Chapter 1: The strategic management process

• Business Management 3A
BMA3A01 / BMA13A3

&

• Business Studies 3A
BMX3A01/BMX13A3

16 February 2024 2
 Lecturer

Dr. Dinko Herman Boikanyo

• Office: DRing 529

• Tel: 011 559 7446

• Email: hermanb@uj.ac.za

16 February 2024 3
 Prescribed Book

• Strategic management process, The - A South African

perspective 3/e
Lazenby JAA (Kobus) (Editor)
Pages: 438
ISBN: 9780627039027
Published: 2021
 Assessments
• Test One: 13 March 2024
• Chapters 1, 2, 4 to 5

• Test Two: 22 April 2024

• Chapters 6, 8, 9 to 10

• Sick Test 1 or 2: 14 May 2024

– Same chapters as the normal tests

• Online Test – 08 May 2024 – MCQs only

• Chapters 13 and 14

• It is compulsory to write Test 1, Test 2 and the Online

Test
Description Contribution to final mark (%)

Test 1 20%

Test 2 20%

Online Assessment 10%

Final Examination 50%

FINAL MARK 100%

• You need a semester mark of at least 40% to qualify

for the Final Exam
 LEARNING OUTCOMES
• Understand the definition and explanation of strategic
management
• Differentiate between the key elements of strategy
• Identify the people involved in strategic management
• Understand the characteristics of strategic planning
• Understand the strategic management process as well as why
strategy is important
• Recognize the benefits of strategic management
• Recognize the risks of strategic management
• Understand all the drivers of the organisation’s environment
• Perceive the link between strategy and ethics
 INTRODUCTION
• One of the most important questions in business and not-for-
profit organisations is why some organisations are successful and
others struggle or even fail.

• Luck and intuition may play a role, but organisations are usually
successful because they plan for the future.

• In South Africa, strategic management is even more important.

• An organisation cannot survive the volatile future without

proper strategic management.
The business environment
Traditional Strategic Management
Process
 WHAT IS STRATEGIC MANAGEMENT?
• Different TASKS can be identified:
– 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 organization.
– 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.
 WHAT IS STRATEGIC MANAGEMENT?
Defining strategic management
• The ultimate objective is to position the organisation optimally for
the future.
• Strategic management can be defined as a process whereby:
• the internal and external environments are analyzed 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.
 WHAT IS STRATEGIC MANAGEMENT?

• When an organisation is successful in formulating and

implementing a value-creating strategy, the organisation will
achieve strategic competitiveness.

• What is a strategy then?

• Strategy can be defined as an effort or deliberate action or a

course of action that an organisation must implement to
outperform its rivals.

• An important concept in strategic management is “competitive

advantage”.
 WHAT IS STRATEGIC MANAGEMENT?

Origins of strategy
• The word “strategy” comes from the Greek word strategos
– meaning a military commander – military origin.

• In military strategy, the idea was to identify the weak

spots of the enemy and use your own strengths to attack
where the enemy was most vulnerable.

• Strategy is a common concept involving the process of

analysing the situation and then developing a strategy
(plan) on how to outsmart your opponent.
 WHAT IS STRATEGIC MANAGEMENT?

Why is strategy important?

• The following reasons can be provided:

– 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.
 WHAT IS STRATEGIC MANAGEMENT?
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 environment – the internal environment must be
aligned with the challenges and opportunities from the external
environment.

• Processes development to deliver the strategy – business processes

must be developed to answer the question on how to outsmart
competitors.

• Value add – strategy must add value for all the different stakeholders.
Levels of Strategy

19
 PEOPLE INVOLVED

The 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.
 THE STRATEGIC MANAGEMENT PROCESS
1. Organisational direction and environmental analysis

2. Strategy formulation

3. Strategy implementation

4. Strategic control and evaluation

 DIFFERENT APPROACHES TO THE
STRATEGIC MANAGEMENT PROCESS

• Two main approaches:

– The prescriptive approach (systemic approach)

– The emergent strategic approach (process approach)

 DIFFERENT APPROACHES TO THE STRATEGIC
MANAGEMENT PROCESS

The prescriptive approach

• A linear and rational process – the different phases are linked

sequentially – known as a top-down approach to strategy.

• The formal prescriptive process is criticised mainly because of the

unpredictability of the real world.

• 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.
 DIFFERENT APPROACHES TO THE STRATEGIC
MANAGEMENT PROCESS
The 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.
 BENEFITS OF STRATEGIC MANAGEMENT
• In general, the benefits can be grouped as:
— Financial – organisations experience an improvement in their
financial performance.

— 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.
 BENEFITS OF STRATEGIC MANAGEMENT

• Prevention of problems.

• 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.
 RISKS OF STRATEGIC MANAGEMENT
• Time – spending too much time on SM process.

• Avoidance of responsibilities – when formulators aren’t involved

in implementation and avoid that responsibility

• Unattained expectations – manage expectation to avoid

disappointment of those whose ideas were not used during the
process.

• Negative perception of strategic management – caused by failure

to implement

• Success groove – being overconfident and focusing only on

current successes without foreseeing any future difficulties.

• Not involving key employees – involve key employees in SM

process.
 THE DRIVERS OF THE ORGANISATION’S
ENVIRONMENT

• The context of the environment, in which organisations have to be

managed strategically, establishes the rules of the game.

• The drivers are:

– the information revolution
– technological changes and breakthroughs
– globalisation.
 THE DRIVERS OF THE ORGANISATION’S ENVIRONMENT

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.
 THE DRIVERS OF THE ORGANISATION’S ENVIRONMENT

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.
 ETHICS AND STRATEGY

• 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.