MAC2602 – STUDY NOTES
PART 1: STRATEGY AND STRATEGIC PLANNING
TOPIC 1: DEVELOPMENT OF THE ORGANISATION’S STRATEGY
SU 1: Defining concepts:
Mission:
- Mission statement defines the core purpose of organization, by broadly stating reasons
why organisation exists.
- Benefits:
o Describes what organisation is about
o Reveals the area in which organisation is operating
o Provides guiding philosophy about direction organisation should take
o Enables communication of common culture through whole organisation
Core Values
- Principles that guide an organization by describing how every employee is expected to
behave.
- Change in environment: Organisation’s core values do not change over time, but remain
the same.
Vision
- Vision statement defines where organisation wants to go in the future.
Strategy
- Choosing long-term activities to achieve the purpose set out in the mission statement and
ultimately moving towards realising the vision.
- 3 Generally accepted competitive strategies that are available to organisations in order to
achieve their long-term goals:
o Cost leadership strategy
o Differentiation strategy
o Pricing strategy (Price skimming, selective pricing, market pricing, Predatory
pricing)
Strategic objectives
- Clearly formulate measures of progress and targets to be achieved in a specific time
frame.
- Characteristics:
o Precise formulation of goals to be achieved
o Measures progress towards the attainment of the attribute.
o Contains a target to be achieved
o Contains a time frame in which the target is to be achieved
- Acronym SMART Criteria:
o Specific in what is to be achieved
o Measurable, specified as a quantity
o Attainable
o Relevant to the mission
o Time-bound with a completion date
,SU 2: Key Stakeholders: Roles, Conflicts and influences
,Definition of stakeholders
- Those persons and organisations that are affected by activities of the organisation
- They have an interest in the strategy of an organisation
- Include staff, shareholders, creditors, suppliers, customers. Government, local authorities,
professional bodies, pressure groups and the community at large.
Classification of stakeholders
- Primary stakeholders (contractual relationships)
o Internal stakeholders (Managers; employees)
o Connected stakeholders (Shareholders/owners, banks and lenders, suppliers,
customers)
- Secondary stakeholders (non-contractual relationships)
o External stakeholders (Government, local authorities, professional bodies, pressure
groups, community at large)
Roles of stakeholders
1. Internal stakeholders
a. Strong management influence
b. Main interests will be growth and continued existence of organisation
2. Connected stakeholders
a. Interested in objectives of organisation that affect own respective goals
b. Shareholders: interested in profit making
c. Banks and lenders: Interested in cash flows
d. Suppliers: Interested in purchase strategy of organisation
e. Customers: Interest in organisation’s product market strategy
3. External stakeholders
a. Government: interested in number of people that organisation employ,
training provided and tax.
b. Pressure groups: Workers unions, consumer right groups, groups against
pollution, local community, etc.
Stakeholder types, expectations and conflicts
Different conflicts from different stakeholders can clash, and influence the strategic choices of
an organisation.
Stakeholder influence on organisation strategy development
1. Dependency on stakeholders relationships
2. Degrees of power differ between stakeholders
3. Level of interest of a stakeholder group
4. Varying degrees of influence from stakeholders
SU 3: Factors that influence the development of an organisations
strategy
, Distinguish between external and internal environmental factors:
External Factors:
1. Political (Influences legislation)
2. Economic (Influences feasibility of strategy)
3. Social (Sustainability and ethics)
4. Technological (Influences competitiveness)
5. Competition (Operating)
a. Competitive position of organisation within segment/industry
i. Study market
ii. Predict / forecast organisation’s demand and supply
iii. Formulate strategy
iv. Increase market share
v. Develop strategy for growth
vi. Plan diversification and expansion
vii. Study forthcoming trends in industry
b. Customer base
c. Suppliers
d. Creditors
e. Labour market
Internal Factors:
1. Corporate culture (employees shared beliefs, values and
symbols)
2. Organisation leadership (executives and managers)
3. HR Policies (workforce of an organisation)
4. Industrial relations (Workplace relationships)
5. Controls at organisation level (Code of conduct)
LU 4: Strategic planning processes
PART 1: STRATEGY AND STRATEGIC PLANNING
TOPIC 1: DEVELOPMENT OF THE ORGANISATION’S STRATEGY
SU 1: Defining concepts:
Mission:
- Mission statement defines the core purpose of organization, by broadly stating reasons
why organisation exists.
- Benefits:
o Describes what organisation is about
o Reveals the area in which organisation is operating
o Provides guiding philosophy about direction organisation should take
o Enables communication of common culture through whole organisation
Core Values
- Principles that guide an organization by describing how every employee is expected to
behave.
- Change in environment: Organisation’s core values do not change over time, but remain
the same.
Vision
- Vision statement defines where organisation wants to go in the future.
Strategy
- Choosing long-term activities to achieve the purpose set out in the mission statement and
ultimately moving towards realising the vision.
- 3 Generally accepted competitive strategies that are available to organisations in order to
achieve their long-term goals:
o Cost leadership strategy
o Differentiation strategy
o Pricing strategy (Price skimming, selective pricing, market pricing, Predatory
pricing)
Strategic objectives
- Clearly formulate measures of progress and targets to be achieved in a specific time
frame.
- Characteristics:
o Precise formulation of goals to be achieved
o Measures progress towards the attainment of the attribute.
o Contains a target to be achieved
o Contains a time frame in which the target is to be achieved
- Acronym SMART Criteria:
o Specific in what is to be achieved
o Measurable, specified as a quantity
o Attainable
o Relevant to the mission
o Time-bound with a completion date
,SU 2: Key Stakeholders: Roles, Conflicts and influences
,Definition of stakeholders
- Those persons and organisations that are affected by activities of the organisation
- They have an interest in the strategy of an organisation
- Include staff, shareholders, creditors, suppliers, customers. Government, local authorities,
professional bodies, pressure groups and the community at large.
Classification of stakeholders
- Primary stakeholders (contractual relationships)
o Internal stakeholders (Managers; employees)
o Connected stakeholders (Shareholders/owners, banks and lenders, suppliers,
customers)
- Secondary stakeholders (non-contractual relationships)
o External stakeholders (Government, local authorities, professional bodies, pressure
groups, community at large)
Roles of stakeholders
1. Internal stakeholders
a. Strong management influence
b. Main interests will be growth and continued existence of organisation
2. Connected stakeholders
a. Interested in objectives of organisation that affect own respective goals
b. Shareholders: interested in profit making
c. Banks and lenders: Interested in cash flows
d. Suppliers: Interested in purchase strategy of organisation
e. Customers: Interest in organisation’s product market strategy
3. External stakeholders
a. Government: interested in number of people that organisation employ,
training provided and tax.
b. Pressure groups: Workers unions, consumer right groups, groups against
pollution, local community, etc.
Stakeholder types, expectations and conflicts
Different conflicts from different stakeholders can clash, and influence the strategic choices of
an organisation.
Stakeholder influence on organisation strategy development
1. Dependency on stakeholders relationships
2. Degrees of power differ between stakeholders
3. Level of interest of a stakeholder group
4. Varying degrees of influence from stakeholders
SU 3: Factors that influence the development of an organisations
strategy
, Distinguish between external and internal environmental factors:
External Factors:
1. Political (Influences legislation)
2. Economic (Influences feasibility of strategy)
3. Social (Sustainability and ethics)
4. Technological (Influences competitiveness)
5. Competition (Operating)
a. Competitive position of organisation within segment/industry
i. Study market
ii. Predict / forecast organisation’s demand and supply
iii. Formulate strategy
iv. Increase market share
v. Develop strategy for growth
vi. Plan diversification and expansion
vii. Study forthcoming trends in industry
b. Customer base
c. Suppliers
d. Creditors
e. Labour market
Internal Factors:
1. Corporate culture (employees shared beliefs, values and
symbols)
2. Organisation leadership (executives and managers)
3. HR Policies (workforce of an organisation)
4. Industrial relations (Workplace relationships)
5. Controls at organisation level (Code of conduct)
LU 4: Strategic planning processes
