strategic management -tarak bahadur k.c., phd -santosh koirala
TRANSCRIPT
STRATEGIC MANAGEMENT
- Tarak Bahadur K.C., PhD
- Santosh Koirala
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Session Outline Strategy - concept Strategic thinking Strategic management
framework
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Fore Thought
Battles are won long before they are fought.
Anonymous
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Strategy
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Exercise
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Strategy:Your Definition
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Strategy
- is an action oriented plan of operation for achieving desired goals based on situation analysis, and emphasises what an organisation will be doing in future.
- is the answer to the question “How”? Strategies are simply a set of actions that enable an
organisation to achieve results.
- is a plan / tactics / scheme one adopts to get something done under conditions of uncertainty.
- is a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.
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Strategy
Plan
Ploy
Pattern
Position
Perspective
5 Ps of Strategy – H Mintzberg
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Strategy … PLAN
o Consciously intended course of action, a set of guidelines to deal with the situation
PLOYo Specific maneuver intended to outwit an
opponent or competitor PATTERN
o In a stream of actions…consistency in behavior whether or not intended
POSITIONo Means of locating an organization in an
environment PERSPECTIVE
o An engrained way of perceiving the world
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Strategy
1. Managerial Intent1. Logical incremental2. Rational command
2. Cultural / Political Process
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1. Strategy: A Managerial Intent
Logical incrementalo Standardized planning procedureso Systematic data collection and
analysiso Constant environmental scanningo On going adjustment of strategyo Tentative commitment to strategyo Step by step small scale change
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Strategy: A ….
Rational command o Senior managers determines and
direct strategyo Strong vision or missiono Definite and precise objectiveso Analysis and evaluation of
environmentso Clear plans
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2. Strategy: A Cultural/Political Process
Muddling througho Managing conflicting interest
groupso Powerful groups with control over
critical resources more likely to influence strategy
o Standardized way of doing thingso Routines and procedures
embedded in organizational strategy
o Deeply rooted beliefs and assumptions
o Strong resistance to changeo Gradual adjustment to strategy
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Strategy: A …. Externally dependento Strategy is imposed by
external forces (e.g. legislation, parent organization)
o Freedom of choice severely restricted
o Groups dealing with the environment have greater influence over strategy
o Political activity within organization and between environment likely
o Externally driven strategy- Johnson &
Scholes
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Strategic Thinking
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Strategic Thinking- Development
Imp
act
Fundamental and sustained
Limited
Time
Strategic Planning Methods
Strategic ManagementIntegrated Systems
Strategic ThinkingCore Enabler
S T R
A T
E
G Y
1960s
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Self Assessment
Assess your strategic thinking abilities
Time 10 minutes
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ScoringUse the following table to interpret your score.
104–125
Exceptional: You’re a talented strategic thinker who possesses many of the traits, behaviors, attitudes, and cognitive capacities that are necessary for thinking strategically.
78–103
Superior: You’re a highly effective strategic thinker in many areas but would benefit from refining some of your skills.
51–77 Adequate: You know and practice many of the basics of strategic thinking. However, you can increase your success by further extending your skills.
25–50 Deficient: You’ll need to work broadly on your strategic thinking skills so that you can learn how to analyze opportunities and problems from a broad perspective and understand an action's potential impact on others.
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Strategic Thinking Strategic thinking means asking
“Are we doing the right thing?” Precisely, it means making that assessment using three key requirements about strategic thinking:oA definite purpose be in mind;oAn understanding of the environment, particularly of the forces that affect the fulfillment of purpose;
oCreativity in developing effective responses to those forces.
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Strategic Thinking
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Strategic Thinking - Level
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Strategic Management … is the application of strategic thinking to
the job of leading an organisation. “Managing strategically”, in other words:
o ‘Diagnosing situation strategically’, and o ‘Applying knowledge strategically’
…is the application of strategic thinking to the job of leading an organisation.
“… is continuous, iterative process aimed at keeping an organization as a whole appropriately matched to its environment.”
- Certo and Peter … Is an ongoing process and involving a
series of steps to be followed.
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Strategic Plan In order to determine where we are
going, where we stand, then determine where we want to go and how we will get there. The resulting document is SP for performance improvement to achieve desired goals.
A living document that has ability to create successful future of the organization NOT large document with detailed plans created arduously over months at great effort and abandoned after they have been duly acknowledged and then filed away.
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Strategic Planning … is an organization's process of defining
its strategy, or direction, and making decisions on allocating its resources to pursue strategy including its people and capital.
… is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organisation is, what it does, and why it does it with a focus on the future. It is defined as the process of addressing the following questions:o Where are we? SWOT – Analysiso Where do we want to be? – VMO o How do we get there? – Strategy
Formulation
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Strategic Planning Process
1. Getting ready (agreement)2. Environmental analysis (SWOT
analysis)3. Strategy Formulation (Identification
of Strategic Issues, Vision/Mission, Objectives, Roles, Strategies)
4. Strategy Implementation (Strategic Actions/Action plan- Tasks/Activities, By whom, By when, Critical Success Factors, etc.)
5. Evaluation and Control
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1. Getting Ready (Agreement)
Assessing readinesso Commitment of leadership o Ability of leaders to devote necessary attention to the ‘big picture’
The purpose is to develop initial agreement among key internal decision makers about overall planning process for their support and commitment
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Steps in preparing for planning
Obtain formal commitment Select a strategic planning committee- a
combination of ‘visionaries’ and ‘actionaries’ or a planning liaison to spearhead the process, and clarify roles
Develop a work plan or a plan to plan that outlines who is responsible for each outcome and time frames
Consider the adequate level of resources (money and time) required for appropriate planning process
Identify the information that must be collected to help make sound decisions
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2. Environment Analysis
Analysis and diagnosis of an organization, often referred to as an Organization Audit or SWOT analysis
This is undertaken to assess an organisation’s ability to deal with its environment by identifying strengths, weaknesses, opportunities and threats (SWOT).
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Internal EnvironmentOrganisation / Supply side analysis
An analysis of internal organizational factors which reviews and investigates the prevailing processes, resources and performance of organization. The analysis identifies major strengths and weaknesses - of all the key functional elements (Structure, Functions, HR, Finance, IT, Rules, Procedures, etc.).
What are major internal Strengths and Weaknesses in terms of Structure, Resources, Processes, Performance, Culture, etc. ?
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External EnvironmentDemand side analysis
Covers the various stakeholders outside the organization. The analysis indicates the opportunities and threats faced by the organisation from its relationship with external stakeholders. Major categories of external environment: 1. Forces and trends – PEST 2. Clients, customers, or payers 3. Actual or potential competitors or collaboratorsWhat major external Opportunities and Threats (Political, Economic, Social, Technology, Legal, Stakeholders, etc.) do the organisation has?
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SWOT Profile
Internal Strengths Weaknesses
1. Mandate / Vision / Mission
2. Structure3. Systems / Processes4. Organizational
resources5. Performance /
outputs
Trained staff Weak implementation
External Opportunities
Threats
1. Political2. Economic3. Social 4. Technological
Health sector as one of the priorities of government
Self sufficiency in resources
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SWOT Profile- an example
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Considerations
SWOT as very meaningful tool rather than a causal ‘warm-up’ for strategy formulation
Use precise, verifiable statements ("Cost advantage of Rs……/unit in sourcing resources x", rather than "Good value for money")- be specific
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Considerations
Reduce long lists of factors, and prioritize them, so that you spend your time thinking about the most significant factors.
Make sure that options generated are carried through to later stages in the strategy formation process.
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Considerations
Apply it at the right level - for example, we might need to apply SWOT Analysis at service-line level, rather than at the much vaguer whole organization level.
Use it in conjunction with other strategy tools (e.g. Core Competence Analysis) so that you get a comprehensive picture of the situation you're dealing with.
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Exercise: SWOT Analysis
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3. Strategy Formulation
The formulation of strategy is best described as a process for developing a sense of direction and ensuring strategic fit. The outcome of which is a formal written statement that provides a definitive guide to the organization’s intentions.
Identifying Strategic Issues- fundamental policy question/choice which affects an organization’s mandate, goals, programs, management processes, organization structure, culture, etc.
Vision/Mission, Objectives, Roles, Strategies An effective strategy is:
o Technically workableo Politically acceptable to key stakeholderso Accords with the organization’s philosophies and
valueso Ethical and legalo Deals with the issues supposed to address
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Approaches to strategy formulation
Whittington (1993) has identified four approaches to the formulation of strategy:1.Classical – as a rational process of deliberate
calculation.
2.Evolutionary – as an evolutionary process that is a product of market forces in which the most efficient and productive organizations win through.
3.Processual – strategy formulation as an incremental process that evolves through discussion and disagreement.
4.Systemic – strategy is shaped by the social system in which it is embedded. Choices are constrained by the cultural and institutional interests of a broader society rather than the limitations of those attempting to formulate corporate strategy.
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Considerations in Formulating Strategy
Organisational competence and resources to capture opportunities
Environmental threats to its long-term well being
Personal values and aspirations of managers
Societal obligations and ethical considerations
Organisational culture
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Strategic PlanObjecti
veStrategy
Measures/
Indicators
Target
Initiatives Resources
Critical Succes
s Factors
What
Who
When
Improve health service
Increase number of health professionals
Decreased Doctor-Patient ratio
10 % by 2017
Increase the number of students / seats
MoHP, Pvt. Sector
2014
Budget,Infrastructure, RP
MoF, Availability of RP, Involvement of Pvt. Sector, Govt. policy
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4. Strategy Implementation
For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization.
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4. Strategy Implementation
However beautiful the strategy, you should occasionally look at the results.
- Winston Churchill
For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization.
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A General Framework for Strategy Implementation
o Building an organisation structure to the requirements of the strategy
o Allocating resources and energies on accomplishment of the strategic goals
o Ensuring organisation-wide commitment
o Installing administrative support system
o Shaping the organisation culture to fit the strategy
o Exerting strategic leadership
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Basic Approaches to Strategy Implementation
I. Commander ApproachII. Organisational Change
ApproachIII. Collaborative ApproachIV. Cultural ApproachV. Crescive Approach
I. Commander Approach
Manager determines “best” strategy
Manager uses power to see strategy implemented
Three conditions must be met:1. Manager must have power2. Accurate and timely
information is available3. No personal biases should be
present
II. Organisational Change Approach
Focuses on the organisation
Includes focusing on the organisation’s staffing and structure
Often more effective than commander
Used to implement difficult strategies
III. Collaborative Approach
Enlarges the organisational change approach
Manager is a coordinator
Management team members provide input
Group wisdom is the goal
IV. Cultural Approach Includes lower levels of the
organisation Breaks down barriers
between management and other employees
Everyone has input into the formulation and implementation of strategies
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V. Crescive Approach
Moves upward from the "doers“ and lower middle-level managers
The top management team shapes the employees' premises
“Strategy" becomes the sum of all successful approaches
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5. Evaluation and Control
The implementation of the strategy must be monitored and adjustments made as needed. Evaluation and control consists:
I. Defining parameters to be measured
II.Defining target values for those parameters
III.Performing measurementsIV.Comparing measured results to
the pre-defined standardV. Making necessary changes
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WHY STRATEGIC INITIATIVES FAIL?
SI will fail when one is STUPID:Sponsorship not forthcomingTeam member do not function as agents of change
Unclear vision and commitmentPoorly planned change programme
Inappropriate/ Insufficient Communication
Don’t take account of culture
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The SUCCESS Principle
Shared visionUnderstand the organizationCultural alignmentCommunicationExperience help where necessary /
Executive supportStrong leadershipStakeholder buy-in / Systematic
planning / Short-term wins
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The story continues…