E2: ENTERPRISE MANAGEMENT

Md. Shahadat Hossen

ACMA, CFC (Canada), CIPFA (Affiliate, UK)
Deputy Manager (Finance), Additional Charge
Dhaka Power Distribution Company Limited
Power Division, Ministry of Power, Energy & Mineral Resources

03/26/2022
Syllabus Structure

Strategic
Managemen
Manageme t&
nt of Assessing
Relationshi the
30%
ps Competitive
30%
Environmen
t

Project
40%
Management
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Question Pattern: Broad Category 1
Part-
Part A
• This section consists of 1 question and 8 sub-questions.
• You are advised to spend no longer than 36 minutes on this
A section.
20 Marks • Section will carry 20 marks and one sub-question will
carry 2.5 marks each.

Part-
Part
B
B •This section consists of 1 question and 5 sub-questions.
•You are advised to spend no longer than 9 minutes on each sub-question in

30 Marks
this section.
•Section will carry 30 marks and one sub-question will carry 6 marks each.

Part-
Part
C C
•This section consists of 2 questions.
•You are advised to spend no longer than 45 minutes on each question in this
section.

50 Marks •Section will carry 25 marks and allocation of marks for each sub-question is
indicated next to the sub-question.
03/26/2022
Question Pattern: Broad Category 2
Year 2018 2017 2016
Part\ June December June December June
Month
A 2 questions 2 questions 2 questions 2 questions 2 questions
20 marks 30 marks 30 marks 30 marks 30 marks
B 2 questions 2 questions 2 questions 2 questions 2 questions
45 marks 35 marks 30 marks 40 marks 40 marks
C 2 questions 2 questions 2 questions 2 questions 2 questions
35 marks 35 marks 40 marks 30 marks 30 marks

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 CHAPTER 1: INTRODUCTION TO STRATEGY
FORMULATION
Rational Approach
Objectives • Mission
• Specific • Objectives
• Measurable • Analysis Levels of strategy
• Achievable • Options • Corporate
• Relevant • Choice • Business
• Timely • Implementation • Functional
• Review & control

Goal Hierarchy
• Mission Basic framework Competitive Advantage
• Goals & concepts of • Cost leadership
• Objectives strategy • Differentiation
• Critical Success formulation • Focus
Factors (CSF)
• Key Performance
Mission
Indicators (KPI) • What is our business?
• Target
• What is valued by our customer? 03/26/2022
• What will our business be?
• What should our business be?
CHAPTER 1: INTRODUCTION TO STRATEGY
FORMULATION
Strategy:
 Strategy is a well defined roadmap of an organization which
bridges the gap between “where we are” and “where we want to
be”.
 Course of action, including specification of resources required, to
achieve a specific objective. (CIMA: Management Accounting:
Official Terminology, 2005 edition p. 54.)
 Strategy determines the direction and scope of an organization
over the long term, and it should determine how resources should
be configured to meet the needs of markets and stakeholders.
(Gerry Johnson and Kevan Scholes, authors of Exploring
Corporate Strategy)
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Strategy simplified
It’s a course of action and long-term direction
that determines the scope of organization’s
Value to activities to achieve competitive advantage and
people
objectives by using internal resources
effectively, meeting challenges from external
Competitiv
e environment and delivering value to the people
advantage who depend on the firm.

Objective Enviro
s n-ment
Long-
term Resource
directio s
n
Organizati Course
on's Future
activities of action 03/26/2022
 Henry Mintzberg suggests various definitions of strategy covering the five
Ps.

By which the
organization hopes to
achieve its aims. It’s a
direction, a guide, or
course of action into the
future

The organization’s
culture and personality. A specific tactic to
outwit a competitor. It
It’s way of getting
can be seen as a
things done. maneuver in a
competitive business
game.

The position of each Consistent behavior over time,

product in the giving the impression of a
logically thought out strategy. It is
marketplace relative
a constant series of decisions and 03/26/2022
to competitors. actions moving the organization
towards its aims.
 Mintzberg’s five Ps of strategy Example
As an example of Mintzberg’s 5 Ps of Strategy in action let’s examine the 5 Ps for Apple.

Plan: To continue to consistently build the easiest to use and most intuitive
consumer electronics. Continue to expand the app ecosystem.
Ploy: Apple is frequently ahead of competitors in terms of innovation. Thus,
as a ploy, it is able to threaten to sue any competitors that copy their
technology.
Pattern: Apple responds to the challenge of competition through innovation.
Some of these innovations are complete failures but others are runaway
successes.
Position: Apple products are positioned at the high-end. Their high-quality
intuitive design covering both hardware and software is difficult to compete
against.
Perspective: One of Apple’s values is “think different”. Its culture and
personality are all about making the best products in the marketplace and
doing it in an innovative way. 03/26/2022
Strategic Management:

 Concerned with the decision organizations make about their future

direction and the development and implementation of strategies
which will enhance competitiveness of organizations. (CIMA)

 Art and science of formulating, implementing, and evaluating

cross-functional decisions that enable an organization to achieve
its objectives. (Fred R. David & Forest R. David)

 Focuses on integrating management, marketing, finance &

accounting, production & operations, research & development
(R&D), and information systems to achieve organizational success.

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 Levels of strategy
Level Definition Example/considerations
Corporate Strategy  concerned with determining the  decisions on acquisitions,
(Complex & non-routine) overall purpose and scope of mergers and sell-offs or
where the organization closure of business units;
 what type of business or  decisions to enter new markets
businesses should the or embrace new technologies
organization be in.

Business Strategy  concerned with how an  marketing issues such as

(competitive strategy operating or strategic business product development, pricing,
formulated) unit approaches a particular promotion and distribution
How market.  how should it segment the
 Responsible for winning market – should it specialize in
customers & beating rivals in particular profitable segments.
particular market

Functional Strategies  concerned with long-term  Long-term management

management policies of policies
Who business functions e.g. sales,  They are intended to ensure
production, purchasing, human that the functional area plays
resource and finance. its part in helping the SBU
achieve the goals of its
corporate strategy. 03/26/2022
Elements of strategy
Elements Definition Example
Financial  Concerned with the  Obtaining funds at the
organization’s relationship optimum cost
with the providers of capital  Delivering adequate return
to the shareholders
Competitive  Concerned with how and  How to attract customers
where the organization should  Which markets to enter and
compete exit
 Which products to market
 How to outperform rivals
Investment & resource  Concerned with how  Expenditure on brand
management uses the finance support & advertising
it has available  R & D expenditure on new
techniques & products
 Capital expenditure

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Rational Approach to Strategy Formulation
 Determine the mission of the organization
 Set corporate objectives
 Carry out corporate appraisal – involving analysis of
internal and external environments
 Identifying and evaluating strategic options – select
strategies to achieve competitive advantage by
exploiting strengths and opportunities or minimizing
threats and weaknesses
 Evaluate each option in detail for its fit with the
mission and circumstances of the business and choose
the most appropriate option
 Implementing the chosen strategy
 Review and control – reviewing the performance of
the organization to determine whether goals have been
achieved. This is a continuous process and involves
taking correcting action if changes occur internally or 03/26/2022

externally
Values, Vision, Mission, Goal, Objectives etc.

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Values
Important and lasting beliefs or ideals shared by the members of a
culture about what is good or bad and desirable or undesirable. Values
have major influence on a person's behavior and attitude and serve as
broad guidelines in all situations.
Vision
A vision statement looks forward and creates a mental image of the
ideal state that the organization wishes to achieve. It should answer
the basic question, “What do we want to become?”.
Mission
A mission statement is a concise explanation of the organization's
reason for existence. It describes the organization's purpose and its
overall intention. It addresses three main questions:
 Why do we exist?
 What are we providing? 03/26/2022

 For whom do we exist?

 Examples of Mission and Vision
Company Vision
Square We view business as a means to the
Pharma material and social wellbeing of the
investors, employees and the
society at large, leading to accretion
of wealth through financial and
moral gains as a part of the process
of the human civilization.
Brac A world free from all forms of
exploitation and discrimination
where everyone has the opportunity
to realize their potential.
Mission
Our Mission is to produce and provide
quality & innovative healthcare relief
for people, maintain stringently ethical
standard in business operation also
ensuring benefit to the shareholders,
stakeholders and the society at large.
Our mission is to empower people and
communities in situations of poverty,
illiteracy, disease and social injustice.
Our interventions aim to achieve large
scale, positive changes through
economic and social programs that
enable men and women to realize their
potential. 03/26/2022
 Examples of Mission and Vision
Company Vision
Unilever To make sustainable living
commonplace. We believe
this is the best long-term way
for our business to grow.
Mission
To add vitality to life. We meet
every day needs for nutrition,
hygiene and personal care with
brands that help people feel
good, look good and get more out
of life

Google To provide access to the To organize the world’s

world’s information in one information and make it
click. universally accessible and useful.

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Roles of Mission statements
Mission statements help at four places in the rational model of strategy:

Mission and objectives: The mission sets the long-term framework and route
for the business. It is the job of the strategy to progress the firm towards this
mission over the coming few years covered by the strategy.
Corporate Appraisal: Assessing the firm’s opportunities, threats, strengths
and weakness (SWOT) must be related to its ability to compete within chosen
business domain. Factors are relevant only when they affect its ability to
follow its mission.
Strategic evaluation: When deciding between alternative strategic options,
management can use the mission as a touchstone or benchmark against which
to judge their suitability. The crucial question will be, “Does the strategy help
us along the road to being the kind of business we want to be?”
Review and Control: The key targets of the division and functions should be
related to the mission, otherwise the mission will not be accomplished.03/26/2022
Benefits of Mission Statements
King and Cleland recommend that organizations carefully develop a written mission statement in order
to reap the following benefits:
 To ensure unanimity of purpose within the organization
 To provide a basis, or standard, for allocating organizational resources
 To establish a general tone or organizational climate
 To serve as a focal point for individuals to identify with the organization’s purpose and
direction, and to deter those who cannot from participating further in the organization’s
activities
 To facilitate the translation of objectives into a work structure involving the assignment of
tasks to responsible elements within the organization
 To specify organizational purposes and then to translate these purposes into objectives in
such a way that cost, time, and performance parameters can be assessed and controlled.
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Contents of Mission Statements
Fred R. David and Forest R. David provide a useful list of what areas should be included in a mission
statement:
 Customers- A statement making reference to who are the firm’s customers.
 Products or services- A description of what are the firm’s major products or services.
 Markets- Geographically, where does the firm compete?
 Technology- Is the firm technologically current?
 Concern for survival, growth, and profitability - Is the firm committed to growth and financial
soundness? It focuses on the broad economic objectives of the firm.
 Philosophy - A statement of what are the basic beliefs, values, aspirations, and ethical priorities of the
firm.
 Self-concept - A statement of what is the firm’s distinctive competence or major competitive advantage.
 Concern for public image - A statement of how much the firm responsive to social, community, and
environmental concerns? 03/26/2022

 Concern for employees – Are employees a valuable asset of the firm? It’s a statement of the firm’s
Goals
A goal is a general statement of what you want to achieve. More
specifically, a goal is a milestone(s) in the process of implementing a
strategy. Examples of business goals are:
• Increase profit margin
• Increase efficiency
• Capture a bigger market share
• Provide better customer service
• Improve employee training
• Reduce carbon emissions

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Objectives
An objective turns a goal’s general statement of what is to be
accomplished into a specific, quantifiable, time-sensitive statement of
what is going to be achieved and when it will be achieved. Examples
of business objectives are:
 Earn at least a 20 percent after-tax rate of return on our
investment during the next fiscal year
 Increase market share by 10 percent over the next three years.
Action Plans
Action plans are statements of specific actions or activities that will
be used to achieve a goal within the constraints of the objective.

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Goal Objective Action Plan
Increase Profit Margin Reduce operating costs by Finance department will
10% in 18 months conduct an in-depth
analysis of identifying low
cost suppliers.
Improve employee skills Conduct a training program in A special committee will be
the next 12 months to improve formed to select and hire a
employee skills professional trainer to
conduct the training.
Increase Profit margin Increase sales volume by 20% Marketing department will
in 12 months. create and implement a
plan to increase sales in
regions west and east.
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Specific means ‘clearly expressed’ e.g. ‘improve
performance’ is too vague; ‘improve operating profit’ is
better

Measurable means ‘quantifiable’ e.g. ‘improve image’ Vs.

‘improve operating profit to 20% of turnover’

Attainable means perceived as achievable by those being held

responsible for achieving them, e.g. ‘improve operating profit to 80%
of turnover’ probably will be impossible to achieve. Unachievable
objectives demotivates those held responsible for them.

Relevant means explicitly linked to the overall goals of

the business, e.g. ‘increase customer retention by 5%’ is
relevant to the overall goal of ‘delight our customer’

Timescales have to be set if the objective is ever to be

achieved, e.g. ‘by 31 December 2020’.
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Critical Success Factors (CSF)
 The concept of CSFs (also known as Key Results Areas, or KRAs) was first
developed by D. Ronald Daniel, in his article "Management Information
Crisis" (Harvard Business Review, September-October 1961).

 John F. Rockart, of MIT's Sloan School of Management, built on and

popularized the idea almost two decades later.

 Rockart defined CSFs as: "The limited number of areas in which results, if
they are satisfactory, will ensure successful competitive performance for the
organization. They are the few key areas where things must go right for the
business to flourish. If results in these areas are not adequate, the
organization's efforts for the period will be less than desired.“

 Rockart also concluded that CSFs are "areas of activity that should
03/26/2022 receive

constant and careful attention from management."

Critical Success Factors (CSF)
 They may be financial or non-financial.
 Each CSF must have a Key Performance
Indicator (KPI) attached to it so as to allow
measurement of progress towards the CSF.
 There are two types of CSF:
 Monitoring – Keeping abreast of
ongoing operations, e.g. expand foreign
sales.
 Building – tracking progress of the
‘programs for change’ initiated by the
executive, e.g. decentralize the
organization.

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Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs) are the critical (key) indicators of progress
toward an intended result. KPIs provides a focus for strategic and operational
improvement, create an analytical basis for decision making and help focus
attention on what matters most. As Peter Drucker famously said, “What gets
measured gets done.”

CIMA defines KPIs as quantities but not necessarily financial metrics that can
indicate progress towards a strategic objective. Key performance Indicators are
integral to the balanced scorecard ideas.

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CSF VS. KPI

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Key Performance Indicators (KPIs) of DPDC (2018-2019)

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