BACHELOR IN BUSINESS ADMINISTRATION

SCHOOL: BUSINESS ADMINISTRATION

SEMESTER

STRATEGIC MANAGEMENT.

INDIVIDUAL ASSIGNMENT

Prepared for:

Lecturer’s name: Mr. Saboor

Prepared by:

Student’s Name: Kelechi Nelson Mbedom

ID No: Alfa2018-0344

Subject Code: BBA

Deadline date: 14th November, 2020

Table of Contents
QUESTION 1.............................................................................................................................................3
BENEFITS OF STRATEGIC PLANNING AND KEY TERMS OF STRATEGIC
MANAGEMENT...................................................................................................................................3
1. It allows organizations to be proactive rather than reactive:......................................................3
2. It sets up a sense of direction.......................................................................................................3
3. It increases operational efficiency:..............................................................................................3
4. It helps to increase market share and profitability:.....................................................................3
5. It can make a business more durable..........................................................................................4
KEY TERMS IN STRATEGIC MANAGEMENT.............................................................................4
Strategists............................................................................................................................................4
Mission Statements-............................................................................................................................4
External Opportunities and Threats-....................................................................................................4
Internal Strengths and Weaknesses/Internal assessments-...................................................................4
Long-Term Objectives-.......................................................................................................................5
Strategies-............................................................................................................................................5
Annual Objectives-..............................................................................................................................5
Policies-...............................................................................................................................................5
QUESTION 3.............................................................................................................................................7
THE KEY TRAITS OF A CEO. THE FORCES THAT DESIGN THE STRATEGIC
MANAGEMENT SYSTEMS................................................................................................................7
Courage, Passion & Intensity...............................................................................................................7
Resilience & Drive.................................................................................................................................7
High Emotional Intelligence.................................................................................................................8
Humility.................................................................................................................................................8
Excellent Communication Skills...........................................................................................................8
Forces that design the strategic management systems........................................................................8
Communication of Corporate Goals-...................................................................................................8
Goal-Setting Process-............................................................................................................................9
Environmental Scanning-.....................................................................................................................9
Subordinate Managers’ Focus-.............................................................................................................9
 Corporate Planner’s Role-..................................................................................................................10
Linkage of Planning and Budgeting...................................................................................................10
QUESTION 5...........................................................................................................................................11
FACTORS AFFECTING STRATEGIC CHOICES........................................................................11
Nature of Environmental...................................................................................................................12
Firm's internal realities......................................................................................................................12
CEO/owners company culture:..........................................................................................................12
Firm's capacity to execute the strategy..............................................................................................12
Resource allocation............................................................................................................................12
 QUESTION 1
BENEFITS OF STRATEGIC PLANNING AND KEY TERMS OF STRATEGIC
MANAGEMENT

While many organizations understand the importance of strategic planning and spend a great
deal of time and money coming up with the strategic plan, it still remains something that is
reviewed just once a year or worse – a glossy document that sits on the shelf!

“If you don’t know where you are going, you are certain to end up somewhere else.” – Yogi
Berra

You might be thinking: Is it worth embarking on a strategic planning process? There are many
benefits that go along with strategic planning. The key to successful strategic planning is to build
in measures and implementation steps that allow you to engage your staff and monitor the results
at regular intervals. A great resource to get started with is our Free Strategic Plan Template
which you can download as a PDF.

The work of strategic planning doesn’t stop at the strategic plan, but it’s a start! Here are the top
5 benefits of strategic planning:

1. It allows organizations to be proactive rather than reactive: A strategic plan allows

organizations to foresee their future and to prepare accordingly. Through strategic
planning, companies can anticipate certain unfavorable scenarios before they happen and
take necessary precautions to avoid them. With a strong strategic plan, organizations can
be proactive rather than merely reacting to situations as they arise. Being proactive allows
organizations to keep up with the ever-changing trends in the market and always stay one
step ahead of the competition.

2. It sets up a sense of direction: A strategic plan helps to define the direction in which an
organization must travel, and aids in establishing realistic objectives and goals that are in
line with the vision and mission charted out for it. A strategic plan offers a much-needed
foundation from which an organization can grow, evaluate its success, compensate its
employees and establish boundaries for efficient decision-making.

3. It increases operational efficiency: A strategic plan provides management the roadmap

to align the organization’s functional activities to achieve set goals. It guides
management discussions and decision making in determining resource and budget
requirements to accomplish set objectives — thus increasing operational efficiency.

4. It helps to increase market share and profitability: Through a dedicated strategic plan,
organizations can get valuable insights on market trends, consumer segments, as well as
product and service offerings which may affect their success. An approach that is targeted
and well-strategized to turn all sales and marketing efforts into the best possible
outcomes can help to increase profitability and market share.
 5. It can make a business more durable: Business is a tumultuous concept. A business
may be booming one year and in debt the next. With constantly changing industries and
world markets, organizations that lack a strong foundation, focus and foresight will have
trouble riding the next wave. According to reports, one of every three companies that are
leaders in their industry might not be there in the next five years… but the odds are in
favor of those that have a strong strategic plan! If you’re considering adopting a strategic
plan at your organization, or are looking for a way to align your staff and daily operations
on your existing one, then Envisio may just be the solution you’ve been looking for.
Envisio’s cloud-based strategic plan management software helps organizations manage
their strategic and operating plans, track performance, and report to stakeholders.

KEY TERMS IN STRATEGIC MANAGEMENT

Strategists: Strategists are individuals who are most responsible for the success or failure of an
organization. Strategists are individuals who form strategies.

Vision Statements: Many organizations today develop a "vision statement" which answers the
question, what do we want to become? Developing a vision statement is often considered the
first step in strategic planning, preceding even development of a mission statement. Many vision
statements are a single sentence.

Mission Statements-
Mission statements are "enduring statements of purpose that distinguish one business from other
similar firms. A mission statement identifies the scope of a firm's operations in product and
market terms. It addresses the basic question that faces all strategists: What is our business? A
clear mission statement describes the values and priorities of an organization.

External Opportunities and Threats-

External opportunities and external threats refer to economic, social, cultural, demographic,
environmental, political, legal, governmental, technological, and competitive trends and events
that could significantly benefit or harm an organization in the future. Opportunities and threats
are largely beyond the control of a single organization, thus the term external.

Internal Strengths and Weaknesses/Internal assessments-

Internal strengths and internal weaknesses are an organization's controllable activities that are
performed especially well or poorly. They arise in the management, marketing,
finance/accounting, production/operations, research and development, and computer information
systems activities of a business. Identifying and evaluating organizational strengths and
weaknesses in the functional areas of a business is an essential strategic-management activity.
Organizations strive to pursue strategies that capitalize on internal strengths and improve on
internal weaknesses.
Long-Term Objectives-
Objectives can be defined as specific results that an organization seeks to achieve in pursuing its
basic mission. Long-term objectives represent the results expected from pursuing certain
strategies. Strategies represent the actions to be taken to accomplish long-term objectives. The
time frame for objectives and strategies should be consistent, usually from two to five years.

Strategies-
Strategies are the means by which long-term objectives will be achieved. Business strategies may
include geographic expansion, diversification, acquisition, product development, market
penetration, retrenchment, divestiture, liquidation, and joint venture.

Annual Objectives-
Annual objectives are short-term milestones that organizations must achieve to reach long-term
objectives. Like long-term objectives, annual objectives should be measurable, quantitative,
challenging, realistic, consistent, and prioritized. They should be established at the corporate,
divisional, and functional levels in a large organization.

Policies-
Policies are the means by which annual objectives will be achieved. Policies include guidelines,
rules, and procedures established to support efforts to achieve stated objectives. Policies are
guides to decision making and address repetitive or recurring situations.

Question 2

Concept of SBU in a multi business organization

Strategic Business Unit (SBU) implies an independently managed division of a large company,
having its own vision, mission and objectives, whose planning is done separately from other
businesses of the company. The vision, mission and objectives of the division are both distinct
from the parent enterprise and elemental to the long-term performance of the enterprise. Simply
put, an SBU is a cluster of associated businesses which are responsible for its combined planning
treatment, i.e. the company engaged in a diversified range of businesses, categorizes its
multitude of businesses into a few separate divisions, in a scientific way. The task may include
analysis and bifurcation of a variety of businesses.

It can be a business division, a product line of the division or even a specific product/brand,
targeting a particular group of customers or a geographical location. A strategic business unit is
specially formed to target a particular market segment, which requires expertise in production or
management, not present in the parent company. The structure of SBU consists of operating
units; wherein the units serve as an autonomous business. The top corporate officer assigns the
responsibility of the business to the managers, for the regular operations and business unit
strategy. So, the corporate officer is accountable for the formulation and implementation of the
comprehensive strategy and administers the SBU by way of strategic and financial controls.

In this way, the structure combines related divisions of business into the strategic business unit
and the senior executive is empowered for taking decisions for each unit. The senior executive
works under the supervision of a chief executive officer. There are three levels in a strategic
business unit, wherein the corporate headquarters remain at the top, SBU’s in the middle and
divisions clustered by similarity, within each SBU, remain at the bottom. Hence, the divisions
within the SBU are associated with each other, and the SBU groups are independent of each
other. From the strategic viewpoint, each SBU is an independent business. A single strategic
business unit is considered as a profit center and governed by the corporate officers. It stresses
over strategic planning instead of operational control so that the separate divisions of the SBU
can respond as fast as they can, to the changing business environment.

3 Levels of strategy-corporate business and functional

How ‘far down’ into the company does our strategy really need to go?” In other words, in what
areas of the company should the groundwork for strategy be laid? This is a question we’ve heard
repeatedly from people at companies that are either in the beginning phases of strategy creation
or are updating an outdated strategy. Regardless of which of those two camps you belong to, you
should have a clear understanding of the three levels of strategy in your business. The three
levels of strategy are:

The Corporate Level: The corporate level is the highest and therefore the most broad, level of
strategy in business. Corporate-level strategy should define your organization’s main purpose. It
should also direct all your downstream decision-making. For example, the objectives (e.g. high-
level goals) in the levels below this one should all have a direct line to the goals defined here.
Creating and understanding your corporate-level strategy is particularly important for
organizations that have multiple lines of business. For example, if one arm of your business
manufactures a product and another arm sells that product, you’ll have a separate business unit
strategy for each—but one single corporate-level strategy that describes why those two arms are
important, and how those businesses interact for the good of the organization.

The Business Unit Level: Your business unit strategy is used for different areas of your
business (like services and products, or multiple departments or divisions, for example). The
complexity of this level will depend on how many businesses you are in, and how your company
is structured. It’s important to create a strategy for each business unit so that you can see which
units are excelling and which need improvement. Having a strategy at the business unit level
allows you to weigh the costs and benefits of each business unit and to decide where you should
spend your resources. Depending on the progress towards your goals and your analysis of the
market, you may even decide it’s time to divest or sell some of your business units so you can
focus on the areas that are most important to achieving your company’s corporate strategy.

The Functional Level: The functional level of your strategy involves each department—and
what those at the department level are doing day-to-day to support corporate initiatives. Whereas
your business unit strategy would be defined and evaluated by senior leadership, your functional
strategy is typically produced by department heads (e.g. leaders in marketing, operations,
finance, IT, etc.). These individuals can help ensure that the departments execute the defined
strategic elements, and that the components laid out at the functional level help support both the
department level and corporate level strategies.

QUESTION 3
THE KEY TRAITS OF A CEO. THE FORCES THAT DESIGN THE STRATEGIC
MANAGEMENT SYSTEMS

However, the recruiting industry has evolved, changing the way hiring managers and search
consultants view candidates. When it comes to the C-Suite, especially Chief Executive Officer,
seasoned executives do not consider a long-term track record to be an important predictor of
success, much less the sole factor. Companies and their retained search consultants are looking
for the full package when it comes to their CEO; charisma, passion, personality and culture fit
are high ranking desirable traits needed to back up a proven track record.

Russell Reynolds partnered with Hogan Assessments to get “Inside the Mind of the Chief
Executive Officer,” and discovered CEO’s have a unique psychological profile compared to the
average executive. Below are a few characteristics that they found best-in-class CEOs need to
possess and work to maintain.

Courage, Passion & Intensity: An excellent CEO is drawn to change and effective action like a
moth to a flame. Best-in-class leaders are always looking towards the future, setting ambitious
goals and often rely on their intuition. CEOs take initiative, are quicker to capitalize on
opportunities and are more likely to take high level risks than their other executive counterparts.
Their intensity and passion for growth and development makes them charismatic and persuasive
people.

Resilience & Drive: Leaders know that taking risks and making large-scale changes can lead to
exponential growth or can fail dramatically. A key difference between good CEOs and great
CEOs is the ability to bounce back and push forward. A great CEO is open to learning from their
mistakes and will work to turn unanticipated situations into positive results.
High Emotional Intelligence: CEOs of successful corporations know a key part of success is
attributed to collaboration. Great leaders strongly believe in building strong networks and know
the best way to do so is forging mutually-beneficial relationships. CEOs are not always
extroverted but they can easily read people’s emotions and are generally warm, easy to approach,
trustworthy and uplifting.

Humility: CEOs should convey a personable demeanor, and one way to achieve this is by
remaining humble and modest about their qualifications. Let your work speak for itself and be
mindful of natural confidence being perceived as arrogance or pretention. A great leader is not
self-involved but instead should be consistently working to develop the next great leader(s).

Excellent Communication Skills: Finally, the climb to the top is never reached without
excellent communication skills. Although CEOs are the decision makers of the company, best-
in-practice CEOs know that employees who feel valued and integral to the company’s success
are incredibly productive. Active engagement within your teams leads to better results.
Remember, the best leaders are also the best listeners so offer mentorship and support whenever
possible. Practice empathy and promote internal, cross-functional collaboration.

Forces that design the strategic management systems

Every business carries on strategic planning, although the formality of that process varies greatly
from one company to the next. Conceptually, the process is simple: managers at every level of a
hierarchy must ultimately agree on a detailed, integrated plan of action for the coming year; they
arrive at agreement through a series of steps starting with the delineation of corporate objectives
and concluding with the preparation of a one- or two-year profit plan. However, the design of
that process—deciding who does what, when—can be complex, and it is vital to the success of
the planning effort.

A strategic planning system is nothing more than a structured (that is, designed) process that
organizes and coordinates the activities of the managers who do the planning. No universal, off-
the-shelf planning system exists for the simple and obvious reason that companies differ in size,
diversity of operations, the way they are organized, and managers’ style and philosophy. An
effective planning system requires “situational design”; it must take into account the particular
company’s situation, especially along the dimensions of size and diversity.

Communication of Corporate Goals-

A common roadblock in designing a formal planning system occurs when second-level managers
ask headquarters for guidelines to focus the preparation of their strategic plans. These managers,
uncertain how to tackle the assignment, may ask, implicitly or explicitly, “Tell us where you
want us to go and the performance you expect from us, and we’ll give you a plan of how to
achieve it.” These questions are not unreasonable, but acceding to them may violate the very
purpose for undertaking strategic planning. To determine how goals should be communicated
and how specific they should be is an important matter in planning system design.

Goal-Setting Process-
From the division manager’s viewpoint, should he or corporate management set the division’s
goals? This issue is sometimes cast as a choice between “top-down” and “bottom-up” goal
setting. Actually, of course, management at both levels must agree on divisional goals. An
important issue, however, remains: Which level in the hierarchy should initiate the process? In a
homogeneous company, the same issue arises concerning the general manager and functional
managers. The design of the planning system can strongly influence how this issue is resolved.
The goals that emerge from the programming process in a small company are tied to an approved
set of action programs. Until the president has decided on the programs, no functional manager
can set goals for his sphere of activity. Selection of a set of action programs, therefore, more or
less automatically determines the performance goals for each functional unit. In many small
companies—such as the pharmaceutical concern we spoke of—a “package” of action programs
spells out the functional goals for every department, because of the interdependence of all the
departments.

Environmental Scanning-
A strategic planning system has two major functions: to develop an integrated, coordinated, and
consistent long-term plan of action, and to facilitate adaptation of the corporation to
environmental change. When introducing and developing such a system, companies commonly
concentrate on its integrative aspects. The design of the system, however, must also include the
function of environmental scanning to make sure that the planning effort also fulfills its adaptive
mission.

Subordinate Managers’ Focus-

In a strategic planning effort, where should the second-level managers direct their attention?
What roles do the division manager, functional manager, and top management play? We shall
consider these questions in terms of whether plans should be more quantitative or more
qualitative, more concerned with financial detail or with strategic analysis. Preparation of a
functionally coordinated set of action programs for a small company may require a great deal of
cross-functional communication. Much of this interchange is most efficiently expressed in dollar
or other quantitative terms, such as numbers of employees, units of product, and square feet of
plant space. Use of financial or quantitative data is appropriate for two reasons: (1) it helps each
functional manager understand the dimensions of a proposed program and forces him to think
through the implications of executing it; (2) it permits the president to select more confidently
the set of programs to be implemented. The pharmaceutical company previously referred to, for
instance, focuses on the funds flows that might be expected from the various strategic programs
suggested by the functional departments.
Corporate Planner’s Role-
A major issue in the design of the planning system is where the corporate planner fits. Strategic
planning is a line management function; a sure route to disaster is to have plans produced by
staff planners and then issued to line managers. Strategic planning is essentially a people-
interactive process, and the planner is only one in the cast of characters involved. If the process
is to function effectively, he must clearly understand his proper role. The corporate planner’s
function in small and large companies is quite different. In a small company (or a product
division of a large company), the planner performs the function of staff planning assistant to the
president (or the general manager). While coordinating the planning activities of the functional
managers, he concerns himself with the president’s problem of selecting the best set of action
programs. Only the president—and his planning assistant—have a business-wide perspective of
the choices, and the assistant must do the bulk of the analysis.

Linkage of Planning and Budgeting-

The steps in a typical planning system represent an orderly, gradual process of commitment to
certain strategic alternatives. Each step is, theoretically at least, linked to those preceding. In
financial terms, this linkage may be quite explicit; for instance, a division’s profit forecast
prepared in the first planning cycle may become the profit commitment for next year’s operating
budget. Although few companies expect to achieve this financial linkage in narrowing the
choices, all the parties involved in the process should understand the intended relationship
between the cycles. How fast this narrowing should be is a situational design question that
depends on the particular corporate setting. A tight linkage between planning and budgeting
indicates that more strategic commitments have been made at an earlier stage. A loose linkage,
on the other hand, implies that the narrowing process is slower and will occur mainly late, in the
budgeting stage of the process.

Question 4

Grand strategies at the corporate level

The Grand Strategies are the corporate level strategies designed to identify the firm’s choice with
respect to the direction it follows to accomplish its set objectives. Simply, it involves the
decision of choosing the long term plans from the set of available alternatives. The Grand
Strategies are also called as Master Strategies or Corporate Strategies. There are four grand
strategic alternatives that can be followed by the organization to realize its long-term objectives:

The Stability Strategy: This is adopted when the organization attempts to maintain its current
position and focuses only on the incremental improvement by merely changing one or more of
its business operations in the perspective of customer groups, customer functions and technology
alternatives, either individually or collectively. Generally, the stability strategy is adopted by the
firms that are risk averse, usually the small scale businesses or if the market conditions are not
favorable, and the firm is satisfied with its performance, then it will not make any significant
changes in its business operations. Also, the firms, which are slow and reluctant to change finds
the stability strategy safe and do not look for any other options.

The Expansion Strategy: This is adopted by an organization when it attempts to achieve a high
growth as compared to its past achievements. In other words, when a firm aims to grow
considerably by broadening the scope of one of its business operations in the perspective of
customer groups, customer functions and technology alternatives, either individually or jointly,
then it follows the Expansion Strategy. The reasons for the expansion could be survival, higher
profits, increased prestige, economies of scale, larger market share, social benefits, etc. The
expansion strategy is adopted by those firms who have managers with a high degree of
achievement and recognition. Their aim is to grow, irrespective of the risk and the hurdles
coming in the way.

The Retrenchment Strategy: This is adopted when an organization aims at reducing its one or
more business operations with the view to cut expenses and reach to a more stable financial
position. In other words, the strategy followed, when a firm decides to eliminate its activities
through a considerable reduction in its business operations, in the perspective of customer
groups, customer functions and technology alternatives, either individually or collectively is
called as Retrenchment Strategy. The firm can either restructure its business operations or
discontinue it, so as to revitalize its financial position.

The Combination Strategy: This means making the use of other grand strategies (stability,
expansion or retrenchment) simultaneously. Simply, the combination of any grand strategy used
by an organization in different businesses at the same time or in the same business at different
times with an aim to improve its efficiency is called as a combination strategy. Such strategy is
followed when an organization is large and complex and consists of several businesses that lie in
different industries, serving different purposes.

QUESTION 5
FACTORS AFFECTING STRATEGIC CHOICES

‘Strategic choice’ involves selecting from among several alternatives the most appropriate
strategy which will best serve the enterprise objectives. To choose a good strategic option, past
data, current data, forecasted data, and various other factors should be examined carefully. The
selection process becomes a complex job because it is influenced by various factors.
Nature of Environmental: The dynamic elements of environment affect the way in which
choice of strategy is made. The survival and prosperity of a firm depend largely on the
interaction of the elements of environment—such as shareholders, customers, suppliers,
competitors, the government and the community. These elements constitute the external
constraints. The flexibility in the choice of strategy is often governed by the extent and degree of
the firm’s dependence on the environment. Pearce and Robinson state, “A major constraint on
strategic choice is the power of environmental elements. If a firm is highly dependent on one or
more environmental factors, its strategic alternatives and ultimate choice must accommodate this
dependence. The greater a firm’s external dependence, the lower its range and flexibility in
strategic choice.” Well established, large companies in different industries are more powerful
vis-a-vis their environments and therefore have greater flexibility in the strategic choice than
their counterparts in the respective fields.

Firm's internal realities: Organizational factors also affect the strategic choice. These include
organizational mission, strategic intent, goals, organization’s business definition, resources,
policies, etc. Besides these factors, organizational strengths, weaknesses, and capability to
implement strategic alternatives also affect the strategic choice.

CEO/owners company culture: In choosing a strategic alternative, strategy makers must

consider pressures from the corporate culture. They must assess a strategy’s compatibility with
that culture. Every organization has its own corporate culture. It is made of a set of shared
values, beliefs, attitudes, customs, norms, etc. The successful functioning of an organization
depends on ‘strategy-culture fit’. The strategy choice has to be compatible with firm’s culture.
The strategic choice should not be out of tune with the cultural framework of the firm. The
culture has substantial influence on the strategic choice. In case of mismatch between strategic
choice and the cultural framework of a company, either one is to be redefined.

Firm's capacity to execute the strategy: Strategy choice must take into account the firm’s
ability to execute the strategy. Without execution, strategy has no meaning. The strategists must
consider the elements like people, skills, processes, resources, and culture of the firm. The ‘suit
must fit.’ Firm’s limitations must be considered for proper execution.

Resource allocation: Research on the resource allocation process emerged in the late 1960s as
scholars sought more accurate portrayals of investment decision making than what had been
abstracted in finance models of capital budgeting. The finance models focused on quantitative
evaluations of predefined investment opportunities available to a firm so that optimal choices
could be made. Neither human behavior nor organizational features had a place in the models.
To fill this gap and put financial evaluation in an organizational context, management
researchers undertook field studies that examined how actual investments were made and, based
on those observations, developed descriptive process models
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