STATEGIC MANAGEMENT

For Post Graduate Diploma

About the Course
 This course aims to guide its participants through the path
of applying strategic thinking on management to know what
to expect, what to plan, and how to cope. It also tackles the
challenging issue of change that has a high impact on the
business specially after the fast changes taking place in
today’s world.

 The course is a mix between foundational knowledge,

practical cases, class assignments, and points of discussion
leading to a high level of grasping the challenging topic and
being able to practically apply it.
Course Outline
 U1: Introduction to Understanding Strategic
Management.
 U2: Understanding the Business Environment.
 U3: Formulating and Planning Strategies.
 U4: Setting the Organizational Mechanism.
 U5: Implementation Challenges & Managing
Change.
 U6: Monitoring and Evaluating Strategies.
UNIT ONE
INTRODUCTION TO UNDERSTANDING
STRATEGIC MANAGEMENT
(Ref. Chapter 1)

 About Strategic Thinking

 About Strategic Management
 Phases of Strategic Management
About Strategic Thinking
Strategic Thinking
• Strategic thinking keeps asking:
"Are we doing the right thing?"

• It requires three things:

• Purpose or end- a strategic thinker is trying to do something
• Understanding the environment, particularly of the opposing
forces, affecting and/or blocking achievement of these ends
• Creativity in developing effective strategies, and responses to the
opponent or opposing forces, and implementing them.

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 Strategic Terms
• Vision

• Conceptual image of your desired status & describes what a

company wants to be.

• It concentrates on future

• It is a source of inspiration

• It provides a reference and decision-making criteria.

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• Mission

• Broad Comprehensive Statement of purpose.

• It concentrates on present to future.

• It defines the customer(s), critical processes and it informs

you about the desired level of performance.

• It has to be within the Vision scope.

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• Core values

• Describing how you conduct yourself in carrying out your

mission.

• Affects and Reflects the organization's culture and priorities.

• Main values protect the organization during the progression

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• Goals & Objectives

• General end purpose toward which efforts are directed

• Goals are simply a clearer statement of the mission,
specifying the accomplishments to be achieved if the mission
is to become real.
• The target objectives are clearer statements of the specific
activities required to achieve the goals, starting from the
current status.
• Objectives are Milestones, Goals are destinations.
• Objectives have to be SMART (Specific, Measurable,
Achievable, Realistic, Time Framed).

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• Strategies

• A strategy is a long term plan of action designed to

achieve a particular goal.

• Methods / Approach used to accomplish your goals.

• Milestones along the strategy path are the objectives needed

to achieve each goal.

• Each goal can have 1 or more strategies, and sometimes 2

goals can be achieved through the same strategy but from
different perspectives.

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• Implementation Plans

• Detailed descriptions of how the strategies are being

executed into actions.

• It sets out how implementation of the strategy is aligned

with the overall resources.

• Operational Planning is an important tool in

implementation of Strategies; and it reaches its peak in
project planning & management

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• Monitoring & Evaluation

• Steps and triggers to successful implementation and

development

• Frequency of Monitoring and Evaluation is the key

• Reporting Results of Monitoring and Evaluation is essential

for continuous development

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• Decision Making:

 Strategic management is based on decision making

because in order to answer the questions raised in the
structured planning process, choices must be made, and
their consequences.

 A plan ultimately is more or less a set of decisions about

what to do, how to do it and why to do it

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• Inclusive Process :

 An inclusive process means that people who have a stake

in the work of your organization participate in the
planning process in an appropriate way.
 It does mean that these interested individuals have a
chance to be heard by the decision makers
 It also means that any change in any of the components
affects the rest of components.

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About Strategic Management
What is Strategic Management?
• Strategic management is the application of strategic
thinking to the job of leading/managing an
organization.

• Strategic management is focused on the future within a

context of a changing, but relatively predictable
environment.

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• Strategic management revolves around:

1. Formulation of the future mission of the organization

in light of changing external factors such as regulation,
competition, technology and customers

2. Development of a competitive strategy to achieve the

mission

3. Creation of an organization structure which will

deploy resources to successfully carry out its
competitive strategy.

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So Strategic Management is …

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Strategic Management
Characteristics
 Changes in any one component will affect other
components
 Strategy formulation and implementation are sequential
 Necessity of feedback from institutionalization, review,
and evaluation to early stages of process
 Need to regard it as dynamic, involving constant changes
in interdependent strategic activities

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Strategic Management
Benefits
 Breaks you out of boundary thinking.
 Identifies direction and purpose.
 Alerts stakeholders to needed change.
 Promotes interest and commitment.
 Encourages and builds confidence.
 Builds loyalty through involvement (ownership).
 Results in efficiency and productivity.
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Strategic Management
Risks
• Time involved in planning may negatively impact
operational responsibilities of managers

• Lack of involvement of strategy makers in strategy

implementation may result in shirking of responsibility
for strategic decisions

• Potential disappointment of employees over unattained

expectations requires managerial time and training
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Strategic Management
Killers
 Business Tradition
 Fear of ridicule
 Stereotypes of people, conditions, roles and
governing councils
 Over-Satisfaction of some stakeholders
 Fatigued leaders
 Short-term thinking
 "Naysayers“
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Strategic Management Phases
Strategic Management Phases
 Model is based on four elements

 The following figure expands the elements of the model

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Goals

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Class Point of Discussion 1

How does strategic management

typically evolve in a corporation?

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 Class
Exercise 1 Assignment
 Write down what you hope to accomplish that
will be truly great.
 Write down how you are preparing to
accomplish your task.
 Write down the greatest obstacles that might
prevent you from accomplishing your
objectives, & How will you be able to overcome
them.
This is an individual Exercise.
UNIT TWO
UNDERSTANDING THE BUSINESS
ENVIRONMENT
(Ref. Chapters 4,5,6)

 Societal Environment
 Industry Environment
 Internal-Scanning
 Turning into Strategies
What is Environmental Scanning?

Environmental scanning is the acquisition and use of

information about events, trends, and relationships
in an organization's external & internal
environment, the knowledge of which would assist
management in planning the organization's future
course of action.

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External Societal Environment
Macro Analysis Model -PEST
 PEST analysis stands for "Political, Economic, Social, and
Technological analysis" and describes a framework of macro
environmental factors used in environmental scanning.

 It is also referred to as the STEP, STEEP, PESTEL (adding Legal,

Environmental). Recently it was even further extended to
STEEPLED, including ethics and demographics.

 PEST analysis is a useful strategic tool for understanding market

growth or decline, business position, potential and direction for
operations.

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POLITICAL factors:

 Tax policy
 Employment laws
 Environmental regulations
 Trade restrictions and tariffs
 Political stability

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ECONOMIC factors:

• Economic growth
• Inflation rate
• Interest rates
• Exchange rates

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SOCIAL factors:

• Cultural aspects
• Health awareness
• Population growth rate
• Age distribution
• Career attitudes

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 Technological factors

 Barriers to entry
 Efficient production level & outsourcing
 Research & Development activity
 Automation
 Technology incentives
 Rate of technological change.

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External Industrial
Environment
 Porter Forces
Assumes that there are five important forces that determine competitive power in an industry.
These are:
 Supplier Power:
 Assessing how easy it is for suppliers to drive up prices.
 This is driven by the number of suppliers of each key input, the uniqueness of
their product or service, their strength and control over you, the cost of
switching from one to another, and so on.
 The fewer the supplier choices you have, and the more you need suppliers' help,
the more powerful your suppliers are.

 Buyer Power:
 How easy it is for buyers to drive prices down.
 This is driven by the number of buyers, the importance of each individual buyer
to your business, the cost to them of switching from your products and services
to those of someone else, and so on.
 If you deal with few, powerful buyers, then they are often able to dictate terms
to you.
 Competitive Rivalry:
 What is important here is the number and capability of the competitors.
 If there are many competitors, and they offer equally attractive products and
services, then you'll most likely have little power in the situation, because
suppliers and buyers will go elsewhere if they don't get a good deal from you.
 On the other hand, if no-one else can do what you do, then you can often have
tremendous strength.

 Threat of Substitution:
 This is affected by the ability of the customers to find a different way of doing
what you do – for example, if you supply a unique software product that
automates an important process, people may substitute by doing the process
manually or by outsourcing it.
 If substitution is easy and substitution is viable, then this weakens your power.
 Threat of New Entry:
 The ability of people to enter the market.
 If it costs little in time or money to enter the market and compete
effectively, if there are few economies of scale in place, or if you have little
protection for your key technologies, then new competitors can quickly
enter the market and weaken your position.
 If you have strong and durable barriers to entry, then you can preserve a
favorable position and take fair advantage of it.

 By thinking about how each force affects you, and by identifying the
strength and direction of each force, you can quickly assess the
strength of your position and your ability to make a sustained profit in
the industry.
Internal Analysis
 Analysis of Societal Environment
Economic, Socio-cultural, Technological, Political-Legal factors

Market
Analysis

Community Competitor
Analysis Analysis

Supplier
Analysis

Selection of Strategic
Factors Government
Interest Group •Opportunities Analysis
Analysis •Threats

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Micro Analysis Model - SWOT
 SWOT Analysis should be:
 Realistic about the strengths and weaknesses of the organization.

 Distinguishing between where the organization is today, and

where it could be in the future.

 Specific avoiding grey areas.

 Applied in relation to competition i.e. better than or worse than

competition.
 Short and simple.

 SWOT is subjective.

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• Strengths are attributes of the organization that
are helpful to achieving the objective.

A STRENGTH could be:

 Strong marketing expertise

 New, innovative product or service
 Location of your business
 Quality processes and procedures
 Strong distribution & Logistics
 Any other aspect of your business that adds
value to your product or service.
• Weaknesses are attributes of the organization that
are harmful to achieving the objective.

A WEAKNESS could be:

 Lack of marketing expertise
 Undifferentiated products or services (i.e. in relation
to your competitors)
 Location of your business
 Poor quality goods or services
 Damaged reputation
 Lack of channels
• Opportunities are factors outside the
organization that allow opportunities for
profit or growth.

An OPPORTUNITY could be:

 New technologies; a developing market such as the

Internet
 Mergers, joint ventures or strategic alliances
 Moving into new market segments that offer improved
profits
 A new international market
 A market vacated by an ineffective competitor
• Threats are factors outside the organization that can
stand in the way of its efforts to grow and develop.
A THREAT could be:

 A new competitor in your home market

 Price wars with competitors
 A competitor has a new, innovative product or
service
 Competitors have superior access to channels of
distribution
 New regulations
 Taxation is introduced on your product or service
 Consumer shift … etc
 SWOT Analysis
Positive Negative

Internal

External

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Turning Analysis into Strategies
 Step 1 – Strategy Alternatives

 During this step, we identify potential strategies for achieving

goals and attaining the community vision.
 Several strategies should be identified for each strategic issue.
 These strategy alternatives reflect the range of choices from
which we may select to reach our vision.
 Strategy alternatives should build upon strengths and
opportunities while also countering the threats reflected in
the strategic issues.
 Step 2 - Barriers to Implementation

 Barriers may take the form of insufficient resources,

lack of community support, legal or policy
impediments to authority, technological difficulties,
etc.

 Barriers will not necessarily eliminate strategy

alternatives. However, they should alert the
community to obstacles that may be encountered if
that alternative is pursued.
 Step 3 - Implementation Details

 We should explore issues such as needed activities,

timelines, participation, and resources.

 Thinking about implementation details at this stage helps

to identify and refine the best strategies.

 It also lays the groundwork for the next phase of

Implementation planning.
 Step 4 - Select and Adopt Strategies

 After the previous steps have been completed, the best

strategy alternatives should become clearer.
 At this point, we should examine the alternatives
together to understand their relationships to one another.
 Understanding the interrelationship between strategies
offers a comprehensive picture of the larger strategy that
the team will implement to achieve the vision/mission.
 Next, we test the strategy alternatives against agreed-
upon values. Once the strategies are selected, they should
be adopted.
Tools for turning Analysis to Strategies
1) TOWS
 The TOWS Matrix is a simple tool for generating strategic options.
 You can look intelligently at how you can best take advantage of the
opportunities open to you, at the same time that you minimize the
impact of weaknesses and protect yourself against threats.
 Used after detailed analysis of your threats, opportunities, strength
and weaknesses, it helps you consider how to use the external vs.
internal environment to your strategic advantage, and so identify
some of the strategic options available to you.
 2) SFAS (EFAS & IFAS)
 The SFAS (Strategic Factors Analysis Summary) Matrix
summarizes an organization’s strategic factors by combining the
external factors from the EFAS Table with the internal factors from
the IFAS Table.
 The SFAS Matrix requires the strategic decision maker to condense
these strengths, weaknesses, opportunities, and threats into fewer
than ten strategic factors. This is done by reviewing and revising
the weight given each factor.
 The revised weights reflect the priority of each factor as a
determinant of the company’s future success. The highest weighted
EFAS and IFAS factors should appear in the SFAS Matrix
Class Point of Discussion 2

How can strategic decisions be different

from other kinds of decisions?

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Exercise
Exercise 2
 After Jan & June Revolutions, the Education and Employment became two
of the major challenges in Egypt on the short and long terms. You have been
appointed as the CEO of a new training & consulting company
”EGYTRAIN” that will be catering to the audience in Egypt and
neighbouring Arab Countries to leverage their skills and productivity and
match their skills with the needed one in the job market. You are requested to
run an environmental scan, and design an abridged (simplified) strategic plan
for the project as follows:

 What is the expected PEST analysis results (2 in each P,E,S,T)

 What is your expected SWOT analysis (2 in each S,W,O,T)

 What is your Vision & Mission Statements (1 sentence each)

This is a team Exercise

UNIT THREE
SETTING STRATEGY ALTERNATIVES AND
FORMULATION
(Ref. Chapters 6,7,8)

 Generic Strategies
 Corporate Strategies
 Business Strategies
 Functional Strategies
STRATEGIC HIERARCHY

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 Generic Strategies

Prospector Analyzer Defender Reactor

Corporate Strategies

Growth Stability Retrenchment Combinations

Business Level Strategies

Cost Leadership Differentiation Focus Stuck in the Middle

Generic Strategies
 Prospector: identification of new market development opportunities
 Analyzer: sophisticated internal information systems and detailed
investigation of options, but this is unlikely to be followed up by the
type of action undertaken by the Prospector
 Defender: maintaining the current market position without exhibiting
a great deal of initiative in developing new market opportunities
 Reactor: deals with circumstances as they arise.

 These dominant characteristics may be relevant only to a specific

period, and will obviously change as managers are replaced.
Corporate Strategies
 It is a DIRECTIONAL STRATEGY: at a corporate level,
senior managers need to consider the following strategic
issues:

 Should the corporation expand, continue operations

unchanged, or cut back?

 Should operations remain within current industry or should

they be diversified?

 If a growth strategy is adopted:

 Should the expansion be nationally or globally?
 Should the growth be effected organically or by means of
acquisitions, mergers or strategic alliances?

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 Types of directional strategies

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Growth Strategy
 Concentration
 Refers to growth in the organization's own product lines
Two types of concentration strategies:

 Vertical integration: This can be either:

 Forward – Organization becomes it own distributor
 Backward – Organization becomes it own supplier

 Horizontal integration: Growth achieved by expanding product

lines into other geographic location or by expanding product range
into existing markets. Can be achieved by merging with other
companies in the same business

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 Diversification

 Growth is achieved through either related or unrelated

diversifications
 Related diversification: Refers to diversification into a
related industry to achieve strategic fit
 Unrelated diversification: Growth is achieved by
diversifying into unrelated business (Sometimes
referred to as conglomerate diversification) This
strategy is often adopted when the objective is mainly
financial and therefore serves as a means of reducing
risk

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Stability Strategy
 Appropriate if organization is operating in a predictable
environment, or when things are not clear for a while.

 Often followed by small businesses operating in a ‘niche’ markets,

enjoying adequate growth

 Can be for reorganizing the company as well.

 Considered useful in the short run but extremely risky in the long
term

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 There are different types of Stability Strategy, namely:

 Pause/Proceed-with-Caution Strategy. Often considered a

temporary strategy when environment is not clear or when
organization needs to consolidate resources

 No-Change Strategy. Based on a decision to continue existing

operation and policies for foreseeable future. Often followed
when there are no obvious opportunities or threats or
significant internal strengths and weaknesses

 Profit Strategy. Often adopted when organizational

performance is declining (e.g low sales) by reducing investment
and expenditure (e.g R&D, sales force, advertising….etc)
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Retrenchment Strategy
 Used when an organization performance and competitive
position are weak

 An organization in this position may opt for:

 Being Captured (Acquired) strategy

 Sell-Out/Divestment strategy
 Liquidation strategy

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Business Strategies
Objective of Business strategy is to create or improve
the competitive position of an organization or a
business units products/services

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 Business Level Strategies
 Cost Leadership:
1. Big Market share (high initial investment)

2. Efficient resource allocation, maintaining position.

 Differentiation:
1. Having an Edge for selling

2. Continually defining & segmenting market with price premium to

compensating for additional differentiation cost.
 Focus:
1. Identify Market niches, avoid competition (product, process or
consumer)
2. Market share - irrelevant

 Stuck in the middle:

1. Undefined strategy, continually adjusting, confused
Core & Distinctive Competencies
Basically the competency (ies) of an organization is it’s ability to
coordinate its capabilities in the provision of its products and services.

 A core competency refers to the activities that the organization can

do very well.

 A core competency becomes a distinctive competency when it is

superior to those of competition

 Two factors determine the sustainability a competency:

 Durability – the rate at which resources, capabilities and competencies
depreciate or become obsolete
 Imitability – the ease and rate at which the resources….etc can be
imitated

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Business Model
 A business model of an organization is composed of

 Who it serves

 What it provides

 How it makes money

 How it provides its product/service

 How it differentiates and sustains a competitive advantage

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Portfolio Analysis
BCG Matrix

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 CASH COWS: use cash to invest in stars and question marks

 STARS: require heavy investment; eventually will become

cash cows

 Q MARKS: invest to transform them into stars or Divest

 DOGS: Sold off or liquidated

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Functional Strategies
 Functional strategies deal with the means to achieve corporate and
business objectives and strategies

Essentiallyit deals with improving functional capabilities in order to

provide and sustain competitive advantage (Maximize Resource
Productivity)

The direction a functional strategy is governed by the strategy of the

business unit.

Every Business develops functional strategies for its major departments

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 Human Resources Strategy
 TALENT ACQUISITION / RECRUITMENT
 Recruit from Outside v. Internal Development
 Require experienced, highly-skilled workers v. “we will train you”
 Offer “top $$” wages & benefits v. mentoring and a career

 TRAINING & DEVELOPMENT

 Training Concept and perception
 Career Paths
 Succession Planning

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 Human Resources Strategy
 WORK ARRANGEMENTS & RELATIONS
 Individual Jobs v. Team Positions
 Narrowly-defined jobs v. Positions with discretion and autonomy
 On-premises Work v. Telecommuting Options
 Conflict Management

 COMPENSATION & BENEFITS

 Extrinsic v. Intrinsic Reward Systems
 Assessment for development v. assessment for rewards
 Incentives for ideas & originality v. incentives for conformity?

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 Marketing Strategy
 Concerned with product development, pricing, selling and distribution

 Marketing strategy may take the form of market development which aims at increasing
market share for existing products or alternatively developing new markets for current
products

 Marketing strategy may also take the form of product development which aims at
developing new products for existing markets or, alternatively, developing new
products for new markets

– Product Strategy Specifying the exact product or service to be offered

– Promotion Strategy How the product or service is to be communicated to customers
– Channel or “Place” Strategy Selecting the method for distributing product or service
– Price Strategy Establishing a price for the product or service
– People Strategy

READ ONLY
Financial Strategy

 Intended to examine and select the most appropriate course(s) of

action to deal with the financial implications of corporate and
business level strategic options

 Financial strategy objective is to maximize the financial value of the

firm

 Financial strategy deals with strategic decisions such as equity/debt

financing

 Also with trade-off between debt/equity financing and internal

financing via cash flow

READ ONLY
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 Research & Dev. Strategy
 Deals with product and process improvements also with different types of R&D
e.g basic, product, process

 R&D strategies may focus on either technological leader or technological follower

approaches

• ACQUISITION OF TECHNOLOGY
– Internally developed v. acquired from outside

• LEVEL OF INNOVATION
– Pioneer (Leader) v. Copy Cat (Follower)
– Different types of R & D (basic, product, process)

READ ONLY
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 Operational Strategy
 Operations strategies addresses the following issues
– How the product is manufactured
– Where the product is manufactured
– Extent of integration of production process
– Deployment of resources
– Supplier relationship

 MANUFACTURING LOCATION
– Internal Production v. Outsourcing
– Domestic Plants v. International Locations
 SYSTEM LAYOUT
– Product v. Process Layouts
• Job Shops v. Mass Production
• Job shop/small batch production fits well with a differentiation strategy
• Continuous production / dedicated transfer lines helps achieve cost leadership
• Continuous improvement systems lower costs and increase quality
91 ONLY
READ
Purchasing Strategy
 Objective is to secure supply of raw materials, parts and supplies needed
to perform the operations functions

 Purchasing strategies include:

– Multiple sourcing – often considered to have the advantages of

promoting supplier competition and ensuring continuity of supplies

– Sole sourcing – considered to promote quality. Supplier relationship

critical used in JIT system to simplify production process and reduce
inventory
The strategy significantly reduces transaction costs

– Parallel sourcing – Two suppliers are sole suppliers of two different

parts and they are also at the same time backup suppliers for each
other’s parts

READ ONLY
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Info. Systems Strategy
 WORKER PRODUCTIVITY & CONNECTIVITY
 Employees can be networked together across the globe
 Instant translation software for global firms

 SALES & INVENTORY MANAGEMENT

 Internet sales and development of customer databases
 Instant sales reports allow immediate inventory reorders

 SHIPPING & TRACKING GOODS

 Stores addresses, prints labels, etc.
 Tracking the progress of package shipment

READ ONLY
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Logistics Strategy
Do we have goods that must be transported or delivered?
 TYPE OF MATERIALS TRANSPORTED
 Raw Materials, Supplies, & Components

 Finished Goods

 BEST MODE OF TRANSPORTATION

 Air

 Rail

 Truck

Do we want Dependability, low cost, or high quality service?

 OUTSOURCE TRANSPORTATION OR DO IT YOURSELF?
 Contract With Others

 Distribution Chain

 INVERNTORY CONTROL

READ ONLY 94
Sourcing Strategy
 The Sourcing Decision: Location of Functions

 Functional strategies need to be built on the capabilities of the function

 If capabilities are not strong the function could be outsourced

 Outsourcing errors include:

– Outsourcing core activities

– Selection of wrong supplier
– Poor contractual linkage
– Ignoring personnel issues
– Loosing outsourcing control activities
– Overlooking hidden costs of outsourcing
– Failing to plan an exist strategy

READ ONLY
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 Dumb Strategies
• FOLLOW THE LEADER
We can do that too…but maybe it’s not worth copying
• LET’s DO IT AGAIN
A pioneer company looking to get lucky again
• WAR RACE
Battles which increase costs and decrease revenues
• DO EVERYTHING
Offering something for everyone…trying to please everyone
• LOSING HAND
Pouring money down a small hole…investment because of prior commitments

NONE OF THESE STRATEGIES WILL CREATE A SUSTAINABLE

COMPETITIVE ADVANTAGE FOR THE FIRM
Class Point of Discussion 3

In what way can strategies and policies

be related?

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Exercise
Exercise 3

IN EGYTRAIN
 What are your 5 years goals (3 goals)

 What are the strategies (1 strategy for each goal)

 What are the objectives (2 objectives for each

goal/strategy)

This is a Group Exercise

UNIT FOUR
SETTING THE ORGANIZATIONAL SYSTEM
(Ref. Chapter 9 & Other Ref.)

 Organizational Culture (& Behavior) and its mutual

effect on and by strategies
 Organizational Structure and its mutual effect on
and by strategies.
- Ownership Structure
- Corporate Structure
 Organizational Challenges (Read Only)
Organizational Structure
 Ownership Structure
 Sole Property:
 A common form of business ownership is the sole proprietorship.
 The majority of businesses nationwide are of this type.
 A business with a sole proprietorship is owned and controlled by
one person; the owner is the business.
 The funds for the business come from the owner's personal funds
such as savings and/or investments, loans from lending agencies,
and sometimes loans from friends or family members
 Legal responsibility on the owner.

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 Partnership:
 A partnership is a voluntary association of two or more people for

the purpose of operating a business.

 Each person contributes money, property, labor or skills, and shares

in the business profits and losses.

 A general partnership is similar to a sole proprietorship with respect to
taxes and liability.
 Each general partner has unlimited personal liability for all debts and

obligations of the partnership and acts of the partners, even if he or

she is not directly involved in a particular debt or decision.

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 Corporation:
 A corporation is a separate legal entity that has been incorporated
either directly through legislation or through a registration process
established by law.
 Incorporated entities have legal rights and liabilities that are distinct

from their employees, shareholders, and members, and may conduct

business as either a profit-seeking business or not-for-profit.
 A corporation has a legal and tax identity separate from its owners,

who are called shareholders, and governed by an elected Board headed

by the Chairman, while day-to-day business is being run by the CEO
or the Managing Director.

103
 Corporate Structure
• Organizational structure is the way in which the inter-related groups
of an organization are constructed.

• From a managerial point of view the main concerns are ensuring

effective communication and coordination to achieve the mission.

• It mainly contains:
– Organizational Chart

– Organizational Flow

– Job Descriptions & KPIs

– Policies & Procedures

104
 Organizational Chart
 An organizational chart shows the structure of an organization and the
relationships and relative ranks of its parts and positions/jobs.
 It shows managers and sub-workers who make up an organization, and
relationships between the organization's staff members which can be
one of the following:
 Line: direct relationship between superior and subordinate.
 Horizontal (Lateral): relationship between different departments on the same
hierarchical level.
 Advisory: between managerial associates & other areas. They will be able to offer
advice to line managers but they have no authority over the staff actions.
 Authority: relationships between higher positions and other inferior areas. The
director will normally have authority to insist that a line manager implements any
of their instructions.
105
Organizational Chart Types
1. Hierarchical organization (cont.)
– Structured in a way such that every entity in the organization, except the
top management, is subordinate to a single other entity.
a) Functional Structure
– The organization is structured according to functional areas.
– Functional structure groups specialize in similar skills in separate units.
– This structure is best used when creating specific, uniform products.
– Well suited to organizations which have single or dominant core product
because each subunit becomes extremely skilled at performing its
particular portion of the process.
– They are economically efficient, but lacks flexibility.
– Communication between functional areas can be difficult.

106
107
1. Hierarchical organization (contd.)
b) Matrix
• Is a type of organizations in which people with similar skills are
pooled for work assignments.
• For example, all engineers may be in one engineering department
and report to an engineering manager, but these same engineers may
be assigned to different projects and report to a project manager
while working on that project.
• A project manager with only limited authority is assigned to oversee
the cross-functional aspects of the project. The functional managers
maintain control over their resources and project areas.

108
II. Matrix Structure

109
2. Business Units (Divisional)

 Strategic Business Unit or SBU is understood as a business unit

within the overall corporate identity which is distinguishable from
other business because it serves a defined external market where
management can conduct strategic planning in relation to products
and markets.
 The unique small business unit benefits that a firm aggressively
promotes in a consistent manner. When companies become really
large, they are best thought of as being composed of a number of
businesses (or SBUs).

110
111
3. Flat organization (horizontal organization) :
 Few or no levels of intervening management between staff and managers.
 Well-trained workers will be more productive when they are more directly
involved in the decision making process, rather than closely supervised by
many layers of management.
 This structure is generally possible only in smaller organizations or
individual units within larger organizations. When they reach a critical size,
organizations can retain a streamlined structure but cannot keep a
completely flat manager-to-staff relationship without impacting
productivity.
 Expected response to customer feedback can thus become more rapid.

In addition to Hybrid Structure that mixes more than one of the previous structures.

112
Organizational Chart Limitations

 It shows nothing about the managerial style adopted (e.g.

autocratic)

 It may be tailored on some key figures not strategies.

 It can quickly become out-of-date, especially in large

organizations which change their staff regularly

113
Organizational Culture &
Behavior
 Organizational Culture
 Culture is one of those terms that's difficult to express distinctly, but
everyone knows it when they sense it.
 Organizational culture is the personality of the organization.

 Culture is comprised of the assumptions, values, norms and tangible

signs of organization members and their behaviours.
 The culture determines the type of leadership, communication, and
group dynamics within the organization.

 Organizational change efforts are thought to fail the vast majority of the
time due to lack of understanding about the strong role culture plays in
organizations.

115
• Strong culture is said to exist where staff respond to stimulus because
of their alignment to organizational values.

• There is also Weak culture where there is little alignment with

organizational values and control must be exercised through extensive
procedures and bureaucracy.

• When culture is very strong, people do things because they believe it is

the right thing to do; hence, there is a risk of another phenomenon,
Groupthink..

116
 Evolution of Organizational Culture
At each level of Organisational Evolution, people will be working, acting,
thinking, and feeling at different levels of personal commitment.

 Organizational psychology classifies these levels commitment as:

 The level of Individual: People rely on personal skill and the direction
from Leaders. Each individual has his own culture.
 The Level of Group: People have an emotional connection to their
work/team. This has further developed their attitude for success.
 The Level of Organization: The feeling of greatness comes when
individuals see their work as their purpose. People see a greater purpose
to the work they do, something greater than the individual, or the group.

117
Forms of Culture
According to Carmazzi, each culture affects the effectiveness and
“level of commitment” of the people within that culture.

 The Blame culture:

 This culture promotes distrust and fear, people blame each other to
avoid being reprimanded or put down.
 This can result in no new ideas or personal initiative because people
don’t want to risk being wrong, and an environment where victims
can get blamed for events.
 The majority of commitment here is at the level of “Individual”

11
8
 Multi-directional culture:

 This culture promotes minimized cross-department communication

and cooperation.
 Loyalty is only to specific groups (departments).
 Each department becomes a gang and is often critical of other
departments which in turn create lots of gossip.
 The lack of cooperation and Multi-Direction can be seen in the
organizations inefficiency.
 The majority of personal commitment in this culture is on the level
of Group.

11
9
 Live and let live culture:

 This culture is Complacency, it shows mental inactivity and Low

Creativity.
 People here have little future vision and have given up their
passion. They just want to survive even by covering up.
 There is average cooperation and communication and things do
work, but they do not grow.
 People have developed their personal relationships and decided
who to stay away from, there is not much left to learn.
 Personal commitment here is mixed between the level of Individual
and level of Group.

120
 Brand Harmony Culture:

 People in this culture believe in the product or service of the

organization, they feel good about what their company is trying to
achieve and cooperate to achieve it.
 People here are passionate and seem to have similar goals in the
organization.
 They use personal resources to actively solve problems and while
they don’t always accept the actions of management or others
around them, they see their job as important.
 Almost everyone in this culture is operating at the level of the
Group.

121
 Leadership Enriched Culture:
 People view the organization as an extension of themselves, they feel good
about what they personally achieve through the organization and have
exceptional Cooperation.
 Individual goals are aligned with the goals of the organization and people
will do what it takes to make things happen. As a group, the organization
is more like family providing personal fulfilment which often transcends
ego so people are consistently bringing out the best in each other.
 In this culture, Leaders do not develop followers, but develop other
leaders.
 Almost everyone in this culture is operating at the level of Organization.

 Once an organizational culture has evolved to a higher level, the

challenge lies in maintaining it.
12
2
 Organizational Behaviour
 Organizational Behaviour (OB) is the study and application of
knowledge about how people, individuals, and groups act in
organizations.

 Organizational behavior encompasses a wide range of topics,

such as human behavior, change, leadership, teams, etc.

123
Organizational Behaviour Models

 Autocratic:
 The basis of this model is power with a managerial orientation of

authority.
 The employees in turn are oriented towards obedience and

dependence on the boss.

 The employee need that is met is subsistence.

 The performance result is minimal.

124
 Custodial:

 The basis of this model is economic resources with a managerial

orientation of money.
 The employees in turn are oriented towards security and benefits
and dependence on the organization.
 The employee need that is met is security.
 The performance result is passive cooperation.

125
 Supportive:

 The basis of this model is leadership with a managerial

orientation of support.
 The employees in turn are oriented towards job performance and
participation.
 The employee need that is met is status and recognition.
 The performance result is awakened drives.

126
 Collegial:

 The basis of this model is partnership with a managerial

orientation of teamwork.
 The employees in turn are oriented towards responsible
behavior and self-discipline.
 The employee need that is met is self-actualization.
 The performance result is moderate enthusiasm.

 Although there are four separate models, almost no organization

operates exclusively in one. There will usually be a predominate
one, with one or more areas over-lapping in the other models.
127
Organizational Challenges
(Read Only)
 1) Founder Syndrome
o Occurs when an organization operates primarily according to the
personality of the founder, rather than to its mission and vision.
o When first starting their organizations, founders often have to do
whatever it takes to get the organizations off the ground to deal with
frequent crises that suddenly arise in the workplace.
o As a result, founders often struggle to see the larger picture and to be
able to effectively plan in order to make more proactive decisions.
o Consequently, the organization gets stuck in a highly reactive mode
characterized by having to deal with one major crisis after another.
o The best "cure" for this syndrome is accomplishing a broader
understanding of the structures and processes of an organization,
including an appreciation for the importance of planning.

READ ONLY
Troublesome Traits Among Some Founders
Highly Sceptical about planning, policies, and procedures. They
often believe they've found a new way to get things done.

Make Reactive, crisis-driven decisions with little input from

others. React to most problems with the lament "if only I had
more money."

Hand-pick their Board members and staff. See these people as

working for the founder as much as working for the
organization's mission.

Count on whomever seems most loyal and accessible, and

motivate by fear and guilt, often without realizing it.

READ ONLY
Hold occasional staff meetings to report crises and rally the
troops.

Have a very difficult time letting go of the strategies that

worked to quickly grow the organization, despite evidence that
the organization can no longer absorb this rapid growth without
major changes.

Founders Syndrome sets in because the organization becomes

dependent, not on the systems and structures of the organization,
but on the unique style of the leader.

READ ONLY
2) Downsizing vs Rightsizing
Downsizing: is reducing the number of employees
on the operating payroll. Some distinguish
downsizing from a layoff, with downsizing
intended to be a permanent downscaling and a
layoff intended to be a temporary downscaling in
which employees may later be rehired.
Businesses use several techniques in downsizing.

Right Sizing: is relocating the employees where

they fit best according to the company needs and
employee capability before moving into lay-off
stage
READ ONLY
 3)Future Challenges
1. Strong employee involvement

2. Organic Nature

3. Authority based on capability

4. Alliances

5. Flatter, decentralized organizations

6. Self Directed Teams

7. New Structures (Networks, Fishnet)

READ ONLY
Class Point of Discussion 4

In what way can a company's organizational

structure and culture be a strength or
weakness?

134
Exercise 4
EGYTRAIN has been there for 5 years powerful and successful

 How has the job market changed?

 What have you done to prepare your employees for success?
 What did board members spend most of their time doing?
 How were the organization, and meetings structured?

Group Exercise
UNIT FIVE
IMPLEMENTATION CHALLENGES AND
MANAGING CHANGE
(Ref. Chapter 10 & Other Ref.)
 Implementation Workgroups
 Implementation Challenges

 Understanding Organizational Change as

a Strategy Implementation Challenge

Strategy Implementation is
 Allocation of sufficient resources (financial, personnel, time,
technology support)
 Assigning responsibility of specific tasks or processes to specific
individuals or groups, & establishing cross functional teams.
 Implementation undertaken by almost every body in the organization
 Changes in strategies and policies + their importance to the company
are clearly communicated to all operations people
 Managing the process:
– Monitoring results, & comparing to benchmarks & best practices

– Evaluating the efficiency of the process, and making adjustments

to the process as necessary.

137
Implementation Work-Groups
1) Chronological Roles in Planning &
Execution

139
 2) Team Dynamics
Team Dynamics are the unseen forces that operate in a team between
different people or groups.
 Team Dynamics can strongly influence how a team reacts, behaves or
performs, and the effects of team dynamics are often very complex.
 You can recognise team dynamics by looking for the forces that
influence team behaviour.
 Personality styles

 Team Roles
 Office layout

 Tools and technology

 Organisational culture

 Processes/methodologies/procedures ..etc.

140
 3) Work-Group Development Stages
 Forming
 The work group meets and learns about the opportunity and
challenges, and then agrees on goals and begins to tackle the tasks.

 Signs:
 Possible complaints regarding the organization
 Decisions being made on the level of information they will need
 Discussions on how the work group should behave individually &
collective
 Discussions on defining goals/objectives
 Possible hypothetical discussions such as ‘what if’ scenarios

141
 Storming
 The WG will then enter this stage in which different ideas compete
for consideration.
 The WG addresses issues such as what problems they are supposed to
solve, how they will function independently and together, & what
leadership model they will accept.

 Signs:
 Arguing
 Possible jealousy, tension and defensiveness
 Unhealthy competition and dominating
 Questioning and challenging the tasks and objectives

142
 Norming
 Work group members adjust their behavior to each other as they

develop work habits that make work groupwork seem more natural
and fluid.
 work group members often work through this stage by agreeing on

rules, values, professional behavior, shared methods, working tools

and even taboos.

 Signs:
 More open, positive discussions between members
 A focused, common approach to the objectives
 Higher communication and trust between members

143
 Performing
 Some work groups will reach the performing stage.

 Able to function as a unit as they find ways to get the job done

smoothly and effectively without inappropriate conflict or the need

for external supervision.
 Signs:

 A strong sense of ownership

 Able to discuss issues openly and positively
 A high level of sharing and interdependence
 Coping with problems in a positive way

In 1977, Tuckman added a fifth stage to the 4 stages: Adjourning, that involves
completing the task and breaking up the team.

144
Implementation Challenges
 Implementation Challenges ..
1) Strategy vs. Implementation

Weak Strong
Doomed
A Weak
from the
Job
Start
Weak

Very
Expecting
Good
a Disaster
Strong

Chance

146
2) Motivation Challenge

Motivation Performance Outcomes Satisfaction

147
 Main Motivational Theories
 Consistency Theory: we seek the comfort of internal alignment.
 Extrinsic Motivation: external: tangible rewards.
Intrinsic Motivation: internal: value-based rewards.
 Cognitive Evaluation Theory: Select tasks based on how doable they are.
 Investment Model: our commitment depends on what we have invested.
 Control Theory: we seek to control the world around us
 ERG Theory: We seek to fulfil needs of existence, relatedness and
growth.
 Hierarchy of Needs Theory: We need to fulfil lower needs to achive
higher needs.
 Expectancy Theory: We are motivated by desirable things we expect we
can achieve. 148
Factors reducing work satisfaction
& implementation
 Continuous Work overload
 Lack of Control
 Insufficient Reward
 Breakdown of Community
 Absence of Fairness
 Conflicting Values

149
3) Strategic Management of Time Challenge
Job Description

Performance Review Discussion with Boss

Key Result Areas

Adhoc ‘one off’ jobs from ‘Day’ job

boss
Managing team
TASKS

Requests from Work arising from

internal/external customers colleagues

PRIORITISATION

IMPORTANCE URGENCY

Time scales to
Complete

Planning tools
150
Understanding Organizational
Change as a Key
Implementation Challenge
Types of Organizations

• Those that MAKE things happen

• Those that WATCH things happen

• Those that WONDER what happened

What is Organizational Change?
Organizational
change management
is the process of
developing
a planned approach
to change in
an organization.
Reactive & Proactive Org Change

 Org Change management can be either:

 Reactive in which case management is responding to changes in

the macro-environment (the source of the change is external),

 Proactive in which case management is initiating the change in

order to achieve a desired goal ( the source of the change is
internal).
 Chronological Types of Org Change
Degree of Change

Time

GRADUAL CHANGE RADICAL CHANGE CRISIS CHANGE

Formula for Org Change
“Gleicher's Formula”

DxVxF>R

 D = Dissatisfaction with how things are now.

 V = Vision of what is possible.
 F = First, concrete steps that can be taken towards the vision.
 R = Resistance.
 The Three factors (DVF) must be present for meaningful organizational change
to take place.
 If the product of these three factors is greater than R, then change is possible.
 Because of the multiplication of D, V and F, if any one is absent or low, then
the product will be low and therefore not capable of overcoming the resistance.
Sustaining Change
 To sustain change, the structures of the organization
itself should be modified, including strategies,
policies and procedures.

 The change in the structures of the organization

typically involves an unfreezing, change and re-
freezing process. (Lewin’s Theory)

 Communications about the change should be

frequent & with all organization members.
Ref: SMALE Consulting
Avoiding the ‘Chaotic Change”

Ending
Neutral Zone
Beginning

Ensuring people make the breakthrough

Based on William Bridges ‘Managing Transitions’

Endings

• Define what is over and what is not

• Mark the Endings
• Treat the past with respect
• Accept the reality and importance of subjective
loss
• Do not drag it out
Neutral Zone
• Be prepared to be anxious
• Help people break out from the “old”
• Be realistic in what you expect
• Model new behaviours and processes
• Encourage people to question
• Communicate, communicate, & listen
New Beginning
• Create a sense of purpose and energy
• Ensure role clarity
• Plan early “wins”
• Celebrate successes
• Monitor progress and communicate
findings
Change Program Characteristics
Scale How much of the organization will be affected?

Magnitude How much will it shift the current status quo?

Duration How long will it take?

Strategic How prepared are we for resistance, problems

Importance and setbacks? Do we have the leadership?
 Resistance to Change
The Origins of Resistance . . .
 Some people fear loss (security, connections, power,
status, control, territory…etc).

 Some people mistrust those who lead.

 Some people disagree on the change.

 Some people don’t tolerate change well.

164
 Emotional Response

Stability

Inability to act

Denial

Anger

Bargaining

Time
Resistance to Change Cycle

Depression

Testing

Acceptance
We Value Resistors Because . . .

 They clarify the problem.

 They identify other problems that need to be solved
first.
 They force change leaders to think before they
implement the change.
 Their tough questions can strengthen and improve
the change.
 They let us know who opposes the change.
 They slow down the change.
 They may be right, it is a bad idea!

167
 Ensuring Continuous Change

 Create incentives for those who adapt to change professionally

 Public recognition of the change agents
 Reward those who remove barriers
 Incorporate good ideas from team members in team meetings
Reasons for Failure of Change
 Not establishing a great enough sense of urgency
 Not creating a powerful enough guiding coalition
 Lacking a vision
 Not removing obstacles to the new vision
 Not planning for, and achieving short term wins
 Not anchoring changes within the organizational
culture
 Declaring victory too soon
Class Point of Discussion 5

 What can the company managers do to reduce

or eliminate the perceived potential losses
accompanying the change process?
Exercise
Exercise5
 Salah took over a lagging business & decided on a total change.

ACTIONS:
 He dropped many products and services, & introduced new ones within
6 months.
 Moved from selling through wholesalers to selling direct to retailers.
 Replaced half of the top Management.
 A cultural change program results in replacing organization’s hierarchy.

QUESTIONS:
 What is the expected outcome of his actions on the organizational and
individual levels?
 Would you do the same actions as Salah? Why?
 What is your conclusion? Group Exercise
UNIT SIX
MONITORING IMPLEMENTATION AND
EVALUATING STRATEGIES
(Ref. Chapter 11)

 Monitoring strategies with implementation

 Strategy Evaluation Tools
 Why may Strategic Management Fail
Monitoring Challenges
 Implementation period longer than planned
 Unexpected major problems surfaced
 Ineffective coordination or definition of activities
 Crises taking focus away from implementation
 Involved employees incapable of performing additional jobs
 Employees at lower level inadequately trained
 Lack of effective leadership by departmental managers
 Poor monitoring of activities

174
 How to ensure the right strategy
Implementation?
 Top Management support is a major driver to strategy implementation.
 When conducting the planning process, involve the people who will be
responsible for implementing the plan.
 Use cross-functional team to ensure the plan is realistic & collaborative.
 Specify who is doing what and by when
 Have pairs of people be responsible for tasks.
 Translate plan’s actions into job descriptions and personnel performance
reviews.

175
Strategy Evaluation Tools
 1) Diagnostic Checklist
The organization is more likely in trouble if some of the following is true:
 Chronic industrial relations problems

 No means of resolving employee complaints

 Increasing / unpredictable employee turnover

 Increasing number of customer complaints

 No pride in the organization

 Inter-group conflicts

 No career paths for ambitious talented employees

 Dissatisfaction with pay and conditions

 Unclear job roles

177
 No clear performance measures
 Quality is unimportant
 Bad product service / delivery records
 Poor recruitment standards / practices
 No management development programs
 No induction training for new employees
 Critical skill shortages
 Inter-departmental conflict
 You do not know if any of the above are applicable

178
 2) COPS Checklists Evaluation
Culture
 Does staff identify with the organization and 'the success of the organization'
as being of direct benefit to themselves?
 Does staff see themselves as having common interests with their work
colleagues and group? Is there a strong team spirit?
 Is work allocated on the basis of individual expertise rather than position in
the organization?
 Are there sufficient skills / power bases in the organization?

 Are there appropriate leadership skills within the organization?

 Is staff encouraged to say what they think about the organization?

 Does organization encourage innovation and creativity amongst staff?

 Does staff feel a sense of personal responsibility for their work?

 Is quality emphasized in all aspects of the organization?

179
Organization

• Does the structure of organization encourage effective performance?

• Is the organization structure flexible in the face of changing demands?
• Is the structure too complex? If so in what areas?
• Does staff have clear roles and responsibilities?
• Does organization structure tend to push problems up rather than resolve
them at the point where they occur?
• Do procedures and management practices facilitate the accomplishment
of tasks?
• Does organization constantly seek to challenge organization structure?

180
People

 Does staff have the necessary skills and knowledge to perform their
jobs in the most effective manner?
 Does staff understand their jobs and how they contribute to overall
business performance i.e. have clear goals and objectives?
 Does staff have a customer service orientation?
 Are people with potential spotted and developed for the future?
 Is staff encouraged to perform well through the giving of recognition,
feedback, etc.?
 Does staff know what their expected performance standards are?

181
Systems

 Do organization's systems (e.g. employee selection and recruitment,

promotion, planning, management, information and control)
encourage effective performance among your staff?
 Are these systems consistent across the organization?
 Are there clear rewards for effective performance within work
group?
 Does the organization review its systems frequently and ensure
they mutually support each other?
 What are the three critical people issues facing the business?
 What plans /actions can be taken to address these issues?

182
 3) Management By Objectives
Management by Objectives is a process of agreeing upon objectives
within an organization so that management and employees buy in to
the objectives and understand what they are.

SPECIFIC

MEASURABLE
Objectives
MUST be:
AGREED

REALISTIC

TIME-FRAMED
MBO Stages
1. Define corporate objectives at board level
2. Analyze management tasks and devise formal
job specifications, which allocate responsibilities
and decisions to individual managers
3. Set performance standards
4. Agree and set specific objectives
5. Align individual targets with corporate
objectives
6. Establish a management information system to
monitor achievements against objectives
4) Balance Scorecard
 It was originally conceived as an improved performance
measurement system but it soon became an important tool
in organizational development and change because of:
 Clarifying Strategy
 Communicating Strategic Objectives
 Planning, Setting Targets, & Aligning Organizational Initiatives
 Strategic Feedback & Organizational learning
 FINANCIAL

Do Actions Contribute to
financial performance.
Profits, return on investment.

CUSTOMERS INTERNAL PROCESS

MISSION
How well do we serve Does the chain of internal
them? STRATEGY activities & processes add
value for customers & share
Customer satisfaction, GOALS holders.
loyalty.. Order-rate, fulfillment, cost
per order.
LERANING & GROWTH
Are we learning &
changing?
Employee Development &
retention, process
improvement.
 Each perspective of the Balanced Scorecard
includes:
 Objectives
 Measures
 Targets
 Initiatives
Objectives Measures Targets Initiatives
Financial
Customer
Process
Learning
 3) Evaluation Metrics & KPIs
 Strategy professionals are using evaluation metrics to evaluate the
performance of critical areas of their company & make better strategic
decisions.

 Metrics can be used in all areas within the company such as the
allocation of resources, technology purchases, hiring and retention,
employee performance, sales, compensation programs and more.

 Metrics help managers focus on the key issues and can effectively drive
the change a company needs to achieve its goals. However, this works
only if everyone knows what is being measured and how they will be
rewarded for meeting the goals.

188
 To be effective, the metrics should not just report results but show a
cause- and- effect relationship. The function professional needs to take
the lead in identifying where a company's investment in resources
capital can best be allocated to meet the company's goals and how to
develop, and retain the resources the company needs to stay
competitive now and in the future.

 Each metric contains 3 to 5 performance indicators. E.g.:“employee

attitudes” metric includes the following indicators: Job Contentment
(the percentage of employees satisfied with their job), & Manager
Contentment (the percentage of employees satisfied with their
manager).

189
 Sample Metrics (Human Resources)
 Employee turnover metric generally include such indicators, as:
 Cost per Hire (calculation of advertising, agency fees, employee

referrals, relocation, recruiter pay and benefits costs and the number
of hires)
 Turnover Cost (calculation of termination, new hire, vacancy and

learning curve costs),

 Turnover Rate (rate of the employees leaving an organization)

 Time to Fill (the period from job requisition approval to new hire

start date),
 Length of Employment (this indicator considers job title,

department, etc.).

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 Recruiting metric includes:
 Vacant Period (number of overall days the positions were vacant)

 New Hires Performance Appraisal (average performance

appraisal of new hires, compared to previous period)

 Manager Satisfaction (according to the survey of hiring managers,
compared to previous period)
 Turnover Rates of New Hires (during a specified period)

 Financial Impact of Bad Hire (according to turnover cost and

cost per hire)

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 Training and Development metric may include:
 Learning and Growth Opportunities (percentage of employees
who are satisfied with the learning and growth opportunities in
the organization),
 On-the-job learning Contentment (percentage of employees who
are satisfied with on-the-job learning, project assignments for
growth and development, and job rotations),
 Opportunities for New Hires (e.g. percentage of employees who

report training opportunities among the top three reasons they

accepted the job).

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 Key Performance Indicators
 KPIs offer an excellent opportunity for businesses to target specific
areas of desired growth and achieve maximum results.
 A KPI is a specific measure of an organization's performance in some
area of its business. It is a general concept, with different applications
depending on type of business & goals of organization.
 The purpose of KPIs is to give a business quantifiable measurements
of things it has determined are important to its strategic success.
Identifying the most important KPIs is the first step towards realizing
increased profitability and efficiency for most businesses.
 For KPIs to be useful, they must be consistently quantifiable, have an
established correlation to the area of the business in need of
improvement, and not give false readings.

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 Examples of KPIs:

 The percentage of deliveries made on time

 Total inventory at any given time
 Distribution costs as a percentage of total sales
 Accuracy of invoices sent to clients, or lead time for a product.
 New Customers Acquired / Turnover
 Employee Turnover

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 METRIC KPI Weight Score Total
(Primary KPI)
Metric1 KPI 1 20% 75% 15%
KPI 2 20% 120% 24%
Metric 2 KPI 15% 67% 10%
Metric 3 KPI 1 10% 100% 10%
KPI 2 10% 50% 5%
KPI 3 10% 100% 10%
Metric 4 KPI 10% 110% 11%
Metric 5 KPI 5% 80% 4%
TOTAL 100% 89%

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Why may Strategic Management fail?
(i.e. things to avoid)
 Failure to understand the customer
 Inability to predict environmental reaction
 Over-estimation of resource competence
 Failure to coordinate
 Failure to obtain senior management commitment
 Failure to obtain employee commitment
 Under-estimation of time requirements
 Failure to manage change
 Poor communications
 Failure to follow the plan
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The Effective Strategist
 Looks at what is happening now in
context of where he/she wants to go.
 Balances short and Long term needs.
 Reacts positively to problems.
 Team Player: Inspires and motivates
people.
 Communicates well.

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 REFERENCES
MAIN REFERNCE:
 Thomas Wheelen, David Hunger, Strategic Management & Business Policy, 12th & 13th Editions, Pearson, 2010-2012.

SUPPORTING
 Andy Bruce & Ken Langdon, Strategic Thinking, DK, 2000.

 Black, Richard J. (2003) Organisational Culture: Creating the Influence Needed for Strategic Success, London UK, ISBN 1-
58112-211-X
 Cummings, Thomas G. & Worley, Christopher G. (2005), Organization Development and Change, 8th Ed., Thomson South-
Western, USA, ISBN 0324260601
 Dr. Mohamed Aly A.Fattah. Integrated Strategic Management, 2008-2014.

 Dr. Mohamed El Masry, Strategic Management for Executive Management, 2007-2008.

 Jeffery Mello, Strategic Human Resources Management, 2006

 Peter Fearns, Business Studies, McGrow Hill, 2003.

 Robert Heller, Manager’s Handbook,DK, 2002.

 William Rothwell & Roland Sullivan, Practicing Organizational Development, Pfeiffer, 2nd Edition, 2005

 Material Compiled by Dr. Mohamed Aly A.Fattah.

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Thank You

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