MNG3701 STRATEGIC PLANNING EXAM PACK.

MNG3701 STRATEGIC PLANNING EXAM PACK OCTOBER/NOVEMBER 2014 MEMORANDUM SECTION A QUESTION 1 – Differentiate between the THREE phases of the strategic management process The three stages or phases of the strategic management process are: Strategy formulation Strategy implementation Strategy review and control Strategic formulation is the first stage in which the top management team decides what to do. This stage involves senior management. At this stage the management analyse the organisation as well as the environment in which it operates. In the process they set a strategic direction and decide on the future of the organisation. By and large, this stage is idealistic. On the other hand, during the strategy implementation everyone in the organisation is involved in putting the strategy into action. Communication and information dissemination will be done at this stage. By and large, this stage is practical or pragmatic in nature. Contrary to the above phases, strategy review and control involves monitoring the progress of strategy implementation, identifying problems and apply some solutions to correct the anomalies. Senior and middle managers are involved in the strategy review process. By and large, this stage is evaluative, analytical and exploratory. QUESTION 2 –Identify and explain any five components of strategic leadership A strategic leader is future oriented visionary who anticipate changes. He/she looks beyond the present by scanning the environment and be vigilant to uncover opportunities inside and outside the organisation. Secondly, a strategic leader is an implementer. This type of a leader do not just talk but will put into practise the best solutions which make a difference. Such leaders have their feet firmly on the ground so as to be in a position to distinguish between practical solutions and ambitious dreams. 2 | P a g e Furthermore, strategic leaders help others to see beyond the establish orthodoxy. These leaders open new horizons by helping others to experiment with new exciting and more effective ways of meeting the needs of their clients. Communication and interpersonal skills are also a prerequisite for anyone in strategic leadership. By and large, the role of a strategic leader calls for sensitivity to different cultures and cross cultural issues. By demonstrating such characteristics these strategic leaders value the input of stakeholders and understand the importance of all parties. They use proactive communication and frequent engagements to build trust and get their support. More importantly, strategic leadership must be pursued by people who have good management of physical and general well-being. Physically fit leaders can be relied upon in times of high pressure and when problems need too be solved. These leaders must be mentally prepared to exploit opportunities which arise unexpectedly. These leaders must be ethical or morally upright. Successful leaders consistently apply the ethics of justice and caring. Over and above all, they must be skilled in managing conflict effectively. QUESTION 3 - Explain the importance of industry assessment as part of external environmental assessment. The external environment of an organisation is complex and challenging. The increasing turbulence in this environment also makes it important for an organisation to do an external environmental analysis by auditing all the factors that pose opportunities and threats. As many managers and employees as possible must be involved in the process of external environmental analysis, because involvement in the strategic management process can lead to an understanding of the organisations situation and a commitment from its members to the process and implementation of the strategy. It is imperative that environmental assessment be conducted on a continuous basis because of the constant change in the environment. The information gathered through environment assessment is then used in strategic decision making. The process for conducting a macro environmental assessment is ongoing and consists of four interrelated activities: scanning, monitoring, forecasting and assessing. Process for conducting a macro environmental assessment • Scanning: early signals of environmental changes and trends are identified • Monitoring: meaning of environmental changes and trends is detected through ongoing observation 3 | P a g e • Forecasting: based on monitored changes and trends, projections of anticipated outcomes are developed • Assessing: the timing and importance of environmental changes and trends for organizations strategies and their management are determined Some elements of the external environment that will influence the organisation: - Consumer demand for both industrial and consumer products and services - Types of product needed to be developed - Nature of positioning and market segmentation strategies - Types of services needed - Choice of businesses to acquire or to sell - Competitors actions - The selection of suppliers and distributors - Governments regulations and laws Organizations need to anticipate, mobilize and empower their managers and employees to identify, monitor and evaluate key external forces. - Accurate information about the environment is very important for strategic decision making and planning. For example, if organisations know very little about the likes and dislikes of their customers and future needs they will have some difficulties in designing new products or services as well as developing marketing strategies. - Helps managers to identify threats and opportunities MODEL ANSWER The boundaries and interfaces that exist between organisations and their external environments are relatively fluid and cannot be easily or clearly defined. Due to the fact that the organisation interact with its external environment, the external environment may throw some surprises on an organisation, therefore, there is need for managers to be prepared to react appropriately to any changes in the external environment. By and large, accurate information about the environment is very important for strategic decision making and planning. For example, if an organisation knows little about the likes and dislikes of its customers and future needs, they will have some difficulties in designing new products or services, developing marketing and strategic plans. Therefore, lack of information about the environment will place managers in a position in which they are limited to understand or predict the future. Understanding of external environment will make managers to understand how the environment affects their organisation. It helps them to identify opportunities and threats. More importantly, it will help the managers to broaden or enhance their ability to make decisions and execute plans effectively. 4 | P a g e Understanding of the external environment provides a foundation for strategic direction and management. The manager need to understand organisational key role players so as to steer the organisation to success. QUESTION 4 - Differentiate between long- and short-term goals. Long-term goals Short-term goals Examples Increase market share of customers by 10% In order to increase our market share in the long term we need to do the following in the short-term: • Introduce monthly promotional activities with discounted products to lure new customers • Introduce product X into the youth market segment • Cross-sell products in all market segments Strategic importance of individual goals High Lower Nature Strategic (providing strategic direction) Operational (i.e. to be directly implemented as part of the operations of the organisation) Time frame Long-term (1-5 years) (depending on the industry) Short-term (annual, quarterly, monthly or weekly) Management involvement High-level managers Lower-level managers and supervisors Specificity Low High Quantity Few high-level goals Numerous lower-level goals associated with a long-term goal A goal is a destination, aspiration or something one works toward. Short-term goal is the expected outcome in the immediate period. Long-term goal would be the expected outcome in the projected future