SENIOR MANAGEMENT

COURSE
TOPIC : STRATEGIC MANAGEMENT

NAME: LUCY VIKE

KENYA SCHOOL OF GOVERNMENT BARINGO

CONTENT
The Concept of Management
The concept of Strategy
Strategic Management
Strategy Formulation
The Internal Business Environment
The External Business Environment
The Strategic Management Process
 It is enough, to adjudge the opponent correctly, to
concentrate one’s
own strengths and to win the people – that is all. ~Sun
Tzu ~
More than 2000 years ago the Chinese warrior-
philosopher Sun Tzu wrote a book, The Art of War, that
even today may well be the world’s most valued and
influential book on strategy.
Sun Tzu describes how victory can be achieved without
fighting by using the appropriate strategy. According to
Sun Tzu, this is achieved:
by understanding the surrounding circumstances
and the power of the opponent;
 by establishing overwhelming strength; relative to the
parties involved: through political dealing, the use of
psychology and convincing communication.
Management concept
 Management is the process of Planning, Organizing,
Leading and Controlling the efforts of organizational
members and using all other organizational resources
to achieve stated organizational goals
Management is continuous process where managers use
the resources of the organization, both physical as well
as human to achieve stated goals.
Management aims at achieving the organization’s goals
by ensuring effective use of resources.
Concept cont.….
PLANNING-Managers use logic and methods to think
through goals and actions
ORGANIZING-Managers arrange and allocate work,
authority and resources to achieve organizational
goals.
LEADING-Managers direct, influence and motivate
employees to perform essential tasks.
CONTROLLING-Managers make sure an organization
is moving towards organizational objectives
HISTORY OF STRATEGIC MANAGEMENT
History of SM is Connected with the history of
management practice i.e. it came from the first
function of management i.e. Planning
Industrial revolution came over. And historians and
other management practitioners such as David Owen,
Winslow, Taylor, Henry Fayol, Henry Gant, Elton
mayo, Abraham Maslow, McGregor, Peter drunker and
even Michael Porter thought about management and
hence strategic management
In January 2003, newly elected NARC government
inherited a public admin which did not have:
1. a clearly articulated mission;
2. a shared vision;
3. a clear strategic direction;
In addition,
4. none of the ministries had a strategic plan;
5. over 70% of state corps, and all 175 local
authorities did not have strategic plans;
6. regarded corporate governance as a private
sector affair;
7. determination of performance was based on how
well processes and activities were carried out;
8. Problem of lethargy and inefficiency;
9. Lost public trust, and
10.Even had problems with
utilization of resources!
In the 2004/05 FY, the Treasury released
KShs299.065billion to all ministries. Out of this,
some KShs34.2billion or 11.4% was however returned
unutilised by the end of the FY;
The following 14 Ministries were not able to spend
large portions of the funds given by Treasury in
2004/05. They therefore surrendered back the
indicated proportion of their funding to Treasury:
 MINISTERIAL EXPENDITURES 2004/2005
(KSH MILLION)
No Ministry/Dept Actual Actual % Actual % Actual
Exchequer Utilised Actual Returned Returned
Funds released Utilised

1 National assembly 5,500 4,375 80 1,125 20

2. DPM 2,157 1,306 61 851 39
3. Planning and Natl. Devpmt. 2,138 1,471 69 667 31
4. Regional Devpmt. 833 492 59 341 41
5. Agriculture 6,570 3,084 58 2,766 42
6. Local Government 7,240 3,954 55 3,286 45
7. Transport 4,652 3,525 76 1,127 24
8. Justice and Const. 2,472 992 40 1,480 60
Affairs
9. Fisheries and Livestock 3,332 2,095 63 1,236 37
10. Co-operative Dev. 2,044 625 31 1,419 69

11. East African Cooperation 528 203 38 325 62

12 State Law Office 547 128 23 419 77
138/21/18
Trade & Industry 2,564 2,035 79 529 21 12
 An economy growing at 0.4%!
• Public sector had therefore become part of the
bigger problem!
 a drain on the Exchequer for financial support in
form of grants and loans,
 Impediment to:
 economic growth

 recovery of the economy

New govt. quickly realized a number of things:
A. Country faced problem of poor performance
resulting from:
 Inefficient exploitation and use of
public resources;
 Unresponsive service delivery culture;
B. That Obstacles to the problems do not lie necessarily
with comparative disadvantage in resource
endowment but with,
a. competitive disadvantage;
b. low program implementation capacity;
c. lack of clear strategic direction; and,
d. hanging on to the same/old ways of doing things.
►you cannot expect different results by persistently
applying the same techniques to solve problems
that Government Will be Improved Only When We:
i. recognize that we do produce outputs and that
what we do can be measured, managed and
improved;
ii. discover that we have real customers, with all the
rights and privileges that the word “customer”
bestows, and that the satisfaction of our
customers is absolutely essential to our success
Reform Strategies
Govt. therefore recognized the need to:
create competitive advantage for the country,
by adopting best international practices in the
management of the public service; and to
increase customer (public) satisfaction with
its services.
ECONOMIC RECOVERY STRATEGY
Due to global push, the ERS was introduced in the
public sector and launched in 2004, in the same year
the government introduced Result Based
Management(RBM) as a deliberate policy in order to
improve performance, Service Delivery and
Governance (GOK, 2004).
• Govt. therefore introduced the following initiatives:
a. 5-year strategic plan ► Economic Recovery
Strategy for Wealth and Employment Creation,
(ERS).
b. Required public institutions to develop strategic
plans by 2004;
c. Programs to Empower citizens to demand excellent
service as an entitlement;
d. Systems to enhance public service efficiency by
minimizing waste to improve prosperity & service
delivery
Strategic Planning
an action-oriented process by which an
agency envisions the future and develops
goals, strategies and action plans for
realizing the vision.
The process encompasses the short, medium and
long term views and provides the road map to
direct the future course of an agency.
It therefore provides the strategic direction.
Remember “if you do not know where you are
going, any path will take you there”
A strategic plan is therefore the product of a
process that entails determining the following
strategic issues:

» Where are we now?

» Where do we want to be?
» How do we get there?
» Who must do what and when?
» How are we doing?
Strategy Defined
“A means of making clear cut choices about how to compete”
~ Jack Welch ~ Former CEO General Electric

“A commitment to undertake one set of actions rather than

another” ~ Sharon Oster~ Professor Yale University.

“Without a Strategy the organization is like a ship without a

rudder” ~ Joel Ross ~ Consultant
Strategy Concept
A strategy is a specific plan of action directed at a
specific result within a specified period of time so as to
achieve certain goals and objectives set up by an
organization.
A strategy is also a description of the match an
organization achieves with its environment i.e. it is a
fundamental pattern of present and planned resource
deployments and environmental interactions that
indicates how the organization will achieve its
objectives
Strategy cont.….
A strategy therefore is an organization’s game plan
which provides a frame work for managerial decisions.
It reflects an organization’s awareness of How, When
and Where it should compete; against whom it should
compete; and for what purposes it should compete.
Levels of strategy
Levels of strategy in an organization depends on the size and
diversity of the organization. We have three levels which assist
in decision making of an organization
At the top is the corporate level
Composed principally of a board of directors(BOD) and the
chief executive and administrative officers.
They are responsible for the firm’s financial performance and
for the achievement of nonfinancial goals e.g. enhancing the
firm’s image and fulfilling it’s social responsibilities.
- Here the emphasis is on stakeholders
interests and the society at large.
Levels cont. …
This level is concerned with the overall purpose and
scope of the organization. It defines the business domain
of an organization i.e. the scope of the organization's
business in terms of market to be served and products to
be produced.
 They also set objectives and formulate strategies that
span the activities and functional areas of the business.
The strategy level also specifies how total organizational
resources will be allocated among the different
parts/departments of the organization.
Levels cont.….
In the middle of the decision-making hierarchy is the
business level.
Composed principally of business and
corporate managers
- These managers must translate the statements of
direction and intent generated at the corporate level into
concrete objectives and strategies for individual business
divisions or SBUs.
Levels cont.…
Business-level strategic managers determine how the
firm will compete in the selected product-market
arena.
They strive to identify and secure the most promising
market segment within that arena and then claim and
defend it because of their competitive advantages.
Strategies formulated for one SBU differ with other
SBUs because each strategic business unit offers
distinct products and services to an identifiable group
of customers
Levels cont.…
At the bottom of the decision-making hierarchy is
the functional level
Composed principally of managers of product,
geographic and functional areas
They develop annual objectives and short-term
strategies in such areas as production, operations
research and development, procurement, finance and
accounting, marketing, and human resources.
Levels cont.…
They implement or execute the firm’s strategic plans.
i.e. “doing things right” by ensuring efficiency and
effectiveness of public resources and human resource
and quality of service delivery to the customers
QUESTION
CAN AN ORGANIZATION OPERATE WITHOUT A
STRATEGY??

WHY?
IMPORTANCE OF A STRATEGY
It provides direction to an organization in that we have
numerous activities to be performed in the
organization whereby some are short term while others
long term and when a strategy is formulated it enables
managers and employees to focus on both short term
and long term activities.
IMPORTANCE CONT….
It offers competitive advantage. Organization’s do
operate in industries where there are other players or
rivals hence competition. Every business dream is to
succeed in such an environment through good
customer satisfaction relative to other competitors and
all these is only possible when a strategy has been put
in place . It will offer a competitive advantage through
knowledge of the market segment and the needs and
preferences of that particular market.
Importance cont.…
A strategy helps a company to focus on resources;
being scarce and limited. In strategy development
process, managers do define the strategy agenda for
the company, the critical tasks to be performed are
identified and then resources are allocated focusing on
the tasks to be performed. Without a strategy, resource
allocation might be random leading to resource
misallocation and wastage.
Importance cont.…
A strategy helps to reduce conflict in an organization
by creating harmony. It is essential for all members of
an organization and departments to work together as
one unit. A strategy contains the organization mission,
vision, goals and objectives and all these create a sense
of harmony in the activities of an organization since
each department and its members will work towards
the specific strategy which will help reduce conflict
within the organization
 Why do we need a strategy
• Because resources are scarce and we need
maximum return
• Because of widespread competition from
other service providers
• Because the goals set cannot be achieved
using the processes/ procedures currently in
place
THEREFORE WHAT IS
STRATEGIC
MANAGEMENT
STRATEGIC MANAGEMENT
Strategic management, is defined as the set of
decisions and actions that result in the formulation
and implementation of plans designed to achieve a
company’s objectives.
The systematic analysis of the factors associated with
customers and competitors (the external
environment) and the organization itself (the internal
environment) to provide the basis for maintaining
optimum management practices.
Defn…..
Strategic management analyzes the major initiatives
taken by top management. It entails specifying the
organization's mission, vision and objectives,
developing policies and plans, often in terms of
projects and programs, which are designed to achieve
these objectives, and then allocating resources to
implement the policies and plans, projects and
programs.
Defn…..
"Strategic management is an ongoing process that
evaluates and controls the business and the industries
in which the company is involved; assesses its
competitors and sets goals and strategies to meet all
existing and potential competitors; and then reassesses
each strategy annually or quarterly [i.e. regularly] to
determine how it has been implemented and whether it
has succeeded or needs replacement by a new strategy
to meet changed circumstances, new technology, a new
economic environment., or a new social, financial, or
political environment."
Defn ….
Strategic Management can also be defined as "the
identification of the purpose of the organisation and
the plans and actions to achieve the purpose. It is that
set of managerial decisions and actions that determine
the long term performance of a business enterprise. It
involves formulating and implementing strategies that
will help in aligning the organization and its
environment to achieve organisational goals."
Steps in SM
It comprises nine critical tasks:
(1).Formulate the company’s mission, including broad
statements about its purpose, philosophy, and goals.
(2). Conduct an analysis that reflects the company’s
internal conditions and capabilities.
Steps in SM
(3). Assess the company’s external environment
including both the competitive and the general
contextual factors.
(4). Analyze the company’s options by matching its
resources with the external environment.
(5). Identify the most desirable options by evaluating
each option in light of the company’s mission.
(6). Select a set of long-term objectives and grand
strategies that will achieve the most desirable options.
Steps in SM
(7). Develop annual objectives and short-term
strategies that are compatible with the selected set of
long-term objectives and grand strategies.
(8). Implement the strategy choices by means of
budgeting resource allocations in which the matching
of tasks, people, structures, technologies, and reward
systems is emphasized.
(9). Evaluate the success of the strategic process as an
input for future decision making.
 What is Strategic
Planning?
A management tool/roadmap to the future used to
help an organization do a better job
 To set priorities
 To focus its energy and resources
 To ensure management and staff are working toward
common goals with clear expectations and accountability
 To ensure agreement with the intended outcomes/results of
their efforts
 To assess and adjust the organization’s direction in
response to a changing environment
A disciplined effort that produces fundamental
decisions and actions that shape and guide what an
organization is, who it serves, what it does, and why it
does it, with a focus on the future
Why is Strategic Planning Critical?

“In this volatile business of ours, we can ill

afford to rest on our laurels, to pause in
retrospect. Times and conditions change so
rapidly that we must keep our aim constantly
focused on the future.”

- Walt Disney
All strategic planning deals with at least one of three
key questions:
"What do we do?"
"For whom do we do it?"
"How do we excel?"
In business strategic planning, the third question is
better phrased "How can we beat or avoid
competition?". (Bradford and Duncan, page 1).
Benefits of strategic planning
Allows identification, prioritization and exploitation
of opportunities in the environment
Allows more effective allocation of resources
Represent a framework for improved coordination
Creates a framework for internal communication
among personnel
Benefits (Cont)
• Provides the basis for the clarification of individual
responsibilities
• Encourage a favourable attitude towards change
• Helps to integrate the efforts of different stakeholders
• Provide a co-operative, integrated and enthusiastic
approach to addressing a problem
STRATEGY FORMULATION
Guides executives in defining the business their firm is
in, the end it seeks, and the means it will use to
accomplish.
The strategy formulation process begins with
definition of the company mission, vision, values.
This is a declaration of an organization's reason for
being.
It answers the pivotal question, ”what is our business
Characteristically, it is a statement, not of measurable
targets but of attitude, outlook and orientation

Vision- This is an inspiring view of the preferred

future. It describes what the organisation would like to
become
Mission- This is a concise statement of the basic
purpose and the role of the organisation, describing
what the organisation is now.
Core values- They describe the standards that govern
operations of an organisation and its relationship with
the society
Mandate of the organisation – Prescribes what must
be done under the organisation’s charter and policies
as well as under various laws, codes, circulars and
regulations
Goals – open ended statement of what one wants to
accomplish with no quantification of what is to be
achieved and no criteria of achieving
Objectives- are statement of what is to be
accomplished and when it is to be accomplished. They
answer the question where do we want to go? Good
objectives must be SMART
Vision statement
Vision: Defines the desired or intended future state of
an organization or enterprise in terms of its
fundamental objective and/or strategic direction.
Vision is a long term view, sometimes describing how
the organization would like the world in which it
operates to be. For example a charity working with the
poor might have a vision statement which read "A
world without poverty"
Mission statement
Mission: Defines the fundamental purpose of an
organization or an enterprise, succinctly describing
why it exists and what it does to achieve its Vision.
It is sometimes used to set out a 'picture' of the
organization in the future. A mission statement
provides details of what is done and answers the
question: "What do we do?" For example, the charity
might provide "job training for the homeless and
unemployed"
Values Statement
Values: Beliefs that are shared among the stakeholders
of an organization. Values drive an organization's
culture and priorities and provide a framework in
which decision are made. For example, "Knowledge
and skills are the keys to success" or "give a man bread
and feed him for a day, but teach him to farm and feed
him for life". These example values may set the
priorities of self sufficiency over shelter.
Mission statement or Vision statem- which
one first?
Organizations sometimes summarize goals and
objectives into a mission statement and/or a vision
statement. Others begin with a vision and mission and
use them to formulate goals and Objectives.
How is the order in your Ministry. Justify the
order.
A Mission statement tells you the fundamental
purpose of the organization. It defines the customer
and the critical processes. It informs you of the desired
level of performance.
A Vision statement outlines what the organization
wants to be, or how it wants the world in which it
operates to be. It concentrates on the future. It is a
source of inspiration. It provides clear decision-
making criteria.
 A clear mission statement is needed before alternative strategies can
be formulated and implemented
 It is important to involve as many managers as possible in the process
of developing a mission statement, because through involvement,
people become committed to an organization.
 A widely used approach is to select several articles about mission
statements and ask managers to read these as background
information
 Then ask managers to personally prepare a mission statement for the
organization
STRATEGIC MANAGEMENT PROCESS
The strategic management process means defining the
organization’s strategy. It is also defined as the process
by which managers make a choice of a set of strategies
for the organization that will enable it to achieve better
performance. Strategic management is a continuous
process that appraises the business and industries in
which the organization is involved; appraises it’s
competitors; and fixes goals to meet all the present and
future competitor’s and then reassesses each strategy.
FOUR STEPS IN SMP
Strategic management process has following four steps:
1. Environmental Scanning- Environmental scanning
refers to a process of collecting, scrutinizing and
providing information for strategic purposes. It helps
in analyzing the internal and external factors
influencing an organization. After executing the
environmental analysis process, management should
evaluate it on a continuous basis and strive to
improve it.
2. Strategy Formulation- Strategy formulation is the
process of deciding best course of action for
accomplishing organizational objectives and hence
achieving organizational purpose. After conducting
environment scanning, managers formulate corporate,
business and functional strategies.
3. Strategy Implementation- Strategy implementation
implies making the strategy work as intended or putting
the organization’s chosen strategy into action. Strategy
implementation includes designing the organization’s
structure, distributing resources, developing decision
making process, and managing human resources.
4. Strategy Evaluation- Strategy evaluation is the final
step of strategy management process. The key strategy
evaluation activities are: appraising internal and external
factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions.
Evaluation makes sure that the organizational strategy as
well as it’s implementation meets the organizational
objectives.
Environmental Scanning - Internal & External
Analysis of Environment
Organizational environment consists of both external
and internal factors. Environment must be scanned so
as to determine development and forecasts of factors
that will influence organizational success.
 It helps the managers to decide the future path of the
organization. Scanning must identify the threats and
opportunities existing in the environment. With
strategy formulation, an organization must take
advantage of the opportunities and minimize the
threats.
INTERNAL ANALYSIS
Internal analysis of the environment is the first step of
environment scanning. Organizations should observe
the internal organizational environment.
This includes employee interaction with other
employees, employee interaction with management,
manager interaction with other managers, and
management interaction with stakeholders,
organizational structure, operational potential, etc.
SWOT ANALYSIS
SWOT is an acronym for Strengths, Weaknesses,
Opportunities and Threats. By definition, Strengths
(S) and Weaknesses (W) are considered to be internal
factors over which you have some measure of control.
Also, by definition, Opportunities (O) and Threats (T)
are considered to be external factors over which you
have essentially no control.
SWOT Analysis is the most renowned tool for audit and
analysis of the overall strategic position of the business and
its environment.
Its key purpose is to identify the strategies that will create a
firm specific business model that will best align an
organization’s resources and capabilities to the requirements
of the environment in which the firm operates.
A consistent study of the environment in which the firm
operates helps in forecasting/predicting the changing trends
and also helps in including them in the decision-making
process of the organization.
Overview of SWOT
1. Strengths
Strengths are the qualities that enable us to accomplish the
organization’s mission. These are the basis on which continued
success can be made.
Strengths can be either tangible or intangible. These are what
you are well-versed in or what you have expertise in, the traits
and qualities your employees possess (individually and as a team)
and the distinct features that give your organization its
consistency. Strengths are the beneficial aspects of the
organization or the capabilities of an organization, which
includes human competencies, financial resources, products and
services.
2. Weaknesses
Weaknesses are the qualities that prevent us from accomplishing
our mission and achieving our full potential. They have an effect on
the organizational success and growth. They are the factors which
do not meet the standards we feel they should meet.
Weaknesses in an organization may be insufficient funds, inadequate
development facilities, poor decision-making, huge debts, high
employee turnover, complex decision making process, large wastage
of resources, etc.
Weaknesses are controllable. They must be minimized and
eliminated. For instance - to overcome obsolete machinery, new
machinery can be purchased.
3. Opportunities
Opportunities are presented by the environment within which
our organization operates. These arise when an organization
can take benefit of conditions in its environment to plan and
execute strategies that enable it to become more effective.
Organizations can gain competitive advantage by making use
of opportunities. Organization should be careful and
recognize the opportunities and grasp them whenever they
arise.
Opportunities may arise from competition,
industry/government and technology.
4. Threats
Threats arise when conditions in external environment
jeopardize the reliability and performance of the
organization’s mandate
Threats are uncontrollable. When a threat comes, the
stability and survival can be at stake. Examples of threats
are - unrest among employees; ever changing
technology; increasing competition, etc.
Advantages of SWOT Analysis
SWOT Analysis is instrumental in strategy
formulation and selection. It is a strong tool.
Successful businesses build on their strengths, correct
their weakness and protect against internal
weaknesses and external threats. They also keep a
watch on their overall business environment and
recognize and exploit new opportunities faster than its
competitors.
SWOT Analysis helps in strategic planning in following
manner-
 It is a source of information for strategic planning.
 Builds organization’s strengths.
 Reverse its weaknesses.
 Maximize its response to opportunities.
 Overcome organization’s threats.
 It helps in identifying core competencies of the firm.
 It helps in setting of objectives for strategic planning.
 It helps in knowing past, present and future so that by using
past and current data, future plans can be chalked out.
Applications of SWOT
An analysis can be used for:
Workshop sessions
Brainstorm meetings
Problem solving
Planning
Product evaluation
Competitor evaluation
Personal Development Planning
Decision Making (with force field analysis)
The SWOT is a great tool that can be used in
association with PESTLE
EXTERNAL ANALYSIS
As business becomes more competitive, and there are
rapid changes in the external environment,
information from external environment adds crucial
elements to the effectiveness of long-term plans.
As environment is dynamic, it becomes essential to
identify competitors’ moves and actions.
Organizations have also to update the core
competencies and internal environment as per the
external environment.
THE STRATEGIC MANAGEMENT PROCESS
A comprehensive strategic management model
Perform
External
Audit

Establish Generate Establish

Evaluate Policies Measure
Develop Mission Long- Allocate And
Statement Term And And
Resources Evaluate
Objectives Select Annual
Performance
Strategies Objectives

Perform
Internal
Audit
EVALUATING PERFORMANCE
 The tasks of strategic management is a continuous exercises because
 Times and conditions changes
 Events changes over time
 New ways of do things also changes
 New leaders also come in with new ideas
 Leaders must
 Constantly evaluate performance
 Monitor situation and decide how well things are working
 Make necessary adjustments
 Alter organization’s long-term direction

 Raise or lower performance objectives

 Modify strategy
Challenges of strategic management
Lack of consensus among the stakeholders
Strategic Planning is for the future which is uncertain
although ready for it
Lack of competence on the part of the board and the
staff to identify the problem
Political interference from within and from without
Lack of technical know how to do planning
Lack of adequate resources to do planning and
implement strategic plans
Change in technology to do research
Lack of ownership due to resistance to change some
stakeholders do no see its benefits
Lack of ability to identify all the stakeholders thus
some are not involved
High staff turnover who leave things hanging
IN CONCLUSION
Strategic Management entails;
• Strategic management involves adapting the organization to its
business environment.
• Strategic management affects the entire organization by providing
direction.
• Strategic management involves both strategy formation and also
strategy implementation.
• Strategic management is partially planned and partially unplanned.
• Strategic management is done at several levels: overall corporate
strategy, and individual business strategies.
• Strategic management involves both conceptual and analytical
thought processes.