Contents ‘CHAPTER 1 The strategic management process Kobus Lazenby ll 12 13 4 What is strategic management?....... 1.2.1 Defining strategic management, 1.2.2 Origins of strategy... 1.2.3 Why is strategy important? . 1.24 Key elements of strategy . 125 Levels of strategy . 1.2.6 ‘The people involved in the strategic management process. . 1.2.7 Characteristics of strategic planning . ‘The strategic management process. ...... 1.3.1 Organisational direction and environmental analysis 1.3.2 Strategy formulation... 1.33 Strategy implementation. 1.3.4 Strategic control and evaluation Different approaches to the strategic management process 1.4.2 The emergent strategic approach Benefits of strategic management. Risks of strategic managemen ‘The drivers of the organisation’s environment 1.7.1 The information revolution, 1.7.2 Technological advances and breakthroughs . 1.7.3 Globalisation PARTI STRATEGIC DIRECTION AND ENVIRONMENTAL ANALYSIS CHAPTER 2 Strategic direction Tienie Crous and Kobus Lazenby 21 BESERRERE Scanned with CamScanner Scanned with CamScanner242 Why a mission statement? ., 24.3 Requirements for a good mie 2.72" 2.44 The development ofa mission statement 2.5 Core values. . missioy ‘Statement. 25.1 What isa core value? 2.52 The b to SSeSeeeesy ‘Case study CHAPTER 3 Strategy, ethics and social responsibility Elray Smith 31 32 a4 3.5.4 Justice approach ... Mechanisms and structures for managing ethics CHAPTER 4 Risk management and corporate governance (Carla Serfontein 4.1 Introduction .... Scanned with CamScanner Scanned with CamScanner43 46 az 48 2 2 72 3 +73, 42.5 Identifying and assessing rs B ‘The risk management process .. 4 aluating the organisation's risk management programme . 76 Response to organisational risks 16 45.1 Avoidance 8 45.2 Transfer 76 45.3 Mitigation om 4.5.4 Diversification 7 7 7 ‘7 78 78 -80 0 1 473 ‘Committee responsible for nominations of members to the governing body 4.75 Commitiee responsible for remuneration. . ! 4.7.6 Social and ethics committee... 92 Strategy and corporate governance . 3 4.6.1 Shift in the focus of objectives 4.8.2 Stakeholder-inclusive approach . 48.3 a of the business strategy..... CHAPTER 5 Internal environmental analysis Kobus Lazenby 5.1 Introduction 108 52 a 53 SWOT, es vaseejaneivay tas sarees ates 105 54 Internal analysis for effective strategy development 5.5 54.1 Resource-based view $42 Value chain analysis 5.4.3 Functional approach . ‘The SWOT matrix. Scanned with CamScanner Scanned with CamScanner6.1 6.2 63 6.4.4 Threat of substitute products . 6.4.5. Rivalry among competing organisations 6.4.6 Limitations of Porter's Five Forces model. .....- ‘Key factors for success in the industry . 7.34 The scenario development process. 7.35 Characteristics of poorly designed scenarios... + 67 7.3.6 What constitutes a good scenario? . 167 7.4 Scenario development in South Africa. . . . «168 7.4.1 A two-scenario design .. 742 Athree-scenario design. 7.43 A four-scenario design .. 75 Patil together wth sear deveepeet in tre managment 170 Scanned with CamScanner Scanned with CamScannerPART ll STRATEGY FORMULATION CHAPTER 8 Business-level strategies Adii Drotskie and Marike van Wyk SSesag 83 Whatis business-level strategy’... B4 Key contributions of a business-Ievel strategy in an organisation 85 Five generic business-l level strategies. 8.5.1 Cost Leadership or Low-Cost Provider strategy. 85.2 Broad Differentiation strategy .......-++++++ 8.5.3 Focused strategy (Cost Leadership and Differentiation) 8.5.4 Best Cost or Integrated Cost Leadership/ Differentiation strategy. 8.6 Criticism of Porter's generic business-level strategies . BSRPRaR Exploring the web Case study. CHAPTER 9 Corporate-level strategies ‘Adri Drotskie and Marike van Wyk 9.1 Introduction .. 201 9.2 Defining corporate-level strategy 201 9.3. Purpose of corporate-level strategy 202 9.4 Four categories of corporate-level strategy. 203 9.4.1 Growth strategies. ............. 203 9.4.2 Cooperative or combination strategies . 9.4.3 Stability or turnaround strategies . 9.4.4 Exit or disinvestment strategies . 9.5 Linking the generic business-level strategies with corporate-level strategies 9.6 Summary... CHAPTER 10 Recovery strategies 10.1 Introduction... 10.33 Common symptoms of failure . « RESREB é Scanned with CamScanner Scanned with CamScanner10.4 Turnaround . 41 Difference benween turnaround and normal management. 10.4.2 The turnaround process. BEESEERESS m2 Industries in different phases of the industy life cycle . 11.2.1 Industries in the introduction (emerging) life cycle phase. 11.2.2. Industries in the growth life cycle phase . 11.2.3 Industries in the maturity life cycle phase. 11.24 Industries in the decline life cycle phase. 11.3. Strategies for competing in fragmented industries . 114 Alignment of strategy with a specific situation. Bez 247 249 251 BEDE 122.1 Advantages and some shortcomings of applying strategic: management in the public sector... 122.2 Nature of the ervronment ofthe piso: BEREE 98 | 12.5 Strategy implementation. 12.6 Strategic control... 12,7 Strategies for not-for-profit organisation: 12.7.1 Thestrategic management concepts and techniques in NFPs 12.72 ‘Revenue sources for NFP organisations......... 127.3 Constraints on strategic management for NFP organisations. ZARTIIRRR Scanned with CamScanner Scanned with CamScannerBue88 8 13.4.1 Contribution to the portfolio of the organisation 13.4.2 Investment appraisal ... 1343 Cash flow forecasting 13.44 Cost-benefit analysis 13.45 Impactanalysis........, 13.5 Strategic evaluation in the different strategic approaches . 13.6 Summary. Exploring the web . BSSEEREESESRRRR By PART Ill STRATEGY IMPLEMENTATION CHAPTER 14 Strategy implementation and Kobus Lazenby and change management Scanned with CamScanner Scanned with CamScanner15.3.1 Building an organisation that develops the necessary competencies and capabilities ............ 000006 +321 15.3.2 Strong strategic leadership to drive the implementation process .....323 15.33. Establishing and nurturing a strategy-enhancing corporate culture. .. 324 15.34 Linking rewards and incentives to the achievement of set strategic targets and milestones 15.35 Establishing an organisational structure that fits the strategy. 15.3.6 Allocating the resources that are necessary for successful strategy 153.7 153.8 Developing action plans, short-term objectives and functional tactics 333 15.39 Designing and incorporating information and operating systems ....333 153.10 Striving for continuous improvement by implementing best practices 336 15.4. Strategy implementation and corporate governance. 336 15.5 Summary... Exploring the web 16.3.2 Strategic intelligence Key actions and responsibilities of strategic leaders. . 16.4.1 Determining the organisation’s strategic direction the organisation's resource portfolio Scanned with CamScanner Scanned with CamScannerWA 17.5 176 177 17.8 Wa 17.10 Summary . spects of culture (manifestations, peopte and culture) Denerminants of organisational cultute 17.5.1 Leadership style... . ++» 17.5.2 Organisational policies 17.5.3. Managerial values. - 17.54 Organisational structure « 17.5.5 Characteristics of the workforce - ‘Types of organisational culture ....++++ r++ +++** Organisational culture and competitive advant Culture must fit the new strategy. 17.9.1 Changing the organisation: gFESRS323 PART IV STRATEGY CONTROL AND EVALUATION CHAPTER 18 Strategic control and improvement Kobus Lazenty wl 182 183, 184 Introduction . Nature of strategic 391 18.2.1 Strategic control asa component of the strategic management process 39]. 182.2. Types of strategic control. .. eee 8 182.3 Criteria for evaluating a strategy . 18.2.4 Designing an effective strategic contral system. ‘The balanced scorecard as strategic control......... ‘Sustaining competitive advantage throu; roves 184.1 Copano with Siete chine ae aa 1842 Comparison with key success factors. 184.3 Benchmarking ........ 18.4.4 Total quality management 184.5 Six Sigma nas approach to continuous improvement. BEERREREEESEE E29 fore) Scanned with CamScanner Scanned with CamScannerHLEARNING OUTCOMES nies studying this chapter, you should be able to do ithe following: Understand the definition and explanation of stra- regic management Differentiate between the key elements of strategy Th e strateg ic identify the people involved in strategic manage- ment Understand the characteristics of strategic planning mana ge me nt Understand the strategic management process 3s ‘well as why strategy fs important process ecognise the benefits of strategic management Recognise the risks of strategic management Understand all the drivers of the organisation's environment Perceive the link between strategy and ethics es Kobus Lazenby PRM aes as in the business world and also in not-for-profit organisations ful and others struggle or even fall, Why will a company like Wool- ny will experience financial distress? The question can also all managers have these and not all can utilise ‘eved through experience in an industry or through other relevant fe where intuition plays a role is in the case of Richard Branson: all his successes with the Virgin Group were due fo strategic vision and intuition. This phenome- inon is often referred to as a manager's “gut feeling’. Although luck and intuition may play a role, organisations are usually successful because they plan for the future - they engage in strategic planning and are able to manage their resources and capabiili- ties effectively and efficiently. In an environment where competition Is tough, managers of any organ- th any challenges and be prepared for whatever the future holds. an for the future and prepare themselves for any ‘One of the most important questio why some organisations are success lworths be successful, while another compal ibe asked whether intuition and luck play @ role, Not isation must ensure that they cope wit Strategic management requires all organisations to pl unforeseen cireumstances. In developing southern Africa, the practice of strategic management is even more important. Here © there are so many factors and complicated environmental changes, including economic, social and political ones, that strategic management should be seen 85 essential to the management process of any organisation. Whether your ‘organisation is a public or private company, close corporation, os Scanned with CamScanner Scanned with CamScannersig STRATEGIC MANAGEMENT PROCESS CHAPTER IT . sole ownership, sports clubs church or government organisation, YOU CANNOt survive volatile future without proper In this chapter, which is an introduction esa ai ee Sa bea discussion of some seers Se vent. This book will uy to enhance managers = a On strategie res dhe student of strategic management {0 its possibilities. The YOU Wil me ment ad fon one day means that it is important to understand iow sad wir alae setae canals real help you to understand the important role you have So P Iping your organs, sation to move to.a better strategic position. ment. 1, you will get a feeling for Cm nang 4.2.1 Defining strategic management ment is to position the —— eae ‘There are many different definitions of strategic management. In terms of the different phases of srg. eniivieeni myn can define strategic management as the art and science of formulating, menting and evaluating strategic cross-functional decisions that enable the organisation to achieve its goals and objectives (David, 2009). Harrison and St, John (2002) describe strategic management as the process through which organisations analyse the internal and external environment of the organ. isation to establish goals and create strategies to achieve these goals to the satisfaction of the organ- .¢ isation’s stakeholders. From these explanations, strategic management can be defined as a praces ‘= whereby the internal and external environments are analysed to identify strategic goals and develop strategies in line with the organisation's vision and mission, and that must be implemented through, 2 coordinated and integrated effort of different functional areas to achieve the strategic goals of the organisation with the ultimate purpose of gaining a competitive advantage. Strategic management is concerned with the decisions that organisations must make about their future direction. Develop- ing and implementing these strategies will enhance the organisation's competitiveness. This will add value to all the different stakeholders. By looking at different defini obvious that different tasks can be identified: definitions of strategic management, itis ‘The ultimate objective of strategic managet * Form a strategic visi Sanday iegic vision, mission and values, indicating the long-term direction of the organi- « Identifying wg resources and capabilities through internal Analysing the extemal environments to idenlfychallenene nn aeas * Coordinating and integrating the efforts of people, mimplement the identified strategies » Structures, technologies and allocated resources + Evaluating the success ‘evaluation, and implementation of the och ame a Scanned with CamScanner Scanned with CamScannerTHE STRATEGIC MANAGEMENT PROCESS An important concept in strategic management is “ 4 ie wo hunters who were walking in the bush, when tquccenusaaaet eee diately put his backpack down and got out a pair of running shoes. The other hunter looked at him and with a smile on his face told him that there was no way of outrunning the lion. However, the banter with the running shoes responded, “Perhaps I can't outrun the lion, but I can definitely out- run you! ‘This is what competitive advantage is - 10 have something that wis a ak ak Competitive advantage is the edge that an organisation has nar others The secret recipa of RFC a something that Its competitors do not have - it does something better and in.a certain sense “outruns” its competitors. In the past, a competitive advantage lasted much longer than it does today. Com- petitors emulate your strategic actions, while they also retaliate in such a way that your competitive advantage is eroded, unless you make an effort to improve the sustainability of the competitive advan- tage. Strategy in action 1.1 provides some more examples of competitive advantage. The concept of competitive advantage and associated strategies will be discussed in more detail in Chapter 8. 9 STRATEGY IN ACTION 1.1 COMPETITIVE ADVANTAGE EXAMPLES Technology c First on the list of competitive advantage examples is technology. supenmarters that offer ef-checkout terminal | have a competitive advantage over those who do not. Fast-food restaurants ke Burger King, that offer the passi- bility of ordering via self-service checkout kiosks, are another example. ide Innovation Companies that invest in innovation are definitely one step ahead of their competitors. A great example is zon's convenience stores without any lines or checkouts. You just entes, put the products in your shopping car,“ and leave the shop. Another great example when it comes to innovation i Arb. They took a regular service ite a ‘accommodation for travellers, and developed a completely new approach to it. a Personal touch a inthis case the product is nat necessarily changed 10 fit the specific needs of customer. The organisation ads however a pi ‘touch tothe product in a way that makes the customer feel special and unique. This is whit Coes la id inthe marketing campaign in which It printed ferent names on is cans. People went absolutely crazy about And Coca Col's profits final increase after a long tne of beng stuck inthe same pace, Ang insta bit of personalisation ta a product might help you te gon 2 empties achaniage aa possible competitive of Having factories dose ta Another possi ‘advantage is the geographic location the organisation. 10 the sting pins wight decrease list processes, and enable the company to deve its products faster than he competition. — Trade secrets "This implies t knowledge advantages are not explcly proteced by property law, but rather kept sect = that comes 10 mind is the secret recipe behind Coca-Cola. Lepend says that there is not a the whole recipe. Scanned with CamScanner Scanned with CamScanner1.2.2 Origins of strategy ‘The term “strategy” comes from the Greek word strategos - meaning a military commander. It is cleay that strategy has a military origin, because the earliest strategic decision makers designed a battleficly in such a way that they gained an edge aver their enemy. In terms of this military strategy, the idea was to identify the enemy's weak points and then use your own strengths to attack where the enemy way mast vulnerable. Military operations still work by developing a strategy. There are many games tha children play today on computers and PlayStations that use strategy. Strategy is a common concep; involving the process of analysing the situation and then developing a strategy (plan) for outsmarting ‘your opponent. In the early 20th century, managers started to explore and define management tasks. Frederick ‘Taylor and Henry Fayol were especially concerned with a detailed analysis of organisational functions in order to improve individual management tasks. Although this cannot be directly related to strate. gic management, it formed the broad perspective of haw to perform better. It is only since the 1980s that strategic management has really become a distinct academic field as researchers began to study ‘organisations, managers and strategies (Coulter, 2009). ‘These researchers tried to understand the relationship between strategic decisions and organisational performance, because organisational per- formance is a primary goal of the strategic management process. In the 1970s, the world experienced major oil price increases. The business environment was suddenly confronted with an unpredicted change that caused organisations to reconsider the value of prediction in corporate strategy. This is ‘the time when strategic management really took off as a separate discipline. 1.2.3 Why is strategy important? Strategy is important because it deals with the fundamental issues that will affect the future of the ‘organisation. If organisations make mistakes in their choices of strategy, the consequences will be felt a long time. In fact, it can put the organisation in danger of failure. Strategy is important for the Teasons. ‘The entire organisation is involved in the strategy formulation process. All the functional areas and employees of the business are involved and should contribute to the strategic management pro- cess. + Ithelps the organisation not only to survive, but also to add value to stakeholders. Survival is not the only strategic objective of strategy. * Strategy helps the organisation to develop a relationship with its environment. By analysing the environment, the organisation is able to adapt as it changes. These changes include general fore- es in the macroenvironment, as well as customers and competitors in the task environment. Al ‘organisation must have information on both the internal and external environments to enable itt predict likely opportunities and threats, * 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. \sations operate in ambiguous and complex environments that make strategy not merely an optional Its crucial to note at this stage that even successful organisations will have strategic problems. Orga | choice or “nice-to-have*, but actually a crucial “must-have”. 1.24 Key elements of strategy Wis clear from the sbove discussion that there are some key elements of strategic decisions. The P™* a) Bits. Ae ji Scanned with CamScanner Scanned with CamScanner‘THE STRATEGIC MANAGEMENT PROCESS 1 «Sustainability, decisions must be man implemented and for the benefits of 4 Se Strategic move to be the long term and therefore strategies must be sustainable. « Competitive advantage. Strategy takes long time. Strategies take time to be ‘Seen, Organisations want to survive in Place in a competitive enviconment and the purpose of strategy is to outsmart the Competition. Achieving 4 competitive advantage is important, but more important is achieving a sustainable campetitive advantage. i ae chaleres suvirenment, The internal environment ofthe organisation snust be aligaed with the challenges and opportunities from the external environment. . Process development to deliver the strategy, ‘A strategy Is about how to outsmart the competition. It means that business. processes must be developed to answer the question of how to undertake this task. + Adding value, ‘The last important element af strategy is that it must add value not only to the own- ers of the organisation, but also to all the different stakeholders. Who are these stakeholders and what stake do they have in the organisation? ~ Shareholders - owners of the organisation will receive a higher Income, Employees and management - they will receive the added value through their pay. Customers - they experience value for money if they buy a quality product or service. Gavernment - it receives part of the added value in the form of taxes. Suppliers - they have to supply more stock because of customers buying more. ~ The community at large will experience the added value through the social responsibility of the organisation. 125 Levels of strategy Strategy development and implementation occur at different levels in the organisation (see Figure 11). At the top of the hierarchy, corporate strategy concerned with the overall direction, Scanned with CamScanner Scanned with CamScanner‘CHAPTER I THE STRATEGIC MANAGEMENT PROCESS ‘or best cost) is decided on at this level. It is vital ta remember that this strategy must be followed, th. of an organisation. Functional strategies must be taken in the financial, marketing, human P50 production, and other business functions and must help the organisation (business unit) achieve y goals of the corporate strategy. 4 Itis clear that strategies at the different levels must be aligned in order to achieve the ultimate p : pose and strategic goals of the organisation. 1.2.6 The people involved in the strategic management process Human resources remain the most important factor in and asset of an organisation. Human esourre have to formulate the strategies of the organisation and must implement them successfully. The dy 7 ers of strategy implementation are the employees. The role of human resources in the four stages of strategy - environmental analysis, strategy formulation, strategy implementation and strategy reviey and evaluation ~ will be discussed. . Environmental analysis is the responsibility of every manager from top management level to mid dle management and dowm to the supervisory level. Although top management will drive the p cess, every manager must make inputs from all levels, because middle managers and first-ling managers are the specialists in certain areas of the organisation and their assessments of the env ronment are not only useful but also a necessity. + Strategy formulation is mainly the responsibility of top management. These individuals must use the information from the completed environmental analysis. This is also a very important stage needs as much input as possible from representatives from all levels of management. + The implementation phase of the strategic management process is quite often the most ch ing one. Strategy implementation Is the stage in which all the strategies that have been t in the previous stages shauld now come to life. This is the make-or-break phase of strategic m ‘agement and can only be done through effective communication with all the parties involved. the employees are important and they must realise the vital role they play in implementing th ‘strategy. Organisations cannot expect their strategic plans to be successfully implemented if they do not have the support of all employees. 4 is supposed to achieve? This review and evaluation must be done by management. Top manage- ment identifies the success or failure of a chosen strategy, They have to exercise strategic control in order to establish shortcomings in the strategic management process. i It is therefore quite abvious that it is not only top management who is responsible for strategic agement. The responsibility filters right down to the lower levels of employment. The successful mentation of strategy will never happen if all the employees of the organisation do not und their important role and the value of their total motivation and dedication. 1.2.7 Characteristics of strategic planning Strategic planning is the process of documenting and establishing the direction in which an orga sation should move. This is dane by assessing both where the organisation is at a particular tim? and where one wants the organisation to go in future. The strategic plan includes the vision, missio® and values of the organisation, as well as the long-term goals and the action plans to achieve them. well-formulated strategic plan is important to an organisation's growth and success, because it ind 8 Scanned with CamScanner Scanned with CamScanner‘THE STRATEGIC MANAGEMENT PROCESS 1 cates how best to respond to the opportunities and challenges in the organisational environment. The s¢rategic planning process should have certain characteristics to be effective (Boulter, 1997; Khakee & Stromberg, 1993). A strategic planning process sa leaming process that can provide an opportunity for organisations to understand ck what they want to achieve, and how and what they can do = 4 isadiscovery process because it can expose hidden opportunities and unseen solutions |. isaprocess in which openness to different perceptions and understandings is fundamental in find- ing solutions to problems by focusing on matters of strategic importance requires the separation of strategy from other issues when decisian making has to be done to select 4 future course of action from various alternatives issupported by priority-based resource allocations informs efforts to implement decisions, taking into consideration available organisational resourc- esand capabilities establishes goals and arranges them in a logical hierarchy, nesting one or more goal(s) within ather broader goal(s) takes account of the need for “goal congruency”, which refers to how weil the goals combine with ‘each other (e.g. does goal A appear compatible with goal B? do they fit together to form a unified strategy?) bearing in mind the need to sequence goals logically over time + isresponsive and innovative rather than reactive. ‘As already mentioned, the four distinct phases of the strategic management process comprise envi- ronmental analysis, strategy formulation, strategy implementation and strategy control and evalua- tion. Figure 1.2 illustrates a model of this process. 43.1 Organisational direction and environmental analysis Organisations must know where they are going. A vision, a mission and the organisational values will guide the organisation into the future. These statements indicate the direction of the organisation and set the scene for environmental analysis. An inspiring vision will give focus to the organisational mem- bers, who will also understand what the business is and on which values they base their operations. A organisation's strategy must allow a good fit with its environment. Environmental analysis is important to allow this fit. An organisation's environmental analysis consists of an evaluation of the internal environment for possible strengths and weaknesses and a further analysis of the external environment for possible opportunities and threats (SWOT analysis). The internal environment (also known as the microenvironment) includes aspects or factors over which the organisation has control. ‘The external environment, on the other hand, consists of the macro- and market environments, and includes factors ar aspects over which the organisation has no control. Environmental analysis is pethaps the most important phase of the strategic management process. Without it, it will be almost Impossible to move on effectively to the next phase of the process, namely strategy formulation, 1.3.2. Strategy formulation With the first phase completed, the organisation is in a position to develop long-term goals and strat- ‘ples. Strategies raust be built on what was identified in the environmental analysis phase. The skills ‘ind intemal competencies identified during the Internal environmental analysis and the special rela 7 Scanned with CamScanner Scanned with CamScanneree ENT PROCESS —--4 f Vision, misston, values, ethical behaviour and corporate social responsibility. Risk management (Chapters 2, 3, 4) ‘SWOT analysis of Chapters 5 and 6) f “— Business and a | (Chapters 8, , ‘Strategies in different ee contexts (Chapter 17) Strategy in the public and not-for-profit sectors (Chapter 12) Components of strategy implementation (Chapters 14 and 15) * Strategic leadership (Chapter 16) * Strategy and culture (Chapter 17) Strategic control and impravement (Chapter 18) a Scanned with CamScanner Scanned with CamScanner‘THE STRATEGIC MANAGEMENT PROCESS ‘1 tionship it may develop with the external environment make it possible to develop specific strategies. First the organisation must decide how to develop advantages aver its competitors by choosing a spe- cific generic strategy. Then it must work out how to grow the organisation by deciding on a corporate strategy. [tis also important for an organisation ta know its specific industry setting, because this will also influence the strategic options available to the organisation. 43.3 Strategy implementation ‘the selected strategic options must now be implemented, ‘The strategy sets the broad direction and identifies the methods the organisation should apply to achieve its goals and objectives. None of these ill happen without a detailed process of implementation, To implement the strategies, it is necessary to have detailed tactical and operational plans, policies and other driving forces to make the strategy happen. 1.3.4 Strategic control and evaluation ‘There should be a continuous process of evaluating and reviewing both the suitability and the imple- mentation of the strategy. Strategic control and evaluation and the process of continuous improve ment are seen as the last phase in the strategic management process and should not be neglected. ‘Aspects such as total quality management and a balanced scorecard are tools that can help to improve the manager's task of successfully controlling the strategic management process. tad ‘The four phases discussed previously must be seen as a cohesive process. There is, however, disagree- ment among practitioners of strategy with regard to the way that organisations arrive at corporate strategy. Two main approaches to strategy development will be discussed. They are the prescriptive approach (also called the systemic approach) and the emergent approach (also called the process approach). 1.4.1 The prescriptive approach ‘his approach is essentially a linear and rational process, where one starts with the question “where are we now” and then develops the strategy of "where are we going". The prescriptive approach starts with the organisation's objective (actually the mission and vision), then the environmental analysis, ‘This is followed by a reconsideration of the objective (mission) Ifthe environment requires it, then the development and selection of the strategy, and lastly the implementation of the strategy: Itis clear that the diferent phases are linked sequentially. This is also known as a top-down appronsh fe Staley Although the prescriptive strategic process is claimed to be a lagical and process that Is capa- y “eters ‘organisations, there are also numerous critics (especially Henry Mintzberg, 1867) of the process. The formal prescriptive process ls criticised mainly because of the Lnpredictablity ofthe real world and the fact that many successful strategies are the result of acciden- ‘al events that help to push organisations in a new direction. Meas per As ‘towards the basic assumptions of the prescriptive approach, and these assump- tions are not always correct. So, what are some of the assumptions of the prescriptive approach and what are the difficulties with these assumptions? * ‘The future of organisation can be accurately predicted. This isnot true: the competitive environ trent isan wolatle and because change i Inevitable, the whole strategic process may be Invalid. 9 Scanned with CamScanner Scanned with CamScanner(CHAPTER | ‘THE STRATEGIC MANAGEMENT PROCESS strategies proposed cal and capable of being Sade on Sr nmi cfrpnesons many Managemen, asaresult ficulties in practice. and n are «Alter the analysis phase stratewies OT srpetimes bu ‘ situations. result of changing external im Despite cs nabs ET neil to an organisation approach to strategic planning ® present the following aaa ; Ms aeal bt ahr ante she a Environmental analysis encourages —-_ plans and decisions. ‘cuavecl entation provides a basis for strategic contra), . “The process of strategy development if organisation clear about where it is gol * nue. Suppliers will eel that they can rely on the tes will experience higher morale, because they wil ey is improved, because the different business Functions will coordinate their eff towork together to realise the full potential of the organisation. ‘There are, however, also some drawbacks to the formal prescriptive approach. . Most importantly, the organisational environment is uncertain. The external organisational — ronment is more uncertain than ever before. «= Itmay be too complicated a process for the small-business owner. 3 + The formal process may be too infrequent to allow the organisation to be dynamic. If there is 6 for mal planning process every three years, for example, the changing environment may result in the strategy becoming inappropriate. g. it enables stakeholders to make plans forthe organisation in terms of future orders. perceive the organisation as capable of meg. Despite what has been said about the prescriptive approach, it favours a step-by-step method achieve the organisation's objectives, a 142 The emergent strategic approach ‘Scanned with CamScanner Scanned with CamScanner