Eight challenges South African businesses face:
1. Rapidly increasing competition from new and unexpected sources.
2. Changing demographics and psychographics.
3. New technology.
4. New global economy.
5. Shift from manufacturing to services.
6. Proliferation of corporate stakeholders.
7. Managing the new workforce.
8. Rapid rise of the green movement.
Former CEO of General Electric Company (GEC) description of strategic management:
Understanding where the business is at the moment.
Having a clear view about where the business wants to go in the future.
Conducting a wide-scale debate about how it will reach its future destination.
Mintzberg’s ten major perspectives on management:
1. Strategy formulation is a formal process – it follows a structured plan.
2. Strategy formulation is a process of conception – it is about designing the future.
3. Strategy formulation is a visionary process – it clarifies what the ideal future should be.
4. Strategy formulation is an analytical process – it considers the current realities and makes
projections about the future.
5. Strategy formulation is a collective endeavour – it involves various stakeholders.
6. Strategy formulation is a reactive process – it responds to internal and external environment.
7. Strategy formulation is a process of transformation – it requires change.
Definitions:
Stratagem – a plan to outwit an opponent or achieve an end.
Strategic – relating to the identification of long-term or overall aims and interests and the means of
achieving them.
Strategise – actions to devise a strategy.
Strategist – a person skilled in planning action or policies.
Definition of strategic management:
Strategic management encompasses the definition elements of both 'strategy' and “management”.
The following definitions provide us with insight on what strategic management entails.
• The first definition is by Lynch:
Strategic management can be described as the identification of the purpose of the organisation and
the plans and actions to achieve that purpose.
This definition takes a high view by approaching strategy from the point of the purpose of the
organisation.
• The second definition is from Thompson.
Strategy is the game plan indicating the choices a manager needs to make to achieve performance
targets by implementing strategies successfully.
This definition highlights various elements of the strategic management process as it tries to identify
answers to questions like “How to ….?”
,The 5 Ps of strategy:
Plan – how to attain objectives and realise goals.
Pattern – consistent pattern of behaviour over time.
Position – position the business within the marketplace.
Perspective – unique way of doing things to remain competitive.
Ploy – action intended to outwit the competition.
Stakeholders in a typical company listed on the JSE:
Primary stakeholders: Internal – those that engage in economic transactions with the business.
Shareholders, customers, suppliers, creditors, employees.
Secondary stakeholders: External – those who indirectly a;ect the business.
General public, communities, activist groups, business support groups, media.
Porter’s 8 factors to establish and maintain di,erentiation in the market place (competitive
advantage):
1. Time – swift action with cautious action.
2. Execution – how and how well the company does things.
3. Manoeuvrability – how quickly and e;ectively the company reacts to change.
4. Knowledge – of products/services, right answers at right time, solutions etc.
5. Value – customer’s perception of a company’s goods and services.
6. Process – regular review and redesign of processes.
7. Cost – internal and external costs are monitored regularly.
8. Di;erentiation – if my competitor makes a blue widget, I will make a red widget.
Advantages of strategic management
Mintzberg identify the following advantages:
Strategy sets direction
Strategy focuses e;ort
Strategy defines the organisation
Strategy provides consistency
Thompson expand on this list with the following advantages:
It guides the organisation regarding 'what it is we want to do'.
It makes managers, employees and other stakeholders more alert to potential opportunities
and threats.
It unifies and orientates the organisation to common goals and objectives.
It enables management to take a creative stance when it comes to large-scale change.
It facilitates the evolution of the business model in order to achieve sustained financial
success.
It creates a framework within which organisational resources can be allocated according to
priority.
, Disadvantages to strategic management:
Cannot provide a precise and detailed picture of the future.
Often reduced to a series of models that are removed from the reality that a company
faces.
Companies often think that the implementation of a strategy happens immediately after
the C-suite speak. However, it takes hard work, constant correction, identification and
reduction of mistakes, etc. to make a strategy work.
Mistakes that are not corrected immediately can have harmful and long-term e;ects.
Often the planning aspect of strategic management is overemphasised. The motivation,
desire and hard work to make the plan work is often underestimated.
Often, executives plan a strategy and do not get involved in the implementation or
correction of strategies.
The promises made by the C-suite are often not achieved because other stakeholders do
not take implementation of the strategy seriously.
There is a strong dogmatism in the plan. In other words, despite evidence that may indicate
that a plan is not relevant, is weak or is in need of adjustment, executives may still cling to
the original plan and try to force the reality into the plan.
Strategic plans are often vague or confusing, resulting in di;erent departments, divisions,
etc. implementing versions that do not correspond with the plan that the C-suite originally
devised.
Strategic plans are often drawn up hastily and in response to a crisis. Thus, the strategic
plan treats the symptoms and not the cause of the situation.
Strategic plans are often drawn up like a menu in a fast-food restaurant. There are so many
strategic options to choose from that the organisation becomes overwhelmed and reverts
to doing things the old way.
Three levels of strategic management:
Strategic level.
Tactical level.
Operational level.
Five steps of the strategic management process
Phase 1: Formulating a strategic direction.
Phase 2: Setting specific objectives for the organisation.
Phase 3: Strategy formulation.
Phase 4: Strategy implementation.
Phase 5: Strategy evaluation.
Definitions:
Vision: Desired future state.
Strategic intent: the aspirations of the company.
Mission: the overriding purpose of the company.
Goal: specific aim that the company wants to achieve.
Objective: quantifiable goal which is to be achieved by a certain time.
Strategic management: the art and science of formulating, implementing and evaluating cross-
functional actions that will enable a company to achieve its objectives.
Strategic control: the monitoring of strategies as they are implemented, in order to ensure that they
are e;ective and achieve the objectives – it also involves the process of modifying and reviewing
strategies if they are not achieving the intended results.
1. Rapidly increasing competition from new and unexpected sources.
2. Changing demographics and psychographics.
3. New technology.
4. New global economy.
5. Shift from manufacturing to services.
6. Proliferation of corporate stakeholders.
7. Managing the new workforce.
8. Rapid rise of the green movement.
Former CEO of General Electric Company (GEC) description of strategic management:
Understanding where the business is at the moment.
Having a clear view about where the business wants to go in the future.
Conducting a wide-scale debate about how it will reach its future destination.
Mintzberg’s ten major perspectives on management:
1. Strategy formulation is a formal process – it follows a structured plan.
2. Strategy formulation is a process of conception – it is about designing the future.
3. Strategy formulation is a visionary process – it clarifies what the ideal future should be.
4. Strategy formulation is an analytical process – it considers the current realities and makes
projections about the future.
5. Strategy formulation is a collective endeavour – it involves various stakeholders.
6. Strategy formulation is a reactive process – it responds to internal and external environment.
7. Strategy formulation is a process of transformation – it requires change.
Definitions:
Stratagem – a plan to outwit an opponent or achieve an end.
Strategic – relating to the identification of long-term or overall aims and interests and the means of
achieving them.
Strategise – actions to devise a strategy.
Strategist – a person skilled in planning action or policies.
Definition of strategic management:
Strategic management encompasses the definition elements of both 'strategy' and “management”.
The following definitions provide us with insight on what strategic management entails.
• The first definition is by Lynch:
Strategic management can be described as the identification of the purpose of the organisation and
the plans and actions to achieve that purpose.
This definition takes a high view by approaching strategy from the point of the purpose of the
organisation.
• The second definition is from Thompson.
Strategy is the game plan indicating the choices a manager needs to make to achieve performance
targets by implementing strategies successfully.
This definition highlights various elements of the strategic management process as it tries to identify
answers to questions like “How to ….?”
,The 5 Ps of strategy:
Plan – how to attain objectives and realise goals.
Pattern – consistent pattern of behaviour over time.
Position – position the business within the marketplace.
Perspective – unique way of doing things to remain competitive.
Ploy – action intended to outwit the competition.
Stakeholders in a typical company listed on the JSE:
Primary stakeholders: Internal – those that engage in economic transactions with the business.
Shareholders, customers, suppliers, creditors, employees.
Secondary stakeholders: External – those who indirectly a;ect the business.
General public, communities, activist groups, business support groups, media.
Porter’s 8 factors to establish and maintain di,erentiation in the market place (competitive
advantage):
1. Time – swift action with cautious action.
2. Execution – how and how well the company does things.
3. Manoeuvrability – how quickly and e;ectively the company reacts to change.
4. Knowledge – of products/services, right answers at right time, solutions etc.
5. Value – customer’s perception of a company’s goods and services.
6. Process – regular review and redesign of processes.
7. Cost – internal and external costs are monitored regularly.
8. Di;erentiation – if my competitor makes a blue widget, I will make a red widget.
Advantages of strategic management
Mintzberg identify the following advantages:
Strategy sets direction
Strategy focuses e;ort
Strategy defines the organisation
Strategy provides consistency
Thompson expand on this list with the following advantages:
It guides the organisation regarding 'what it is we want to do'.
It makes managers, employees and other stakeholders more alert to potential opportunities
and threats.
It unifies and orientates the organisation to common goals and objectives.
It enables management to take a creative stance when it comes to large-scale change.
It facilitates the evolution of the business model in order to achieve sustained financial
success.
It creates a framework within which organisational resources can be allocated according to
priority.
, Disadvantages to strategic management:
Cannot provide a precise and detailed picture of the future.
Often reduced to a series of models that are removed from the reality that a company
faces.
Companies often think that the implementation of a strategy happens immediately after
the C-suite speak. However, it takes hard work, constant correction, identification and
reduction of mistakes, etc. to make a strategy work.
Mistakes that are not corrected immediately can have harmful and long-term e;ects.
Often the planning aspect of strategic management is overemphasised. The motivation,
desire and hard work to make the plan work is often underestimated.
Often, executives plan a strategy and do not get involved in the implementation or
correction of strategies.
The promises made by the C-suite are often not achieved because other stakeholders do
not take implementation of the strategy seriously.
There is a strong dogmatism in the plan. In other words, despite evidence that may indicate
that a plan is not relevant, is weak or is in need of adjustment, executives may still cling to
the original plan and try to force the reality into the plan.
Strategic plans are often vague or confusing, resulting in di;erent departments, divisions,
etc. implementing versions that do not correspond with the plan that the C-suite originally
devised.
Strategic plans are often drawn up hastily and in response to a crisis. Thus, the strategic
plan treats the symptoms and not the cause of the situation.
Strategic plans are often drawn up like a menu in a fast-food restaurant. There are so many
strategic options to choose from that the organisation becomes overwhelmed and reverts
to doing things the old way.
Three levels of strategic management:
Strategic level.
Tactical level.
Operational level.
Five steps of the strategic management process
Phase 1: Formulating a strategic direction.
Phase 2: Setting specific objectives for the organisation.
Phase 3: Strategy formulation.
Phase 4: Strategy implementation.
Phase 5: Strategy evaluation.
Definitions:
Vision: Desired future state.
Strategic intent: the aspirations of the company.
Mission: the overriding purpose of the company.
Goal: specific aim that the company wants to achieve.
Objective: quantifiable goal which is to be achieved by a certain time.
Strategic management: the art and science of formulating, implementing and evaluating cross-
functional actions that will enable a company to achieve its objectives.
Strategic control: the monitoring of strategies as they are implemented, in order to ensure that they
are e;ective and achieve the objectives – it also involves the process of modifying and reviewing
strategies if they are not achieving the intended results.
