STRATEGIC MANAGEMENT ASSIGNMENT 3

Group Members:
1) Bezawit Tesfaye UU 71350E
2) Eman Mecha UU 71505/E
3) Misganaw Asnake ye Hula UU 71455E
4) Aryam Brhanu UU 71608E
5) Selam Zeru UU 71473E
6) Ferdos Jamal UU 71596E

SUBMITTED TO Dr. Assefa Assefa Beyen

  Unlike the 20-year strategic plans of the 1960s and 1970s, most long-term (strategic
level) planners today find it difficult to look even 5 years in the future. Why? Discuss in
detail by substantiating your views with pertinent (practical) examples.

The major reason behind why strategic planers find it difficult to plan long term strategies is due
to the reason that in an ever-changing time horizon we are now it is unrealistic to have inflatable
and fixed strategic plan for any organization.

In the past, in the 1960s and 1970s formulating a strategic plan up to 20 years was not as such
difficult. However, currently in the 21st century formulating a five-year strategic plan becomes
not easy. Many factors can be considered for failing to formulate just a five-year strategic plan.
Among the predominant factors and realities are; the globalization effect, rapid changes in
technology, fierce and increasing competition between organizations, a dynamic and changing
workforce, dynamic and continuous changing of markets and economic conditions, and the last
but not the least is developing resource shortages all increase the complexity of formulating
strategic management.

According to ( Nicolas Kachaner, Kermit King, and Sam Stewart) BCG article 2016, Strategic
planning is one of the least-loved organizational processes. Executives at most companies
criticize it as overly bureaucratic, insufficiently insightful, and ill-suited for today’s rapidly
changing markets.

More than ever, companies need to devote time to strategy. The problem isn’t strategic planning.
It’s that most companies lack an effective strategic-planning process.

 companies that get the most benefit from their strategic-planning activities have four
things in common:
 They explore strategy at distinct time horizons
 They constantly reinvent and stimulate the strategic dialogue
 They engage the broad organization
 They invest in execution and monitoring

The purpose of long-term strategic thinking should be to define, validate, or redefine the vision,
mission, and direction of the company. It’s about projecting more than five years into the future

For Example: Philips’s decision to shift its focus from consumer electronics to the health care
sector. population and the fitness trend would provide strong tailwinds for a change in course
toward the health care sector, while continuing commoditization would leave the traditional
consumer electronics business at best becalmed. It was a vision for the future around which they
could then align the organization for a multiyear journey. The long term is also a great
perspective from which to consider how to project skills and brand into new domains.
Many strategic-planning processes fall short mainly because they focus on analyzing the current
market and current competitors, rather than searching for or anticipating disruptive new entrants
or business models. They make work but don’t offer insight.

Clearly, long-term vision, medium-term strategy, and short-term plans need to be revisited with
different frequencies and those frequencies need to reflect the particulars of the sector. The key is
to match the rhythm of the process to the “body clock” of the sector. For a sector like mining, a
ten-year horizon for the long term could be just right. In a fast-moving tech sector, five years
could be too long even for the long term. ( Nicolas Kachaner, Kermit King, and Sam Stewart)
BCG article 2016.

 Explain with examples what the terms vision, mission and objectives are? Discuss their
value for the strategic management process?

A. A vision statement is what the organization wants to become in the future. It specifies a
destination rather than a route to get there.

Example: Dashen Bank’s Vision is; “To be best-in-class bank in Africa”

B. A mission statement is what an organization is all about. It specifies the business or

businesses in which the firm intends to compete and the customers it intends to serve.

Example: Dashen Bank’s Mission is; “To provide efficient customer-centric banking
service using the expertise of inspired professionals and cutting-edge technology, while
creating sustainable value for our stakeholders.”

It prevents misunderstanding for the strategic management prosses and enhances professional
perception, fosters a team oriented environment , enhances employee moral gives cense of
direction to greatly improve business focus.

C. Objectives are statements of desired outcomes or expectations. Objectives are very precise,
time-based, and measurable actions that support the completion of a goal.

Example: Dashen Bank’s Objective is;

Objectives provide focus attention to people, money and equipment and Justifies reason for
orders, provide a planning base, give direction as well as indicate problems for strategic
management process.
  What is knowledge management and discuss the reason why it is important in strategic
management process? How Competitive Advantage can be enhanced via effective
management of knowledge in one’s organization? Discuss.

Knowledge management is Knowledge management is the process of creating, sharing, using

and managing the knowledge and information of an organization. It is the systematic
management of an organization's knowledge assets for the purpose of creating value and meeting
tactical & strategic requirements.

In the early 80s strategic management was defied as a new paradigm for business policy a
prosses that deals with entrepreneurial works to development, implementation and utilization of
strategies which renews and grow organizations by guiding organizations operation.

There for since strategic management is the process of development and implementing strategies
that guide organization it is vital to have knowledge management of organizations in the process
of strategic managements to create value and meeting strategic goals or requirements.

The primarily definition of the competitive advantage relies more on putting the organization in
the top the place of the industry and having power of economics of scale against competitors.
(Dixit D, 1980; Shapiro S, 1989; Porter M, 1980). Organizations acquire sustainable competitive
advantage through acquiring resource. Therefore, it should not be easy to imitate resources for
competitors. (Lippman L nad Rumelt S, 1982). The principle source of competitive advantage is
organizational knowledge that is difficult to imitate (Spender B and Grant G, 1996; Teece T,
Pisano P, & Shuen S, 1997).

Nowadays the success of enterprises in the competitive market place relies mostly on the quality
of knowledge, which is applied by enterprises to their key business processes. knowledge
management has caused companies’ core competencies become stronger than before. Therefore,
competitive advantage has been more sustainable.

In short knowledge management tis the intangible asset of organizations. Organizations mange
its human knowledge to meet its competitive advantage against their competitors through the
successful process of strategic managements that is developed and implemented by the
organization’s employees using their knowledge about the organization and its competitors.
  What are the differences between tangible and intangible resources? Why is it important
for decision makers to understand these differences? Are tangible resources linked more
closely to the creation of competitive advantages than are intangible resources, or is the
reverse true? Why? Discuss in detail.

Tangible assets are physical and Intangible assets do not exist in physical form. A tangible
asset’s value reduces gradually as it is used.  An intangible asset can appreciate in worth until it
reaches its expiration date.  Its use drops to zero immediately at the end of its life.

Some economists feel that intangible assets are much more valuable than tangible assets
especially as we continue to transition from a “financially-based” to a “knowledge-based”
economy. Capabilities are the source of a firm’s core competencies, which are the basis of
competitive advantage.

We believe that intangible resources are more valuable. In the global economy, intellectual and
systems capabilities are more important to success of a corporation. Tangible asset parish over
time and are continuously replaced.

Majority of intangible resources have indefinite life making them very valuable.

For example, Intangible resources such as Good will are very important for a company’s
existence because Its thing’s like word of mouth and reputations that can make or break a
business and it isn’t something other companies can just replicate or make on their own. Such as
brand image and signature products.

 Conceptually, strategy of a firm consists of two inseparable parts: business strategy and
corporate strategy.
(a) Distinguish between business strategy and corporate strategy.
(b) Identify the key elements to be considered to develop and formulate each of them.

A) Business strategy is concerned with the strategic decisions concerning the choice of
product, competitive advantage, customer satisfaction, etc. framed by the business
managers to strengthen the overall performance of the enterprise.
corporate strategy is concerned with the overall objective and scope of business to fulfil
stakeholder’s expectations. It is stated in the mission statement, which explains the
business type and ultimate goal of the firm.
B) The key element of these strategies is Visio, Core competencies, Market opportunities
and effective execution.
 From that vision, goals will emerge that are even more specific. Goals represent desired
achievements in quantifiable terms. The goals are the gateway to effective execution,
which we'll explore in a moment.
 Core competencies are what we do well, and Market opportunities are the groups of
customers who would be most inclined to buy what we offer. Finally, great strategy will
need great execution.
Reference

 BCG Article, Four Best Practices for Strategic Planning, By Nicolas Kachaner, Kermit
King, and Sam Stewart, (April 14, 2016 )
 knowledge-management-tools.net, Article from 2018.
 Ailar Rahimli, Knowledge Management and Competitive Advantage, Vol 2, No.7, 2012
 Jofre, Sergio, Strategic Management: The theory and practice of strategy in (business)
organizations, Publication 2011.
 Pacific Crest Group, http://www.pcg-services.com
 Ken Cook, The business journal. 2014.
 Strategic Management PPt, Prepared by : Dr. Assefa Assefa Beyen