MNG3701 EXAM PACK 2023 QUESTIONS AND ANSWERS

MNG3701 EXAM PACK 2023 QUESTIONS AND ANSWERS. Competitive Advantage Explained: The organisation strives for is profitability. In order to make a profit in a specific industry, a business has to have something that makes it better than its competitors in the same industry. Spur restaurants have a competitive advantage in the area of creating a family atmosphere with good quality, affordable food and something for everyone: from steaks and burgers to pizzas and pastas and obviously also their kiddies meals that are so popular. In this context, your textbook describes competitive advantage as “what makes you better than anyone else”. In an environment where technology and innovation are the order of the day, a competitive advantage is often short lived. What businesses want is for their competitive advantage to be sustainable over the long term. Some businesses have certain resources and capabilities that are difficult to imitate (for instance,certain technological processes) and others have excellent relationships with stakeholders that are very difficult to replicate. In such a case, businesses have sustainable (long-term) competitive advantages. Over the years Spur has built up a certain reputation and goodwill amongst the community and consumers that results in them winning awards year after year and therefore provides them with a sustainable competitive advantage. In their 2017 Integrated Report it is stated that “Spur continues to be well-received by customers and was voted the ‘Coolest eat out place’ for the fifth year in a row in the 2017 Sunday Times Generation Next survey of South Africa’s youth”. The modern business environment is characterised by technology and innovation. This results in, competitive advantages being short lived and instead of building one advantage and defending it, many businesses focus on innovation strategies that continually build new advantages. This is building a transient competitive advantage. In 2017 the top seven most valuable brands were all in the telecommunications industry where innovation and change are constant. Two of these companies are Samsung and Apple. We are all aware of the continuous technological advancements in their products. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace MNG3701: Strategic Planning Lessons of Lecturer (MyUnisa 2020) Willmary Murtz Lesson 2: The Role of Strategic Management in an Organisation 1. STRATEGIC MANAGEMENT AND ITS COMPONENTS The purpose of strategic management is to achieve a competitive advantage for the business that will add value to its stakeholders. A competitive advantage may be achieved in many different ways and top management can use various strategies (methods) to create such a competitive advantage. Strategic Management: “the process for planning, implementing and controlling the strategy of the organisation”. It consists of three components, namely strategic planning, strategic implementation and strategic control. 3Components/ Characteristics of Management 1.Strategic Planning  Determine where the organisation is now and where it would like to be in 5-10 years from now.  Determine goals and objectives that will enable the organisation to move from where it is to where it would like to be  Decide which strategies are going to be used to attain its goals and objectives. 2.Strategic Implementation  Execute the strategy formulated during the planning stage. 3.Strategic Control  Ensure that the formulated strategy remains valid and that the implementation of strategy remains on track. The Universal Principles of Strategic Management (Venter, 2019) are as follows:  Strategy is ultimately about change, as it moves the organisation from where it is, to where it would like to be.  Strategy takes a long-term view as it focuses on the long-term sustainability of a business.  Strategy is complex, as the organisation operates in an environment that is constantly changing and is often very unpredictable. As a result of this, strategic managers have to deal with high levels of uncertainty and risk.  Strategy has an internal and external focus. Because strategy involves moving the whole organisation in a specific direction, it is crucial that managers understand not only what is happening inside (resources and capabilities), but also what is happening outside the business (opportunities and threats). These factors will have an influence on the choice of strategy and the way in which it will be implemented.  Strategy is both deliberate and emergent. Those specific strategies that an organisation pursue – like low cost leadership or differentiation – are deliberately chosen. However, strategies are developed, implemented and influenced by individuals, which means that strategies sometimes "emerge" that were not initially planned. It is therefore important when we are involved in developing and/or implementing a strategy, that we understand who the strategists are, how and why they make decisions and what motivates them. According to this perspective, not only top managers are strategists, but also any other individual who has an influence on how the resources are allocated.  Strategy involves various different thought processes. Some thought processes are rational and cognitive, for instance when strategic workshops are conducted to formulate strategies. Strategists also have to think analytically so that they can determine how the external as well as the internal environments have an impact on the strategic options. In order to formulate strategies, managers have to think creatively to determine possible strategic options. Lastly, strategic decisions are often influenced by political processes. Strategists will not necessarily agree on the best course of action to achieve strategic goals and may use their sphere of power and influence or persuasive (or dissuasive) language to sway others towards their preference. Strategists are ultimately, like all human beings, social and political beings. They are influenced by their background (e.g. education, culture and religion) and personality in their quest for status and power. It is, therefore, almost impossible to expect strategic decisions to be entirely objective and rational.  Strategy happens at different levels. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace 5. THE ROLE OF STRATEGIC MANAGEMENT IN REALISING THE DESIRED OUTCOMES OF AN ORGANISATION That strategy is about gaining a competitive advantage and about long-term survival. It is not just doing “business as usual”, but it is about deliberately steering the organisation into the direction of its strategic goals. This process takes place over a long period of time and requires a large commitment of resources. In this context, strategy is defined as the direction provided by the actions and decisions of strategists in pursuit of organisational goals. Although strategic management reaches across all business functions and across all managerial levels, achieving the strategic goals ultimately remains the responsibility of top management. According to Venter (2019) the role of strategic management is to:  steer the organisation into a coherent future direction  provide a framework to guide the decision-making processes in the business as all decisions have to be aligned with the strategy  combine the inputs of various stakeholders and to communicate the outcome back to ensure that everyone follows the same strategy  inspire, unite and motivate the staff in organisation The purpose of strategic management is to ensure that the organisation applies the following four key elements (Venter, 2019):  A clear and consistent strategic direction outlining what the organisation wants to achieve  A profound understanding of the external environment to align the organisation with the opportunities and threats  Strategic role players must have an objective knowledge of the resources and capabilities of the organisation and also understand their value in building a competitive advantage.  The structure, systems, culture, functions and operations of the organisation must be aligned to ensure that strategic plans, programmes, projects and so forth are implemented effectively. According to Venter (2019) strategic management is ultimately about consistently aligning the organisation with its internal and external environments. The challenge is to ensure that the organisation makes the best possible use of its resources and capabilities (strengths) to benefit from the opportunities and to avoid or steer around the threats in its external environment. Changes in the external environment will therefore very often require strategies to be changed accordingly. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace 6. THE DIFFERENT LEVELS OF STRATEGY IN THE ORGANISATION Strategizing (taking strategic decisions) takes place at different levels of the organisation. In order to explain the levels at which strategic decisions are taken, we distinguish between corporations and single businesses. A corporation is an entity that consists of various businesses. For example, Spur Corporation has several business outlets like Spur Steak Ranches, Panarottis Pizza and Pasta, John Dory’s, Hussar Grill, RocoMamas and Casa Bella. Edcon is a corporation with businesses like Edgars, CNA and Boardmans. At corporate level, the board of directors have to take strategic decisions that encompass the whole group of businesses. In this context, Edcon might decide to buy an additional business like, for instance, PNA. This kind of strategic decision entails the acquisition of an additional business. As most corporations are listed on the stock market, their primary goal is to create value for their shareholders. At a business level, the strategic decisions taken by top management are about how to build ansustain a competitive advantage for the particular business in the specific industry or market that theyoperate in, for instance the restaurant industry, the clothing industry or the cell phone market (which is part of the telecommunications industry). The strategies developed at this level are called business-level strategies and include strategies like low cost leadership and differentiation. Strategic decisions are also taken at functional level, for instance when Cell C decides to launch a new cell phone package, the marketing manager has to develop a marketing strategy outlining how this new service will be launched to the market. Operations managers will take decisions at operational (shop floor) level. The shift manager will, for instance, make a decision with regard to the amount of overtime that is required to reach the production objectives for a specific period. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace 7. THE MEANING OF STRATEGIC SUCCESS According to Grant (2016) a successful strategy has certain characteristics. He refers to the success Lady Gaga in the music industry. In March 2017 her net worth was estimated as $ 275 million (Woods, 2017). Grant contributes her success to “the presence of a soundly formulated and effectively implemented strategy”. The 4 Characteristics of a successful Strategy that he identifies are: 1. The goals of the organisation are consistent and long-term. Lady Gaga displays a focused commitment to career goals that she is pursuing steadfastly. On the following link,yyou can view her social media strategy for 2017. 2. The organisation has a profound understanding of the competitive environment. Lady Gaga’s strategy displays an awareness of the changing economics of the music business; the marketing potential of social media. In 2016 she had 18.7 million Instagram followers and on average 40% of these followers engaged with her by liking or commenting on her posts. 3. There is an objective appraisal of resources. Lady Gaga deploys her resources effectively. She is also aware of the limits of her resources. In this case she draws upon the variety of talents in her Haus of Gaga (her personal creative team). 4. Effective implementation. The size of Lady Gaga’s following is testimony to her effectiveness in implementing her strategy. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace 8.A CONTEMPORARY STRATEGIC MANAGEMENT FRAMEWORK In Figure 2.4 of your textbook you will find an integrated framework of strategic management that will be used throughout the textbook to guide you through the strategic management process. Read through section 2.6 in your textbook and ensure that you understand the different components of this model. The section of the model that is relevant for this module is strategy formation (section 2.6.1). You will see that strategy formation has three elements, namely process, context and content. Certain general processes are used to develop a strategy. Strategy always takes place within a certain context. This means that the strategic decisions have to be made in an internal and external environment, influenced by various factors. Your prescribed book provides the example of an organisation in Botswana which is influenced by international, continental, national, industry and internal issues. The last element refers to the content of the strategy that is developed, in other words, what it exactentails. There are different business-level strategies and each of them have specific characteristics. 9. CONCLUSION The role of strategic management is to steer the organisation in a desired direction and to provide aframework within which decisions can be made. A clear strategy will assist management at all levels make decisions that support one another and ultimately ensure that the goals and objectives of the organisation are achieved. A business is successful when it is profitable, adds value to its stakeholders and meets its social anenvironmental responsibilities. Strategies are successful when the strategic goals are consistent and longterm orientated, and when the organisation has a profound understanding of its business environmentappraises resources objectively and implements strategies effectively.