ANALYTICAL FRAMEWORKS AND STRATEGIC MANAGEMENT

Professionalism means conforming either to the technical or ethical standards of profession or an occuplion regarded as such. The important role that managers play in modern business organizations requires a professional approach or what is called professionalism in management. Challenges presented external and internal environment require practitioners who are qualified and professional trained on professional outlook Managerial skills are so important to organizations and society that these cannot be ignored. The increasing importance of managerial function requires the managers lo strive for the high standards expected of professionals.

Possession of technical ability proficiency in financial management and resources utilization and acquisition of human relations skills go a long way in enhancing effectiveness of a professional manager in today’s environment.

A profile of a professional manager viz nature of his job or overall responsibility and knowledge abilities and skills required to be effective and efficient manager in the changing business environment. The primary responsibilities include examining organizational objectives assessing available resources, their strengths and weaknesses, results to be achieved, remundying deficiencies and designing a strategy of action to achieve the required results. He needs to struck a balance of skills which demand perception and judgment. The professional manager affairs in such a manner that he succeeds in. achieving the tasks set the Board of Directors. The job of professional manager can be described in the job

DEVELOPING A STRATEGY
Strategy making involves a few steps

  1. Identifying specific roles suitable for the company in view of society’s needs and the company resources.
  2. Integrating various roles with other company efforts to obtain combined effects.
  3. Expressing the plans interms of targets.
  4. Setting up sequences and timing of changes.

Developing a strategy and translating it into managerial action requires decision making at each stage.

DETERMINANTS OF STRATEGY
The considerations that affect a strategy are

  • Demand for firm’s goods and services
  • Supply of services
  • Competitive conditions in the industry
  • Key success factor
  • Growth potentials and profit prospects
  • Market strength
  • Financial capacity of the management etc

STRATEGIC MANAGEMENT

Strategic management as a stream of decisions and actions which leads to the development of an effective strategy or strategies to help to achieve corporate objectives. The end result of strategic management is a strategy or a set of strategies for the organisation. Strategic management is the process which deals with fundamental organizational renewal and growth with the development of the strategies, structures and systems necessary to achieve such renewal and growth, and with the organizational systems needed to effectively manage the strategy formulation and implementation process. Firstly this includes two sub-processes within the overall strategic management process. Through the formulation and implementation of sub-processes, the development of strategies, structures and systems is done to achieve the objectives of organizational renewal and growth of the strategic management process. It is also considered as managing the organizational systems which are required for strategic management. For instance, the administrative arrangement necessary for formulation and implementation of strategies would also be included in the process of strategic management.

In simple words, Strategic Management can also be defined as the formulation and Implementation of plans and the carrying out of activities relating to the matters which are of vital, Importance or continuing .importance to the total organisation. This is an allen compassing view of strategic management and considers all plans and activities which are Important for an organisation. Strategic management is a systematic approach to a major and increasingly important responsibility of general management: to position and relate the firm to its environment in a way which ensures Its continued success and make it secure from surprises. The emphasis is on the environment-organisation relationship for the purpose of achieving the objectives of continued success and protection from environmental surprises through the adoption of a systematic approach to general management. Strategic management is defined as the set of decisions and actions resulting in formulation and implementation of strategy. Strategies designed to achieve the objectives of an organisation.

The functions of strategic management can be designed as a set of activities related to the maintenance of an organization in operations. This includes

  • Planning for future (developing organizational objectives and purposes).
  • Developing organization structure and Developing of Effective information System.
  • Motivating people (seeking cooperation from different members of the organization).
  • Use of necessary control systems.
  • Providing Leadership (Long term survival of the organisation).

Thus, Strategic management is considered as either decision-making and planning, or the set of activities related to the formulation and implementation of strategies to achieve organizational objectives. The emphasis in strategic management is on those general management responsibilities which are essential to relate the organisation to the environment in such a way that its objectives are to be achieved.

This model is widely accepted and comprehensive. Significant improvement in sales, profits and productivity. Allows for identification, prioritization and exploitation of opportunities. Provides an objective view of management problems. Creates a framework for internal and external communication. It gives encouragement to forward thinking. It gives a degree of discipline and formality to the management of a business. Identification on organizations existing mission, objectives, and strategies is the logical starting point for strategic management.

Mission statement
Every organization has a mission, objectives, and strategy, even if these elements are not consciously designed, written or communicated. The strategic- management process is dynamic and continous. A change in any one of the major components in the model can necessitate a change in any or all of the other components. Strategists do not go through the process in lock step fashion. Many organizations conduct formal meetings semiannually to discuss and update the firm‘s mission, opportunities/threats, strengths/weaknesses, strategies, objectives, policies, and performance. These meetings are commonly held off-premises and called retreats. The rationale for periodically conducting strategic-management meetings away from the work site is to encourage more creativity and condor among participants. Good communication and feedback are needed Throughout the strategic management process. A number of different forces affect the formality of strategic management in organizations such as:-

• Size of an organization is a key factor;
• Smaller firms are less formal in performing strategic-management tasks.
• Management styles
• Complexity of production process
• Nature of problems
• Purpose of planning system
• Guides executives in defining the business their firm is in, the end it seeks, and the means it will use to accomplish.
• The strategy formulation process begins with definition of the company mission.
• This is a declaration of an organisation‘s reason for being.
• It answers the pivotal question, ‖what is our business‖
• Sometimes called
• A creed statement
• A statement of purpose
• A statement of philosophy
• A statement of beliefs
• A statement of business principals
• A vision statement
• Characteristically, it is a statement, not of measurable targets but of attitude, outlook and orientation

In general terms, the mission statement addresses the following questions:

  1. Why is this firm in business?
  2. What are our economic goals
  3. What is our operating philosophy in terms of quality, company image, and self-concept?
  4. What are our core competencies and competitive advantages?
  5. What customers do and can we serve?
  6. How do we view our responsibilities to stockholders, employees, communities, environment, social issues, and competitors

A good mission statement describes an organization‘s purpose, customers, products or services, markets, philosophy, and basic technology

Importance of a clear mission
1.High performing companies have got a more comprehensive mission statement than low performers
2.Organizations‘ carefully develop a written mission statement for the following reasons

• To ensure unanimity of purpose within the organisation
• To provide a basis, or standard, for allocating organisational resources
• To establish a general tone or organisational climate
• To serve as a focal point for individuals to identify with the organisation‘s purpose and direction; and to deter those who cannot from participating further in the organizations activities
• To facilitate the translation of objectives into a work structure involving the assignment of tasks to responsible elements within the organisation
• To specify organisational purposes and translation of those purposes into objectives in such a way that cost ,time, and performance parameters can be assessed and controlled

Vision VS Mission
• Some organisations develop both a mission statement and a vision statement.
1.Wherereas the mission statement answers the question, ‖what is our business‖
2.The vision statement answers the question, ‖what do we want to become‖

The process of developing a mission statement

• A clear mission statement is needed before alternative strategies can be formulated and implemented
• It is important to involve as many managers as possible in the process of developing a mission statement, because through involvement, people become committed to an organisation.
• A widely used approach is to select several articles about mission statements and ask managers to read these as background information
• Then ask managers to personally prepare a mission statement for the organisation
• A facilitator, or a committee of top managers, should merge those statements into a single document and distribute this draft mission statement to all managers
• A request for modifications, additions, and deletions is needed next, along with a meeting to revise the document
• The process of developing a mission statement represents a great opportunity for strategists to obtain needed support from all managers in the firm
• During the process of developing a mission statement, some organizations use discussion groups of managers to develop and modify the mission statement
• Some organizations hire an outside consultant or facilitator to manage the process and help draft the language.

Fundamental factors to be incorporated in the Mission

• Basic product or service, primary market; principal technology
• Company goals: Survival, Growth, Profitability
• Company philosophy (beliefs, values, aspirations etc.)
• Public image
• Company self-concept (how it relates to its external environment)
• Customers
• Quality

Corporate Social Responsibility

• In defining the company mission, strategic managers must recognize the legitimate rights of the firm‘s claimants
• These include, stakeholders and employees and outsiders affected the firms
actions.

  1. Customers
  2. Suppliers
  3. Governments
  4. Unions
  5. Competitors
  6. Local Communities
  7. General Public

• Strategic managers can use a continuum that encompasses four types of social commitment

  1. Economic
  2. Legal
  3. Ethical
  4. Discretionary social responsibility

Economic Responsibilities
• This is the most basic CSR of a business
• The CSR is assured to be providing goods and services to society at a reasonable cost

In discharging the economic responsibility; the company also emerges as socially responsible providing productive jobs for its workforce, and tax payments for its local, state and federal governments.

• Legal responsibilities

  1. Reflects the firms obligations to comply with the laws that regulate business activities
  2. The consumer and environmental movements focused increased public attention on the need for social responsibility in business lobbying for laws that govern business in the areas of pollution control and consumer safety

Effects of CSR on mission statement

  1.  In developing mission statements, managers must identify all stakeholder groups and weigh their relative rights and abilities to affect the firms success
  2. Some companies are proactive in their approach to CSR, making it an integral part of their mission statement. Others are reactive, adopting socially responsible behaviour only when they must.

Environmental scanning

The Internal
All strategic managers must have an in-depth understanding of the strategic factors within the organization. These factors are the internal strengths and weaknesses that act to either constrain or support a strategy. The strategic factors in a corporation‘s internal
environment are:-

  1. Structure
  2. Culture and
  3. Resources.

1. Structure

A structure is a formal arraignment of roles and relationships of people in such a way that work is directed toward the achievement and accomplishment of an organization goals and mission. The structure of any organization is viewed in terms of communication authority and work flow. There are five types of organization structures

  • Simple
  • Functional
  • Divisional
  • Matrix
  • Conglomerate

2.Culture

An organizations culture is the collection of beliefs, expectations and values that are shared its members and are passed from one generation of employees to another. The result is norms which are rules or codes of conduct that define that behavior is acceptable from top management to the rank and file. Infact, the behavior of people in an organization is shaped corporations of the world have distinctive cultures that are somehow responsible for their ability to create, implement, and maintain their world leadership positions.

3.Resources

On the most practical ways to develop a master strategy of a corporation is to choose particular roles that are appropriate in view of competition and corporations resources. Corporation‘s resources are considered in terms of financial, physical and human, organizational systems and technological abilities. These resources are normally dealt with under functional areas of marketing, finance, research and development, operations, human resources and information‘s.

External Environment
• This is determined conducting an external strategic management audit (sometimes called environmental scanning or industry analysis).
• This audit focuses on identifying and evaluating trends and events beyond the control of a single firm.
• An external audit reveals key opportunities and threats confronting an organisation so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats.

External forces can be divided into five broad categories:
• Economic forces
• Social demographic, and environmental forces;
• political, governmental, and legal forces;
• technical forces;
• competitive forces.
• Sources of information
• Key magazines
• Trade journals
• Newspapers
• Collection of primary data through questionnaires
• Suppliers
• Distributors
• Customers
• Competitors
• Universities
• Libraries
• Periodic scanning reports can be submitted to the department concerned, normally strategic planning department or the relevant department
• Once the information is gathered, it should be assimilated and evaluated for decision making

Technological forces

• This is very rapid
• Includes the internet
• W.W.W, EDI, money transfer, etc…
• Help to identify opportunities as well as threats in business Competition, products, market, customers, pricing etc…
• Facilitates efficiency and effectiveness in business transaction
• The organisation must effectively utilize the opportunities availed the technological forces and minimize the threats
• The organisation must change with the changing technology to remain competitive

Economic forces

• Inflation
• Unemployment
• Availability of Credit
• Level of disposable income
• Propensity of people to spend
• Interest rates
• Economies of scale
• Value of Kshs in world markets
• Foreign countries economic conditions

Social cultural forces

• Social cultural, demographic, and environmental changes have a major impact upon virtually all products, services, markets, and customers
• Small, large, for-profit and non profit companies are affected threats and opportunities created the above factors
• Managers must understand the dynamics of this environment and make decisions which will enable the organizations attain their goals and objectives
• In Kenya the scourge of AIDS/HIV pandemic on the productivity of the workforce must be addressed.
• Cultural practices in certain communities must be eliminated
• Tribalism has to be reduced to bare minimum/cohesive nation a must for prosperity
• Population explosion needs to be curbed
• Poverty levels should be monitored
• Shelter
• Literacy levels/Education institutions should be improved and quality education
• Infrastructure
• Health facilities should be improved
• Number of marriages
• Number of divorces
• Number of births
• Immigration and emigration rates
• Social security programmes
• Life expectancy rates
• Per-capita income
• attitudes towards business
• Lifestyles

Political forces

• Central government, local and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations
• Political, governmental, and legal factors can therefore represent key opportunities or threats for both small and large organizations
• Government regulations and deregulations
• Change in tax laws
• Voters participation rates
• Level of defense expenditures
• Legislation on equal employment
• East African Community
• Relationship between Kenya, Tanzania, Uganda
• Movement of people across the borders
• Size of government budgets
• Location and severity of terrorist activities
• General election impact on the people, policy and economy.

Establish long term objectives

The strategic management is the major vehicle for planning and implementing major changes an organization makes. Many organizations tend to spend substantial amount of time and effort in developing the strategic plan, without devoting sufficient attention to the means and circumstances under which the strategic plan to be implementation has often been seen that changes come through the implementation. Though strategic management begins with strategic planning, the other components are no less important.

About the implementation of strategic plans, the need (or proper corporate culture, organization structure and appropriate policies regarding appraisal need to be stressed. Strategic Management is a stream of decisions and actions with a view to develop an effective strategy (or strategies) which would help the organization achieve its Corporate goals. Strategic management involves strategic analysis. Strategic choice making and strategic implementation strategies exist at all levels-Corporate level business level and operational level. There is a need for strategic vision for strategic managers and the benefits of strategic management.

The strategic management process is the way in which strategists determine objectives and make strategic decisions. In the management of business in earlier times, the focus of the manager’s job was on decision for today’s world in today’s business. This approach may have been satisfactory then. However, the changes that have been taken place over a period of time in the environment have led to the need for a different approach to management Instead of focusing all their time on today’s problems, the managers began to see the value of trying to anticipate the future and to prepare for it. They did this in several ways. One way vas to evolve systems and prepare manuals (or procedures) for decisions which are routine and repetitive in nature as this allowed more time for important decisions. Another way was to prepare budgets and thereanticipate future sales and flow of funds.

Long range planning

These things helped, but they tended to be based on the present business and its present conditions and as such these mechanisms could not deal well with the change‘s themselves. The lack of emphasis on future in budgeting led to long range planning. Long range planning focused on forecasting the future using economic and technological tools. The formulation of these plans has bean the responsibility of corporate staff group, whose reports forwarded lo top management. The top management could approve, disapprove or modify these plans. However, the corporate planners ware not the decision makers.

Long range planning had some impact, but not as much as would be expected if the top management were involved. Moreover, the corporate planners were producing what can be termed “first-generation plans”. First-generation planning means the firm chooses the most probable appraisal of the future environment and of its own strengths and weaknesses. From this, ‘it evolves the best possible strategy for a match of the environment and plan for the most likely future. Modern approach is called “strategic planning.” The top management, including the board of directors and corporate planners have important roles to play in strategic management. But the starting roles are for the general managers of the corporation and its major operating divisions. Strategic management focuses on analysis thus strategies are then prepared for each of these likely future scenarios.

Generate, evaluate and select strategies
Interaction of organization with its environment in the light of its strengths and weaknesses results into various strategic alternatives. This process may result in to large number of alternatives through which an organization can relate itself to the environment.

However, all alternatives can not be chosen even if all of them produce the same results. Obviously managers may like to limit themselves to the serious consideration of some of the strategic alternatives so that they are saved from unnecessary exercise. Therefore, the strategic alternatives to be identified in the light of strategic opportunities and threats generated through environmental analysis, and organizational mission and objectives. The identification of various strategic alternatives leads to the level when managers consider some alternatives serious/y and may choose one of the most acceptable. This is the stage of strategic decision process and all factors for decision making are relevant.

Since the particular strategy attempts to affect the organizational operation in some predetermined manner, the choice process systematically considers how each alternative strategy affects the various critical factors of the organizational functioning. Further, the chosen alternative to be acceptable in the light of organizational objectives. Thus, it is not necessary that the chosen alternative is the best one. In the choice process, apart from the various organizational and environmental factors, personal factors play considerable role because choice of strategy reflects the personal values and aspirations of strategist.

Establish policies and annual objectives

Annual objectives serve as guidelines for action, directing and channelling efforts and activities of organizational members. They serve as standards of performance and as such give incentives for managers and employees to perform. They provide a basis for organizational design. Annual objectives are essential for strategy implementation because they:

  • Represent the basis for allocating resources;
  • Are primary mechanism for evaluating managers;
  • Are the major instruments for monitoring progress toward achieving longterm objectives; and
  • Establish organizational, divisional and departmental priorities.

Annual objectives translate long-range aspirations into this year‘s targets. Annual objectives should be consistent across hierarchical levels and form a network of supportive aims. They should be:

  1. Measurable,
  2. Consistent,
  3. Reasonable,
  4. Challenging,
  5. Clear,
  6. Communicated throughout the organization,
  7. Characterized an appropriate time dimension, and
  8. Accompanied commensurate rewards and sanctions.

They should be compatible with employees‘ and managers‘ values and should be supported clearly stated policies

Policies

Policies are specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work towards stated goals. They are broad, precedent-setting decisions that guide or substitute for repetitive managerial decision-making. Therefore, they are directives designed to guide the thinking, decisions, and actions of managers and their subordinates in implementing a firm‘s strategy. Policies set boundaries, constraints and limits on the kind of administrative actions that can be taken to reward and sanction behaviour. They clarify what can and cannot be done in pursuing of an organization‘s objectives. Policies let both employees and managers know what is expected of them, thereincreasing the likelihood that strategies will be implemented successfully. Whatever their scope and form, policies serve as a mechanism for implementing strategies and achieving objectives.

Policies

represent the means for carrying out strategic decisions and hence should be stated in writing whenever possible.

Functional strategies

They are the shot-term activities that each functional area within a firm must undertake in order to implement the grand strategy. Functional level strategy primarily focuses on achieving maximum use of resources i.e attaining maximum resources productivity. Functional strategies address issues regarding the coordination and integration of activities within a single function. They must be consistent with both short and long-term objectives.

Allocate resources

Once the creative and analytical aspect en strategy formulation has been decided, the organization tries to convert the strategy into something operationally effective. To bring the result toe strategy to be put to action because mere choice of even the soundest strategy may not lead to its objectives. In strategy implementation, various activities involved are design of organization structure to suit the chosen strategy, effective leadership, development of functional policies, allocation of resources, development of effective information system and use of control system, etc.

‘Measure and evaluate

Review and control may be treated as the fast stage of strategic management process. However, this is an on-going process and review and control to be taken as the process for the future course of action. For effective implementation and consequently achievement of organizational objectives, it is necessary that there is continuous monitoring of the implementation of the strategy so that suitable action is taken whenever something goes wrong.

Review and control of strategy and its implementation may result into various actions that the organization has to take to be successful depending on the situation. Such action may be required in the area of correcting implementation of strategy, choice of strategy or change in organizational mission and objectives and consequently leading to change in that identification of strategy. Therefore, strategic management process be taken as dynamic so that new action is taken whenever there is any change in any of the factors affecting strategy.

Factors to consider in strategy formulation

  1. The most important outcome from successful strategy implementation is real value added through goal achievement and increased stakeholders satisfaction.
  2. Successful strategy implementation depends on various factors.
  3. For effective strategy implementation, there must be congruence between several elements: organization structure, culture (shared values), resource (budget) allocation, staff competencies and capabilities, support systems, reward systems, policies and procedures, and leadership style.
  4. Organizational structure is the formal framework which job tasks are divided, grouped, and coordinated
  5. It helps people pull together in their activities that promote effective strategy implementation.
  6. The structure of an organization should be compatible with the chosen strategy and if there is incongruence, adjustments will be necessary either for the structure or the strategy itself.
  7. For a successful strategy implementation, a supporting organization structure is critical.
  8. Positioning of the functions in the organization structure sets more focus on key functions whose performance is critical to the success of a firm‘s strategy and institutionalizes the decision making of the heads of these functions.
  9. When the business strategy changes, organization structure is received in light of the changes in strategy to maintain the relevance of the structure.
  10. Organizational culture is a system of shared meaning and beliefs held organizational members that determines, to a large degree on how they act.
  11. It provides the social context in which an organization performs its work.
  12. It guides the organization‘s members in:
  13. Decision making,
  14. Determining how time and energy are invested, and Deciding which options are looked on favourably from the start and which types of people are selected to work for the organization.
  15. It is the strategy implementer‘s task to bring the corporate culture into alignment
    with the strategy and keep it there once a strategy is chosen.
  16. Culture can either be a strength or a weakness.
  17. As strength, culture can facilitate communication, decision-making, and control, and can create co-operation and commitment.
  18. As a weakness, culture may obstruct the smooth implementation of strategy creating resistance to change.
  19. Organizations have at least four types of resources that can be used to achieve desired objectives, namely:
  20. Financial resources,
  21. Physical resources,
  22. Human resources, and
  23. Technological resources.
  24. It is possible to implement a strategy with the resources available but impossible to implement a strategy which requires more resources than can be made available.
  25. Innovative state-of-the-art support systems can be a basis for competitive advantage if they give firm capabilities that rivals can‘t match.
  26. Strategy implementation is also affected how well policies and operating procedures that aid the task are prescribed.
  27. New or revised policies and procedures provide top-down guidance to operating managers, supervisory personnel and employees regarding how certain things need to be done and what behaviour is expected.
  28. Responsibility for strategy implementation should be clearly defined. The ―How‖ of allocating responsibility is also important.
  29. Roles played are determined the nature of institutional structures that are in place:
  30. The Board
  31. Top Management Team
  32. Middle Management
  33. Operational Staff
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