Chapter 2 The Process of Strategic Management

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 2 Objectives understand and analyse the processes that comprise the practice of strategic management implement techniques for improving the quality of strategic thinking in organisations

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 3 Objectives relate the process of strategy analysis, direction setting, strategy choice and implementation to the overall performance of an organisation and explain the process of establishing an effective strategic information system.

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 4 Value of frameworks and models encourage objective analysis encourage consideration of full scope of relevant issues provide a general framework often derived from the practice of management rather than theory

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 5 Process of strategic management strategy analysis direction setting strategy choice strategy implementation

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 6 Why organisations lose competitive capability failure to see a strategic challenge. failure to understand the challenge. allowing corporate politics to dictate priorities. inability to develop a strategic response. inability to activate a new strategy.

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 7 Approaches to the practice of strategic management Normative descriptive perspectives on strategy complex models detailed information as to what should be done Descriptive looks at reality learn from what actually happens rather than what should happen Normative and descriptive perspectives

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 8 Formal or rational approach reassess basic purpose and activities appraise opportunities and threats SWOT analysis revaluation of goals and methods selection and implementation of strategies periodic review of performance

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 9 Incremental approach changes occurs in an evolutionary way avoids single mindedness allows for flexibility in financial commitments allows for time to develop commitment

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 10 Ethical frameworks Deontology the rights and responsibilities of the individual Teleology the welfare of society as a whole Within these frameworks are these subsets utilitarianism rule-based ethics categorical imperative motive-based ethics

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 11 Causes of unethical behaviour excessive goal orientation lack of underlying ethics cultural variety pressure to conform competition closed communication system the ‘escalation’ principle narrow perspective abuse of power

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 12 Developing a corporate ethical framework organisation systems and structures recruitment, selection and training corporate culture levels of ethical issues

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 13 Strategic information system (SIS) is complex and iterative concerns external information concerns internal information is dynamic

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 14 Communication (SIS) Effective systems need to have open communications and effective networks e.g. committees networks formal and informal information systems reporting systems

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 15 Establishing a strategic information system Types of information clearly defined qualitative and quantitative Form of information variety of media ‘what if’ scenarios Reporting information relevant, current and project based

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 16 Strategic thinking Considerable effort is needed to: create the vision through training and development to promote strategic awareness

Strategic Management 4e., Viljoen & Dann © 2002 Pearson Education Australia 17 Integrating strategic management activities Typical strategic issues concerned Process category External environment internal skills and resources customer analysis competitor analysis Process of Analysis Formulating strategic objectives defining KRAs (key result areas) Process of direction setting Degree of strategic fit choosing scope and scale selecting product markets Process of choice managing investment levels and patterns managing organisations structure managing change managing finance, marketing, operations and human resources Process of implementation