11)b)

STRATEGIC MANAGEMENT MODEL / STRATEGIC PLANNING PROCESS

The term strategic management process refers to the steps by which management
converts a firm’s mission, objectives and goals into a workable strategy. In a dynamic
environment, each firm needs to tailor its strategic management process in ways that
best suit its own capabilities and situational requirements. The firm must engage in
strategic planning that clearly defines objectives and assesses both the internal and
external situation to formulate strategy, implement the strategy, evaluate the progress,
and adjust as necessary to stay on track.

A simplified view of the strategic planning process is shown by the following diagram:

a) STRATEGIC INTENT
Strategic intent takes the form of a number of corporate challenges and opportunities,
specified as short term projects. The strategic intent must convey a significant stretch
for the company, a sense of direction, which can be communicated to all employees.
Strategic intent gives a picture about what an organization must get into immediately
to use the opportunity. Strategic intent helps management to emphasize and
concentrate on the priorities. Strategic intent is vision, mission and objectives, the
influencing of an organization’s resource potential and core competencies to achieve
goals in the competitive environment.

b) Environmental Scan
The environmental scan includes the following components:
● Analysis of the firm (Internal environment)

● Analysis of the firm's industry (micro or task environment)

● Analysis of the External macro environment (PEST analysis)

The internal analysis can identify the firm's strengths and weaknesses and the external
analysis reveals opportunities and threats. A profile of the strengths, weaknesses,
opportunities, and threats is generated by means of a SWOT analysis

An industry analysis can be performed using a framework developed by Michael

Porter known as Porter's five forces. This framework evaluates entry barriers,
suppliers, customers, substitute products, and industry rivalry.
 a) Strategy Formulation
Strategy formulation is the process of offering proper direction to a firm. It seeks to
set the long-term goals that help a firm exploit its strengths fully and encase the
opportunities that are present in the environment.

Strategy Formulation is the development of long-range plans for the effective

management of environmental opportunities and threats, in light of corporate
strengths & weakness. It includes defining the corporate mission, specifying
achievable objectives, developing strategy & setting policy guidelines.
I. Vision: vision is a picture of the organization-the core values for which an
organization stands and a clear description of what the organization wishes to
become in the years ahead.

II. Mission: Mission is the purpose or reason for the organization’s existence. It tells
what the company is providing to society, either a service like housekeeping or a
product like automobiles.
 III. Objectives: Objectives are the end results of planned activity. They state what is
to be accomplished by when and should be quantified, if possible. The
achievement of corporate objectives should result in the fulfillment of a
corporation’s mission.

IV. Strategies: Strategy is the complex plan for bringing the organization from a
given posture to a desired position in a future period of time.

V. Policies: A policy is a broad guide line for decision-making that links the
formulation of strategy with its implementation. Companies use policies to
make sure that employees throughout the firm make decisions & take actions
that support the corporation’s mission, objectives & strategy.

c) Strategy Implementation
It is the process by which strategy & policies are put into actions through the
development of programs, budgets & procedures. This process might involve changes
within the overall culture, structure and/or management system of the entire
organization.
I. Programs:
It is a statement of the activities or steps needed to accomplish a single-use plan. It
makes the strategy action oriented. It may involve restructuring the corporation,
changing the company’s internal culture or beginning a new research effort.

II. Budgets:

A budget is a statement of a corporation’s program in terms of dollars. Used in

planning & control, a budget lists the detailed cost of each program. The budget thus
not only serves as a detailed plan of the new strategy in action, but also specifies
through proforma financial statements the expected impact on the firm’s financial
future

III. Procedures:
Procedures, sometimes termed Standard Operating Procedures (SOP) are a system of
sequential steps or techniques that describe in detail how a particular task or job is to
be done. They typically detail the various activities that must be carried out in order to
complete

d) Evaluation & Control

After the strategy is implemented, it is vital to continually measure and evaluate
progress so that changes can be made if needed to keep the overall plan on track. This
is known as the control phase of the strategic planning process. While it may be
necessary to develop systems to allow for monitoring progress, it is well worth the
 effort. This is also where performance standards should be set so that performance
may be measured and leadership can make adjustments as needed to ensure success.
Evaluation and control consist of the following steps:
i) Define parameters to be measured
ii) Define target values for those parameters
iii) Perform measurements
iv) Compare measured results to the pre-defined standard
v) Make necessary changes

12)a)
i)

12)A)
ii)
13)A) the components of internal environment analysis.
14)a)
Michael Porter’s 5 forces model
Porter’s Five Forces Model
Let us look at the five forces proposed by Porter:
#1 – Industry Competition
More rivals and similar products and services reduce a company’s strength. First, examining niche’s
competition is vital. It reveals market competitiveness, rivals, and competitive strategy
comprehension. Many variables affect industrial rivalry. Industry expansion, Fixed costs value-added,
intermittent overcapacity, product disparities, brand identity, switching costs, Informational
complexity, competition diversity, corporate stakes, and departure hurdles. Promotional and pricing
battles may affect a business’s bottom line when rivalry is intense.
#2 – Potential of New Entrants into the Industry
This group explores how rivals can enter the market. When new competitors may enter easily,
incumbent businesses risk losing market share. Strong entry barriers allow incumbent enterprises to
demand higher prices and better conditions. Comparative cost benefits, resource access, size, and
brand identification are entry barriers.
#3 – Power of Suppliers
Businesses rely on each other online and offline. This aspect considers a supplier’s influence on a
company. When evaluating the prospect of supplier overreliance, the elements to consider include
market supply, bargaining power, and switching suppliers involves money, from rewiring hardware to
developing new supply networks.
#4 – Power of Customers
One of the Five Forces is customers’ capacity to push down prices. It depends on how many clients a
firm has, how important each one is, and the amount it would take to find new ones. If there are fewer
customers than suppliers, they have “buyer power.” This implies they may easily move to cheaper
competitors, lowering costs. In food retail, buyer power is important. Imagine crowded, competing
supermarkets.
#5 – Substitutes Threat
This force analyses how simple it is for consumers to switch products or services. It assesses the
number of rivals, their pricing and quality compared to the firm being analyzed, and how much profit
they generate to determine if they can cut their expenses. Cost of switching, both immediate and long-
term, and customers’ willingness to shift influence the danger of replacements. The final force is
other substitute products. Companies with no comparable substitutes can raise prices and lock in
advantageous conditions. When close replacements are available, buyers might skip a company’s
goods, reducing its power.

15)a)