.
- is a learning process
i- is a discovery process
- is a process in which openness to different perceptions and understandings are
fundamental
- requires the separation of strategic thinking from other issues when decision
making has to be done
- is supported by priority-based resource allocations
- informs efforts to implement decisions
3- establishes goals
- takes account of the need for “goal congruency”
- is responsive and innovative rather than reactive
- Organisational direction and environmental analysis
Strategy formulation
E -- Strategy implementation
b- Strategic control and evaluation
 NB
-
-
understand

② Strategic Management Process

/
 Approaches to Strategic management Process

1. The Prescriptive Approach

What are some of these assumptions?
- The future of an organisation can be accurately predicted.
- The strategies proposed are logical and capable of being managed in the way
proposed.
- The long-term benefit is more important than the short-term advantages.
- After the analysis phase, strategies are specified and need no further
development or change.
- The prescriptive approach may present some advantages.
- There are, however, also some drawbacks to the formal prescriptive approach.
- Despite what has been said about the prescriptive approach, it favours a step-by-
step way to achieve the organisation’s objectives.

2. Emergent Strategic Approach

• The different phases of strategic management are interrelated – analysis is still
the first phase, but strategy development and implementation are closely linked.
• The approach to strategy is to try a specific strategy and see what happens. If it
fails, management will adjust it as the organisation implements it.
• Strategic thinking enables managers to have an integrated perspective on the
organisation and to concentrate on the interrelationships between the different
components of strategic management.
• There are advantages of this emergent process.
• There are also drawbacks of this approach.
• The important conclusion from these approaches is that the strategic
management process consists of different phases.
 Drivers of the Organisation’s Environment

1. The information revolution

• The amount of information that is being created in digital format is growing more
than 57 % per year.
• The availability of this information has changed the way we do business.
• When information is read, understood, interpreted and applied, it is transformed
into knowledge.
• Knowledge must be used to achieve increased effectiveness and efficiency –
becomes an essential resource to production.
• The implication for strategic management – information and knowledge are the
keys to gaining a competitive advantage

2. Technological changes and breakthroughs

• Technology refers to all the equipment, material, knowledge and experience in an
organisation used to perform its tasks.
• Technological diffusion – speed at which technologies are available and are
used.
• Three aspects of the organisational environment are affected by technological
change:
o The amount of market competition and uncertainty are increasing,
o There are requirements for more diversity and improved quality in the
organisation's products or services, and
o The political and legal environment influencing the organisation will
increase in complexity.
• This influence on the organisation’s structure and relationships with employees
and customers.
• Covid pandemic changed the working environment – expedited technological
use.
• Innovation is an important technological trend.
• Technology and innovation will influence the way an organisation is managed
strategically – influence on sustainable competitive advantage.
• Perpetual innovation describes how fast and consistently new technologies
replace older ones.
• The challenge for organisations is to capture and exploit the unique advantages
of technology and use innovation to create new valuable processes and products
3. Globalisation
• World is the marketplace.
• Organisations can no longer remain ignorant about globalisation when
developing and implementing strategies.
• To create a competitive advantage, organisations must look locally and globally
for potential customers.
• Globalisation has created new ways of looking and thinking about the
organisational environment.
• Strategic implication of these drivers is that organisations are operating in an
environment characterised by continuous turbulence and change – need for
speed is more important than ever before.

② Link between strategy and ethics

- Ethics is an important concept that must have an influence on strategic

management.
- Organisational ethics refers to the standards of conduct that the organisation
must set itself in its dealings with all the different stakeholders of the organisation.
- The code of ethics determines the behavioural norms according to which the
organisation operates.
- It is important that the organisation has an ethical framework that will support the
organisation’s standards of conduct