Lesson 4 Strategic management and the entreprenuer 2025.pptx

Lecture notes

1. Lesson 4: the manager as a Strategic thinker WEEK 4 MISS Z.P. PHIRI 2022 1

2. Class activity In 30 minutes give a synthesis of the following article; Article 1:No excuse Management by T Rogers (1990) Week 4 - Classical article MISS Z.P. PHIRI 2022 2

3. The Management Process It is the process of bringing together several factors of production with the goal of optimizing production. The process of deciding how best to use a business’s resources to produce good or provide services.

4. The Management Process The management process requires interaction with a number of variables within different ‘environments’: the organisation- the Vision and mission the macro-environment The management schools of thought  the approach or strategy (entrepreneurial)

5. Overview of Strategic Planning Why strategy? Strategic thinking defined What is a Strategic Plan? Purpose of Strategic planning? The Strategic planning process What makes a good Strategic Plan? What makes a bad Strategic Plan? Why do many Strategic plans fail? How to make your strategic plan work? Characteristics of a strategic Manager

6. Introduction The management rules of the competitive game are constantly changing. As a Manager you must adapt to changes in the marketplace. Fortunately, Managers have a powerful weapon to cope with an often hostile, ever-changing environment: The process of strategic planning. MISS Z.P. PHIRI 2022 6

7. WHY STRATEGY There is a shift from a base financial economy to a intellectual capital economy. Human Capital- consists of talents, creativity, skills and abilities of companies’ work force and it shows up in the innovative strategies, plans and processes the people in the organisation develop and passionately pursues. Structural capital is the accumulated knowledge and experience that a company poses. It can take many forms such as processes, software, patents, copyrights and perhaps the mosts important is the collective experience of the employees. MISS Z.P. PHIRI 2022 7

8. WHY STRATEGY Customer capital- this is the established customer base, positive reputation, ongoing relationships and goodwill of the company. The goal is a strategy is to create a competitive advantage. This is the value proposition that sets a small business apart from its competitors and gives its unique position in the marketplace. From a strategic perspective, the key success to business is to develop a sustainable competitive advantage. MISS Z.P. PHIRI 2022 8

9. Strategic thinking : the foundation At the outset of planning keep in mind the following guidelines that will help you develop an effective strategic plan. Think first, then write- In His book the Mind of the Strategist Kenichi Ohmae observes that “ successful business strategies result not from rigorous analysis but from a particular mindset” Analytical processes is essential for testing ideas more carefully and for ensuring that they re implemented properly. However the starting point of the process is a particular mindset, a mental out look that guides and conditions the entrepreneurial planning process. MISS Z.P. PHIRI 2022 9

10. What is a Strategic Plan ? Class Input………

11. What is a Strategic Plan? A clear roadmap of achieving intended goals. A formal response to the organization's key risks.

12. What is Strategic Planning? A process by which leaders determine what the organisation intends to be in the future and how it will get there. A process of developing a shared vision of the organisation’s future and determining the best way to make the vision occur. A systematic way of thinking, which is based on a realistic appraisal of resources, facts and the environment, involving all groups and interested parties.

13. What is Strategic Planning It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.

14. Why Strategic Planning? To develop collective consensus on how to improve the present situation. To develop and provide a clear definition of intended goals and a clear roadmap of how to get there.

15. The purpose & benefits of a Strategic Plan Helps the organisation to remain relevant & responsive to the needs of its Shareholders & Stakeholders Contributes to organizational stability and growth Provides a basis for monitoring progress, assessing results & impacts

16. The purpose & benefits of a Strategic Plan Facilitates new program development Enables an Organisation to look into the future in an orderly & systematic way Enables the Board to identify policies & goals for the organization Provides a clear focus to Management & staff in terms of program implementation

17. SIMPLE Strategic Planning process Step 1: Develop a case for Strategic Planning and commit thereto Step 2: Develop a shared vision Step 3: Develop an appropriate mission statement Step 4 : Establish values for attaining the vision Step 5 : Carryout internal and external analysis Step 6 : Develop key strategic focus areas, goals and strategic actions Step 7: Consolidate strategic plan Step 8 : Implement and monitor implementation thereof Step 9 : Periodically review and evaluate relevance of the strategic plan Step 10 : Restrategise for the next 5 years

18. Organizational Profiling

19. Who is company xx?

20. What services does company x ?

21. What industry is company x operating in?

22. Who are company x ’s key stakeholders

23. Who are company x ’s competitors?

24. What key challenges currently affect and hinder company x ’s performance?

25. Assignment 2: Organisational Diagnosis

26. SWOT Analysis STRENGTHS – describe what an organization excels at and what separates it from the competition: a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. WEAKNESSES S – stop an organization from performing at its optimum level. They are areas where the business needs to improve to remain competitive: a weak brand, high levels of debt, an inadequate supply chain, or lack of capital. OPPORTUNITIES – refer to favorable external factors that could give an organization a competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share. THREATS – refer to factors that have the potential to harm an organization. For example, a drought is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common threats include things like rising costs for materials, increasing competition, tight labor supply and so on.

27. PESTEL Analysis Political Economic Social Technological Environmental Legal External factor evaluation matrix

28. INTERNAL Functional Areas GM Finance Marketing Operations Logistics Value chain analysis INTERNAL FACTOR EVALUATION MATRIS MISS Z.P. PHIRI 2022 28

29. Assignment 3: Determination of company x ’s new Vision, Mission and Value Statements

30. company x ’s new Vision, Mission and Value statements Vision Mission Value Statements

31. Useful Definitions Vision A vision is an inspirational description of what an organisation desires to be in the planned future. When developing a vision remember to keep it clear short and simple but also inspirational and motivational to all the people in the organization “People don’t remember or embrace paragraphs but they remember and embrace sentences.” Andy Stanley

32. Useful Definitions Vision Example 1 : “ The farmer’s choice with the most competitive and sustainable market for maize, other grains and cereals in the SADC region. ” Example 2: “ To achieve optimum import regulation, significant import substitution and maximum export sales NMB’s mission is to maximize its own organizational performance effectiveness and, in collaboration with farmers and other stakeholders in the agricultural community, build an efficient commercialized Swazi production and distribution agri-business value chain in accordance with sustainable farming best practices that meet international GAP and SPSS standards.”

33. University of Pretoria’s Vision “To be a leading research-intensive university in Africa, recognised internationally for its quality, relevance and impact, and also for developing people, creating knowledge and making a difference locally and globally.”

34. Useful Definitions Mission It defines how the Organization essentially wants to achieve its vision. Examples: EXAMPLE 1: Enhancing increased production and national food security through improved stakeholder relationships, creating strategic partnerships, farmer support, vigorous marketing and supply of high quality maize, cereals and other grains Example 2: We envision a financially viable farming community contributing significantly to food security and to the economy of Eswatini .

35. UNESWA’s Mission Statement To be responsive to national and international needs through excellence in teaching and learning, research and innovation, entrepreneurship, and community engagement for sustainable development.

36. Useful Definitions Examples: Values Integrity Professionalism Accountability Dependable Innovation Responsibility Team work Commitment Integrity Value statement: The values and philosophy of an organisation that guide the behaviour of its members. It defines the organisation’s key principles.

37. University of Johannesburg’s Value Statements Imagination – We encourage and inspire free, independent and critical thought Conversation – Through facilitating open, respectful and meaningful dialogue Regeneration – We are dynamic, progressive, responsive and innovative in our endeavour to provide access to global academic excellence Ethical Foundation – We nurture and actively promote an ethos of honesty, transparency, accountability and fairness in all our endevours

38. Assignment 4: Determination of Focus Areas and related objectives

39. Key Focus Areas Strategic Objectives Board leadership and governance To improve Board Governance and decision-making To enhance Leadership and Corporate Governance skills of Board members To ensure that organisational risks are identified, profiled and properly mitigated To ensure effective implementation of the Strategic plan Advocacy and image building To improve visibility and image of the Society To provide members with information about the Society and the industry To improve stakeholder confidence Institutional capacity strengthening and improving operational efficiency Put in place an appropriate organizational structure and department organograms Develop Accounting and Human Resource Management and other appropriate operational policies Improve record keeping and reporting Ensure enhancement of staff skills, competences, and capacities Improve management of Human Resources Establish a fair system of managing organizational, Department and staff Performance Motivate and improve the rewards of our staff To improve financial accounting control and reporting Put in place adequate technological systems Improve quality of communication within the company, regulators other stakeholders Decentralization of services

40. What is the right period for a Strategic Plan? Long enough as can be conceptualized, but not so long as to seem absurd. 3 to 5 years.

41. What makes a good strategic plan? Class input

42. The Strategic plan should be able to provide answers to the following questions: Who we are? What is our mandate? Where are we now? Good Strategy

43. Where are we going? Where should we be going? Why should we be going there? How do we get there? When do we want to get there? Possibly at what cost? Of utmost importance, how do we monitor & evaluate progress of implementation? Good Strategy

44. Good Strategy A good Strategic Plan must have a Kernel. This means that it must have an effective mixture of thought and action with a basic underlying structure which includes: A Diagnosis, A Guiding policy, and Coherent actions A good guiding policy sets the stage for focused action.

45. What makes a bad strategic plan? Class input

46. BAD STRATEGY Bad strategy is more than just the absence of good strategy but has a life and logic of its own, a false document built on mistaken foundations. Bad strategy may actively avoid analyzing obstacles because the leaders believe that negative thoughts get in the way. One mistake might be taking strategy work as an exercise in goal setting rather than problem solving ; generating a bad strategy that tries to cover all bases rather than focus resources and actions.

47. BAD STRATEGY Failing to face the challenge- Oftentimes, challenges go undefined. Obstacles are allowed to fly under the radar, and the strategy is already insufficient. Any obstacle, if left unaddressed will become the stumbling block of the whole organization. Calling a list of goals, a Strategic Endeavour - Leaders are required to set the vision for the whole organization. They are also responsible for creating the conditions to make the vision possible. This will not happen because of a list of goals. Goals are good in and of themselves. But many, many goals go unrealized because they were unrealistic. They had no basis in reality.

48. BAD STRATEGY Unclear Objectives - Long to-do lists are not strategic plans. Many corporate leaders will spend hours in meetings over a number of days determining every little thing that must be done in order to get the organization to a desired outcome. This level of understanding is good. However, tackling a long list of things to do is a very daunting undertaking. Has Fillers - The same is true in strategy. Filler masks the absence of real, concrete thought. Implementing strategic plans which include a lot of filler contain a lot of restated, obvious information. The strategic plan of a bank stated that part of the strategy included “customer-centric intermediation.” Intermediation means that a bank will accepts deposits and loan the money out to other people, like what banks do. In other words, that part of the bank’s strategic plan is to be a bank.

49. Why do many Strategic Plans fail? Class input

50. Why do many Strategic Plans fail? Lack of “political” will Lack of Purpose Not based on proper Risk Assessment Too Ambitious in terms of time, targets and numerous objectives Absence of or poor evaluation tools Not linked to budget Not “sold” to staff/implementers Absence of a champion Absence of stakeholder involvement Use of inappropriate and unclear targets, KPI’s and measures Strategy not used as a monitoring tool by the Board

51. How to make your Strategic Plan work Establish a clear and inspiring vision Paint a clear picture of where the organisation will end up with specific anticipated outcomes Appoint a champion or leader in executive management who will “own” the strategic plan implementation process

52. How to make your Strategic Plan work Encourage open communication Communicate your strategy and keep your plan alive Monitor progress of action on a quarterly basis Link your budget to your strategic plan Establish incentives to reward good performance

53. Characteristics of Good Strategic MANAGERS Vision, eloquence, and consistency Articulation of a business model Commitment Being well informed Willingness to delegate and empower Astute use of power Emotional intelligence Self-awareness, self-regulation, and motivation Empathy and social skills MISS Z.P. PHIRI 2022 53

54. Class discussion MISS Z.P. PHIRI 2022 54 Do you know any types of strategies??

55. Types of Strategies Most organisations pursue a combination of two or more strategies, but this can be risky. These strategies can be categorized into the eleven actions discussed in the following Table .

56. Types of Strategies Forward Integration Gaining ownership or increased control over distributors or retailers Backward Integration Seeking ownership or increased control of an organisation’s suppliers Horizontal Integration Seeking ownership or increased control over competitors Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts Market Development Introducing present products or services into new geographic area Product Development Seeking increased sales by improving present products or services or developing new ones

57. Types of Strategies Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit Divestiture Selling a division or part of an organisation Liquidation Selling all of a company’s assets, in parts, for their tangible worth

58. Porter’s Five Generic Strategies Type 1 Cost Leadership – Low cost Type 2 Cost Leadership – Best value Type 3 Differentiation Type 4 Focus – Low cost Type 5 Focus – Best value

59. Means for Achieving Strategies