CHAPTER FOUR – A PROCESS PERSPECTIVE OF STRATEGIC MANAGEMENT

Learning outcomes for this chapter:

1. Depict strategic management as a logical flow of activities.
2. Differentiate between the main phases of strategic management.
3. Criticise the process approach to strategy.
4. Explain the roles of different layers of managers in strategic management.
5. Explain the role pf assumptions in strategic management.
6. Explain what a vision statement is.
7. Explain what a mission statement is.
8. Explain what strategic goals are
9. Evaluate strategic goals
10. Balanced scorecard

The process perspective of strategic management consists of 3 stages:

1. Strategy formulation – conceptual stage that includes environmental analysis and strategy
formulation
2. Strategy implementation – all staff in the organisation are tasked with implementing the
formulated objectives
3. Strategic control – monitor progress of strategic objective implementation and provide
feedback

The advantages of having a clear strategic direction:

 It provides direction
 It guides organisational efforts towards achieving the same goal
 It binds organisation members to work together towards achieving the organisations goals
 It communicates to internal and external stakeholders what the organisation wants to
achieve
 It guides decision making
 It distinguishes the organisation from other organisations
 It promotes a sense of shared expectations
 It contributes to synergy among managers and employees

The vision statement of the organisation:

 Often referred to as the dream of the organisation

 It is mean to be a powerful statement that should motivate the organisation
 No standard format, some organisations opt for short, punchy visions while others go for
more descriptive versions

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Some guidelines for vision statements include:

 It should present a clear picture of a desirable future, something towards which the
organisation and its members can aspire towards
 It should guide decision making but be flexible enough to so that the organisation can
respond to changes in the environment
 It should be easy to communicate, easy to explain and easy to understand

The mission statement is also referred to as the purpose statement of the organisation, what it
does and why it exists, it builds on the vision statement . The three components of a mission
statement include: product, market and technology.

Further, a well articulated mission statement should include the following components:

1. An indication of commitment to stakeholders

2. An organisations orientation towards survival and growth
3. Organisational values
4. The organisational philosophy

What is the correct process for formulating a mission statement? Perhaps do the following:

a) Orientate those involved as to what constitutes a well formulated mission statement

b) Do a brainstorm exercise to generate ideas
c) Collate the draft ideas and distribute them to the rest of the ream for comment
d) Continue this process until there is agreement on what the mission should be

Strategic goals are generally measured in terms of time, money and units – in addition they are
SMART (specific, measurable, achievable, realistic and timely)

The Balanced scorecard approach to setting strategic goals

The balanced scorecard is a strategic tool which consists of 4 perspectives, namely;

1. Financial – to succeed financially what does the organisation need to achieve and how
should it appear to its shareholders, eg: return on equity goals
2. Customer – to ensure organisations gain loyal customers, how do they want to be perceived
by their customers, eg: more innovative product development
3. Learning and growth – focus on sustainable growth, value creation and innovation to change
and improve the organisation, eg: retain valuable customers
4. Business process perspective – focus on core capabilities and areas where the organisation
must excel in order to be competitive, eg: reduce waste in the manufacturing process

The role of environment in the strategic management process

Continuous environmental scanning of the internal and external environment needs to take place
and opportunities that could be exploited need to be identified. Threats that may stop the
organisation from achieving its objectives need to be monitored. Key organisational strengths and
weaknesses should be understood and balanced against each other.

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Some additional points from Ch 5 which are relevant to note in understanding strategy:

 Strategies can be set by top managers, boards of directors, middle managers and/or
consultants.
 Strategies can be deliberate or emergent, deliberate strategies are implemented and
realised as intended whereas emergent strategies are those implemented by middle
managers and are adapted as they are implemented (middle managers are involved in
operations and can make changes as they go along and as the environment dictates).