STRATEGIC MANAGEMENT
WELCOME
• Lecturer : Prof. Juvenalis M. Tembo
• Email : dr_jmtembo@yahoo.com
• Cell
: 0977853179
Course Objectives
1. To deepen understanding of the concept of
business strategy.
2. To develop the ability to formulate and
implement business strategy.
Course Outline
I. Nature and significance of business strategy
• Nature of strategy
• Significance of strategy
• Evolution of strategy
• Strategic choices/alternatives
• Strategy and the functions of the CEO
II. Formulation of Strategy
•
The external environment
»
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•
A company's strategic capability
»
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•
•
Nature of an external factor
Types of external factors
Opportunity/ Threat and Strategic Choice
Nature and significance
Indicators of capability
SWOT analysis
Management orientation
Obligation to society
III. Implementation of strategy
• Organizational structure
• Systems for influencing performance
• Organizational politics
• Organizational culture
• Management development
• Leadership
PROGRAM-DISTANCE
week
Topic
One
• Nature of strategy
• Strategic choices
• Strategic management as a Function of
the CEO
Two
• Formulation of Strategy
i. External environment
ii. Strategic capability
iii. Management orientation and
Strategy
iv. Obligations to Society
Three
• Strategy Implementation
i. Organizational structure
ii. Influencing performance
iii. Organizational politics
PART-TIME PROGRAM
Week
Topic
1,2
• Nature of Strategy,
• Strategic choices
• Strategy and Functions of CEO
3,4,5,6
• Formulation of Strategy
• Strategic capability
7,8
• Management orientation
• Obligations to Society
• TEST
9,10,11
• Strategy implementation
• Organizational Structure,
• Organizational Process
• Motivation
Selected Reading materials
Required:
• Kenneth R. Andrews, (1971),The Concept of Corporate
Strategy, Homewood, Illinois: Dow Jones-Irwin.
• Arthur A. Thompson, A J Strickland, John E. Gamble
and Arun K. Jain, (2007),Crafting and Executing
Strategy: Concepts and Cases, New York: McGraw Hill
• Gerry Johnson and Kevin Scholes, (1997), Exploring
Corporate Strategy, London: Prentice Hall
Recommended:
• Robert M. Grant, (2008), Contemporary Strategy
Analysis, London, Blackwell Publishing
• Jeremy Grant, (2009), Business Strategy, London:
Profile Books Limited
Assessment
• Continuous Assessment : 30%
– Assignment : 10%
– Test :
: 20%
• Final Examination
: 70%
Nature & Significance of Strategy
Introduction
• A strategy is employed to facilitate the
achievement of an objective.
• Consider the meaning of strategy in the
following instances:
–Sport
–Military
–Bribery and corruption
–Pick pocketing
• Irrespective of the context, strategy is
deployed to guide a firm in the
achievement of an objective/success.
• In this course, strategy will be examined
in the context of a business firm.
What is a business strategy?
• Kourdi (2009:3) has defined business strategy
as a “plan, choice or decision used to guide a
company to greater profitability and
success.”
• Genesis of strategy: a business enterprise is
founded for the primary purpose of creating
and increasing wealth for the owner(s).
Hence, a strategy is employed to facilitate the
achievement of profit/success.
• Underlying questions:
– Where is the organization?
• Situation analysis
– Where does the organization wish to go?
• The articulation of success
• Strategic choices
– How does it get there?
• Strategy implementation
EVOLUTION OF BUSINESS STRATEGY
According to Grant(2008), there have been four
milestones in the evolution of business strategy:
1. The search for business success through
Strategic planning
• In the period following the end of the Second
World War, firms were not making money
because of the economic devastation that had
occurred in the second World War.
• To achieve success, firms embarked on strategic
planning to seek profit.
Strategic planning entailed the following:
– Scanning of the environment for
opportunities (or threats) to business
success.
– Determination of market opportunity to
exploit, or threat to avoid.
– Determination of requisite activities
(production levels) in those markets
– The mobilization and allocation of resources
to those activities.
II. The advent of economic turbulence
(1970-1980)
• The emergence of economic turbulence
was characterized by:
–shortages of raw materials (oil) and
–the emergence of international
competition.
• The search for economic opportunity in
the face of economic turbulence
• The search for opportunity which had
characterized the period after the second
World War became untenable;
• Instead, to achieve success, firms now
had to shift from planning for growth to
market repositioning or strategy
making.
• The shift to strategy making carried the
following implications:
• Recognition that Competition was a
central feature of a business external
environment
• Awareness that Competition was a threat
to profitability.
• In the light of the threat of competition
to profit, firms had to seek competitive
advantage to achieve success;
• Competitive advantage was an internal
factor and a source profitability/success.
III. Technological developments : a new
way of doing business
• The
onset
of
technological
developments, such as,
–digitalization,
–mobile telephone and
–the internet.
• Strategic
Implications
of
technological
developments:
– Technological developments revolutionized the
way business was to be conducted. Firms could
not expect to achieve progress by continuing
with the old way (established) of doing
business
– Christensen
(1970)
considered
them
“disruptive” to established ways of doing
business.
– In the light of the potential threat to success of
technological developments, firms had to be
innovative.
IV.
The need for ethics in the way business
achieved success or made profit (20012006)
• The preoccupation with profit led to ‘excessive and
unbridled’ greed for profit.
• Driven by the desire to make profit, firms drifted into
questionable and ‘unethical’ behavior in the way they
generated money, as evidenced by the number of
financial scandals committed by some famous
companies in America and Western Europe.
• This concern gave rise to the need for corporate social
responsibility in the manner firms sought success.
Conclusion:
• Strategy is any action by a firm intended to
enhance success.
• The search for success begins with an
assessment of a firm’s current situation
(Where is a firm?)
• This is followed identification of opportunity
or threat in a firm’s external environment
(Where does a firm wish to go?).
• A firm must use capability to successfully
exploit the opportunity and/or to overcome a
threat in its environment (How does a firm get
to where it wishes to go?).
• Finally, a firm’s strategy must be in the
interest of the public.
• The extent to which a firm navigates the
external and internal environment to achieve
success is what strategy is all about!
Strategic Choices
a)No Change or Do-Nothing strategy
• Strategy is a guide to success. However, if success
is being achieved from current strategies, it is
prudent to continue with such strategies
whatever these strategies might be.
• A “No Change” or “Do-Nothing” strategy is
followed when a firm is satisfied with its current
strategy and therefore sees no justification for
change of strategy.
• A “No Change” or “Do-Nothing” strategy thus
involves a continuation of the existing strategy,
because a change of direction when all is well
might be retrogressive.
b)Concentration or specialization (single
business strategy)
• This involves seeking progress by directing
resources
towards
continued
and
profitable growth of a “single” product, a
“single” market, or a “single” technology.
• This is perceived to be more beneficial than
spreading resources across many products,
markets or processes.
c)Market development
• This strategy involves seeking progress
by extending into new markets that are
not served or developing new uses for
existing products.
• This can be done by building on
existing
strengths,
skills
and
capabilities to:
–Acquire new markets
–Increase use of an existing product
d)Product development
• This involves substantial modification or
additions to present products in order to
increase their market penetration within
existing customer groups.
• It is intended to prolong or extend the life
cycle of an existing product.
e) Innovation
• This involves significant or material
changes to a product or service.
• It involves replacing existing products
with new ones as opposed to
modifying them.
• Innovation provides growth by
increasing market share, revenues,
growth and profit.
f) Strategic outsourcing
•
•
This means allowing any of a
company's functions
to
be
performed by
an
independent
specialist
company.
The principal reason for outsourcing is
that the
company may not have
a distinctive competence,
or
competitive advantage, in the activity
or function to be outsourced, and it
may thus be uneconomical for a
company to carry out the function.
• Some activities which are commonly
outsourced:
–Cleaning
–Security
–Subcontracting
• The rationale is that it is more economical to
let another firm carry out these activities than
for a firm to carry them out.
STRATEGIES IN COMPETITIVE
INDUSTRIES
Introduction
Competition means rivalry among
participants.
In short, one firm is a threat to the
profitability of another firm.
A competitive strategy involves having
a competitive advantage over a rival
g)Market Focus strategy
• This strategy means deciding on a market
segment that offers a firm a competitive
advantage.
• A market segment is a set of people (a
subgroup) who share with a larger population
a similar need for a particular product.
• Within a group though there may be
subgroups that may have a more specific need
for a product. Market focus aims at targeting
these needs more narrowly.
• A company may have a competitive
advantage over its rivals in the way it
satisfies a targeted segment
• A segment may be based on any number
of customer attributes:
–Income/demand characteristics
–Location
–Purchase habit (cash vs. credit)
h)Product differentiation strategy
•This strategy involves obtaining a competitive
advantage over rivals by making, creating, and
selling a product in a way that satisfies
customers differently from and better than
rivals.
•A company can devise strategies to
differentiate a product through
– Innovation
– Excellent quality
– Responsiveness to customers.
– Branding
i)Low - Cost strategy
• A major component of a price is the cost and
by reducing the cost, a firm may
correspondingly reduce the price
• This strategy is based on a company obtaining
a competitive advantage by lowering its cost
structure so that it can make its product(s) at
a lower cost and sell its product at a lower
price than its rivals.
This offers a competitive advantage in two ways:
– Where firms charge similar prices for their
products:
The company with a lower cost structure
will be more profitable than its competitors
because of its lower costs.
– Where a company offers its product at a
lower price:
The company with a lower cost structure
can sustain its operations by attracting
customers away from its rivals.
STRATEGIES IN DECLINING
INDUSTRIES
• Many industries experience, sooner or later, a
decline, whereby the size of the total market
starts to contract.
• The decline of a market can be attributed to
many causes, such as:
– Technological changes
– Emergence of substitutes
– Shifts in tastes and preferences
– Falling incomes.
j)Leadership Strategy
• This strategy aims at growing in a declining
industry by picking up the market share of
companies that are leaving the industry.
• This strategy is appropriate when:
A company has distinctive strengths that allows it
to capture the remaining share and
The rate of decline is slow, and intensity of
competition is not severe.
• The tactical steps may include aggressive
marketing and making new investments.
k)Niche Strategy
• This is premised on the possibility that the
rate of decline is not uniform; that is, the
existence of pockets of demand in which
demand is stable or declining slowly.
• The niche strategy calls for a company to focus
on such markets.
• This strategy is appropriate when a company
has a strength to exploit the pockets of
demand.
l)Harvest Strategy
• This is used when a company wishes to get out
but would like in the process to optimize cash
flow.
• This strategy involves consolidation by:
 Cutting off all new investments
 Reducing costs wherever possible.
 Repositioning and seeking survival by
concentrating on core
and/or on those
activities in which the company
has a
distinctive competence(the retrenchment of
non-core activities).
m)Voluntary Liquidation or Exit
This involves ceasing operations in the current
industry. It can take any of the following forms:
• The sale of a complete business
• The sale of a business in piecemeal to
different buyers
• Auctioning of assets
10022034
REVIEW
• What is strategy?
• What is the significance of strategy?
• Evolution of strategy
– Era of economic devastation
– Competition
– Era of technological advances
– Ethics in the search for profit
• Strategic choices
– Nature and relationship to success
• Strategic choices
– No Change/Do nothing
– Specialization/Concentration
– Market development
– Product development
– Innovation
– Outsourcing
– Competitive strategies
• Market focus
• Product differentiation
• Low cost
Strategic choices, cont’d
• Strategies in declining industries
– Leadership
– Niche
– Harvest
– Exit/Liquidation
• External growth strategies
– Merger, acquisition, Joint venture
• Diversification
EXTERNAL GROWTH STRATEGIES
n) Acquisition, merger or joint venture.
• These involve the purchase of, or entering an
arrangement with, or forming joint ventures with
firms that are behind or ahead in a firm’s valueadded chain.
• These strategies are premised on the fact that,
singly, a firm does not have the capability to grow
in the way it desires.
• A firm then integrates with another firm to grow
by exploiting new opportunities that generate
synergy.
• An acquisition, merger or joint venture
may be necessitated by any of the
following:
–The other firm has an opportunity
–The other firm is a threat
–The other firm has a strength/
capability
Form: A merger, an acquisition or a joint venture
can take any of the following forms:
• Backward integration: This is where a firm
merges with, acquires or forms a joint venture
with a firm that supplies it with key raw
materials, e.g., a butcher acquiring a ranch
• Forward integration: This is where a firm merges
with, acquires or forms a joint venture with a firm
that has retailing facilities.
• Horizontal integration: This is where a firm
acquires, merges with, of forms a joint venture
with a firm which is a rival.
n)Diversification
• This involves adding new businesses to the
company that are distinct from its core
business.
• For example, UNILUS can diversify by going into
the hospitality business to its core business of
disseminating knowledge.
• It is triggered by the desire for more profit:
 When there is an opportunity in a different
industry
 When there is a threat to profit in the
current line of business.
STRATEGY & THE CHIEF EXECUTIVE OFFICER
• How strategic management fits into the
functions of a CEO
• CEOs are also known by titles such as:
–General manager
–Managing Director
–Executive Director or simply
–Manager
•Strategy is about guiding a firm to success.
• The primary responsibility of a CEO is to deliver
success.
• A CEO is concerned with the general
management of a total enterprise
• By its nature, strategic management is about
guiding a firm to success by steering the total
enterprise toward success.
• In this regard, a CEO performs the following
functions:
1. Supervising Current Operations
– The CEO must achieve results in the present
against continually rising expectations of
other stakeholders. These include:
• Shareholder (s)/Owners of equity
• Strategic partners
• Suppliers/buyers
• Employees
• Government
• Society at large
– The GM see and attend to people who want
to see him/her.
• To receive reports on progress
• To receive reports on problems and any
difficulties which hinder success and
resolve such difficulties or hindrances
– The GM will be expected to physically see
and acquaint himself/herself with all
operations.
– The GM is expected to remain continually
informed and be ready to intervene in
crises.
• Must
be informed about new
opportunities which affect current
operations
• Must be informed about threats to
success and be ready to intervene in
crisis
• Must receive visitors of his own stature to
share experiences and learn from others.
2.The GM must preside over the process
of making policy decisions affecting future
results.
• He/she must plan for success in the
future against known and unknown
odds and determine where he wants
the firm to be in three, five or ten
years from now.
• This means having a vision (of
success) and working with and
inspiring others, to bring success to
the organization.
3.The GM must mobilize resources, develop an
organization structure and deploy its people in
such a way as to permit both business success
and individual satisfaction and expression.
• He must search for and bring to the
organization resources and competences
that will enable the organization to
achieve success
• He must bring all on board to strengthen
team effort.
• He must resolve conflict which
undermines success
• He must make painful decisions to
remove or reassign people
• He must make his company attractive to
recruits; and
• He must penalize as well as reward in the
interest of progress.
4.The CEO is also expected to make a distinctive
personal contribution by:
• excelling in some technical or social way
• demonstrating that he/she deserves to
be in the position he occupies
• participating in matters of concern to his
community,
industry
and
trade
association and the nation at large
• being a good family man/woman and be
a role model to all and sundry.
II. THE FORMULATION OF STRATEGY
The formulation of strategy comprises the
following:
• The analysis of the company’s external
environment
• Determination of a company’s strategic
capability (internal environment)
• Influence of personal values and aspirations of
decision makers
• Obligation to society
A Company’s External Environment
A past examination question:
Determination of a suitable strategy for a company
begins with identifying opportunities and risks in its
external environment.
Using the context of Zambia, explain and give
examples of the significance of the following in the
formulation of strategy:
a) The political environment
b) The economic environment
c) The technological environment
d) Globalization
Introduction
• The essence of strategy is to guide a firm to
success/profitability.
• An effective strategy thus begins by identifying
opportunities and risks in a company’s external
environment.
– A company’s ‘external environment’ refers to
events or factors, outside a firm’s control,
which nevertheless affect a firm’s success.
– Strategic choice refers to a response to an
opportunity or threat by way of exploiting an
opportunity, or overcoming a threat, thus
paving the way to success.
• The scanning/analysis of the external
environment is aimed at identifying
opportunities and threats that have a bearing
on success.
• Strategy:
– is derived from the identified opportunities
and threats.
– It comprises a response in a way which
leads to success or greater profitability.
Framework for the analysis of the
external environment
Type of environment
Identification of
Opportunity
Identification
of Threat
Globalization
x
x
Technological Advances
x
x
Competition
x
Political
x
x
Legal environment
x
Cultural
Economic
x
x
x
Response to o
opportunity/threat
(Strategy)
Globalization
• A globe is a set of countries.
• Globalization refers to the interactions between
countries.
• There are Opportunities and threats inherent in the
interactions between countries.
• Consider the following:
– There are opportunities to Zambia when Zambia sells its
copper to other countries
– There are threats to Zimbabwe when other countries
refuse to buy tobacco from Zimbabwe; and there are
threats to Zambia local manufacturers when products
from other countries compete with locally produced
products.
Key drivers of globalisation include:
(i) Convergence of needs and preferences
(i) Convergence of needs and preferences
• Countries are inclined to trade with each
other when their needs are similar as opposed
to a situation when their needs are different.
• A firm starts by satisfying needs in its home
country and then progresses to satisfy similar
needs in other countries ( market
development).
• The homogeneity of need is exemplified by the
following:
– An electric or electronic gadget manufactured in
Japan but also imported by Zambia
– Heavy machinery and equipment manufactured
overseas but imported into Zambia for use in
extraction, agriculture, manufacturing or commerce
– Consumer goods imported into Zambia
– machinery and equipment used in extraction,
agriculture, manufacturing or commerce
– military equipment manufactured in the Soviet but
imported by the Zambia Army.
(ii) Route to Growth
• Historically, trading between nations has
long been recognized as the direct route
to growth as no nation can exist on its
own.
• Indeed, the economic survival and
prosperity of Zambian depends on the
country’s export of its copper to other
countries.
(iii)To enhance efficiency through economies of
scale
• Globalization means access to a wider market,
or an increase in the volume of goods
produced/marketed
• Economies of scale refer to efficiencies which
occur when costs are spread over a larger
volume leading to lower per unit cost.
• Example:
Coca-Cola Company achieves lower per unit
cost/price from its increased volume stemming
from its international operations.
(iv) Easing of political tensions
– Economic cooperation between nations
usually follows political tolerance between
nations.
– There is now greater political understanding
and tolerance among nations today than
was the case, say, fifty years ago, which has
led to increased economic relations
between countries.
– Some examples:
• Zambia and South Africa relations
• The United States and China/Russia
The strategic impact of globalization
• Market growth opportunities
Globalization creates an opportunity of doing
business in other markets, hence increasing the
prospect of increased profitability.
• The threat of competition
Globalization necessarily implies that nations must
open their doors to each other, which means letting
in competition and hence reducing the profit due to
a firm.
• Examples from Zambian:
– On the positive side, mining companies are
able to prosper because they are able to sell
copper to overseas buyers
– On the negative side, many local firms in
Zambia have gone under because they have
not been able to compete against foreign
products
• The textile industry
• Tiptop products and CocaCola
TECHNOLOGICAL ENVIRONMENT/ADVANCES
• The Technological Environment refers to
innovations and developments that are
generated through the application of
science and technology
• Technological advances comprise:
inventions
product development
automation
A ZAMBIAN EXAMPLE OF THE IMPACT OF
TECHNOLOGICAL ADVANCES
• Technological advances create an
opportunity for success to firms that
embrace technology, but technological
change can also be a threat to the
established way of doing business.
• Consider the impact of technological
advances on Zambia Railways/ZAMPOST
Other examples of the impact of technological advances:
(i) Transport: Increased transportation capability
• Transportation is the movement from one point to
another point.
• Technological advances in transportation
– have increased masterly of greater distances in less time
and at less cost
– offered firms the opportunity to operate in space,
under seas, and in otherwise inaccessible areas.
• Strategy: Market development
Firms can reach more and distant markets that are not
being currently served, thus enabling firms to attain
higher levels of profitability/success
• Consider the limitations of reaching other
markets and making profit from the following
modes of transportation:
• Pedestrian
• Bicycle
• Oxcart
• Road
• Train
• Sea
• Air
ii)Increased masterly of energy
• Energy provides the capability to undertake
production.
• Technological advances have provided
masterly of energy through the generation of
energy of greater magnitudes and intensity,
and hence facilitating higher level of
production.
• Strategies:
– product innovation
– product development
(iii)Increased ability to extend and control life
and serviceability
• Some technological advances have led to the
following:
– Longer life for living things, especially of
perishable foods and other organic
products
– Reduced deterioration of physical goods.
• Strategies:
– Product development
–
Market development
(iv)Increased ability to alter characteristics of
materials
• Other technological advances have entailed
the development of new properties from old
products, thus giving products a new or
extended lease of life. For example, cases of
welding and recycling.
• Strategies:
– product development,
– innovation,
– market development
v)Growing mechanization of physical activity
• Mechanization refers to the process of substituting human
labour with machines
• Mechanization of human physical activity has increased
productivity and efficiency, leading to higher profitability.
• Consider the impact of mechanization in the following
instances:
– Production
• direct labour
• materials handling
• packaging
• testing and inspection
• Service delivery and use of Automatic Teller
Machines in banking
– Distribution
• loading
• shipping and receiving
• warehousing
– Communication
• Messenger to electronic mail
• The internet
– Extractive industries and construction
• earthmoving
• mining
• lumbering and
• agriculture
– Intellectual process
• Information processing
• Problem solving
17022024
Announcements
• The assignment has been uploaded. It is due
on 4th March.
• The test will take place on 16th March from
16:00 hrs. to 19:00 hrs.
THE ENVIRONMENT OF COMPETITION
Introduction
• Competition is a feature of a company’s
external environment
• By its nature, competition is a threat to the
profitability of a firm.
• Thus, a firm may achieve progress by
developing competitive strategies that give it
an advantage over competition.
The analysis of the competitive environment
attempts to achieve two goals:
• To understand the nature of competition
• To develop appropriate competitive strategies
Perspectives of Competition
A. Industry rivalry
B. The market perspective
C. Porter’s Model of Competitive Forces
– Threat of New Entrants
– Bargaining Power of Suppliers
– Bargaining Power of Buyers
– Power of substitutes (Market Perspective)
– The threat of industry rivalry
A. Industry rivalry
• An industry is defined as
– A group of firms that offer a product or class of
products for which there is a high cross-elasticity
of demand.
– It is the high cross-elasticity of demand which
creates rivalry for market share among industry
participants.
• Examples:
– Public transporters, Car manufacturers
– Supermarkets
• Industry rivalry intensifies when:
– participants are numerous, and are of about
equal size and power
– industry growth is slow,
stagnant or
declining, thus intensifying fight for market
share
– the product is homogeneous, this creates a
buyer’s market
– the product is perishable, thus increasing
pressure to sell a product within a product’s
life.
– fixed costs are high, this exerts pressure on
a firm to generate enough sales to
cover the fixed costs
– there are no exit barriers, this intensifies
fight for market share; an exit implies there
are less participants and competition
becomes less intensive. An exit by a
participant offers an opportunity to the
remaining firms to pick up the share left by
firms that have exited the market.
Generic competitive strategies:
Given the rivalry between participants, competitive
strategies aim at giving a competitive advantage
over a rival.
(a) Product differentiation
• This is where a firm achieves a competitive
advantage over its rivals by making a different
and better product.
• This means attracting customers away from a
rival by making a product which has a better
appeal to customers because it stands out
among rival products.
• Product differentiation can be based on
elements of the marketing mix (Product, Price,
Place, or Promotion
• Differentiation can be centred on:
– Product –
• Design or features of a product
• Performance of product
– Reliability
– Durability
– Brand name and packaging
– Price
• Differentiated pricing – low vs. a high
price
– Place
• Ease and convenience of an outlet
• Time preferred by customers – on time
transport delivery
– Promotion
• Effectiveness of medium
• Message
• Responsiveness to customers
(b) Market Focus
• This is where a firm achieves a competitive
advantage over its rivals by offering a product
to a market segment in which it has an
advantage over its rivals.
• Example:
– Informal trader versus Shoprite when it
comes to trading in townships with respect
to:
• Credit sales
• Selling in small quantities
• Personalized selling
(c) Low cost
• A Price is made up of cost and a margin
• A low cost strategy is where a firm achieves a
competitive advantage over its rival by
producing products at a lower cost, which
translates to offering a product at a lower
price than its rivals
• A firm may achieve lower costs through
– Economies of scale
– Cheaper sources of supply
– More advanced technology
B. The market perspective of competition
• In industry rivalry, competition is supply-driven,
that is, competition is characterized by rivalry
between companies supplying a product or
service.
• In contrast, in the market perspective of
competition, competition is market-driven, that
is, competition is based on the choice a
consumer makes by electing not to buy a
product. Note that even a monopoly can be
affected by this type of competition.
• Example:
– A decision not to smoke
– A decision not to drink
– A decision to diet
• This form of competition was initially
experienced by railway companies in North
America who were puzzled that despite
being monopolies they experienced a
decline in sales.
• It later dawned on them that the threat to
their profit came from potential passengers
electing NOT to travel by train.
• The failure to recognize this threat came to
be known as marketing myopia
• Strategy: Innovation by being a step ahead of
a customer by anticipating needs of a
customer
C. Michael Porter's Model of Five Competitive
Forces
Porter argued that the profits of a firm can be
threatened by the following forces of
competition:
– Potential new entrants
– Bargaining power of suppliers
– Bargaining power of buyers and
– Substitutes
– Industry rivalry
The Threat of New Entrants
• The threat of new entrants refers to the risk to
profitability of established firms attributed to
companies that are not currently in the
industry but have the capability to enter the
industry if they should choose to do so.
• Note that new entrants are a potential threat
now but will only be an actual threat
sometime in the future when and if they
decide to enter the industry.
• Potential entrants to an industry pose a threat
by seeking to gain market share through
better valued or lower priced products when
and if they eventually decide to enter an
industry.
• The strategy is in recognizing that the
potential entrant is a threat to profit in future
and in preempting the eventuality of the
threat.
Strategies (barriers) by established firms against
potential new entrants
(i) Economies of scale
• Economies of scale refer to instances when an
increase in volume allows a firm to spread its
costs across a higher volume resulting in a lower
cost per unit. This can lead to a lower price.
• It is presumed that established firms, because of
their experience, are better placed than
newcomers to achieve economies of scale.
(ii)Denying a new entrant access to the market
• This refers to the advantage in accessing customers
established firms have over a newcomer.
– If an established firm has a good retention policy, it is
nigh impossible for a new comer to pry customers away
from an established firm. As an example, Coca-Cola
offers marketing support to its customers which would
be difficult to match by a newcomer.
– It is also difficult for a newcomer to find customers in a
new and unfamiliar market. In contrast established firms
know their way and it will be relatively easier for them to
find new customers.
(iii)Expected retaliation
Established firms may retaliate against any
perceived threat from a new entrant by fighting
against any move to woo customers. For instance
• Undercutting a lower price offered to
customers
• Improve service delivery: The threat of new
entrants can serve as a wakeup call to
established firms to
–Strengthen
clout
with
customers/distributors
–Invest in heavier advertising.
(iv)Lobbying Government for protection
• Established firms may also lobby government to be
protected from the threat of a new competitor
• If Government is willing to protect local industry
against foreign entrants it has a number of options:
• It may enact an explicit policy barring or
restricting foreign participation
• It may impose more stringent entry conditions
e.g. more restrictive entry visas
• It may allow foreign participation but raise the
bar for new investments
• It may impose restrictive regulations with respect
to taxation/remittance of profit
(v)Enhancing Brand loyalty
• This refers the extent to which consumers are
attracted by the appeal of products
manufactured by established firms.
• Customer loyalty to an existing brand will
discourage switching to the newcomer and
compel new entrant to spend heavily on
advertising, customer service and product
differentiation to attract customer away from
established firms.
The Bargaining Power of a Supplier
• A supplier refers to a provider of inputs to an
industry.
• Inputs include raw materials, components, energy,
services or labour.
• Bargaining power of a supplier refers to the relative
power of a supplier over a buyer with respect to:
– Raising prices of inputs or
– Providing poor quality inputs/services
• These actions have the effect of raising the costs of
the buyer.
Example:
ZESCO is a threat to the profit of its
customers when ZESCO.
• increases the tariff
• imposes load shedding
Conditions under which a supplier’s Bargaining
Power over a buyer will intensify:
• Product/service – if the input supplied is
unique
• Supplier – if there is one or a few suppliers
• Buyers – if the buyers are numerous and
fragmented
• Profitability of supplier – if the profitability of
a supplier is not under threat from any
retaliatory action a buyer may take.
Strategies against a powerful supplier
• Search for an alternative supplier/substitute input
Suppliers become powerful when the product
they sell is unique and vital to the buyers and
buyers cannot switch easily to another
supplier or another product.
• For example, in the case of a threat from
ZESCO, buyers can source alternative sources
of power such as:
– solar energy,
– charcoal or firewood
– gas
• Enter the supplier’s business
Buyers faced with a powerful supplier may enter
the supplier’s business through acquisition, merger
or joint venture.
Example:
 Zambeef as a butchery(buyer of beef)
 Zambeef owns and runs ranches to ensure a
reliable supply of meat to its butcheries
Bargaining Power of a Buyer
• Buyers consist of consumers, users or
distributors of a product.
• The bargaining power of a buyer refers to the
relative power of a buyer over its suppliers
with regard to the following:
– bargaining down prices or
– demanding better quality and service from
supplier.
• For example: Food Reserve Agency has
bargaining power over subsistence farmers
Conditions under which a buyer will have
bargaining power over a supplier:
• Product – if the product is standard rather
than unique
• Buyer – if there is one or a few buyers
• Suppliers – if suppliers are numerous and
fragmented
• Profitability of buyer – if the profitability
of a buyer is not threatened by any action
a supplier may take.
Strategies against powerful buyers
• Market development
Buyers become powerful when they are few,
concentrated and buy in large volumes. By looking
for other buyers, a firm becomes
less
dependent on a single buyer
• Enhance brand of products
Make the product unique so that buyers will not be
inclined to look for other suppliers. A buyer
becomes powerful if a product is standard or
undifferentiated. A buyer’s freedom of choice can
be curtailed if a supplier’s product is unique.
• Increase switching costs to the buyer
Create a situation where a buyer will find it
difficult to switch to another supplier
 creating a strong working relationship
with a buyer.
 suppliers forming a cooperative and
acting in unison.
The Threat of Substitutes
• Substitutes are products of different industries
or businesses that satisfy the same customer
needs.
• Substitutes to copper are metals other than
copper that satisfy the needs copper attempts
to satisfy.
• Such metals are in competition with copper
when there is cross elasticity of demand
between them and copper.
Forms of substitution :
(i)Product-for-product substitution
 postal service and electronic mail;
 maize-meal, cassava, rice and
potatoes;
 pain killers - Panadol, Aspirin,
Aspro);
 soft drinks - Coke, Fruiticana,
Mazoe.
(ii)Generic substitution
– This occurs when the choice for an item is
perceived as a threat to the products NOT
chosen.
– For example: :
• in a household there are typically many
different items from different suppliers
–food,
–clothing,
–furniture,
–entertainment,
–beverages.
• These items compete for the disposable
income of a household
• The choice to spend money on any item
effectively means money cannot be spent
on other items, hence items can be
considered to be in competition with
each other.
(iii)Doing without
– This occurs when customers decide they no
longer need a product as might be the case
with:
 Abandoning smoking
 Giving up drinking or
 Going on diet
– The ultimate result of these actions by the
consumer is to reduce purchases of these
products.
Strategies against substitutes
• Innovative/Product development
Substitutes are products from other
industries that satisfy the same need. An
effective response to the threat of
substitutes is to anticipate needs of
customers through Innovation/product
development by embarking on diligent and
constant research and development.
Industry rivalry
• The industry perception of competition is
implicit in most discussions of competition.
An industry is a group of firms that offer a
product or class of products for which there is
a high cross-elasticity of demand.
• An example
– Car manufacturers
– Maize millers
– Christian churches
– Universities
• Conditions under which Rivalry among industry
participants intensifies:
– when competitors are numerous, and are of
about equal size and power, e.g.
• public transport operators,
• supermarkets
– industry growth is slow, stagnant or declining
and hence the fight for market share, e.g.
• trading in a recession
– when the product is perishable, thus creating
strong temptation to cut prices, e.g.
• selling fresh fruit
– when fixed costs are high, thus exerting
pressure on increasing sales volume, e.g.
• renting a shop at a mall
• Operating a bar from a rented premises
– when there are exit barriers; such barriers
may be economic, strategic or emotional,
e.g.
• Coca-Cola provides marketing assistance to
retailers of coke, making the latter so
dependent on Coca-Cola that it precludes the
temptation to seek another supplier.
Strategies:
• Product differentiation
– Create market appeal by making a product
that stands out.
• Market focus
– Select a market segment in which you have
an advantage over rivals.
• Low cost
– Reduce costs and by extension reduce the
price of a product.
24022024
Review
• Task: Formulation of strategy
• Significance of the external environment
– Identification of opportunity/threat
– Determination of Strategy (appropriate
response to opportunity/threat)
• Analysis of different types of environments
and determination of strategy
THE POLITICAL ENVIRONMENT
 A political environment refers to activities carried
out by individuals elected to public office. These
individuals consist of:
i. The President and his Vice
ii. Members of Parliament,
iii. Chairpersons of council
iv. Mayors
v. Councilors
 It is these elected officials who form
government.
and run
Dimensions of Political power and influence
Politics is not only powerful but it is also
pervasive – affecting our personal lives and life
of corporations.
(1) Some examples of influence on corporate life
• The creation of state-owned companies
and subsequent liberalization (T &O)
• Sale and repossession of Zambia
Railways/Repossession of Zamtel (O &T)
• The KCM/Mopani sagas (T)
• The ban of street vending (T)
• Taxation of mining companies (T)
(2) Power and influence of the Presidency.
The most powerful and influential office in the land
is political – that of the President
The president wields a lot of power and influence
and is country's chief executive officer and the
appointing authority of
senior positions in
government:
» The Vice President
» Cabinet ministers
» Speaker
» Chief Justice
» Secretary to the cabinet
» Permanent Secretaries, Heads of state-owned
institutions
» Other senior positions in government
(3) Pervasive nature of politics
All areas of human endeavour are affected and
influenced by Politics:
–Agriculture
–Education
–Health
–Security
–Commerce
–Infrastructure
–Commerce
–Sport, etc.
–Religion
(4) Other areas of Governance
– Legislature
• Responsible for enacting laws which
govern the conduct of business
• Such laws cover:
–Investment and development
–Trading
–Production & Consumption
–Taxation
• Judiciary
– this organ of governance deals with the
administration of laws and arbitration of
disputes between business and other
parties.
– It is headed by the chief Justice and staffed
by judges who are all appointed by the
President and Parliament
(3) Government Role in the economy
Government assigns itself the following roles:
(i)Ownership and participation
o The government may own and run
business.
o State ownership and participation limits
the opportunity for the private sector to
own and run business
o A state-dominated economic system is
inclined to serving public interest and
this has an effect on the philosophy of
business
o Goal of a business profit
maximization
versus
public
welfare
o Areas of investment
(ii) Government as Regulator
• A Government usually regulates how
business will be conducted.
• Areas that may be regulated include:
 What and where of Investment
 Nature and Scope of competition
 Limits on Production and
Consumption
 Limits on Marketing
Control of Advertising
Price controls
Distribution
 Obligation to pay tax
(iii) Government as a Client
• Government custom is large and
lucrative and is a big opportunity to
profit
Incidences of Corruption/bribery
indicate the lucrative nature of
government as a client
• Marketing reorientation in selling to
government
Importance of personal selling
(4)Nationalism
• This refers to the belief among nationals of a
country that they are better than, and/or
different from, nationals of other countries.
• On the positive side, nationalism is an
opportunity when it translates into patriotism
– the love and pride of citizens for their
country resulting in preference for domestically
produced goods over goods of foreign origin.
• On the negative side, it can be a threat when it
is a barrier to imports from other countries.
Consider, for instance,
the
implications of the following in
Zambia:
The challenge of marketing locally
produced goods given the
presence of foreign goods:
ofate of textile companies in
Zambia
oThe collapse of Tiptop
oThe Buy Zambia campaign
(5) Political Stability
• This refers to the extent to which the
environment is conducive to business
• Some indicators of political instability:
• Is change orderly, peaceful, or gradual?
• And when change occurs, how are
business plans affected?
• Presence of conflict
–civil wars and disobedience,
–religious or ethnic intolerance,
–political assassinations,
–armed crimes
– Political instability has a negative impact on
investment or business operations
(6) Political sovereignty
– This refers to a nation’s desire to assert its
authority and complete power over foreign
businesses which operate within its
borders.
– Indicators of the desire for political
sovereignty:
• Resentment and hostility towards foreign
owned business
• rebuke of the foreign owned business for
perceived transgressions.
– Denying awards of contracts to foreign firms.
– Punitive taxes intended to demoralize or
discourage foreign business
– Denial of foreign exchange/remittance of profit
– Domestication or indigenisation.
»Insistence of gradual transfer of
ownership to nationals
»Directive for nationals to occupy top level
positions
»Directive for more local products to be
used
as
inputs
in
local
manufacturing/assembly
»expropriation or nationalization (seizure)
of foreign owned property by a host
country supposedly in the public interest
Strategies against Political sovereignty
–form joint ventures with host
government or nationals
– hold back in home countries critical
elements in production or process
technology
– open political alliance with government
through
»friendships
»donations
»invitations to prominent citizens to sit
on board
–support and finance of social programs
»sport, or other forms of
entertainment
»education,
»health
»national disasters
THE LEGAL ENVIRONMENT
• This comprises a nation’s laws and regulations
pertaining to business.
• Laws apply at two levels:
(a) At national level:
These are laws whose jurisdiction is confined to the
country. For example:
•
License and investment laws,
•
Trading regulations,
•
Taxes,
•
Regulations with respect to production,
consumption, or advertising
(b) At international level:
– These are laws whose jurisdiction applies to
two or more countries.
– They originate from treaties, conventions or
agreements between concerned countries.
– Examples:
• patents and
• trademarks
The strategic impact of these laws is that
they give patent or trademark holder a
monopoly.
THE CULTURAL/SOCIAL ENVIRONMENT
• Culture refers to a system of shared
ideology, beliefs, or values by
members of a group.
• The shared ideology, beliefs or
values create a social obligation on
members to conform to the shared
ideology, belief or value.
• Features of Organizational culture:
– The existence of an ideology, belief or value to
which members of a group subscribe.
– The individual or group succumb to the ideology,
belief or value and thus conform to an accepted
way of behaviour
– The conformity to an ideology denies a company
the opportunity to interact with members of the
group
– Consider the following:
• The non consumption of alcohol/pork by
Moslems
• The veneration of a cow by the Hindus
An example:
• The Tongas of Zambia have a culture of keeping cattle. This
tradition is valued by and shared among Tongas.
• A butchery in Lusaka buys cattle from Tonga villagers for
resale.
• Customers of the butchery have noticed that the meat they
buy from the butchery is hard and have requested the
butcher to source young animals whose meat is tender.
• The villagers who sell animals to the butcher value their
animals so much that they prefer to hold onto the young
animals but are willing to part with the older animals.
• Given the unwillingness of the villagers to sell young
animals, the butcher decides to start a ranch from which he
can choose the quality of meat to sell to his customers. In
this way, he will overcome the difficulty presented by the
Tonga culture.
DIMENSIONS OF ORGANIZATIONAL CULTURE
MATERIAL CULTURE
• This refers to a way of life of a society
characterized by a desire for materialism,
such as possession of physical things, tools, or
skills.
• The bushmen, because of their nomadic way
of life, are not materialistic. Possession of
material things would not go well with the
‘nomadic’ style of living of bushmen.
• Materialism can be conceptualized in
number of ways.
a
– The term “development” among nations reflects
materialistic culture because it refers to a
standard of living as determined by the
application of science and technology.
– The reference to levels of development form use
of terms like “rich versus poor”, or “developed”
versus “underdeveloped” nations also reflect
materialism among nations.
Impact of Material Culture on Strategy
• Materialism is the longing for and possession
of material things.
• When a society craves material things, it
provides an opportunity for a to provide what
is craved for. It is in this way that business
make money
• Conversely, the absence of materialism in a
community denies a firm an opportunity to
satisfy a need and make money.
LANGUAGE
• Language is the most obvious distinguishing
characteristic between cultures.
• It refers to a way members of a community
communicate with each other.
• It can be an opportunity to the extent that it
enables a firm to interact with a market to
generate money; it can be a threat when it
inhibits an exchange between a firm and its
market.
AESTHETICS
• This refers to a community’s conceptualization of
beauty and good taste as may be experienced in:
 Works of Art (paintings)
 Product design
 Tradename
 Colour
 Forms of entertainment
₋
₋
Music
Dancing
• Demand for a product is premised on a product being
perceived to be in good taste.
Impact of Aesthetics
Consider the market appeal of
– Product design
– Colour of a product
– Brand name
– Trademark
– Music
02032024
REVIEW
• Strategic management is a guide to success.
• Strategy is about navigating a company’s
external environment to identify opportunities
for success and threats to success.
• The premise is that the external environment
has a bearing on the success of a firm.
Strategy refers to any action that exploits an
opportunity, or overcomes a threat to success.
• An outline of strategic choices.
• Formulation of strategy and the External
environment
– GLOBALIZATION
– TECHNOLOGICAL ENVIRONMENT/ADVANCES
– COMPETITION
– THE POLITICAL ENVIRONMENT
– THE LEGAL ENVIRONMENT
– THE CULTURAL/SOCIAL ENVIRONMENT
 MATERIALISM
 LANGUAGE
 AESTHETICS
EDUCATION
• What is Education?
– In the broader sense, education is the process
of transmitting skills, ideas and attitudes
between human beings
– In the narrower sense, education is the pursuit
of knowledge through formal education.
• Why is education cultural element?
– It is a value shared by members of a
community
– It elicits conformity from members of a
community
Impact of education on success:
– Opportunity
• It facilitates success
– Economic development/success is a function
of education. Nations that are poor in
education characteristically also lag behind in
economic progress.
– Production/innovation is triggered by the
application of Research and Development
– Consumption/use is influenced by education.
What is used or consumed is learnt from
others
» Food, Tools or equipment
» computers
» drugs
• Threat: Lack of education retards
progress
–Demand is the basis of revenue
–Demand is based on knowledge of
needs and wants
–Needs are physiological but wants are
influenced by money and knowledge.
Lack of knowledge is a source of
deprivation.
RELIGION
• Religion is a belief in or conforming
to the spiritual.
• Religion is not hereditary; it is
knowledge transmitted from one
individual to another.
• It creates conformity to a doctrine;
in turn conformity can be a threat
to the success (profit) of a firm
when
a
doctrine
inhibits
consumption or use of a product.
The impact of religious beliefs
(a) Animism:
•
This is
religion and philosophy
associated with primitive people.
•
It is founded or based on:
 traditional witchcraft,
 ancestor worship,
taboos and
fatalism.
• It tends to promote a traditionalist and
conservative attitude to innovation
(b) Hinduism
• This is a religion largely prevalent in India
• It is based on
» A caste system in which heredity
predetermines
a
person’s
specific occupational and social
roles.
» It promotes the veneration of
the cow
» It restriction the role on women.
• The impact of Hinduism is that
–It erects barriers to progress of
underprivileged members of a
society
–it
does
not
promote
commercialization of beef; thus,
Hindus are all to often vegetarian
–limits the role and contribution of
women/outcasts in business
(c)Islam
– It is practised in most parts of Africa, the
Middle East and Asia and is growing rapidly
in other parts of the world.
– It is based on the Sharia - a body of Islamic
doctrine which
• holds a fatalistic belief that everything
which happens, whether good or evil, is
preordained by Divine Will.
• Prohibits the consumption of alcohol and
pork and wearing of certain styles of
dress
• Limits the role of women
• Impact of Islam on business
– Forbids commercialization of pork, alcohol and
western style of dress
– Restricts the role of women, such as in promoting
goods and services, or even in open driving
(d) Shinto
• This is a national religion of Japan.
• It advocates reverence for:
– the special or divine origin of the Japanese
people,
– The sovereignty of Japan as a nation
– the imperial family as head of the nation.
• It creates a sense of nationalism among the
Japanese by inducing love for and pride in
Japan and Japanese-made products.
• This sense of patriotism is said to be
instrumental in the growth of Japanese
domestic trade and success of Japanese
businesses in international business.
(e) Christianity
Many Christian doctrines are also renowned
for prescribing what should be consumed/
used in the name of God or salvation and thus
indirectly creating a threat to business.
(i)Catholicism
– Church laws prescribe certain forms of
abstinence or forbids the use of some
products. For instance, the Church prohibits
use of contraceptives, condoms and other
devices to control birth.
• Seventh Day Adventists?
– Consumption of pork/certain types of fish
• Jehovah’s Witnesses?
– Laying of wreath
THE ECONOMIC ENVIRONMENT
OVERVIEW
(a)
(b)
(c)
(d)
(e)
Gross National Product (GNP)
Level of Economic Development
Market size and market growth
Distribution of Income
Nature of the economy
Gross National Product(National Income)
• It refers to the aggregate goods and
services produced and consumed/used
in a country.
• This is a measure of the aggregate
economic performance of a country.
• As a measure of performance of a
country, it gives an indication of the
material well being of a country.
(b) Level of Economic Development
• The level of economic development of a
country refers to the degree (stage)of economic
wellbeing of a country.
• The economic development of nations can be
rated on a scale ranging from developing to
developed:
– Developing economies: these are countries
with a low levels of affluence.
– Developed economies: these are countries
with high levels of affluence.
Features of a Developing economy:
• Most of the people subsist on agriculture output.
• There is limited income from agriculture.
• Might be endowed with one or two natural
resources but poor in others.
• Revenue is earned mostly from exporting the
endowed resource.
• The manufacturing sector is usually undeveloped
and characteristically
a country produces
simple/elementary goods and services.
– A major economic activity is the transportation of
minerals to markets in developed countries
– The captive market comprises foreigners and a
small group of wealthy locals.
– There is a high need for consumer goods, which
often remains unsatisfied because of limited
income
– Historically been regarded as producers of cheap
labour and primary goods
– Potential for growth as evidenced by the constant
flow of investors in the primary sector (mining and
agriculture)
Opportunities:
– There is high potential in many sectors of
the economy, notably in agriculture and in
the extractive sectors.
– There is need for capital goods to develop
the extractive industries.
– There is also relatively high consumption of
consumer goods.
– The economy is import dependent.
• Threats
– Low income and high levels of poverty.
– A large pool of unskilled labour.
– High unemployment levels
– Poor infrastructure
– High levels of Inflation
– Weak and unstable currency
– Monetary instability
• Developed economies: At the other end are
advanced
or
developed
economies
characterized by the following features:
– A highly developed manufacturing and
service sector
– Exporters of manufactured and consumer
goods
– Suppliers of capital
– High per capita incomes
– Advanced infrastructure
In between are Industrializing
economies
Examples: South Africa, Egypt
Industrial
Features:
• Emerging manufacturing sector
• Growing export sector for manufactured goods
• Growing import sector – inputs of steel, raw materials,
and heavy machinery to sustain manufacturing
• A growing service sector to service the manufacturing
sector
• Rising middle class with wants for all sorts of goods, a
rich class which feeds and gives impetus to the
manufacturing sector
(c) Market size and growth rate
• Demand is a function of market size and the
market growth rate.
• In general, population size can be used to
estimate market size; however not all people
are economically active.
• a high population growth rate can be an
opportunity when it translates into a
potential and vibrant market.
• However, a high population growth rate
can be a threat if it places a strain on
resources and inhibits growth and
economic development.
(d)Distribution of income
• Income is a determinant of demand. However,
rarely is income evenly distributed.
• A viable market depends not only on
population size but also on people with
income and a willingness to spend income.
• In areas where there are variations in income,
market segmentation can be used as a guide
in exploiting economically viable sections of
the population.
– Urban versus rural areas
– Lusaka versus the rest of the country
(e) Nature of the economy
a) Physical
features
comprising
natural
endowments, such as, minerals, fertile land as
opposed to a desert, forests and timber
b) Climate can create opportunities; for example, in
the following instances:
 tourism,
 ice-cream business
 refrigeration, air conditioners,
 agriculture
c) Topography refers to surface features such as
land, rivers, mountains.
d) Infrastructure
in
transportation
and
communication
Illustrating capability
(a) A subsistence Farmer:
– A measure of success for a maize
subsistence farmer is to grow enough maize
to subsist on and earn income by selling any
surplus to the Food Reserve Agency (FRA).
– Assume that the subsistence farmer now
finds that the price at which FRA will buy
maize is rather low, prompting the farmer
to look for another buyer.
– Assume further that by scanning the external
environment, the subsistence farmer learns that
maize fetches a higher price in Congo.
– Possible strategy: Sell the maize to Congo (market
development).
• Capability of the farmer: The farmer will sell maize in
Congo only if he/she has the capability to sell the
maize in the Congo by way of:
– Transport to the Congo
– Language skills
– Financial resources
(b) A small-scale entrepreneur
• An entrepreneur makes home and office
furniture for sale from his stand at a public
market.
• An NGO approaches him to make furniture
for them worth K500000.
• Strategic Choice: Take advantage of the
opportunity and make the furniture for the
NGO.
• Strategic capability: To make the furniture for
the NGO the carpenter must have the
capability in the form of:
– Working capital
– Skill and knowledge
– Equipment
WHAT IS CAPABILITY?
• The capability of an organization is its
demonstrated or potential ability to
accomplish, in the face of opportunity or
threat, whatever it sets out to do.
• Strategic capability (strength/weakness)
involves:
– resources possessed by a firm
– competences of the firm
RESOURCE AUDIT
A resource audit seeks answers to two questions:
– What is the nature of the resource(s) available?
• For a subsistence farmer:
– finance/human resources,
– a truck,
– language skill
• For the carpenter:
– capital,
– machinery
– What is the inherent strength or weakness of these
resources?
• age,
• condition,
Types of Resources:
(a)Physical resources
–Plants/factory (street vendors?)
–Machinery/equipment
–Land
(b)Human resources
– number of people
– type of skills/adaptability of skills
• Human resource management is the
marshalling of personnel to ensure a firm has
the capability to accomplish its objectives.
– Recruitment: hiring people with the desired
capability
– Retrenchment:
doing
away
with
inadequate/obsolete capability.
(c)Financial resources
– Capability of a fiscal or economic nature:
– Capital
– Debt
– Managing cash
(d)Intangibles: Nontangible assets
– name
– reputation
– image
– network of distributors, suppliers or
customers
Distinctive Competences
• Competence is the ability to deploy resources in a
unique or special way to sustain excellent
performance.
• For instance, it is not enough to have cash;
financial acumen is also required in the manner
the cash is applied.
• Accordingly, the significance of distinctive
competence in strategy formulation rests on the
capability of an organization to capitalize on a
particular opportunity, and/or to overcome a
threat.
INDICATORS OF DISTINCTIVE COMPETENCE
(a) Quality – ability to produce goods of high quality
• Quality refers to the ability to match or exceed
expectations of a customer.
• Expectations from a product can be desired
attributes with respect to the following.
– design,
– features,
– performance,
– durability,
– reliability,
– style.
• A product is said to be of superior quality
when:
– customers perceive its attributes to be of
higher
utility
(value,
usefulness,
convenience, function) than those of rival
products,
– Customers perceive its utility to meet or
exceed their expectations
• For example:
A Mercedes Benz is perceived to be a car of high
quality
because
it
has
attributes(design,
performance, and reliability) which more than meet
the expectations of buyers and/or which customers
perceive to have superior attributes than of other
cars.
Thus, we can refer to a Mercedes Benz as a highquality product. Hence, the manufacturer of a
Mercedes Benz has competence in the
manufacturing of Mercedes Benz automobile.
(b) Innovation - ability to create new
products or processes.
• Product innovation is the development of
products that are new to the world or
have attributes which are new and
different to existing products.
• Process innovation refers to the
development of a new procedures of
producing products and/or delivering
them to customers.
• Innovativeness has also been portrayed from
a wider perspective as:
– The ability to offer customers superior
service
– The ability to deliver quality service
– The ability to undertake superior repairs
and maintenance
– The ability to offer warranties and
guarantees, or have a policy on returns
and/or refunds
Value added
This refers to the ability of a firm to create
benefits for a customer and to reduce costs to a
customer
• A business system can be perceived as a series
of activities
– which create and deliver benefits (value) to a
customer
– where a customer must be willing to pay for the
stream of benefits (price)
• Consumer surplus {V-P}: the difference
between the benefits to a customer {V} and
the price a customer pays for the benefits{P}.
• Value added refers to the ability of a firm to:
– Increase the benefits to a customer
– Reduce the price to a customer, or
– Both - increase benefits and reduce price to
a customer
• This can be amplified as follows:
– Value: A company creates value by
incurring a cost {C}to convert inputs into a
product on which customers place a value
{V}.
– Price{P} is the sacrifice Customers must
incur to enjoy benefits created by a
company.
– Consumer surplus {V-P} is the difference
between benefits to a customer {V} and the
sacrifice{P} made by a customer.
• A company can create more value for its
customers either by
– Increasing the benefits, that is, making the
product more attractive through superior
design, functionality, quality, etc. so that
consumers place a greater value on it and,
consequently, are willing to pay a high price
(V increases).
– lowering C,
– increasing V and Lowering C
(d) Efficiency – the ability to produce some
given output at less inputs(sacrifice)
• Efficiency is the ratio of inputs to outputs
E= Outputs
Inputs
• The more efficient a company is, the lower or
fewer its inputs produce a given output.
• The most important component of efficiency
for many companies is employee productivity,
which is usually measured by output per
employee.
• Economies of scale: Additionally, efficiency
can be attained at corporate level by striving
toward economies of scale, that is, higher
volumes with relatively less per unit cost.
– production,
– distribution
– advertising or
– sales promotion.
(e)Comparison with industry norms
• Another indicator of competence is the ability
to make or deliver something in a better way
than other industry participants.
• It is measured by a firm’s relative market
share(the competitive advantage of a firm
over its rivals).
Benchmarking
• A firm may set its own standard without
having to compare itself to competition by
defining its own expectations.
• A monopoly can set a benchmark by stating
what it considers desirable, such as, the
innovation/growth it wants to achieve.
• A competence is then the ability of a firm to
meet its own benchmark.
(e)Financial Analyses
• This involves an analysis of the company’s
financial condition.
Although analysing
financial statements can be quite complex, in
general a company’s financial position can be
determined using ratio analysis.
• Financial performance ratios can be calculated
from the balance sheet and income
statement. These ratios can be classified into
five different subgroups:
• Profit
– Gross profit
– Net profit
– Return on assets/shareholder equity
• Liquidity
– Current ratio
– Quick ratio
• Activity
– Inventory turnover
(i)Profit margin (GPM)
• Profit is a return from use of assets
– Gross Profit Margin: Sales Revenue – Cost
of Goods Sold/Sales Revenue
– Net profit margin: Net Income/Sales
Revenue
ii)Return on total assets
• Net income available to common
stockholders/Total assets
• Net income available to common
stockholders/Stockholders’ equity
(iii)Liquidity Ratios
• A company’s liquidity is a measure of its ability to meet
short-term obligations.
• An asset is deemed liquid if it can be readily converted
into cash.
• Liquid assets are current assets such as cash,
marketable securities, accounts receivable, and so on.
Current Ratio
=
Current Assets
Current Liabilities
Quick Ratio
=
Current Assets – Inventory
Current Liabilities
(iv) Activity Ratios
Activity ratios indicate how effectively a company is
managing its assets.
• Inventory Turnover
=
Cost of Goods Sold
Average Inventory
This measures the number of times inventory is
turned over. It is useful in determining whether a
firm is carrying excess stock in its inventory.
• Days sales outstanding (DSO), or average
collection period
This ratio is the average time a company
has to wait to receive its cash after
making a sale.
DSO =
Accounts Receivable
Total Sales/360
(v)Leverage Ratios
– A company is said to be highly leveraged if it uses
debt rather than equity, including stock and retained
earnings.
– This measures the extent to which borrowed funds
have been used
to
finance
a
company’s
investment
•
Debt-to-assets ratio = Total Debt
Total Assets
•
Debt-to-equity
= Total Debt/Total Equity
(vii)Cash Flow
• This is simply cash received minus cash
distributed.
• A positive cash flow occurs when cash inflow
exceeds cash outflow. This enables a company
to fund future investments without having to
borrow money from bankers or investors.
• A weak or negative cash flow means that a
company must turn to external sources to
fund future investments.
09032024
Product Portfolio Analysis (SWOT Analysis)
• A SWOT analysis is used to determine an
effective
strategy
by
merging
opportunity/threat on one hand with
strength/weakness.
• Product Portfolio Analysis, developed by the
Boston Consulting Group, is a form of SWOT
analysis.
• It can be applied to determine an effective
strategy by merging opportunity/threat with
capability (strength/weakness).
Product Portfolio Analysis
• External environment: rate of market growth (
high or low)
• Capability: relative market share (strong or
weak)
Possible scenarios:
A. High rate of market growth,
Large relative market share (STAR).
B. High rate of market growth,
Small relative market share (QUESTION
MARK).
C. Low rate of market growth,
Large relative market share (CASH
COW)
D. Low rate of market growth,
Small
relative
market share
(DOG).
Appropriate strategies:
• Star: GROWTH/INVESTMENT
• Question mark: CASH MOBILIZATION & THEN
GROW/INVEST
• Cash cow: MARKET DIVERSIFICATION
• Dog: EXIT/LIQUIDATION
Star
• This depicts a favourable external
environment (high market growth rate)
and a favourable internal position (high
market share).
• It reflects a company with an opportunity
and with a capability
• The company should use its strong
relative market share to exploit the state
of high market growth to grow or invest
Question mark/problem child
• This depicts a situation in which there are
opportunities for growth characterized by a
high market growth rate, but a firm is in weak
position because it does not have the capacity
• The company must target growth but first
seek gain a favourable market share.
Cash Cow
• This depicts a company that has capability – a
strong market share - but is faced with a
situation in market growth is low.
• The company is a market leader, it enjoys a
relative larger market share and higher profit
margins but must look for an opportunity to
use its resources. This can be achieved
through market diversification.
A Dog
• This is a situation in which company faces an
unfavourable state of market growth and is
additionally in a weak condition.
• An appropriate strategy is to quit the market
(voluntary liquidation).
EXERCISE
DERIVING STRATEGY FROM THE EXTERNAL ENVIRONMENT AND A
COMPANY’S CAPABILITY
Midlands Pork Products Limited is Zambia’s leading company in the
processing and sale of pork. However, the company has observed that
the demand for pork has been declining in the last two years. Its
marketing research unit has attributed the decline in the demand for
pork to two factors: First, a growing segment of the population in the
country that is converting to Islam, a faith that prohibits the
consumption of pork. Second, many Zambians who, for health reasons,
are becoming increasingly wary of consuming pork because it is
considered fattening.
Required:
Use the Product Portfolio Analysis to:
• Determine the opportunity or threat
• Determine the strength or weakness
• Recommend an appropriate strategy
PERSONAL VALUES AND ASPIRATIONS
OF SENIOR MANAGERS
Introduction
• We have thus far examined the significance of the
external environment and a firm’s capability in
the formulation of a strategy
• This section examines how strategy formulation is
influenced by the personal values and aspirations
of those charged with formulating strategy, that
is, shareholders, the Board of Directors, the Chief
Executive and the senior managers other than
the CEO.
WHAT ARE PERSONAL VALUES AND
ASPIRATIONS?
• In a paper titled ‘Personal Values and
Corporate Strategy’ published in the Harvard
Business Review, Sept-Oct 1965, Guth and
Tagiuri (1965) argued that strategy is also
influenced by personal values of those
responsible for the formulation of strategy.
• What are Personal values/aspirations?
Guth and Tagiuri defined personal values and
aspirations as the conceptualization of the
desirable.
Characteristics of a value
• A value may be explicit or implicit
• A value is acquired over time
• A value is formed early in life and is a result of
the interplay of :
– what the individual learns from those who
bring him/her up,
– the times and circumstances of his
upbringing and
– his individuality
• A value is distinctive or characteristic of the
individual or group
• Consider what is desirable between
the following:
 ZNCB and Standard Chartered Bank
 ZNBC and Prime Television, Radio
Ichengelo
 UNILUS and UNZA
• Strategic choice is a function of what is
desirable
Types of value orientations
• The theoretical orientation – characterized by
– curiosity or intellectual interest
– empirical, critical, and rational approach to
issues.
• The economic orientation – characterized by
– a materialistic approach to practical affairs,
such as interest in the creation and use of
wealth,
– production and consumption
• The
aesthetic
orientation
–
characterized by
• what is in good/bad taste, or
beautiful,
• interest in works of art, design of
objects, or
• symmetry, order or harmony.
• The social orientation – characterized by
– love for and concern for the welfare of people,
– warmth of human relationships.
• The political orientation – characterized by
– love for power,
– Desire to influence and be recognized.
• The religious orientation – characterized by
– fascination with mystery, and interest in the
supernatural,
– Interest in moral and ethical issues.
STAKEHOLDERS AND THEIR VALUE
ORIENTATIONS
Shareholders
• Shareholders and strategic partners are
individuals who have an equity interest in
the firm.
–Shareholder own a firm
–Strategic partners provide
critical
resources/competences
• Their value orientation is economic,
based on a desire for an economic return
on their investment.
b)The Board of Directors
• Members
of
the
Board
are
representatives of shareholders/ strategic
partners e.g. Banks that might have
loaned funds to a firm.
• Their interest is derived from that of their
principals; that is, their value orientation
parallels that of their principals
• They are
the policy making and
governing body of a firm; it is at the
board level, that strategic decisions are
presented, discussed, and approved.
c) The Chief Executive Officer (CEO)
• The CEO is responsible for the day-to-day
running of the firm.
• He/she is accountable to the Board for the
success of the organization.
• As such, he/she is expected to initiate,
defend and implement strategy.
• He/she is the chief strategist and guides the
Board in the selection, evaluation and
implementation of strategy.
• He/she has the greatest latitude in the
choice of strategy subject to approval by the
board.
(d) Senior (Top) Management
• These are the functional managers who directly
assist the CEO in initiating and implementation
of strategy.
• They are the embodiment of the expertise,
knowledge and capability necessary in the
search, analysis, selection and implementation
of strategy.
• Their power and influence derives from their
functional professionalism
OBLIGATION TO SOCIETY
(CORPORATE SOCIAL RESPONSIBILITY)
WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
Corporate Social Responsibility is the intelligent and
objective concern by a firm for the welfare of society.
This concern has two aspects:
– Using profit to address issues of concern to
society
– Restraint from behaviour and activities that are
harmful to society, no matter how profitable such
behaviour or activities might be.
• CSR is a gesture of philanthropy/charity for
the community in which a firm operates. A
firm uses its economic power to uplift society.
• CSR is mot intended to generate profit for a
firm. On the contrary, CSR involves
– the profit gained from a good strategy to
address the concerns of society
– giving up profit if a strategy is harmful to
society
• Notable areas of CSR in Zambia:
– Zambia Consolidated Copper Mines
• Sport
• Recreation facilities
• Schools
– CEC
• Road construction
– Shoprite
• Donations
The areas of concern
–Exploiting
a
country’s
resources versus contributing
to
the
industrialization/development
of a country.
– Sharing
ownership
(joint
ownership) versus insisting on
sole ownership
– In a joint venture, sharing
profits
in
terms
not
proportionate to the actual
contribution of the other
partner
–Training nationals for skilled
jobs so that they develop
their country
–Meeting material and
social needs of society.
– Cooperation in matters
of taxes, bribery or
corruption.
–Assistance toward occasional
disasters such as floods,
earthquakes, drought
–Mitigation/alleviating
negative
environmental
consequences
of
manufacturing processes
–Alleviating and control of harm to
the environment arising from
disposable products.
• Disposable bottles
• Plastic bags
• Packages
–Promotion of underprivileged
groups.
• Employment – empowering
through offer of employment
• Providing material assistance
–Avoiding
investments
which
disrupt existing cultures and
traditions of a community
• Development of commercial
farms in land occupied by
villagers
• Development of Industrial plants
which displace settlements
–The offer of needed social
amenities to the community
•Schools
•Clinics
•Sport
–Contribution
toward
the
welfare of employees
•Leave to undertake unrelated
activities, e.g., church work
•Investments in recreational
facilities
–Construction and/ or maintenance
of infrastructure for the immediate
benefit to society
• road
• schools
• health facilities
–Offer of employment opportunities
to the local community
–The freedom afforded to the
individual employee to participate
in social causes beyond the
corporate effort.
• Church
• Community programs
• Sports
• Service in Government
Relationship between CSR and Strategy
• Business Strategy guides a company to
greater profitability/success
–The primary concern of strategy is
therefore economic success.
• CSR is concerned with advancing the
welfare of society.
–The primary concern of CSR is social
success.
• Are these concerns diametrically
opposed or complementary?
• Reconciling strategy and CSR:
– CSR (Contribution to the welfare of society)
depends on an effective strategy which
generates the profit which is used to
advance the welfare of society.
– An effective strategy also means that a firm
must forego profit when the pursuit of a
strategy is harmful to society
– CSR depends on an effective strategy
– The implication is that the pursuit of
strategy must be in public interest .
THE CASE AGAINST CORPORATE SOCIAL RESPONSIBILITY: THE
ECONOMIC ISOLATIONIST VIEWPOINT
a) CSR undermines the primary purpose of business
• The primary purpose of a business is economic, that is,
to generate and maximize revenue.
• CSR is at variance with the economic objective of a
firm because it involves
•
•
•
(a) using profit generated from an effective strategy to
address social concerns
(b) forfeiting profit when the pursuit of a strategy harms
the public
CSR is thus a deviation from the economic principle
and is therefore self-defeating and can lead to
economic inefficiency.
b) The pursuit of profit may in some
instances also benefit society:
o Adam Smith in his famed book, Wealth of
Nations, argued that under perfect
competition, as characterized by atomized
markets, entrepreneurs seek and achieve
self interest by working in the best interest
of the public.
o Firms can achieve profit for themselves
only if they satisfy needs of customers.
o Pursuit of self interest by a firm necessarily
implies that a firm will satisfy customers.
– In a famous quote, Adam Smith asserted that:
‘It is not from the benevolence of the butcher, the
brewer, or the baker that we expect our dinner,
but from their regard for their own interest’
• Society can have dinner only if the butcher, the
brewer or the baker make profit from providing
dinner
• Adam Smith argued that the entrepreneur generally
neither intends to promote the public interest, nor
does he know how much he is promoting it. He
intends only to secure his own gain. And he is in this
led by an invisible hand to promote an end which
was no part of his intention.
Source Paul Samuelson, in Economics p.41, McGrawHill, 10th edition)
• The counter argument to Adam Smith’s
proposition is that perfect competition does
not exist in its pure idealized form as
envisaged by Smith:
• What obtains is imperfect competition
characterized by few large suppliers who
control markets, and the buyers have
incomplete knowledge resulting in a seller’s
market.
(c) The undesirable social consequences of
business activity should be left to
government to regulate or correct.
(d) Business should, however, live up to its
legal obligations, such as
• paying taxes or bills,
• keeping honest expense accounts and
• labelling and weighing its products
accurately.
Other arguments against CSR
(a) Theodore Levitt & Reavis Cox argued that:
– The only responsibility of business is to make
profit.
– The need to make profit in the present is so
great and pressing that public service takes a
secondary role to self-interest.
– If firms harm the public as they pursue profit,
it is government’s role and responsibility to
check abuse, and prescribe rules that protect
public interest.
(b)Milton Friedman (in Capitalism and Freedom)
argued that:
– In a free society, business should have the
freedom to make choices that generate profit,
CSR is an obligation on business to be
concerned with the welfare of society. Thus,
the one and only responsibility of business is
to use its resources and engage in activities
designed to increase its profits, so long as it
stays within the rules of the game.
– Direct intervention or the doctrine of social
responsibility is therefore “fundamentally
subversive” in a free society.
THE CASE FOR INVOLVEMENT IN CORPORATE
RESPONSIBILITY: THE Social Interventionist:
(i)Inadequacy of government regulation
In response to the argument from the
economic isolationists that the undesirable
consequences of business should be left to
Government to regulate, the social
interventionists
concede
that,
yes,
Government regulation is indeed called for
particularly in cases of grossly improper and
dishonest behaviour;
However, so it is argued, government
regulation is not an effective instrument for
reconciling private and public interests, nor
an effective substitute for self-restraint
because government regulation is
Not specific: Laws are invariably not
specific enough as they may have
loopholes;
Not knowledgeable: Laws do not cover
every single case of abuse
Not timely: Laws come after the abuse and
are never enacted on time
(ii)Wanton irresponsibility
• It is considered unethical and irresponsible
to deliberately and knowingly engage in
activities that are harmful to the public just
because of profit.
• The public constantly expects and demands
that businesses behave not only legally but
within visible regard for the rights of
competitors, customers and the public.
(iii)Government lacks capability to address the
multitude of social concerns
• Governments, especially of developing
nations, do not have the sufficient capacity to
solve the vast and diverse array of social and
economic problems which beset society.
• On the other hand, companies may have the
capability to deal with social problems which
plague a society.
• Companies can assist the government in
resolving problems that affect a community
(iv)The trend toward care for the less fortunate
– There is a trend among nations world over for
concern for the less fortunate. For instance
• Rich nations are helping poor nations
through various aid programs.
• Individuals do extend a helping hand to
help each other.
– It is not asking too much to expect executives
of modern corporations not to confine
themselves to the pursuit of narrow economic
interest and to ignore social programs of
communities and societies in which they make
profit.
(v)Cooperation rather than confrontation
– When problems of society are left unattended
for too long, tension and unrest can arise out
of desperation.
– The voluntary participation in working
towards a common good is preferable to a
standoff between the public and government
on one hand and business on the other hand.
– It is prudent to prevent public hostility by
dealing with problems affecting society
through research and education than through
confrontation.
In short, there are three reasons why a
business should examine the impact of
showing concern for the public:
• professional concern for legality,
fairness
and
decency;
and
professional contempt for returns
improperly or unfairly secured;
• humane concern for society in the event
of
suffering
particularly
when
corporations have the capability to
mitigate suffering
• Regulation is inevitable when business is
perceived to be unresponsive matters of
public concern.
SUMMARY
I. The concept and significance of strategy
– Nature and strategic choices
– Significance: guide to more profit/success
– Strategic management as a function of a
leader
II. Formulation of strategy
– Strategy and the external environment
– Strategic choice and capability of a firm
– Influence of management orientation
– Strategy and Obligations to Society
III. Implementation of strategy
The TEST
• The test =f(content and expression)
– Avoid verbose and speculation
– Write in full sentences; avoid answering in point
form
– Substantiate an opinion
– Observe grammar and good construction
• Type or write legibly
• Take time to read through paper.
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IMPLEMENTATION OF STRATEGY
Introduction
• Once a strategy has been formulated, it must
be implemented.
• Implementation of Strategy means performing
activities that will lead to the realization or the
achievement of results.
• Note that Implementation is not a discrete
process; implementation can also take place
during strategy formulation.
Elements of Strategy Implementation
1. An Organizational structure
2. Systems for influencing performance
3. Organizational politics
4. Organizational culture
5. Management development
6. Leadership
Organizational structure
At the end of the topic, you should be able to
answer the following questions:
I. Explain how an organizational structure
facilitates the implementation of strategy.
II. XYZ Ltd Has decided to pursue a market
development strategy by extending its
operations to the Copperbelt. Justify the
significance of an organizational structure in
such an undertaking.
Nature and significance
organizational structure
of
an
• An organizational structure is a mechanism for
achieving success: it refers to the way people
and tasks are arranged to facilitate the
accomplishment of purpose.
• It involves the management of people so that
they work toward the accomplishment of an
objective.
Illustration of the influence of Organization structure
in the achievement of results
(a) A social function
• Purpose of function: Entertainment
• People and tasks: What must be done and by
whom
– Planning of the function by host/hostess
– Announcing the sequence of events by
master
– Making seating arrangements by host
– Opening Prayer by a pastor
– Making a speech by Guest Speaker
– Preparation/Purchase of Food by a cook/
caterer
– Procuring drinks by the host
– Serving
of
food/drinks
by
waitresses/waiters
– Providing music by a band/DJ
– Cleaning up by cleaners
– Superintending/coordinating
of
the
function by the host
– The success or failure of the function will be
attributed to the way the function was
organized:
• Were quests entertained?
• Were requisite tasks identified and carried
out in full and in a timely manner?
• Were the requisite tasks assigned to people?
• Was the performance of tasks monitored?
– Success of the function will be attributed to
good organization and failure of the function
will be attributed to poor organization.
(b) The offer of education by UNILUS
• PURPOSE: To disseminate knowledge
• ORGANIZATION
- Design of courses.
- Determination of support services
- Administration
- VC, Registrar, Accountant etc
- Library
- Recruitment of people and assigning
them to schools and units.
• All these tasks are carried out in a
systematic manner in furtherance of the
delivery of education
(c) A mob
• A collection of people who champion
some cause
• The tasks are defined by the acts of the
mob
• Purpose is to create awareness of the
issue of concern
• Success is the resultant sensitization or
action
(d) A political party
• Purpose: to win power to rule
• Organization – structure of the party
– People: members or sympathisers
– Tasks: program of action as reflected
in the party manifesto
– People and tasks are managed
systemmatically
Designing an organizational structure
1. Determine a company’s distinctive
purpose/strategy
– Implementation begins by understanding
purpose (strategy).
– Effective
implementation
depends
on
understanding purpose. Whatever is to be
undertaken must be for a purpose.
– It is therefore important to define and
understand the strategy which necessitates
the coalescence of people and the tasks that
are carried out.
2. Identify tasks to be performed
• Once the strategy or purpose is clearly defined
and understood, the required tasks to
accomplish the objective must be identified
• All work is done for a purpose. It is necessary
to define work that is associated with a
strategy.
• A change of strategy implies a review of the
tasks:
Will new or additional tasks be called for?
Will old tasks be deleted or retrenched
from current portfolio?
Will personnel have to be retrained?
3. Assign tasks to individuals or groups
– Once the appropriate tasks are identified, the
tasks must be assigned to individual or groups to
carry out.
– A founder is initially responsible for performing
the tasks required to achieve the purpose of an
organization.
– However, as an organization grows, tasks grow
and become more complex, necessitating the
recruitment of more people into the
organization.
Ways of assigning tasks:
(i) Functional organizational structure
 In this format, people are assigned to
functions to be performed.
 For example, in a typical manufacturing
firm, people are assigned to the basic
functions of production, marketing and
finance.
 In a trading firm, people are assigned to
the functions of buying, storage, accounts
and selling.
(ii) Product Organizational Structure
• In this type of organization, people are assigned
to a product to be produced/marketed.
• An example of a product structure might be at a
farm where a variety of products is expected to
be produced, such as:
– poultry
– crop
– dairy products
– fruits
• People and tasks are assigned to products.
• Note that functions are product based
(iii)Customer/Market/Geographic Organizational
structure
• In this structure people are assigned to customer,
market or region to be served.
• For example, in a bank:
– the branch network reflects a geographic
organizational structure
– retail and corporate banking reflects a
customer organizational structure
• Tasks are driven by the need to satisfying a
market or territory
• This kind of structure is common in the service
industries, or in competitive situations.
• N.B. Formats of organizational structures are
not discreet; rather it is common to see a mix
of organizational structures, albeit one
structure may be dominant
• What organizational structure characterises
the following:
– The University of Lusaka?
– Commercial banks?
– Shoprite?
4.Providing for coordination of inherent
divided responsibility
• Assigning work to individuals or groups
implies divided responsibility:
– Functional organizational structure
– Product organizational structure
– Market customer or geographical
organizational structure
• Coordination of divided responsibility is
necessary to ensure unity of purpose.
Ways of achieving coordination:
(a)Supervision and control
Supervision ensures conformity to a
common purpose and, in the event of
deviation from a common goal the
supervisor brings into line the erring
unit or individual(s).
A
primary
responsibility
of
Supervisors, the CEO and HODs is to
manage any undesired variance.
For example, a Chief Executive Officer, such
as Managing Director, General Manager or
Executive
Director,
coordinates
the
functions of the managers who directly
report to him, such as,
finance,
manufacturing and marketing.
 In turn, each of the functional managers
coordinates the sub activities falling under
them.
(b) Committees
Committees provide an opportunity for people
who do different tasks to get together and agree
on an approach to achieve an organizational
objective.
 A planning committee - draws membership
from a cross-section of stakeholders to work
on a common direction.
A management committee – comprises
membership of different managers who come
and work together to work in the interest of
unity of purpose
• (c) Project approach
Coordination may also be accomplished
when various people are brought together
to work on a specific task(project).
 A project pools together various people
and skills to accomplish a defined objective,
such as, the introduction of a new product .
5.Designing of an Information System
Lack
of,
or
a
breakdown
in,
communication
can
inhibit
the
achievement of success.
Communication is intended to provide
members with information needed to
perform their respective tasks and create
synergy with the work of others.
 Communication
facilitates
the
implementation of
strategy in he
following ways:
• To create Awareness
–Understanding of one’s own work and
that of others
–Factors that impact on performance
• Progress information
– monitors progress by comparing actual
performance to desired performance.
• Red-flag information
– alerts an organization to threats to the
achievement of success.
RELATED CONCEPTS
• The rationale for any organization is
to facilitate the achievement of
success.
• To this end, the following should be
taken into account in designing an
organizational structure:
I. Flexibility
– A structure should be flexible and responsive
to any changes in strategy, particularly with
respect to:
 (i) emerging opportunities or threats
 (ii) capabilities of a firm
– An organizational structure must facilitate
strategy in the achievement of success.
Structure follows strategy and not the other
way. A structure should be designed with a
strategy in mind.
II. Customization
 There is no structure which will be suitable
for every strategy. That is, there is no
typical
or
universal
organizational
structure.
 An organizational structure must be
customized to the features or peculiarities
of a strategy.
 Wholesale adoption of a structure from
elsewhere in not appropriate.
III. Height and Width of structure
• The height and width of a structure must be
aligned to a strategy because these features
have a bearing on performance.
– The height of a structures refers to the
number of hierarchical levels between
the top and bottom (tall structure),
– The width of a structure refers to the
span of control (flat structure)
– Tall structures tend to have narrower
spans of control and flat structures
tend to have wider spans of control
Implication on performance
(i) A tall structure and Performance:
• The advantage of a tall structure
– it allows for easier control because of the
narrower span of control.
• Disadvantages of a tall structure
– The many levels or ranks can result in a long
hierarchical and psychological distance
between top and bottom, which could impair
performance.
– Another shortcoming of a tall structure is
that decision making processes become,
tortuous, long-winded and ultimately
ineffective.
(ii) A Flat structure and Performance
• Advantage: decision making is likely to be faster
because of the relatively short distance between
a subordinate and a superior.
• Disadvantage: can be problematic when the span
of control means a supervisor having to look after
more subordinates.
III. Centralization vs. decentralization
• This refers to the location of authority and
control between the top (boss-driven) and at
the lower/operational level (subordinatedriven).
– Centralisation is when decision - making or
authority is at the top (boss-driven) and
– Decentralization is when decision - making or
authority is at lower levels ( subordinates-driven).
– The tighter the control exercised at the top, the
greater the degree of centralization.
• Centralization and Performance
– Centralization facilitates control and allows top
managers to remain fully aware of performance at
operational level.
– On the other hand, centralization may stifle
individual initiative and motivation
• Decentralization and Performance:
– Decentralization allows for easier and faster
response to local conditions and impoves the quality
of performance
– Decentralisation enables speedier and timely
decisions-making and
– Decentralization gives subordinates greater
motivation and morale.
Shortcomings of decentralization
– Coordination of performance is relatively
more difficult to accomplish
SYSTEMS FOR INFLUENCING PERFORMANCE
• The last discussion dealt with how organizational
structure influences the implementation of strategy.
It dealt with the following:
– Specifying purpose/strategy
– Identifying work which must be performed
– Assigning work to individuals/groups
– Providing Coordination work to minimize
incidences of variance.
– Designing an appropriate communication system
• Effective implementation of strategy
also depends on systems that
influence performance.
• Systems for influencing performance
are positive and constructive in two
ways:
–By encouraging behaviour which
advances strategy (positive) or
–By discouraging behaviour which
does not advance strategy.
• The focus will be on positive systems –
systems that influence behaviour which
advances strategy, although both systems
can be applied simultaneously.
• The positive systems of influence will be
restricted to the following:
–Basic pay
–Monetary incentives and
–Nonmonetary incentives
I. Basic pay
– Basic pay is a commonly used system of
influencing
performance (or the
implementing strategy).
– Remuneration can be either in the form of
rewards for satisfactory performance or
incentives to elicit satisfactory performance.
• Incentives are administered before
performance and
• Rewards are given after satisfactory
performance.
• Basic pay is a form of reward.
The Challenge
• Generally, basic pay influences performance.
However, there are instances where basic pay
fails to motivate workers as attested by the cliché
known as greener pastures and the existence of
unionism.
• The way in which basic pay is designed and
administered has a bearing on retention and
motivation.
• It is therefore necessary to work towards making
basic pay more effective in influencing
performance.
Guidelines to making Basic Pay more
effective
(a) Align pay to the characteristics of the
work to be carried out:
–Nature
and
intensity
of
competition
– Familiarity
to
work
circumstance
– Work demands and requisite
skills (competence)
(b) Nature and number of decisions to
be made
• Routine versus nonroutine
• Number of decisions
(c) The responsibility of the jobincumbent for people and property
(d) The risks associated with the job
• The pressure for achieving
results
(e)Quality of performance
Individual exceptional performance should be
recognized and rewarded differently from
average performance.
• Is individual an exceptional
performer
or
an
average
performer?
• How critical to success is
individual performance?
(f) Logical relationship of individual basic pay to
what is paid to others.
– The gap in basic pay between a CEO and
others in the same organization
– The gap between what is paid to one
category of employees and what is paid to
others in the same organization
– The gap between what is paid to employees
and what is paid in other organizations
(d) The relevance of the following in determining
pay:
– Age?: Equal pay regardless of age
• People must be paid according to their productivity
• Stereotyping works may hide individual
effort/talents
• Older people may have hidden talents like maturity
which go unrecognized and unrewarded
• Advisable to segment workers by desired attributes
– Length of service: Pay aligned to experience
• Pay must be based on value added and not
longevity per se.
• Beyond a point, longevity becomes redundant
– Potential: Reluctance to pay for skills which are
not yet developed
• Competence NOW is preferred to competence in
future, hence employers’ reluctance to base pay on
capability that is not in evidence in the present.
• Investing in potential will payoff in the long run.
Some skills develop over time; in the case of formal
education, it may provide an individual with the
capability to learn more quickly and broaden one’s
approach to issues
– Material needs: The desire to satisfy needs
is the principal motivating factor in seeking
employment and the determinant of
satisfaction with pay
• An important criterion of the effectiveness of
pay in influencing performance is the extent to
which basic pay meets the material needs of an
employee
• The challenge for an employer is to match pay
to the needs of an individual.
30032024/06042024
Elements of Strategy Implementation
1. An Organizational structure
2. Systems for influencing performance
3. Organizational politics
4. Organizational culture
5. Management development
6. Leadership
REVIEW
• Implementation of strategy
• Organizational structure
• Systems of influencing performance
– Basic pay: Making basic pay more effective in
influencing performance
• Aligning pay to
– the nature of the job
– Routine vs. nonroutine
• Aligning pay to:
– Risks
– Responsibilities
– Quality of individual performance
– Logical relationship between differences in pay
• Other factors
– Age
– Experience
– Potential
(e) External factors:
– regional difference in the cost of living to
individuals
• The cost of living reduces remuneration
among individuals
• Employer can attempt to normalize
differences in pay
– regional hardships to individual and his
family
• Regional hardships(availability of
education and health facilities)
• Some form of hardship allowance can be
given to cushion the hardship
–market price of qualification
• May force company to be
competitive to avoid exodus to rival
employers
–Level of local taxation.
• A company may consider grossing up
what it pays to employee
ALLOWANCES
(A) MONETARY INCENTIVES
• These are intended to compensate a worker
for any hardship encountered in the course of
work.
–Housing allowance, Transport allowance,
–Medical or Education allowance
–Entertainment allowance.
• Evaluation: do they serve their intended
purpose?
• Other Monetary incentives:
–profit sharing
–stock options
–executive bonuses
–pension schemes
–savings plans
(B) NON-MONETARY INCENTIVES
– satisfaction derived from doing work
– pride in doing the work
– sense of accomplishment
– friendly and honest associates
– climate for free expression and innovation
– good/pleasant physical environment
• Availability of parking
• Office
– location, size, comfort, type of
furnishings
• Protective wear
ORGANIZATIONAL POLITICS
Introduction
–The meaning of organizational
politics
–Types of political games
–Functional and dysfunctional roles
of organizational politics.
What is Organizational politics?
• Organizational
politics
refers
behaviour which is NOT legitimate.
to
• Bases of legitimacy: Behaviour/Performance is
considered legitimate when it is based on the
following:
– Authority: when it is officially sanctioned by
law or formal authority
– Ideology: when it is based on a widely held
belief, practice or tradition, that is, it is the
accepted way of doing things.
– Expertise: it is officially certified, that is, when
it is performed by someone certified as
competent to carry out the task
What then is meant by organizational
Politics?
Organizational politics refers to behaviour
which is illegitimate, that is,
• it is not authorised,
• it is not the accepted way of behaving
or
• it is not certified
TYPES OF POLITICAL GAMES
(a) Insurgency Game
• It is played by resisting the established
authority, ideology or expertise, by seeking
to effect change outside the established
procedure.
• It can range from a “protest” to an open
rebellion/insurrection
• It is usually played by “lower participants”
who are supposed to be subservient to
formal higher authority
(b) Counterinsurgency Game
• This game is played by those with legitimate
power who fight insurgency with illegitimate
means against.
• It is manifested by abuse of official authority
in dealing with instances of insurgency, such
as excessive or illegitimate use of power
• It is attested, for example, when
subordinates refuse to disclose their identity
for fear of reprisals from their superiors
when they comments about their
superior/work situation
(c)Sponsorship Game
• This game is played by subordinates to build
a power base by invoking a superior in vain
• It involves an individual attaching self to
someone with legitimate power, in
authority, or of higher status, by holding out
that their behaviour has the support of their
superior when this is not so.
• It is played by, for example,
special
assistants to CEO or family members in a
family-owned company.
(d) Alliance-building Game
• This is played among peers, such as
general workers or even line managers
• It is played by a group to build a power
base to advance partisan interests at the
expense of the organization
• This can be done by negotiating contracts
of support for each other to enhance selfinterest, e.g., the behaviour of workers’
unions
(e) Empire-building Game
• This game is played by the CEO or
departmental superiors on select
subordinates to elicit personal loyalty.
• The aim is to make the subordinates
place the interests of a superior before
those of the organization.
• This may occur because of the promise of
special favours given to the subordinates.
(f)Expertise Game
• This game involves non-sanctioned use
of expertise to build a power base by
–exploiting one’s technical skills and
knowledge,
–emphasizing one’s expertise, uniqueness,
criticality or irreplaceability.
• It is strengthened by keeping one’s skills
from being programmed or by keeping
knowledge to self.
(g) Line versus Staff Game
• This is a sibling- like rivalry
• It is aimed at showing that one is
more important to the organization
than the other.
• It is characterized by rivalry between:
–line managers and advisors
–core workers versus support staff
–technical staff and non-technical
staff
(h) Rival Camps Game
• This is played by those in different
departments and is intended to merely
defeat a rival
• It occurs when one personality or
department wishes to exert power over
another person or department
• It will result in two power blocks that do
not see eye to eye instead of cooperating for
the good of the organization
–e.g. Professional clashes say between a
Finance Manager and a Production
Manager who want the best for the
organization
(i) Whistle-blowing Game
• It is played by an insider, usually a lower
participant, to seek change by “blowing the
whistle” on an insider – usually a superior about what a subordinate perceives to be
questionable or illegal behaviour
• The questionable or illegal behaviour is
reported to an influential outsider in order
to force change on the organization
• The seeking of ‘external’ intervention is
resisted by insider (s)
• For example, when superiors act in an
improper or dishonest manner, a
subordinate may report such transgressions
to an influential outsider in order to seek
change for the good of an organization.
• However, reporting to an outsider may not
be well received internally and the whistle –
blower may find himself being victimized.
[The Government of Zambia has enacted a
law to protect a whistle-blower against
possible victimization].
(j) Young Turks Game
• It is played by a small group of
“youngish” people in the organization
who are close to power but not at the
centre of power.
• It involves questioning or even
challenging in a subtle way those who
have legitimate power, with a view of
changing the direction of an organization.
Functional and dysfunctional politics
Organizational
behaviour
is
considered
destructive or dysfunctional when
• it is divisive, costly and burns up energies that
could be channelled into collective and
cooperative effort
• it results in organizational paralysis, that is,
when performance comes to a standstill
Organizational politics is considered
constructive or functional when:
• It corrects certain deficiencies in an
organization’s legitimate systems of influence
which impair organizational performance.
• It brings about progress even though it may
bring conflict with those interested in
maintaining the status quo.
– For example, when politics involves
introducing change which is progressive.
• When it enhances flexibility as opposed to rigidity
which is implied by bases of legitimacy:
Legitimate systems of influence at times can kill
the spirit of debate by requiring adherence to the
status quo:
– the system of authority defers open discussion
to a central hierarchy, and this is often
favoured by those in authority;
– the system of ideology means deferring to
tradition or the accepted way of doing things
– the system of expertise gives deference to the
expert or to experience
• When It ultimately enhances motivation and
leads to improved cooperation and better
performance:
– It can allow the pessimist to be better
informed, and once persuaded, can then
ALL to work together for the good of the
organization. People who agree to
everything undermine an organization by
failing to point out what may stand in the
way of progress
13042024
Feedback on Assignment and Test
1. CAs have been posted to student portal
2. Missing Cas should be brought to the
attention of the lecturer immediately
3. Answer = f(Content, Expression)
1. Content
i. Understand the thrust and direction of the
question:
• Describe
• Explain
• Discuss
• Critique
• Compare & contrast
• Evaluate
Assignment
1. What is the significance of a company’s external
environment to its strategy?
• Strategy – guide a firm to success/greater
profitability
• Relationship of the external environment to
strategy.
 The external environment harbors opportunities
and threats to success
 Strategy is about exploiting opportunities and
overcoming threats. Success will be attained by
exploiting opportunities and by overcoming
threats to success
2. Describe the strategies Naboni deployed or
should have deployed in response to
developments that transpired in its external
environment
• Identify external developments and
• Describe the strategic responses to the
developments.
–Liberalization: Response - establishment of
company
–Responses to the Boom and decline of
copper industry
ii. Matters of expression/construction
– Write in full sentences. Avoid using phrases
or presenting answers in point form.
– Number your answers in line with
numbering of questions.
– Express yourself grammatically
– Edit your work
The implementation of strategy
– Structure of the organization
– Systems of influencing performance
– Organizational politics
– The culture of the organization
– Management development
– Leadership
ORGANIZATIONAL CULTURE
Learning outcomes:
1. Understand the nature of an
organizational culture
2. Understand how an organizational
culture influences the implementation
of strategy
What is an organizational culture?
An organizational culture is a system of
man-made behavioural traits to which
members of a society subscribe and which
influences their decisions.
Key terms:
• Key terms:
– A man-made behavioural trait
• A behavioural trait refers to a particular characteristic
that induces a specific behaviour. This is an ideology or
a strategy.
• The trait is man-made; it is not genetic
– To which members of a society subscribe
• Members of an organization are loyal to it
– Which influences their decisions
• The ideology influences the behaviour of members
• Examples of the influence of culture in
organizations
– A political party:
• Man-made
behavioral
trait
is
the
ideology/manifesto of the party
• Members of the party are supposed to
subscribe to the party’s ideology
• The manifesto of the party influences the
behavior/action of party followers
• Example: behaviour of a cadre
– A church:
• Ideology is reflected in the doctrine of the
church
• The doctrine is a set of man-made guidelines to
Members of how they should conduct their
lives.
• The church through its doctrine influences the
behaviour of its followers
• Example: The behavior of Christians, Moslems,
etc is supposed to be in line with the doctrine
of their church.
– A tribe
• A tribe is a grouping of people who
subscribe to a specific tradition or way of life
• A tradition is a creation of man and
distinguishes a group from another
(Language is a distinguishing feature
between cultures)
• Tradition prescribes a way of life.
• Tradition creates a sense of belonging
• Examples: When people follow tradition,
they allow tradition to influence their
actions.
The elements of organizational culture
1. The existence of an ideology fashioned by man
2. Those attracted to the ideology coalesce and
group around the ideology.
3. The attraction to an ideology creates loyalty and
commitment to an ideology.
4. The
loyalty
and
commitment
means
subordinating oneself to the ideology; reflecting
the influence of an ideology on behaviour.
• Andrews (1971) has argued that:
– a group is rooted in an ideology; it is an
ideology that brings people together
– as a working system, a group is said to have
a ‘mood, atmosphere or chemistry which
induces effort over and above the ordinary.
– The influence of the mood, atmosphere or
chemistry on performance is such that group
performance elicits more effort than could
be obtained from an individual (2 + 2 =
5).
The development of culture
Stage 1: An ideology determines a sense of mission
• The root of organizational culture is an ideology
• An ideology is a mission - what the organization
seeks to achieve over the long term
• A mission is identified at the time when an
individual or prime mover
establishes an
organization, or when an individual comes to an
organization.
• A founder or prime mover then collects a group
around him or her to accomplish that mission.
• The individuals who come together do not do so
at random but coalesce because they share the
ideology associated with the prime mover and
the fledgling organization.
• When people come together in this fashion, they
can be said to share a common sense of purpose
• Examples:
– An entrepreneur's sense enterprise is the basis of a
business organization.
– A political party: the organization is made up of
followers of a founder
– A church: membership comprises followers of a
founder
Stage 2: Development of tradition from ideology
• An ideology is the basis of the decisions a firm
makes and actions a firm takes in furtherance of
its stated mission.
– This applies to instances when a new organization
establishes itself, or as an existing one moves along
under an ideology.
– The decisions made and the actions taken serve as
commitment to its mission and establish a precedent
• When these decisions and actions are repeated
over time, they lead to reinforced behaviour
• Reinforced behaviour in turn translates itself into
tradition - a way of doing things which members
share
• Tradition means the organization transcends
the individual and becomes a self, distinctive
personality or identity
• This distinctive personality captures the
allegiance and commitment of members of
the organization.
• Allegiance and commitment have a bearing on
Performance.
Stage 3: Reinforcement of ideology through
identifications
• At this stage, the organization is a living
system with its own culture.
• Membership or identification with the
organization becomes cardinal.
• This process of identification elicits loyalty to
the organization and implies the following:
– For New members:
• New members find the culture attractive
and rich and want to be identified with the
organization.
• New members may be subjected to a
selection process, to see whether they “fit
in” with the existing beliefs. This is the
process of socialization and indoctrination
• New members may try to prove their loyalty
by outperforming
– For existing members:
• Advancement to higher positions is made
on the basis of strength of loyalty to the
beliefs and values of the organization.
• Identification may also be evoked
through the use of socialization and
indoctrination to reinforce natural or
selected commitment to the system of
beliefs.
MANAGEMENT DEVELOPMENT
• Management
development
is
the
resharpening of old skills/competences to
make them appropriate for the challenges of
the day.
• Management is a recognition that skills and
competences may overtime become stale and
there is therefore need to sharpen them in
order to achieve the performance of old.
• Rationale of Management Development
– The quality or standard of performance will
over time decline because demands of the
organization will grow, and the skills needed
will fall short of delivering needed results.
– Underperformance can arise because
individual skills are outgrown by the
dynamics of the organizations, necessitating
that old skills be re-sharpened or new skills
be acquired by an individual.
Critique of manpower development:
1. People are born with business acumen/skills.
• Some men and women are born with qualities
of energy, shrewdness of judgement, ambition
and capacity for responsibility.
• It is argued, for instance, that this explains
why some people of humble education can
become quite successful at business, or why
certain ethnic groups – such as Jews, Asians,
and West Africans – seem to have a natural
flair for business.
Rejoinder
Yes, some people are, of course, born
with different innate characteristics:
– This can manifest in the early stages
of business. However, over time it is
necessary to acquire knowledge,
skills and attitudes which fill the gap
between an identifiable trait and
executive action and success over
time.
– Basic instincts may be necessary for
effective performance in lesser and lower
jobs. Different and additional skills are
required for one to successfully exploit the
opportunities and challenges of the
dynamics of the corporate world.
– Example: The development or growth of
corner shop in a township to a modern
supermarket
cannot
be
entirely
attributable to basic instinct for a founder.
2. Experience is the best teacher
• Experience - he improvement of skills
which come repeated performance of a
job - is the best preparation for a job as
opposed to training, which is done away
from the job.
• It is indeed the man or woman who
excels in his/her present job who is best
qualified to
– for the next job
– lead, inspire and guide others
Rejoinder:
• A man will not learn all he needs to know from
what he is currently doing.
• Advances
in
technology,
the
internationalisation of markets, and the
progress of research in science and
information processing and organizational
behaviour easily challenge the notion that
experience on the job is adequate.
• Moreover, experience is a form of learning at
work. Nobody is born with all the knowledge
they will need on their working life.
3.Horizontal recruitment
• If an organization does not have adequate
numbers of men with innate qualities of
leadership who are equal to higher
responsibilities, it may bring in such persons
from other companies.
• There is an advantage in this as people who
are new bring a fresh outlook to
performance.
Rejoinder
Experience in human resource management
reveals that there are some disadvantages to
hiring from outside.
– It is both risky and expensive to prefer
hiring from outside instead of having
a deliberate manpower development
scheme within the organization. First,
it is difficult to precisely appraise the
quality of outsiders. The outsider is a
stranger to an organization and it
may be difficult to have an accurate
assessment of an individual who has
been unknown
– An
outsider
cannot
be
completely familiar about all
aspects of an organization.
There will be some areas that
will be unfamiliar which will be
taught to him/her. Indeed, it is
usual for any newcomer to b
subjected
to
some
familiarization and briefing
about the new organization.
– it is questionable whether outsiders
can effectively transfer to another
organization
their
technical
effectiveness,
knowledge
and
experience which blossomed and
matured in a different organization;
– Hiring from outside inevitably impacts
negatively on the motivation of those
who have been loyal to the
organization
4. Self Motivation
• Men/women with proper amount of
ambition may not need to be “motivated”
through training for them to show their
personal qualities which qualify them for
advancement.
• Such people are successful because they
are internally driven.
Rejoinder
• Ambition is not a recipe for success in each
circumstance. Indeed, ambition can be misplaced.
Ambition must be nurtured through a realistic
assessment of opportunities and constraints.
• Freedom to make mistakes and achieve success
through a process of learning is more productive
in developing executive skills than the practice of
following detailed how-to-do-it instructions
designed by superiors or specialists.
REVIEW
• The meaning and significance of a business
strategy
• Strategy formulation and implementation as
functions of a CEO
• The formulation of strategy
– The external environment
– Strategic capability of a firm
– Personal values of decision makers
– Obligations to society
The implementation of strategy
– Structure of the organization
– Systems of influencing performance
– Organizational politics
– The culture of the organization
– Management development
– Leadership
13042024
LEADERSHIP AND
IMPLEMENTATION OF STRATEGY
Introduction:
• Strategy can be considered as a long-term
objective to achieve success.
• The term implementation of strategy
refers to performance - carrying out
actions that will lead to the achievement
of results.
Who is a leader?
• A leader refers to the individual who is responsible
for the management of a total enterprise or an
autonomous unit within an enterprise.
• A leader is responsible for steering a firm to
success. In a business context, a leader goes by
many titles depending on tradition and practice.
The following are the commonly used titles in
Zambia to refer to a leader of a business enterprise:
– Chief Executive Officer (CEO)
– Managing Director (MD)
– General Manager (GM), or simply
– Manager.
• A leader is primarily responsible for achieving
success. He takes credit for success and
shoulders responsibility for any failure.
• A leaders is influential in the achievement of
purpose in two ways:
a) By applying his/her individual attributes to
achieve results, and
b) By using his individual attributes to inspire
subordinates to achieve results, this is
commonly referred to as achieving results
through other people.
The framework of leadership attributes that
influence the achievement of results.
I. The attitudes and values of a leader
II. The roles of a leader
III. Traits and characteristics of a leader
IV. Types of leadership
V. Styles of Leadership
VI. Succession and continuity
I. Attitudes and values
(i)A generalist attitude
 A leader have a broader rather than in a
narrow perspective
 A leader must have a balanced interest
and approach to all different sections
 A leader should be objective and impartial
in his approach to issues.
• The attitude of a CEO is typically one of a
generalist as opposed to the attitude of
functional managers which is a specialist
one.
• Division of work or departmentalization often
leads to specialist attitude where a departmental
head looks at issues from the perspective of his
function as head of his functional unit.
• Consider the attitude of a general manager vis-avis
– Production Manager: engineering/technical
– Finance Manager: financial standing
– Marketing Manager: Customer bias
• A leader must be balanced in his approach in
decision making and should not allow his
professional interest to cloud his judgment.
(ii) A practitioner’s orientation
A leader should be action-oriented, that is
– A leader must be prepared and be willing to
roll his/her sleeves and get down to any
task in the organization
– A leader must be willing to be seen in all
sets of circumstances
– A leader must be willing to accept failure
– A leader must be prepared to act even on
the basis of incomplete information instead
of being indecisive.
(iii) A professional orientation
• A leader must show occupational
commitment in the performance of
his/her task and in the way he/she
relates to others.
• This is indicated by the extent to
which a leader is guided by principle
and the extent to which he works in
the
best
interests
of
the
organisation.
(iv) An innovation orientation
• An innovation orientation means that the basis
and vehicle of innovation must be the present
state of activities, products, services and
processes, rather than change for its own sake.
• This is in line with a No Change/Do-Nothing
strategy. If the current state of affairs is
satisfactory, it is unnecessary and may be
retrogressive to change what is producing
results.
• Any innovation should be aimed at improving
what is not working well.
• An innovation orientation also means a
willingness to develop new products and
services, which may or may not succeed.
(v) A positive orientation
• A leader must have an optimistic and
buoyant approach to whatever he/she is
confronted with, be it:
– products and services,
– marketing campaigns and activities,
– staff, communities and clients, and
– crises and emergencies.
• A positive attitude conveys a leader’s
legitimacy, pride, confidence and
commitment in the organisation and in
its products, services and staff.
II. Roles of a leader
• A leader is expected to play several roles in
an organization. The nature of these roles and
the frequency with which the leader fulfils
them
obviously
will
vary
between
organisations.
• However, roles serve to inspire followers.
Among such roles are the following:
(i)The visionary role:
– This refers to the ability of a leader to carve a
future of success for the organisation, and to
bring all on board so that the picture of success
engages the support of all stakeholders and
constituents.
– A visionary role requires a leader to be able to
analyse the external circumstances for
opportunities and threats, and to organize the
ability to navigate the external environment.
create a niche for his organization.
– A vision serves as a focus for performance.
(ii)The champion role
– This refers to the leader’s ability to garner the
support of others in the organization in
enthusiastically
promoting,
supporting,
defending or fighting for the chosen strategic
choice.
– Enthusiasm refers to the extent to which a
leader projects interest and passion in the way
he or she carries out his/her duties and in the
way he/she relates to staff, shareholders,
backers, suppliers, customers and clients.
– Enthusiasm
is
positively
related
to
performance; lack of enthusiasm can lead to
underperformance.
(iii) Hero or heroine role:
–This refers to the extent a leader
distinguishes himself/herself from others
through
»exceptional courage,
»Individual achievement and
» superior qualities.
–By playing the hero/heroine in situations
which call for personal courage and
sacrifice, a leader earns the admiration and
respect of others in the organization.
–The performance of a hero/heroine is likely
to inspire others and be emulated.
(iv)Role model:
– A leader must be able to set the
standard for others to follow.
–Others in the organisation must take
their cue in terms of the required,
desired and demanded standards of
performance from the leader
–This serves as a practical example of
how performance should be done.
(v)The wanderer role:
• This refers to the need for the leader to
be visible to his/her followers
• It also refers to the leader to be physically
familiar with every aspect of his
organization and the staff and see for
himself or herself what is happening
within his domain rather than relying on
what is reported to him.
• This legitimizes any intervention a leader
may take to improve performance.
• Wandering may also involve
–visiting other organizations to learn
from others.
–Attending courses, conferences or
meetings of professional associations
to meet with others and learn from
them.
These professional visits broaden and
deepen a leader’s competence and lead
to better performance.
(vi) The coach role
– A leader must also provide
guidance when needed.
– In this, he will improve the
performance of his team of
subordinates.
• (vii) The surgeon role
₋ This involves cutting off functions,
products, services or processes when it
is ascertained they are no longer
required.
₋ This might mean making painful
decisions, but the painful decisions are
made in the greater interest of the
organization.
III. Traits and Characteristics
• Research studies in the United States have
revealed that there is a relationship between a
leader’s traits and the performance of his/her
subordinates
• The preferred traits in a leader generally serve
to inspire subordinates and enhance the
leader’s ability to achieve results through
subordinates
• Some of these traits and characteristics are as
follows:
• A leader who sees himself as part of the
problem vs. A leader who presides over the
mess
• A leader who is a problem solver and advice
giver, vs. A leader who is invisible, gives
orders to staff, expects them to be carried out
• A leader who is comfortable with people in
their workplaces vs. A leader who is
uncomfortable with people
• A leader who manages by walking about vs.
A leader who is invisible
• A leader who arrives early, leaves late vs. a
leader who arrives late, leaves on time, or leaves
early
• A leader who is a good listener vs. a leader who
is a good talker
• A leader who is available vs. a leader who is hard
to reach
• A leader who is humble vs. a leader who is
arrogant
• A leader who sees a mistake as learning
opportunity to develop vs. a leader who sees
mistakes as punishable offences and the means
of scapegoating
• A leader who is tough, and confronts nasty
problems vs. a leader who is elusive, and is an
artful dodger
• A leader who prefers discussion vs. a leader who
prefers written reports
• A leader who shares credit with others vs. a
leader who monopolizes/takes credit
• A leader who takes the blame vs. a leader who
looks for scapegoats
• A leader who gives honest, frequent feedback
vs. a leader who amasses information
27 April
IV. Types of leader
This generally refers to how an individual
became to be a leader. This can have an effect
on how a leader inspires the followers.
The following types of leader may be
distinguished:
(a) The traditional leader
• This is one whose position as a leader is
assured by birth and heredity, e.g. When
one becomes a leader (CEO) by virtue of
being related to the owner of a business
• Heredity and competence
Heredity can be flawed does not necessarily ensure
competence and performance may be adversely
affected when a traditional leader does not possess
the same attributes as those of the predecessor.
• For instance:
– When a founder of
small and medium
enterprises is succeeded by which happen to be
family-owned businesses
– When appointments to public institutions are
based on patronage
(b)The appointed leader
– This is one whose position as a leader is
legitimised by an open and transparent selection,
assessment and appointment process
– These are individuals who earn leadership by
virtue of possessing superior attributes compared
to rivals.
– When a leader does not deserve to be where
they are, they may fail to perform or they may
lack the capability to inspire others.
(c)The known leader
– This is an individual whose position as a leader is
generally acknowledged by peers and others.
– For instance, a pastors/priests of churches are
assumed as leaders of their congregations
because the position they occupy confers
leadership.
– Such individuals are generally accepted by the
followers of the religious organizations which
ordained them as pastors and revered as
(spiritual) leaders.
– They are looked on as role models.
(d) The functional or expert leader
– This is where one becomes a leader by
virtue of his expertise, or command of
resources/ technology.
– On the positive side, such leaders
deliver results because of the expertise
they have obtained or because of what
they have staked in the institution.
(e) The charismatic leader
– This is where one secures the position of
leadership by the sheer force of his personality
which others find appealing and elicits loyalty.
– The positive side is that blind loyalty has a
bearing on performance for as long as the leader
has the personal magnetism.
– The negative side is when performance is
associated with the person of the leader and not
with the organization.
(f)The informal leader
– This is where leadership is not formally
bestowed but one is accepted or
considered a de facto leader by
colleagues by virtue of his personality,
charisma, expertise, command of
resources.
– Informal leadership usually elicits
cooperation from others.
V. Leadership Style
– Decision making relating to work can be classified on an
autocratic-democratic continuum, characterized by
whether a decision-making relating to work is boss-centred
or subordinate-centred
– An autocratic leadership style is when the authority to
make a decision is centralized in a superior, and a
democratic leadership style is when the authority to make
decisions relating to work to be done lies with a
subordinate
– Centralization is associated with a boss-driven leadership
style and decentralization is associated with a subordinatedriven leadership style.
• In a boss-centred leadership, the leader makes
all decisions relating to the work of the
subordinate; in a subordinate-centred
leadership, the subordinate has relative
freedom in decision that affect his work.
• Boss-centred decisions are considered
autocratic
while
subordinate-centred
decisions are considered democratic
• Subordinate-centred leadership is often
credited with motivation and boss-centred
leadership is credited with control of
performance.
• Within these two extremes, and depending on
the nature of work, a leader must determine
the niche that gives better results for the
organization.
VI. Succession and Continuity
• The final element of strategic leadership is the
extent to which a leader prepares for his
succession and continuity of his priorities,
direction, and performance.
• The keys to a legacy are:
– Full communication between the CEO and
his top management team.
– Integration of subordinates into the
management of crises and emergencies and
the overall direction of the organisation.
– The development of leadership skills and
strategic expertise in all those in senior
positions and all those who aspire to such
positions (Management development).
– The identification of a range of individuals
from within the organisation who show
promise, capability and willingness to be
developed into strategic positions.
– The identification of sources of expertise
from outside the organisation so that as and
when fresh talent and thinking are required,
these sources can be accessed quite quickly.
– The integration of strategic thinking,
awareness
and
expertise
into
all
management development programmes. This
includes action learning, project work,
secondments and MBA and other
organisation leadership programmes.
• A leader as Organization Leader
– A leader must act as promoter and
defender of strategy
–A leader must remain focused and
keep the organization on course
against the tendency of organizations
to veer off course in response to
circumstances, special interest and
sudden opportunity
– Leader as mediator and integrator
–A leader must deal with conflict
among special interest groups
–A leader must balance the need for
present profitability against the need
to invest in future success
–A leader must balance the desirability
for
uniformity
against
the
requirements for flexibility.
– A leader must create a conducive climate in his
organization
–A leader must ensure an absence of
political manoeuvring for position or
attention
–A leader must reject preferment on
grounds other than merit
–A leader must create interpersonal amity
and tolerance of individual differences
–A leader must instil high standards of
moral integrity
STRATEGY IN ORGANIZATIONAL
CONTEXT
Introduction
• What has been presented thus far is a
theoretical framework or model for achieving
success, namely:
– Nature and significance of strategy
– The formulation of strategy
– The implementation of strategy
• These issues have been presented in a
generic way irrespective of type of
organization.
• This section customizes these variables to
type of organization – extent to which
strategy responds to features of an
organization.
• The mission of strategy does not change.
However, adjustments may be necessary in
the formulation and implementation.
The Entrepreneurial Context
• Business organizations typically evolve
from infancy (Entrepreneurial) to
maturity.
• An entrepreneurial context refers to an
organization in its infancy. A mature
context refers to an organization that has
matured over the course of time.
• Strategic management applies to both
types of organization. However, there are
differences in kind.
Examples of entrepreneurial organizations
• Entrepreneurial enterprises refer to
organizations that are in their infancy
and generally small because they
have yet to develop to maturity.
• They are generally known as small
and medium enterprises (SMEs)
• They are typically owned by one or
two individuals.
–Examples include the following:
»SMEs in manufacturing, agriculture
and service sectors.
» Guest Houses
» Restaurants
» Corner shops
• Retail outlets,
• Hair saloon,
• Garage, etc
Features of an entrepreneurial organization:
• It is owned by a one(founder) or two
individuals (partnership)
• It is operated according to the dictates or
whims of the founder.
• The founder as CEO exercises a high personal
profile, and the organization is driven by the
sheer force of the personality of the founder:
– The sole owner and founder
determines the vision of the enterprise
– The owner is also the chief driver in
the implementer of strategy.
How strategy is formulated
• Strategy rests on the Vision of the owner/ founder.
• Influence of Pest Factors
 Although PEST factors may influence strategy
formulation, the economic factor is perhaps the most
dominant.
 The economic influence originates from the economic
conditions of the founder and play its way to the
enterprise.
 The opportunities and threats of entrepreneurial
organizations are bounded by bust-and-boom cycles in
the economy.
 The economic circumstances as experienced by the
founder are the basis of opportunity and risk and play a
significant role in shaping the strategic direction of the
enterprise.
• Capability:
– Most of these businesses are handicapped by
lack of, or limited financial resources and
competence.
– There is dependence on the personal
resources and competences of the founder
• There is great dependence on institutional
borrowing, but this is incapacitated by weak
security
• Generally, they are not attractive
destinations to skilled and professional
labour.
• Personal aspirations & values:
– The personal aspirations and experiences of the
entrepreneur play an important role in setting the
vision.
• The ideology of the founder has limited appeal
to others
• The influence of value orientations varies:
–the theoretical orientation will tend to be
subjective rather than rational and
objective;
–the economic will play a prominent role;
–the political orientation will also be
influential but less so the social, aesthetic
and religious orientations.
Corporate Social Responsibility:
Issues of corporate social responsibility
are insignificant and are not likely to
prevail because of limited profit.
• Contribution to welfare is inhibited by
lack of profit and limited resources
• Restraint from harmful but profitable
practices does not have a strong impact
over the pressure and temptation to
make money
How strategy is implemented
Organizational Structure:
• Organizational structures are simple and basic.
• Specialization is not prominent
• Tend to be flat rather than tall, and interaction
between top and bottom more likely.
• Control and communication are relatively easier
• Performance revolves around the person of the
founder and the few followers.
• Difficult to recruit professional and skilled
personnel.
• The following facilitate the achievement of
results:
– Vision can easily be disseminated and
understood
by
members
of
the
organization.
– It fosters interaction among members of
the organization
– Control can easily be implemented
– Tends to promote centralization and control
by the boss.
• On the other hand, the following can be
drawbacks:
–The centrality of the founder may offer
little freedom for initiative by the other
members of staff.
–Absence or levels of specialization may
mean that work is basic, simple and
routine and can lead to boredom
–Performance is likely to be influenced by
the person of the founder
–Succession plan is usually problematic.
Systems of influence
• Although basic pay is likely to play a leading
role among systems of influence.
• Basic pay is too often politicised as attested by
the presence of workers’ union, legislation of
negotiations for pay and other conditions of
service and the formality of negotiations.
• The effectiveness of basic pay and nonmonetary incentives remains uncertain and
unpredictable
Organizational Politics:
• Political games are not likely to feature
prominently because of the nature of ownership.
– Sole ownership and the small nature of these
enterprises are not breeding ground for
political behaviour
– On the contrary, SMEs are characterized by
organizational designs which tend to promote
consultations and flexibility
– Insurgency, whistle blowing or allied political
games are unlikely to occur
– Instead, empire building is more likely to
emerge
Organizational culture:
• A culture of ‘the way things are done here 'is
likely to emerge rooted in the ideology of the
founder.
• It is the singular stated mission of the founder
that will galvanize others to follow the founder
depending on the attractiveness of his
ideology.
• The small size nature of the organization will
foster membership rather than diversity.
Management Development:
• This is likely to play a minor influence in
influencing performance because of time and
money pressures.
• Where there is need for it, it will be in the
form of personal guidance and steerage on
the job.
• Management development is generally not
practised by SMEs.
Leadership
• This is critical and the following aspects
leadership are practised:
• A practitioner’s orientation - A leader should
have a practical approach by being willing and
being prepared to get down and do any task in
the organization
• A positive orientation - This means that a leader
must have an optimistic and buoyant approach to
people he is leading, products and times of crisis
• Hero or heroine role:
This refers to the extent a leader distinguishes
himself/herself from others through exceptional
courage, achievement and superior qualities.
• Coach role
A leader must also provide
guidance when needed.
• Traditional types of leadership
The
traditional
type
of
leadership is most likely to
emerge.
• Succession of a leader and Continuity
– There are usually no formal plans of
succession of a leader in an
entrepreneurial enterprise and
continuity is usually problematic
especially in smaller organizations
which are run autocratically
– When there is a leadership gap,
performance may be affected if
there is no clear direction
The Mature/Machine Context
Entrepreneurial enterprises usually evolve
into machine/mature organizations.
Features of the machine organization
• Ownership
and
governance
are
fragmented and reflected at three levels
of governance:
–Shareholders
–Board of Directors
–Management
• There is an elaborate organizational
structure characterized by
–Hierarchical levels
• Managerial and operative work
• Centralization and decentralization
• Prescribed lines of communication
–Specialization of work
• Line versus support staff
Examples of a mature organizations
• Service organizations –
– Banks (ZNCB, Standard Chartered)
– Hotels (Hotel InterContinental, Pamodzi)
– Zambia State Insurance Company
• A mining company
– Mopani Copper Mines
– Konkola Copper Mines
• Supermarket chain
– Shoprite, Pick and Pay
• Government/Public Enterprises
How strategy is formed
• Strategy originates from the top of the
hierarchy, where the perspective is broadest
and the power most focused.
• There is a clear delineation of roles in the
formulation of strategy among shareholders,
the Board of directors, the CEO and the
management team
– Shareholder: as owners they determine the
vision; they also provide capital.
– Board of Directors: these are representatives of
owners. They receive, consider and approve
strategy
– Chief Executive Officer: he/she initiates strategy
for approval by the Board of Directors. He/she
implements strategy in order to give a return to
the owners
– Senior managers: assist the CEO in the
formulation of strategy and implementation of
strategy
• PEST Analysis:
• There is usually a rational and objective way of
arriving at a strategy; almost all external factors
may have to be considered depending on the
times.
– Political considerations are paramount
• Ownership and state control/participation
• Nationalism/sovereignty
• Corporate taxation
– Economic factors have a bearing on the setting of
strategic direction
– Social/cultural factors too have a bearing
– Technological advances also have a bearing on success
• Resources and capability:
There
is
wide
latitude
resources/competences.
for
sourcing
– There is wide latitude in securing capability
• initial
capital
provided
shareholders/strategic partners
by
• Borrowing
• wide pool from which to source human
resources
• Personal Values & Aspirations:
– These have a bearing as attested by mention of
values in documents of strategic plans, but their
impact varies across organizations.
– Diversity of members at shareholder and board
of director levels necessitates consensus of a
working ideology.
– Values are usually indicated in strategic plans
and/or displayed at convenient points within the
organiations
o The theoretical orientation- objective and
rational
o The Social orientation – depends on the
owners
o The Political orientation – some
companies especially multinationals seek
to determine the political landscape
o The Economic orientation – this is a
primary orientation but occasionally
moderated by socialism
o The Religious orientation – when religion
is a prominent national ideology
Corporate social responsibility:
• Mature organizations are expected to be
socially responsible because of the perception
that they epitomize profit
• CSR is also heightened by size, nationalism
and sovereignty but the practice varies
because CSR is voluntary.
Strategy implementation
Organizational Structure:
There is usually heavy reliance on organizational
structure as a mechanism for the implementation
of strategy as attested by the following:
• Work is assigned to individuals and groups
• There is need for coordination
• Lower jobs are usually routine and boring and
call for systems for influencing performance
– Supervision
– Control
– Centralization versus decentralization
• Systems of influence
Influencing performs plays a
critical part because of
 High incidence of boredom
especially in lower jobs
 Complexity
of
job
and
corresponding
need
for
specialization
 Growing mechanization
Organizational politics:
• Politics are a common feature in mature
organizations:
 Insurgency is common, especially in public
companies
 Counterinsurgency is also common
 Sponsorship
 Alliance
 Whistle blowing
• Organization are usually not perfect systems,
and therefore tend to attract political games.
Organizational Culture
• Organizational culture is based on an ideology.
Culture originates from a sense of mission and
nurtured as the organization grows.
• There are challenges in determining an
ideology that cuts across the various
stakeholders
• Values can be gleaned from strategic plans
which are documented.
Management Development:
• This is often necessary because of the need to
respond to the dynamics of external factors
and the availability of resources.
• Mature organizations are likely to have
management development programs:
o The pressure to respond to environmental
dynamics
o They have the capability
Leadership:
• Leadership is desirable but leaders are not
indispensable
• The most common and most effective
type of leadership is the appointed
leaders
• Bipartisan (political) influences are
undermining the values of transparency
that are associated with the system of
appointed leadership.
THE BENEFITS OF A CONSCIOUSLY CONSIDERED
STRATEGY
• It helps in articulating goals/the direction of a
firm. This helps a firm avoid drifting without
purpose.
• It will facilitate the mobilization of effort
toward a defined and understood purpose.
• It will open the possibility of stating goals in
other terms other than maximizing profit.
• It helps a firm plan ahead especially in
situations with long lead times.
• Improvisation is not enough in dealing with
the complexities of modern business.
• Planning ahead helps a firm cushion itself
against negative effects of unforeseen events
such as:
– technological advances,
– Globalisation
– New product development
• It will help managers influence rather than
merely respond to environmental change.
– The environments and circumstances in
which businesses operate are dynamic.
Merely adapting to developments may
leave a company in a weaker position
against its rivals. Organizations that ‘play
catch up’ are often weak against
competition
• For instance, being ahead in planned
innovation and creativity can enable a
company carve out success rather than
depend
on
chance
or
favourable
circumstances.
• From
the
point
of
view
of
implementation, the most important
function of strategy is to serve as:
–the focus of organizational effort,
–the object of commitment and
– the source of constructive motivation
and self-control in the organization
itself.
THE LIMITATIONS OF STRATEGY
• Strategy involves planning, but is planning ahead
really possible or practical?
• It is argued that planning becomes difficult in the
face of increasing complexity and accelerating
rate of change. Long-range plans cannot be
detailed precisely and quantitatively with much
confidence
in
unstable
environments
characterized by social upheavals, economic
instability or political uncertainty.
• The rejoinder: It is precisely dynamic and
uncertain futures that call for some
contemplation of what can happen, and which
pose the highest risk of failure.
• Looking ahead involves assigning probabilities
to the imaginable possibilities in order to
reduce the possibility of surprise and total
subjugation to an unforeseen event.
• Commitment or over-dedication to plan may
result in lost opportunity. Planning means that
one must stick to a plan, but such dedication
to a chosen plan necessarily implies closing
one’s mind to other alternative plans.
• There is thus an opportunity cost to
commitment to a plan to the exclusion of
other plans.
• The rejoinder: Yes, commitment to fixed plans provides
a needed focus of approach and effort. However,
realistic planning calls for some room for
accommodating uncertainty through reasoned
flexibility.
• This calls for development of the concept of a “moving
balance” among considerations on which strategy is
based, that is, careful and informed balancing of a
company’s resources and the opportunities in its
environment.
• Rejoinder: Ironically, the most articulate, specific
and persuasive definition of strategy by the CEO,
ratified by the Board of Directors and even
emulated or envied by competitors, may not have
the same meaning or appeal to all parts of the
organization to which it is announced.
• It can be argued on the other hand that a
difference of opinion can be used constructively in
promoting understanding of a different
perspective of an issue.
WHAT IS TO BE GAINED BY THE STUDENT
• It will provide the student with direct but
distant preparation for performance as a
general manager.
• It will broaden the student’s provincial
perspective of the specialist in any of the
functional areas to the larger picture of the
firm as a whole.
• It will deepen the student’s understanding and
knowledge of the concepts relating to strategy
and strategic planning.
• It will facilitate reorientation of attitude and
appreciation of decision-making through:
o Acceptance of the satisfaction and
frustration and of success.
o Appreciate the importance of being
‘general’.
– Willingness to act in the face of incomplete
information and to bear the risk of being
proved wrong by subsequent events.
– A dislike for organizational drifting or
individual hesitation in the face of the
managerial imperative to make directiondetermining decisions.
– An appreciation of the orientation of the
professional manager as distinct from the
self-serving contrives/dealings of the
entrepreneur. The professional manager
relies on application of mind and judgement
while the entrepreneur relies on elemental
gifts of enterprise.
– A preference for creativity and innovation
over the maintenance of the status quo.
THE END
REVIEW SESSION
• Understand the nature & significance of
business strategy.
– Generic meaning of strategy
– Strategic choices: specific meanings of strategic
options and their relevance to success/profit
• Understand the variables in the formulation of
strategy.
• Understand
the
variables
in
the
implementation of strategy.
• Strategic choices
– Do nothing/No change
– Market development
– Product development
– Innovation
– Strategic outsourcing
– Competitive strategies
– Strategies in declining industries
– Acquisition, merger, joint venture, alliance
– Diversification
• Formulation of strategy
– A company’s external environment and related
strategies
• Opportunity and Threat (External)
• Types
–Globalization
–Political/legal
–Economic
–Social/cultural
–Competition
–Technological
– Capability and strategy
• Strength/weakness (Internal)
• Role
• Different types of capability
– SWOT analysis
– Personal values and strategy
• Meaning
• Alternative orientations
• Influence on strategic direction
– Obligations to society and strategy
• Meaning and dimension of CSR
• Strategy and CSR
• Arguments for and against CSR
• Implementation of Strategy
– Meaning of implementation
– Structure and implementation
– Systems of Influencing performance
– Organizational behaviour and performance
• Politics
• Culture
• Management development
– Leadership and implementation
• Aspects of leadership and
implementation
Examination issues
1. Exam format
 A compulsory question- a case study (40
marks)
 3 out of 4 elective questions (20 x 3=60
marks)
2. Coverage: questions will be sampled from
the three sections
• Nature of business strategy
• Formulation of strategy
• Implementation of strategy
3. Case study
• It describes a real-life situation and
requires one to apply theory to a practical
situation.
• Read the case thoroughly.
• Do not rehash the case.
• Address the questions on the case. Do not
bring in extraneous issues, even if the
case looks familiar.
• Operate within the scope of information
provided in the case.
4. Elective questions
A good answer = f(content, expression)
Contain substance
Use proper construction
Observe correct spelling
Answers must be in full sentences and
not in phrases or points
 Understand the thrust of the question
 Describe
 Explain
 Discuss
 Compare/Contrast
 Critique
 Use examples if you can. However, do not use
abstract examples.
 Use local examples
 Number your answers in line with the
numbering of the question.
 Edit answer
END