STRATEGIC MANAGEMENT -Tarak Bahadur K.C., PhD -Basant Raj Sigdel

Session Outline 2  Strategy - concept  Strategic thinking  Strategic planning process

Strategy 3

Exercise  What comes to your mind while talking about Strategy? Please create a PICTURE/DIAGRAM within 5 minutes that expresses the term- ‘Strategy’. (You may use words or phrase as supplement) o Each participant will get 1 minute for drawing o Succeeding officers may build on the concept already drawn o You are requested not to communicate while drawing o Circulate your drawing to other groups o Share learning in plenary in 5 minutes 4

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Strategy  - is an action oriented plan of operation for achieving desired goals based on situation analysis, and emphasises what an organisation will be doing in future. “How”?  - is the answer to the question “How”?   Strategies are simply a set of actions that enable an organisation to achieve results.  - is a plan / tactics / scheme one adopts to get something done under conditions of uncertainty.  - is a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem. 7

8 Strategy Plan Ploy Pattern Position Perspective 5 Ps of Strategy – H Mintzberg

Strategy …  PLAN o Consciously intended course of action, a set of guidelines to deal with the situation  PLOY o Specific maneuver intended to outwit an opponent or competitor  PATTERN o In a stream of actions…consistency in behavior whether or not intended  POSITION o Means of locating an organization in an environment  PERSPECTIVE o An engrained way of perceiving the world 9

Strategy Managerial Intent 1. Logical incremental 2. Rational command 2. Cultural / Political Process

1. Strategy: A Managerial Intent 11  Logical incremental o Standardized planning procedures o Systematic data collection and analysis o Constant environmental scanning o On going adjustment of strategy o Tentative commitment to strategy o Step by step small scale change

Strategy: A …. 12  Rational command o Senior managers determines and direct strategy o Strong vision or mission o Definite and precise objectives o Analysis and evaluation of environments o Clear plans

2. Strategy: A Cultural/Political Process 13  Muddling through o Managing conflicting interest groups o Powerful groups with control over critical resources more likely to influence strategy o Standardized way of doing things o Routines and procedures embedded in organizational strategy o Deeply rooted beliefs and assumptions o Strong resistance to change o Gradual adjustment to strategy

Strategy: A …. 14  Externally dependent o Strategy is imposed by external forces (e.g. legislation, parent organization) o Freedom of choice severely restricted o Groups dealing with the environment have greater influence over strategy o Political activity within organization and between environment likely o Externally driven strategy - Johnson & Scholes

15 Strategic Thinking

Self Assessment 16  Assess your strategic thinking abilities  Time 10 minutes

Scoring Use the following table to interpret your score –125 Exceptional: You’re a talented strategic thinker who possesses many of the traits, behaviors, attitudes, and cognitive capacities that are necessary for thinking strategically. 78–103 Superior: You’re a highly effective strategic thinker in many areas but would benefit from refining some of your skills. 51–77 Adequate: You know and practice many of the basics of strategic thinking. However, you can increase your success by further extending your skills. 25–50 Deficient: You’ll need to work broadly on your strategic thinking skills so that you can learn how to analyze opportunities and problems from a broad perspective and understand an action's potential impact on others.

Strategic Thinking 18

Strategic Management 19  … is the application of strategic thinking to the job of leading an organisation.  “Managing strategically”, in other words: o ‘Diagnosing situation strategically’, and o ‘Applying knowledge strategically’  “… is continuous, iterative process aimed at keeping an organization as a whole appropriately matched to its environment.” - Certo and Peter

Strategic Planning Strategic Planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organisation is, what it does, and why it does it with a focus on the future (JM Bryson). It focuses on the best ‘fit’ between an organisation and its environment. It is defined as the process of addressing the following questions: 20 The resulting document is Strategic Plan for performance improvement to achieve desired goals. A living document that has ability to create successful future of the organization.

Strategic Planning 21 SWOT VMO Strategy The resulting document is Strategic Plan for performance improvement to achieve desired goals. A living document that has ability to create successful future of the organization.

Strategic …  Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. 22  The resulting document is Strategic Plan for performance improvement to achieve desired goals. It is a living document that has ability to create successful future of the organization.

Strategic Planning Process It is an ongoing process and involving a series of steps to be followed. 1. Getting Ready (Agreement) 2. Environmental Scanning (SWOT Analysis) 3. Strategy Formulation (Identification of Strategic Issues, Vision,Mission, Objectives, Roles, Strategies) 4. Strategy Implementation (Strategic Actions (Action Plan): Actions/Activities, By whom, By when, Resources, Indicators, Critical factors) 5. Evaluation and Control 23

1. Getting Ready (Agreement) 24  Assessing readiness o Commitment of leadership o Ability of leaders to devote necessary attention to the ‘big picture’  The purpose is to develop initial agreement among key internal decision makers about overall planning process for their support and commitment

Steps to Prepare for Planning I. Obtain a formal commitment to conduct planning II. Select a strategic planning committee of no more than five to seven people, a combination of visionaries and "actionaries,” III. Develop a work plan or a plan to plan that outlines who is responsible for each outcome and time frames IV. Consider the adequate level of resources (money and time) required to conduct an appropriate planning process V. Identify the information that must be collected to help make sound decisions 25

2. Environment Analysis  Analysis and diagnosis of an organization, often referred to as an Organization Audit or SWOT analysis.  It is undertaken to assess an organisation’s ability to deal with its environment by identifying strengths, weaknesses, opportunities and threats (SWOT). 26

SWOT 27

Internal Environment Organisation / Supply side analysis 28 An analysis of internal organizational factors which reviews and investigates the prevailing resources, processes and performance of organization. The analysis identifies major strengths and weaknesses - of all the key functional elements (Structure, Functions, HR, Finance, IT, Rules, Procedures, etc.). What are major internal Strengths and Weaknesses in terms of Structure, Resources, Processes, Performance, Culture, etc. ?

External Environment Demand side analysis 29 Covers the various stakeholders outside the organization. The analysis indicates the opportunities and threats faced by the organisation from its relationship with external stakeholders. Major categories of external environment: 1. Forces and trends – PEST 2. Clients, customers, or payers 3. Actual or potential competitors or collaborators What major external Opportunities and Threats (Political, Economic, Social, Technology, Legal, Stakeholders, etc.) do the organisation has?

Benefits of SWOT Analysis  Produces information vital to the organisation’s survival and prosperity  Allow seeing the organization as whole in relation to its environment  Clarify for the organization the nature of the ‘tension fields’ within which it exists  Timely actions may be taken to deal with threats and weaknesses

Considerations  Use precise, verifiable statements ("Cost advantage of Rs……/unit in sourcing resources x", rather than "Good value for money")- be specific. prioritize  Reduce long lists of factors, and prioritize them, so that you spend your time thinking about the most significant factors. 31

Sources of Information and Methods of Information Collection Sources of Information Primary Secondary Methods of Information Collection Interview Focus group discussion / Workshop Questionnaire Survey Observation Reviewing available materials 32

SWOT Profile SWOT Profile 33

InternalStrengthsWeaknesses 1. Mandate / Vision / Mission 2. Structure 3. Systems / Processes 4. Organizational resources 5. Performance / outputs Trained staff Use of modern technology is not at optimum level ExternalOpportunitiesThreats 1. Political 2. Economic 3. Social 4. Technological Recognition of Nepal army by international communities Growing terrorism worldwide 34 SWOT Profile- an example SWOT Profile- an example

Exercise: SWOT Analysis 35

 Army Command and Staff College  Army Hospital  Welfare Fund  Logistics Management  Disaster Risk Management 36

3. Strategy Formulation: Identifying Strategic Issues Strategic Issues  Fundamental policy questions or critical challenges that affect An organization’s mandates, mission and values Organization/management Costs, financing Services Consumers, users…. About which something can be done. John M. Bryson, Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement, rev. ed. (San Francisco: Jossey-Bass, 1995), 30 37

Strategic Issues Example 1. How to provide adequate health service to the needy people? Prioritizing Issues No action is needed at present, but needs monitoring Can be handled as regular planning Urgent, must be dealt with Actionable/feasible, Resources, Stakeholder readiness, Importanc e 38

Vision, Mission, Objectives, Roles 39 Vision:  …is a mental picture of a possible situation or state of affairs.  …a statement about what your organization wants to become. How the organisation would like the world in which it operates to be? What it should look like? Where it wants to go in future? Example: “All Nepali having adequate basic health service at their doorstep.”

- the fundamental purpose of an organisation, basically describing why it exists (reasons for existence – purpose) and what it does to achieve its Vision. Why it should be doing what it does? Example: “Promoting basic health service in the country involving CBOs related to health service and providing technical support to them for their institutional capacity development.” 40 Mission

What you are trying to achieve by a particular course of action. Stated in terms of the results it needs/wants to achieve in future. Objectives should relate to the expectations and requirements of all the major stakeholders. They should be SMART. Example: Implement government policies and plans related to health service Provide technical support to CBOs Carry out basic health related studies and research 41 Objectives

- the position that an organisation has in a particular situation, which determines how much it is involved in the situation or how much responsibility it has. Roles are identified considering strategic strengths and opportunities. Example: 1. Policy advice 2. Implementation of policies 3. Research 4. HRD 42 Roles

Strategy Formulation Strategy is an action oriented plan of operation for achieving desired goals based on situation analysis, and emphasises what an organisation will be doing in future. An effective strategy must meet several criteria:  Technically workable  Politically acceptable to key stakeholders  Accord with the organisation’s philosophy and values.  Ethical, moral and legal,  Deal with issues it was supposed to address 43

Considerations in Formulating Strategies  Organisational competence and resources to capture opportunities  Environmental threats to its long-term well being  Personal values and aspirations of managers  Societal obligations and ethical considerations  Organisational culture 44

Strategic Options: TWOS Matrix Strategic Options: TWOS Matrix - W eihrich OpportunitiesThreats Strengths SO (Maxi – Maxi) ST (Maxi – Mini) Weaknesses WO (Mini – Maxi) WT (Mini – Mini) 45

Example of Strategy: 1. Establishing and strengthening CBOs related to health service 2. Fostering institutional networking and coordination Choice of Strategy The Choice of Strategy depends upon organisation’s environment and mission and objectives. 46 Strategy …

Strategic Plan 47 ObjectiveStrategyMeasures/ Indicators Target Initiatives ResourcesCritical Success Factors What / Activities WhoWhen Improve health service Increase number of health professi onals Decreased Doctor- Patient ratio 10 % by 2017 Increas e the number of students / seats Mo HP, Pvt. Sect or 2014Budget, Infrastruct ure, RP MoF, Availabilit y of RP, Involvemen t of Pvt. Sector, Govt. policy

4. Strategy Implementation  However beautiful the strategy, you should occasionally look at the results. - Winston Churchill 48 For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization.

A General Framework for Strategy Implementation 49 o Building an organisation structure to the requirements of the strategy o Allocating resources and energies on accomplishment of the strategic goals o Ensuring organisation-wide commitment o Installing administrative support system o Shaping the organisation culture to fit the strategy o Exerting strategic leadership

50 Basic Approaches to Strategy Implementation I. Commander Approach II. Organisational Change Approach III. Collaborative Approach IV. Cultural Approach V. Crescive Approach

I. Commander Approach  Manager determines “best” strategy  Manager uses power to see strategy implemented  Three conditions must be met: 1. Manager must have power 2. Accurate and timely information is available 3. No personal biases should be present

II. Organisational Change Approach  Focuses on the organisation  Includes focusing on the organisation’s staffing and structure  Often more effective than commander  Used to implement difficult strategies

III. Collaborative Approach  Enlarges the organisational change approach  Manager is a coordinator  Management team members provide input  Group wisdom is the goal

IV. Cultural Approach  Includes lower levels of the organisation  Breaks down barriers between management and other employees  Everyone has input into the formulation and implementation of strategies

V. Crescive Approach 55  Moves upward from the "doers“ and lower middle-level managers  The top management team shapes the employees' premises  “Strategy" becomes the sum of all successful approaches

5. Evaluation and Control 56 The implementation of the strategy must be monitored and adjustments made as needed. Evaluation and control consists: I. Defining parameters to be measured II. Defining target values for those parameters III. Performing measurements IV. Comparing measured results to the pre- defined standard V. Making necessary changes

WHY STRATEGIC INITIATIVES FAIL? 57 SI will fail when one is STUPID : Sponsorship not forthcoming Team member do not function as agents of change Unclear vision and commitment Poorly planned change programme Inappropriate/ Insufficient Communication Don’t take account of culture

58 The Principle The SUCCESS Principle Shared vision Understand the organization Cultural alignment Communication Experience help where necessary / Executive support Strong leadership Stakeholder buy-in / Systematic planning / Short-term wins

59 Strategic Plan- sample format 1. Background/Introduction 1. Purpose 2. Present Situation 2. SWOT Analysis 1. Supply side analysis 2. Demand side analysis 3. Strategic Issues 4. Vision, Mission, Objectives, Roles 5. Strategies and Activities 6. Action Plan

Conclusion Strategic Management originated as a discipline in 1950s and 1960s is “diagnosing situation strategically” and “applying knowledge strategically” to achieve objectives. It starts with getting ready for planning and moves on to addressing the questions: Where are we today? Where we want to go? How do we get there? Organisations to achieve their long term objectives successfully have to put strategic management into practice strategically involving key stakeholders in the planning process at some level. 60

“If you don’t have a strategy, you will be …. part of somebody - else's strategy. - Alvin Toffler

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The story continues… 63