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Strategic Management and Strategic Planning Process
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STRATEGY MANAGEMENT AND STRATEGIC PLANNING PROCESS
BY
STEVENS MALEKA
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Stevens Maleka: Strategic Management And Strategic Planning Process: South African Perspective
SOUTH AFRICAN PERSPECTIVE
First edition
AUTHOR
Stevens Maleka
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TABLE OF CONTENTS
CHAPTER 1: STRATEGIC MANAGEMENT PROCESS.................................................................. 4

1.1. Introduction ................................................................................................................................. 4
1.2. Strategy ....................................................................................................................................... 5
1.3. Categories of Strategy .............................................................................................................. 9
1.4. What is strategic management .............................................................................................. 12
1.5. Strategic Planning .................................................................................................................... 15
1.5.1. The Strategic Planning Process ............................................................................................ 16
1.5.2. The Strategic Plan Work Product .......................................................................................... 17
1.5.3. The Elements of a Compelling Vision ................................................................................... 19
1.5.4. Translating the Vision Into Strategic Direction .................................................................... 19
1.6. The Difference between Strategic Management and Strategic Planning ....................... 22
1.7. Importance of Strategic Planning .......................................................................................... 22
1.8. Benefits of Strategic Planning ................................................................................................ 23
1.9. Limitations of Strategic Management ................................................................................... 24
1.11. Conclusion ................................................................................................................................ 26
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CHAPTER 1: STRATEGIC MANAGEMENT PROCESS
1.1. Introduction
New approaches to management in the public sector are imperative as governments enter the
new trajectory. Market dynamics have created challenges for public organisations, with the
emergence of the global economy, advances in technology, increased societal demands, and
the need to provide more social services with fewer resources. As well, a widespread desire for
increased organisational scrutiny has increased the pressure for change, given more accessible
globalized information systems and heightened media attention critical of government
inefficiencies in service delivery. Strategic management has gained a sustained prominence in
the management of public services in the past two decades or so. South African Public Sector
departments are increasingly being asked to use it as part of their management techniques. It
has become an attractive management tool to reformers, and it also instills accountability with
regards to the organisational management.
Bovaird (2009: 61) argue that an organisation without a strategy does not have direction and
lead to being incompetent. It is not an exaggeration to say that, the use of strategic
management particularly in this era, when public organisations are considered under-
performing and uneconomical in their use of public resources, could, among other things, help
to enhance public organisations’ image and legitimacy. The general mood of the public has
been that public managers must ‘do more with less’, the situation that requires strategic thinking
in order to ‘reduce wastes’. Berry (2001) noted that widespread recession of the early 1990s
precipitated the need to ‘hold down the size of the government’ thereby forcing political leaders
to initiate public sector reform process that takes strategic management to its heart.
Response mechanisms have emerged within the private market to meet these recent
challenges but government organisations have been slower to respond. This is understandable,
given fiscal constraints and the bureaucratic process axiomatic to governments. However, a
new approach, which incorporates modern strategic management tools, is necessary for the
public sector to achieve improved performance and overall service quality.
While current public policy models have certainly started to reflect a shift away from traditional
thinking about organisational design and public management, a systematic process for creating
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and sustaining improved performance that reflects changes in the environment is clearly absent.
There is enough confirmation which suggests that change is affecting the public sector, and this
change is manifest in the metamorphosing structures and processes of many public
organisations.
The guiding principles in any strategic management process, whether in the public or private
sector, are about understanding what changes are needed, how to implement and manage
these changes, and how to create a roadmap for sustaining improvements that lead to better
performance. The difficulty in strategic management is the challenge of laying a foundation for
success in the future while meeting today’s challenges.
1.2. Strategy
What makes a good strategy? If you ask a collection of management gurus and you’ll get a
variety of answers. Some say that you need a vision. Others emphasize focus on your core
competencies. Still others would insist that you innovate your business model and on it goes.
There is also a divide on who should formulate strategy. While some hold that it is a
management function, others believe that it should emerge from the bottom-up. Often it is
developed by high priced consultants who specialize in strategy (many of whom have never
actually run a business or organisation themselves).
Strategy is about making sure that your organisation arrives where you want it to at a given
time. However Mintzberg (1994:458) defined strategy as "a pattern in a stream of decisions" to
contrast with a view of strategy as planning while McKeown (2011) argues that "strategy is
about shaping the future" and is the human attempt to get to "desirable ends with available
means". Kvint (2009) defines strategy as "a system of finding, formulating, and developing a
doctrine that will ensure long-term success if followed faithfully”. When there is uncertainty in the
organisation, strategy serves as an organisational compass, pointing the direction to where we
need to go without disregarding where we are or where we've been. Strategy is a crystal ball of
the organisation, around which all of the elements of the business can focus and rally.
Johnson and Scholes (2002) define strategy as "Strategy is the direction and scope of an
organisation over the long-term: which achieves advantage for the organisation through its
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configuration of resources within a challenging environment, to meet the needs of markets and
to fulfill stakeholder expectations".
Strategy is an action that managers take to attain one or more of the organisation’s goals.
Strategy can also be defined as “A general direction set for the organisation and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”.
A strategy is all about integrating organisational activities and utilising and allocating the scarce
resources within the organisational environment so as to meet the present objectives. While
planning a strategy it is essential to consider that decisions are not taken in a vacuum and that
any act taken by the organisation is likely to be met by a reaction from those affected,
competitors, customers, employees or suppliers.
As a manager, you need to know what good strategy looks like and understand how it can be
used to create the future for your team or organisation. When mapping out a strategy the
organisation is creating a future that may be three, five or more years ahead. It’s not just the
plan itself that has the value, but all the thinking that goes into it, the questions organisations
should ask themselves, and the answers that come forward as strategy is a high level plan to
achieve one or more goals under conditions of uncertainty.
According to an article in “The Economist”- Why a strategy is not a plan, strategies too often fail
because more is expected of them than they can deliver. Freedman (2013) in his book Strategy:
A History, find a workable definition of what strategy is and to show how it has evolved and
been applied in war, politics and business. Above all, he argues, it is about employing whatever
resources are available to achieve the best outcome in situations that are both dynamic and
contested: “It is about getting more out of a situation than the starting balance of power would
suggest. It is the art of creating power.”
Sun Tzu, a Chinese general, wrote “The Art of War”, a book argue that the way to win is by
always doing the opposite of what your opponent expects. Sun Tzu gave birth to a long tradition
that believed strategic goals could often best be achieved by avoiding the destructive
uncertainty of pitched battle. It was preferable to use “stratagem and finesse” to defeat an
enemy—famine was a favourite tactic of Sun Tzu’s—than to expose yourself to “the chance of
arms”. His teachings are still used in business schools and military academies today.
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No one is more associated with strategies founded on deceit and psychological manipulation
than Niccolò Machiavelli, who is also still studied. Machiavelli believed that his prince needed
both the cunning of the fox and the strength of the lion to keep power. If David’s slingshot had
missed the gap in Goliath’s helmet, which unaided by God it might well have done, things would
have gone badly for him.
It is, however, not really until the late 18th century, partly as a consequence of the
Enlightenment and partly through the impact on military and political thinking of the Napoleonic
wars, that the concept of strategy as it is usually understood today made its first appearance. It
was seen as a way of uniting operational art in the military sphere with political objectives. As
Carl von Clausewitz, a great Prussian strategist, put it: “War is not merely an act of policy but a
true political instrument, a continuation of political intercourse carried on with other means.”
Lawrence (2013) concludes that it may be better to look at strategy as a form of script, albeit
one which incorporates the possibility of chance events, which attempts to anticipate the
interactions of many players over a long time and which is open-ended.
It should be noted that strategic management is obligatory to achieve success in all type of
organisations. Nevertheless, the way strategy is understood and applied differs depending on
the sector in which your organisation operates, whether it is private, public or voluntary.
Williams (2009: 14) provide the clarity of different strategy of different sectors as follows:-
Private Sector Strategy The private sector is defined by competition.

Companies continue to exist only if they
provide products or services that are better
than those of their competitors, so the concept
of sustainable competitive advantage is
usually at the heart of company strategy.
Another key dimension of private sector
strategy is time. Lead time for developing new
products and getting them to market are often
short and tension can exist between delivering
short-term profits and planning and resourcing
long term strategy.
Public Sector Strategy The public sector delivers public policy and
undertakes functions such as collecting taxes.
It is largely immune to the forces of
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competition, although competition does exist
internally, such as between departments
seeking funding from a limited government
pot. If public sector organisations spend less
than they receive the difference is known as
“surplus”, not “profit”. Strategy in the public
sector is usually centred on delivering goals to
satisfy the political process and producing
conspicuous efficiency and value for money to
reassure taxpayers. Political pressure
commonly lead to changes in priorities to gain
voter supports, and to a short-term view that
impacts upon longer term strategic planning
Voluntary Sector Strategy Voluntary organsations can be considered to
fall between public and private sectors. While
their objectives may be social or political, they
are subject to the same competitive forces as
the private sector. They must compete for
funding from public or private organisations,
and from individuals. Unlike the private sector,
however, it is not always clear who the
customers of a voluntary organisations are- is
it the recipients of funding, the donors, the
trustee, or the volunteers who help make it
run? Consequently, strategic management of
voluntary sector organisations is heavily based
upon satisfying all of these different groups,
through careful stakeholder management.
Voluntary sector organisation must be careful
not to spend more than they receive in
donations. Like public sector organisations, if a
voluntary organisation spends less than it
receives, the difference is known as “surplus”
rather than “profit”, for social, political and
presentational reasons.
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Figure 2: Features of Private, Public and Voluntary Sectors
Private
Organisation in the Market
Ussually strong
Competitive advantage
Profit marking
Gain market share
Voluntary
Public Donors, recipients &
Public & Political Leaders volunteers
Usually weak Usually strong
Public approval for resource Competitive advantage &
stakeholder management
Surplus
Surplus
Providing service
Acting for the social good
1.3. Categories of Strategy
There are three types of strategic planning that are essential to every organisation: corporate,
business and functional. The word strategy is ambiguous in many ways, not the least which is
the distinction of corporate-level strategy, contrasted to business-level strategy, and functional
strategy.
 When you are leading a strategic initiative for executing a corporate-level strategy, you
are creating a new business model
 When you are leading a strategic initiative for executing a business-level strategy, you are
improving several or all of the elements of a business model
 When you are leading a strategic initiative for executing a functional level strategy, you
are optimizing one or more of the elements of a business model.
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Corporate strategy- Corporate strategy deals with the overall firm. This kind of strategy is
concerned with market definition: what businesses and markets do we want to be in? A strategic
initiative might be launched to answer that question, or more likely to realize the strategic intent
of a new chosen business or market.
These strategic decisions cannot be made at a lower level without risking sub-optimization of
resources. The first task is to conduct an environmental scan (study the business environment)
in order to identify strengths and weaknesses. Next would be to scrutinize the firm's mission, the
segmentation of its businesses and the integration of those businesses. Completion of these
tasks yields answers to the questions corporate strategy must answer: What are the corporate
performance objectives? How should the firm's resources be allocated to satisfy corporate,
business and functional requirements? Should the design of the managerial infrastructure and
the selection, promotion and motivation of key personnel change? The Red-Ocean-Blue-Ocean
metaphor has been popular over the last few years. A red ocean is a market where competitors
bloody each other up fighting for market share. A blue ocean is an emerging, growing business
arena; potential competitors have not yet identified it and the opportunity for success is large.
An example of corporate-level strategy: The February 2011 announcement an alliance between
Microsoft and Nokia Corp. The alliance involve Nokia will produce phones running Windows
Phone 7, a recognition that Nokia’s investment in its own operating system has failed. The
alliance gives Microsoft access to the world’s largest phone maker and its huge mindshare - in
many developing nations a mobile phone is known as a Nokia. The deal with Microsoft gives
both Nokia and Microsoft a route to the future in the smart-phone market.
There are four key aspects of corporate strategy. The first has to do with the strategic
management of the current set of businesses in the company’s portfolio and the allocation of
resources among them. The second related aspect is the creation of shareholder value through
corporate strategy. The third aspect has to do with the realization of synergies across
businesses and the identification and management of direct linkages between businesses. The
fourth aspect is the strategy of diversification, whether through acquisition or internal
development.
Business strategy - This kind of strategy is concerned with succeeding in chosen markets,
focuses on competitive positioning (where to compete and how) in order to create an advantage
over competitors. An example of a business-level strategy was Domino’s Pizza Turnaround
which required all areas of the organisation to pull together to achieve a simple understandable
business goal: have a clear win against competitor in a taste test.
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Business managers should run the business in a way that is in alignment with overall corporate
strategy. The framework for building a business strategy includes developing the mission of the
business, once again conducting an environmental scan and examining the key activities of the
value chain. The action plan that results directs the business strategy, programs and budget.
Functional strategy- This kind of strategy is concerned with making improvements to business
functions that support business and corporate strategy. Functional strategy include IT strategy,
marketing strategy, IT strategy, human resources strategy, and operations. Typically,
documents portraying functional strategy will list estimates and plans for operating expenses,
headcount, and continuous improvement. It carries out the objectives and mission set at the
corporate and business strategy levels. This is achieved by creating action plans and setting
budgets.
Functional-level strategy is the foundation that supports both corporate-level strategy and
business strategy. Many strategic initiatives are simply the implementation of functional
strategies, but often a strategic initiative straddles numerous functions and businesses.
An example of functional-level strategy: In 2008, Swiss Life Group, a Zurich-based insurance

company (ranked #373 on the Fortune Global 500 list) announced a change in its Information
Technology functional strategy priorities. The implications of this was a decision to considerably
scale back the number of IT projects in order to reduce costs through re-prioritization. This was
successful as shown in this November 2010 announcement,
Lastly, in regards to the strategic planning process, it is not a top-down or bottom-up flow of
ideas. It is a flow of objectives from managers at the corporate level combined with a flow of
program and budget alternatives from the business and functional levels. If sincerely executed,
the strategic planning process generates broad participation, a wealth of ideas, consensus and
clarity moving forward. Everyone knows what to do, when to do it and why he or she is doing it.
Regardless of the size of your organisation, are you considering the three types of strategy?
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The Diagramme below illustate the different kinds of strategy
Diagram 2: Categories of Strategies.
Corporate Strategy Business Strategy Functional Strategy
•In which business •Cost Leadership •Marketing strategies

should we be in? •Differentiation •New products
•How do we grow in •Focus development
these business •Financial strategies
•Human Resources
•Legal Strategies
•Supply Chain
Strategies
•IT Strategies
CHOOSE MARKET COMPETE FIERCELY SPECIALIZE

WISELY EFFECTIVELY
1.4. What is strategic management
Strategic management is the process in which an organisation develops and implements plans
that espouse the goals and objectives of that organisation. Strategic management process is
continuous and evolves as the organisational goals and objectives change. Organisations
engage in strategic management to ensure that they adapt to trends and external changes such
as globalization. Several key concepts characterize strategic management and the development
of organisational goals (Wicks, 2014:02).
Strategic Management can be defined as an ongoing the process Dess, Lumpkin and Taylor,
(2005) Indicates that strategic management of an organisation entails three ongoing processes:
analysis, decisions, and actions. That is, strategic management is concerned with the analysis
of strategic goals (vision, mission, and strategic objectives) along with the analysis of the
internal and external environment of the organisation. In essence strategic management
consists of the analysis, decisions, and actions an organisation undertakes in order to create
and sustain competitive advantages. In essence strategic management is centered around
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businesses world and respond to the questions of “where do you want your business to go”
(goals), “how is your business going to get there” (strategy) and “how will you know when you
get there” (evaluation) (Hofstrand, 2007:1)
A strategic management is like taking a journey during your holiday, you first decide where you
want to go – Cape Town in Robbin Island. Then you develop a strategy of how to get there –
take an airplane (which Airline), drive your car (which highways), etc. This will be influenced by
the amount of money, time and other resources you have available. Then you monitor your trip
to see if your strategy takes you to your destination and how your strategy worked (missed
flights, poor road conditions, etc.). Therefore strategic management is the widespread set of
ongoing activities and processes that organisations use to systematically coordinate and align
resources and actions with mission, vision and strategy throughout an organisation. Strategic
management activities transform the plan into a system that provides strategic performance
feedback to decision making and enables the plan to evolve and grow as requirements and
other circumstances change.
In a nutshell the strategic management can be summarized and defined as the art and science
of formulating, implementing and evaluating cross-functional decisions that enable an
organisation to achieve its objectives”,(David,2009:36-37). “An integrative management field
that combines analysis, formulation, and implementation in the quest for competitive advantage”
(Rothaermel, 2012: 5).
Furthermore according to Johnson, Scholes and Whittington (2008: 11-12) point out that
Strategic management includes understanding the strategic position of an organisation, making
strategic choices for the future and managing strategy in action. Strategic management
therefore defined as the process by which organisation analyse the internal and external
environments for the purpose of formulating strategies and allocating resources to develop a
competitive advantage in an industry that allows for the successful achievement of
organisational goals (Cox, Daspit, McLaughlin. and Jones III, 2012: 27-28). Most importantly to
be noted that strategic management is not about predicting the future, but about preparing for it
and knowing what exact steps the organisation will have to take to implement its strategic plan
and achieve a competitive advantage (Blatstein, 2012: 32).
The following figure presents the relevant key concepts for strategic management process.
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Figure 2: Key Concepts for Strategic Management Process
Analysis Strategy Strategy Strategy Strategy

Goal Setting
Formation Formation Implementation Monitoring
Goal Setting
At the core of the strategic management process is the creation of goals, a mission statement,
values and organisational objectives. Organisational goals, the mission statement, values and
objectives guide the organisation in its pursuit of strategic opportunities. It is also through goal
setting that managers make strategic decisions such as how to meet targets and higher revenue
generation. Through goal setting, organisations plan how to compete in an increasingly
competitive and global business arena.
Analysis Strategy Formation
Analysis of an organisation's strengths and weaknesses is a key concept of strategic

management. Other than the internal analysis, an organisation also undertakes external
analysis of factors such as emerging technology and new competition. Through internal and
external analysis, the organisation creates goals and objectives that will turn weaknesses to
strengths. The analyses also facilitate in strategizing ways of adapting to changing technology
and emerging markets.
Strategy Formation
Strategy formation is a concept that entails developing specific actions that will enable an
organisation to meet its goals. Strategy formation entails using the information from the
analyses, prioritizing and making decisions on how to address key issues facing the
organisation. Additionally, through strategy formulation an organisation seeks to find ways of
maximizing profitability and maintaining a competitive advantage.
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Strategy Implementation
Strategy implementation is putting the actual strategy into practice to meet organisational goals.
The idea behind this concept is to gather all the available and necessary resources required to
bring the strategic plan to life. Organisations implement strategies through creating budgets,
programs and policies to meet financial, management, human resources and operational goals.
For the successful implementation of a strategic plan, cooperation between management and
other personnel is absolutely necessary.
Strategy Monitoring
A final concept is monitoring of the strategy after its implementation. Strategy monitoring entails
evaluating the strategy to determine if it yields the anticipated results as espoused in the
organisational goals. Here, an organisation determines what areas of the plan to measure and
the methods of measuring these areas, and then compares the anticipated results with the
actual ones. Through monitoring, an organisation is able to understand when and how to adjust
the plan to adapt to changing trends.
1.5. Strategic Planning
Strategic planning provides a blueprint for achieving organisation’s goals. When creating a
strategic plan, there are certain objectives that the organisation is trying to satisfy during the
execution of the strategic plan. Understanding the organisational objectives of a strategic
corporate plan will help to create efficient plans to guide organisation's growth (Root, 2014:1). A
strategic plan is a document used to communicate with the organisation the organisations goals,
the actions needed to achieve those goals and all of the other critical elements developed
during the planning exercise. However, strategic planning is an organisational management
activity that is used to set priorities, focus energy and resources, strengthen operations, ensure
that employees and other stakeholders are working toward common goals, establish agreement
around intended outcomes/results, and assess and adjust the organisation's direction in
response to a changing environment. It is a disciplined effort that produces fundamental
decisions and actions that shape and guide what an organisation 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 organisation is going and the actions needed to make progress, but also how it will
know if it is successful.
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There are many different frameworks and methodologies for strategic planning and
management, however one should note that there is no fixed rules regarding the right
framework most follow a similar pattern and have common attributes. Many frameworks cycle
through some variation on some very basic phases:
 Analysis or assessment, where an understanding of the current internal and external

environments is developed;
 Strategy formulation, where high level strategy is developed and a basic organisation
level strategic plan is documented;
 Strategy execution, where the high level plan is translated into more operational
planning and action items, and
 Evaluation or sustainment / management phase, where ongoing refinement and
evaluation of performance, culture, communications, data reporting, and other strategic
management issues occurs.
1.5.1. The Strategic Planning Process

Strategic planning is one of the most important responsibilities of the senior management of an
organisation. It is the vehicle that senior management should use to set the organisational
vision, determine the strategies required to achieve that vision, make the resource deployment
decisions to achieve the selected strategies, and build alignment to the vision and strategic
direction throughout all levels of the organisation.
Unfortunately, strategic planning is also one of the most misunderstood and poorly used tools in
many organisations. Strategic plans are often large documents with detailed plans created
arduously over months at great effort...only to gather dust and languish after they have been
duly acknowledged and then filed away.
There are several reasons why strategic plans are not developed properly, or not implemented
properly. Among the most common are:
 Senior management does not follow a defined process to accomplish this task. As a
consequence, months of effort are wasted in creating reams of paper that do not have
strategic import.
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 The process is delegated to a planning group, or assigned to the various functional
leaders to complete for their respective areas. If completed in individual functional areas,
the plan may work for individual departments, but is likely to sub-optimize the whole
organisation. If assigned to a planning group, the result is often not truly embraced and
endorsed by senior leadership.
 Senior management does not set aside the time to develop the strategic plan as a
collective team work product.
 The organisation does not understand what a strategic plan is actually designed to
provide. Therefore, the strategic plan is a tactical business plan with multiple year
extrapolations. There is very little about it that addresses actual strategic direction.
 Senior management does to follow a defined process or methodology that will result in a
strategic plan in a timely and efficient yet comprehensive manner.
 The plan is developed but there is no process to communicate it throughout the
organisation and build organisation-wide alignment to its implementation.
 The plan is developed with no implementation guidelines at all. At best, it is implemented
in pieces. At worst, it is unfunded and ignored.
This does not have to become the reality. Strategic plans can be developed in an efficient and
timely manner as long as the senior management team of an organisation is committed to
meeting and working together over a period of several months to develop it.
The general scope of work is a series of dedicated sessions for one day each conducted with
the senior management team once a month for 3-5 months. The number of work sessions may
vary, depending on the complexity of the organisation and the shifts in the business
environment. The process can also be conducted in a series of half day sessions once every
two weeks. In either case, once the process has begun it must be applied with consistency and
dedication by the senior team...as a team. In addition, members of the senor team should be
prepared to spend an amount of time equal to the length of each session for follow-up work from
each session. Members of their individual organisations may be required to provide some staff
input as well.
1.5.2. The Strategic Plan Work Product

The work product (the strategic plan) is a tightly developed, concise document that can then be
shared with the employees of an organisation. This work product (without the high level
implementation plan) should generally consists of the following:
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 SWOT analysis (Assessment of current business environment)
 Vision
 Mission (may also include core values)
 Critical success factors
 Overall organisational performance measures
 Core Strategies – External and Internal
 Performance measures for each strategy
 Major resource deployment decisions
 Assignment of strategic responsibilities
 High level macro implementation schedule
 Monitoring and control system
In addition to the Strategic Plan described above, the following additional supplemental work
products may be developed:
 Communications plan to build organisational alignment
High level tactical implementation plan for each strategy – to include major tasks, high level
schedule, resource requirements, and responsible personnel
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1.5.3. The Elements of a Compelling Vision
Some visions are remarkably short and compelling. In just a few words they capture the
imagination, minds and spirits of people. They are grand in scale and incredibly uplifting.
Sometimes they even have the sense of a slogan about them.
In an attempt to create this kind of vision statement, organisations often set about developing a
single sentence or short paragraph as their vision statement. Unfortunately, the senior team (in
the spirit of full participation and inclusion) often delegates this work to a committee. The
committee dutifully seeks widespread participation and collaboration, modifying its statement
until everyone can accept it. And the result is a meaningless statement filled with platitudes,
corporate pap, and no substance.
Visions are not created by the masses. They are not created by a committee. They are created
by the leadership of an organisation.
A single statement is typically inadequate as a functioning vision. Such a statement may contain
emotional appeal, but it does not have sufficient clarity to be translated into meaningful action.
A comprehensive vision that is also compelling MUST include the following:
 The vision statement itself – short, clear, compelling and distinct

 The core strategies that the organisation will follow to achieve that vision
1.5.4. Translating the Vision Into Strategic Direction

Once the vision has been articulated and agreed by the senior team, it must be converted into
the core strategies that will be deployed to turn the vision into reality.
This step is often omitted by leadership teams. Instead, the vision is converted into specific
goals which are divided into functional areas and assigned to the different members of the
senior team for implementation. Unfortunately, different members of this team – even though
they agree on the vision – may have profoundly different perspectives regarding the best ways
to achieve that vision. The result is disagreement, conflict and organisational confusion as the
organisation attempts to execute to its vision.
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The vision process is not complete until senor management- as a cross-functional integrated
team – has worked together to define and agree on the core overall business strategies that will
be used to achieve this vision
The process of developing this strategy document must include the articulation of the core
strategies. It may also include the measures to use as the benchmark of performance and
progress against this strategy. It may even include the assignment of specific members of the
senior leadership team as champions of specific strategies. This step is especially useful if the
strategies require cross-functional integration and implementation.
The following questions can help guide the strategy development process.
 How will this vision be achieved? What must we do differently?

o What are the key things we must start doing?
o What are the key things we must stop doing?
o What are the key things we must continue doing?
 What does this mean for:

o Our product/service mix
o Our target marketplace(s)
o Our customer base
o Our employees – our talent base
o Our core work processes
o Our infrastructure (locations, facilities, equipment, etc).
o Our business partners – alliances, suppliers, etc.
o Possible acquisitions or divestitures
o Capital requirements
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The Discipline of Execution
In order for a strategic plan to achieve its potential, it must be translated into determined
execution. For this reason the final session(s) of the work with the senior team include the
construction of the execution plan.
The six core execution drivers are:
 Clarity – employees must clearly know the strategic direction, goals and priorities
 Commitment – employees must buy into the goals
 Translation – employees must know what they must individually do to achieve the
strategic goals
 Enabling – Employees must have the proper structure, tools, resources and freedom to
do their job well
 Synergy – Employees must work well together to create results greater than the sum of
their individual contributions
 Accountability – Employees and managers must regularly hold themselves and each
other accountable to their commitments
The drivers are satisfied through four key disciplines of execution. The four disciplines are:
 Focus on the wildly important

o The 20% of the activities that will generate the 80% of the results
o Acknowledging and responding to the concept that people are naturally hard
wired to focus only on one (or at most a few) things at one time
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o Distinguish between what is merely important and what is wildly important
o Wildly important requirements are discovered by filtering through the stakeholder
screen, the strategic screen, and the economic screen
 Create a compelling scoreboard
o People play differently when they are keeping score
o Compelling, visible, accessibly scoreboard for the strategic plan and its crucial
goals
o The scoreboard makes clear from what-to-what – by whom – by when – for how
much
 Translate lofty goals into specific actions
o Establish the difference between the stated strategy and the reality of today’s
work environment. The stated strategy is what is communicated and expected.
The current reality is what people are doing every day. Build the bridge through a
specific action plan that moves the organisation from today’s reality to tomorrow’s
strategic future.
o Everyone must know exactly what they are supposed to do to implement the
strategy and achieve the results being measured on the scoreboard.
 Hold one another accountable all the time
o Collective, shared and individual responsibilities and accountability
o Triage reporting in a team environment
o Finding third alternatives to overcome obstacles
o Clearing the path – removing roadblocks to success
1.6. The Difference between Strategic Management and Strategic Planning
According to David (2009:40) strategic planning is sometimes confused with strategy

formulation, because strategic plan is constructed in this stage. Both strategic management and
strategic planning terms mean the same. The difference is that the latter one is more used in the
business world while the former is used in the academic environment.
1.7. Importance of Strategic Planning
The strategic planning is a requirement for sustained competitive advantage on organisations.

Competitive advantage is what keeps great organisations ahead of their competitors.
Rothaermel (2012:5) pointed out that the organisations, which has a competitive advantage,
22 | P a g e
performs financially much better than other companies in the industry or better than the industry
average. Some organisations may achieve it without thorough strategic plan but for the most
players out there it is vital to plan strategically, i.e. analyse, create, implement and monitor, and
do this continuously. It is not guaranteed that organisations will ever achieve competitive
advantage conducting strategic planning but it is an essential process if the organisations
The strategic planning also assists to view things from broader perspective. Johnson et al
(2008:12) argues that other reason why the organisations don’t simply rely on their finances,
marketing or operations functional areas to create competitive advantage is that managers of
each area often view things only from their own specific angle, which is too narrow view for the
whole organisation to rely upon. Only the managers (e.g. CEOs or strategic planners) who see
the whole picture of the company and its surrounding environments can make the decisions that
bring the competitive advantage.
Furthermore strategic planning also facilitates collaboration. Nowadays, most companies

involve middle managers of functional areas into the process of formulating strategic plan.
Middle managers are the people who implement the strategies set out in a plan and if they
aren’t involved in making the plan, then they aren’t so committed to support it. Thus, strategic
planning is used to achieve the competitive advantage and to integrate all the functional areas
of the company by facilitating the communication between the managers of all levels.
1.8. Benefits of Strategic Planning
 Defines organisation’s vision, mission and future goals.

 Identifies the suitable strategies to achieve the goals.
 Improves awareness of the external and internal environments, and clearly identifies the
competitive advantage.
 Increases managers’ commitment to achieving the organisation’s objectives.
 Improves coordination of the activities and more efficient allocation of organisation’s
resources.
 Better communication between managers of the different levels and functional areas.
 Reduces resistance to change by informing the employees of the changes and the
consequences of them.
 Strengthens the firm’s performance.
 On average, organisations using strategic management are more successful than the
organisations that don’t.
 Strategic planning allows the organisation to become more proactive than reactive.
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1.9. Limitations of Strategic Management
Although strategic management brings many benefits to the organisation it also has its
limitations:
 The costs of engaging in it are huge.

 The process is complex.
 Success is not guaranteed.
Above are the reasons why small and medium enterprises are usually reluctant to have their
own strategic departments
1.10. Strategic Direction
A course of action that leads to the achievement of the goals of an organisation's strategy it is
referred as strategic direction. Organisations usually define a Strategic Direction that can be
seen as the organiation's roadmap. Vision is crucial for developing a strategy-focused
organisation and alignment within the organisation. A strong vision leads to enhanced
communication, participation, and commitment by employees. In an organisation people must
share certain values and pictures about where we are going. It is important that people must
have a real need to feel that they are part of the mission of the organisation. (Dess & Picken,
2000:19).
An organisation’s strategic direction is created through the development of a strategic plan. The
direction an organisation chooses to take to achieve its goals is an important part of the
strategic planning process. The benefits of a clear strategic direction are felt all over the
organisation --- from ground-level employees, who work more efficiently with clear goals, all the
way up to shareholders, who remain confident in the company's potential for continued success
and financial prosperity.
A strategic direction within a department or business as a whole allows you as a business

owner or manager to focus your employees on specific goals. Employees are able to work with
greater efficiency and with better allocation of resources because each worker is pointed
towards a specific task aimed at achieving the larger goal. Employees should understand how
24 | P a g e
each task fits into the larger business goal to gain a greater sense of importance in the larger
project.
With the strategic direction the organisation knows which its objectives are, how will they be
accomplished, what resources are required and creates a general scheme of how the
organisation must work. However a great deal of organisations does not include on their
strategic vision two components that are basic for nowadays: Internet and Technologies.
Internet and Technology components have greatly evolved in the last years (even decades) and
currently play a major role in any modern organisation. Few years ago Internet and
Technologies where thought as secondary characters, usually as support areas, but this has
been rethink due to changes in the market and business environment.
Organisations have to define a clear strategic direction that takes into account Internet and
Technologies. And these two components must be present with a 360° Vision where every
single area has a saying: top management, marketing, sales, financial, human resources,
logistics and any other area.
When defining a strategic direction that includes a 360° corporate vision, every single area of
the organasation must be analyzed, including all processes in order to gain the maximum
possible value. Organisations must establish their strategic direction and then translate its vision
to every area and process. This is done in this fashion because once the corporate objectives
are clear, organisations must can go into every single area of the organisation with ease and
calm and provide the greatest value (aligned with the corporate strategy). It's very difficult and it
is advised against it to define in just one instance how each area will take advantage of Internet
and Technologies. Much better results will be obtained if the corporate wide objectives are
defined at the beginning and then this are applied area by area.
While the benefits of a good vision are quite apparent and every business has some form of a
vision—either implicit or explicit—not all vision statements achieve these benefits. According to
Kotter (1996), an effectively worded vision statement should be, amongst other characteristics,
graphic, directional, feasible, and easy to communicate. Those that do not will likely be
considered bland, vague, overly broad, or generic. Collins and Porras (1991) noted,
Most vision statements are terribly ineffective at creating a compelling guiding force . . . They
don’t grab people in the gut and motivate them to put forth their best efforts toward a compelling
25 | P a g e
goal. They don’t mean something to people all up and down the organisation. they usually are
nothing more than a boring stream of words. They are not compelling, nor are they exciting.
They’re not clear, crisp and gut-grabbing. (p. 31).
The challenge of creating a compelling vision begins with top management. John Seely Brown,
former chief scientist for the Xerox Corporation, argued, “The job of leadership today is not just
to make money: It’s to make meaning” (Dess & Picken, 2000:19). A clear and compelling vision,
relentlessly communicated by a organisation’s senior team, is crucial for building organisations
that can respond to rapid changes in technology and markets (O’Reilly & Tushman, 2004).
1.11. Conclusion
This chapter has provided an overview of the strategic management process and thorough
definition of strategic management, strategy, strategic management and strategic planning has
been given. The key concepts of strategic management process were discussed and
importance and benefits of strategic planning in an organisation. Furthermore the limitations of
the strategic management were summarized.
26 | P a g e
References
1. David, F.R. (2009). Strategic.Management: Concepts and Cases. 12th ed. FT Prentice Hall,
p. 36-37, 40, 48
2. Rothaermel, F. T. (2012). Strategic.Management: Concepts and Cases. McGraw-Hill/Irwin,
p. 5
3. Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed. FT
Prentice Hall, p. 11-12
4. Cox, M. Z., Daspit, J., McLaughlin, E. and Jones III, R.J. (2012). Strat.Mgmt.: Is It an
Academic Discipline? Journal of Business Strategies, Vol. 29 Issue 1, pp. 27-28
5. Blatstein, I.M. (2012). Strategic Planning: Predicting or Shaping the Future? Organisation
Development Journal, Vol. 30 Issues 2, pp. 32
6. Wikipedia (2013). Strategic Management. Available at:
http://en.wikipedia.org/wiki/Strategic_management
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basics/#page-1576
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York: McGraw-Hill Irwin, 2005.
9. Hofstrand, D. (2007). Strategic Management Concepts: AG Decision Maker. OIWA State
Univeristy File C6-39 July 2007 (article)
10. Freedman, L. (2013). Strategy: A History. Oxford University Press,USA.
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Planning, Plans, Planners, Free Press, p. 458
12. Mintzberg, Henry (2004), Managers, not MBAs: a hard look at the soft practice of managing
and management development, Berrett-Koehler, p. 464,
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Courses.
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Honkapohja, S. Frontiers of Economics. Oxford: Basil Blackwell. pp. 909–924.
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(4): 909–924. JSTOR 2938166.
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strategy equilibrium points", Int. J. Game Theory 2: 1–23, doi:10.1007/BF01737554.
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22. Key Concepts for Strategic Management and Organisational Goals :by Diana Wicks,
Demand Media(Article)
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strategic-planning-10034.html
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CHAPTER 1: STRATEGIC MANAGEMENT PROCESS.................................................................. 4

Private Sector Strategy The private sector is defined by competition.

1.3. Categories of Strategy

An example of functional-level strategy: In 2008, Swiss Life Group, a Zurich-based insurance

Diagram 2: Categories of Strategies.

Corporate Strategy Business Strategy Functional Strategy

•In which business •Cost Leadership •Marketing strategies

CHOOSE MARKET COMPETE FIERCELY SPECIALIZE

1.4. What is strategic management

Analysis Strategy Strategy Strategy Strategy

Analysis Strategy Formation

Analysis of an organisation's strengths and weaknesses is a key concept of strategic

1.5. Strategic Planning

 Analysis or assessment, where an understanding of the current internal and external

1.5.1. The Strategic Planning Process

1.5.2. The Strategic Plan Work Product

 Communications plan to build organisational alignment

A comprehensive vision that is also compelling MUST include the following:

 The vision statement itself – short, clear, compelling and distinct

1.5.4. Translating the Vision Into Strategic Direction

 How will this vision be achieved? What must we do differently?

 What does this mean for:

The six core execution drivers are:

 Focus on the wildly important

1.6. The Difference between Strategic Management and Strategic Planning

According to David (2009:40) strategic planning is sometimes confused with strategy

1.7. Importance of Strategic Planning

The strategic planning is a requirement for sustained competitive advantage on organisations.

Furthermore strategic planning also facilitates collaboration. Nowadays, most companies

1.8. Benefits of Strategic Planning

 Defines organisation’s vision, mission and future goals.

 The costs of engaging in it are huge.

1.10. Strategic Direction

A strategic direction within a department or business as a whole allows you as a business

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