THE MANAGEMENT UNIVERSITY OF AFRICA

SCHOOL OF MANAGEMENT AND LEADERSHIP

BML 206: INTRODUCTION TO STRATEGIC MANAGEMENT

COURSE SYLLABUS

COURSE INSTRUCTOR: A.KIHANYACREDIT HOURS: 3 HRS

1.0COURSE PURPOSE

The course equips the learner with knowledge and skills in Strategic Management to be able to make strategic decisions in business. It is also intended to provide the student with an exposition to the concept of strategy, the process of strategy formulation and strategy implementation.

The course is designed to help you develop skills and judgment for your business career. The intent is to sharpen your ability to think

critically and logically, and to help you learn to diagnose situations from a strategic point of view.

2.0COURSE LEARNING OUTCOMES

At the end of this course, the learner should be able to;

1. Analyze a company’s external environment, internal strategy and their interface.

2. Explain the nature of business competition and sources of competitive advantage

3. Discuss how the internal and external environment influence firm performance

4. Understand and appreciate the process and value of Strategic Management.

5. Relate the role of ethics in corporate social responsibility.

3.0 TEACHING METHODOLOGY

The course will be conducted using lectures, group/class discussions, assignments and case studies.

4.0COURSE ASSESSMENT

Continuous Assessment Test 15%Work Based Assignments 15%Final Examination 70%TOTAL 100%

5.0COURSE TEXTS AND JOURNALS1. Wheelen, T., & Hunger, J. D.

(2004).Concepts in strategic management and business policy. New York: Prentice

2. Academy of Management Executive: Academy of Management: New York.

6.0RECOMMENDED TEXT BOOKS

1. Gerry, J., Scholes, K., & Whittington, R. (2005).Exploring Corporate Strategy: Text only. New Jersey; Prentice Hall.

2. Ghemawat, P. (2006). Strategy and the Business Landscape. Core Concepts. Upper Saddle River. NJ: Prentice Hall.

3. Hunger J & Wheelen, T. (2006) Essentials of Strategic Management. New Jersey: Prentice Hall

4. International Executive : Joho Wiley & Sons : New Jersey

TOPIC ONE INTRODUCTION

INTRODUCTORY QUESTION Why are some firms more successful than others?

1.0 THE CONCEPT OF STRATEGY

“Effective managers live in the present – but concentrate on the future." James L. Hayes

What is Strategy?

The word strategy comes from a combination of the words; stratos, which meant “army”, and agein meaning “to lead”. Greek Language (6th century BC)

A strategy is a comprehensive action plan that identifies long-term direction and guides resource utilization to accomplish organizational goals with sustainable competitive advantage.

“Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a changing environment, to meet the needs of markets and to fulfill stakeholder expectations.”

“Strategy becomes a fundamental framework through which an organization can assert its vital continuity, while at the same time purposefully managing its adaptation to the changing environment to gain competitive advantage. Strategy includes the formal recognition that the recipients of the results of a firm’s actions are the wide constituency of its stakeholders. Therefore the ultimate objective of strategy is to address stakeholder benefits – to provide a base for establishing the host of transactions and social contracts that link a firm to its stakeholders.” Strategic Management is Process of formulating, implementing, and evaluating, strategies to accomplish long-term goals and sustain competitive advantage.     

Strategic management is the process in which an organization develops and implements plans that espouse the goals and objectives of that organization.

The process of strategic management is a continuous one that changes as the organizational goals and objectives evolve. Small businesses engage in strategic management to ensure that they adapt to trends and external changes such as globalization. Several key concepts characterize strategic management and the development of organizational goals.

Essentially strategic management answers three basic questions;

1. “Where do you want your business to go?” (goals),

2. “How is your business going to get there?” (strategy)

3. “How will you know when you get there?” (Evaluation).

1.1 Characteristics of StrategyThe question “what is strategy?” can be addressed by attempting to find characteristics that distinguish strategic

decisions from other decisions taken within the organization.

Characteristics of strategic decisions:• affect the long term direction of the

organization.• achieve an advantage, frequently over the

competition.• are about the scope of the organization’s

activities.• match an organization to its environment.• build on an organization’s resources and

competences.• are the requirement for major resource

changes within an organization.

• have an impact on operational decisions across the organization.

• give the values and expectations of the organization.

Above all, strategic decisions are complex, involve a high degree of uncertainty and affect the organization as a whole.

2.0BUSINESS POLICY

2.1 Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can be taken by the subordinates in an organization.

It permits the lower level management to deal with the problems and issues without consulting top level management every time for decisions.

Business policies are the guidelines developed by an organization to govern its actions. They define the limits within which decisions must be made.

Business policy also deals with acquisition of resources with which organizational goals can be achieved.

Business policy is the study of the roles and responsibilities of top level management, the significant issues affecting organizational

success and the decisions affecting organization in long-run.

2.1.1Features of Business Policy

An effective business policy must have following features-

1. Specific- Policy should be specific /definite. If it is uncertain, then the implementation will become difficult.

2. Clear- Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy.

3. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates.

4. Appropriate- Policy should be appropriate to the present organizational goal.

5. Simple- A policy should be simple and easily understood by all in the organization.

6. Inclusive/Comprehensive- In order to have a wide scope, a policy must be comprehensive.

7. Flexible- Policy should be flexible in operation/application. This does not imply that a policy should be altered always, but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios.

8. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance.

2.1.2 Difference between Policy and Strategy

The term “policy” should not be considered as synonymous to the term “strategy”. The difference between policy and strategy can be summarized as follows-

1. Policy is a blueprint of the organizational activities which are repetitive /routine in nature. While

strategy is concerned with those organizational decisions which have not been dealt/faced before in same form.

2. Policy formulation is responsibility of top level management. While strategy formulation is basically done by middle level management.

3. Policy deals with routine/daily activities essential for effective and efficient running of an organization. While strategy deals with strategic decisions.

4. Policy is concerned with both thought and actions. While strategy is concerned mostly with action.

5. A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target as prescribed by a policy.

3.0 Meaning of Strategic Management

The following statements serve as a number of workable definitions of strategic management:

Strategic management is the process of managing the pursuit of organizational mission while managing the relationship of the organization to its environment (James M. Higgins).

Strategic management is defined as the set of decisions and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of the organization (John A. Pearce II and Richard B. Robinson, Jr.).

Strategic management is the process of examining both present and future environments, formulating the organization's objectives, and making, implementing, and controlling decisions focused on achieving these objectives in the present and future environments (Garry D. Smith, Danny R. Arnold, Bobby G. Bizzell).

Strategic management is a continuous process that involves attempts to match or fit the organization with its changing

environment in the most advantageous way possible (Lester A. Digman).

Meaning of Strategic Management

Strategic Management is Process of formulating, implementing, and evaluating, strategies to accomplish long-term goals and sustain competitive advantage.     

Strategic management is the process in which an organization develops and implements plans that espouse the goals and objectives of that organization.

The process of strategic management is a continuous one that changes as the organizational goals and objectives evolve. Small businesses engage in strategic management to ensure that they adapt to trends and external changes such as globalization. Several key concepts characterize strategic management and the development of organizational goals.

Essentially strategic management answers three basic questions;

4. “Where do you want your business to go?” (goals),

5. “How is your business going to get there?” (strategy)

6. “How will you know when you get there?” (Evaluation).

Key Terms in Strategic Management

Strategic management, like many other subjects, has developed terminology to identify important concepts.

1. Purpose

The organization's purpose outlines why the organization exists; it includes a description of its current and future business (Leslie W. Rue, and Loyd L. Byars) The purpose of an organization is its primary role in society, a broadly defined aim (such as manufacturing electronic equipment) that it may share with many other organizations of its type.

2. Mission

The mission of an organization is the unique reason for its existence that sets it apart from all others. The organization's mission describes why the organization exists and guides what it should be doing. Often, the organization's mission is defined in a formal, written mission statement. Decisions on mission are the most important strategic decisions, because the mission is meant to guide the entire organization. Although the terms "purpose" and "mission" are often used interchangeably, to distinguish between them may help in understanding organizational goals.

3. Goals

A goal is a desired future state that the organization attempts to realize.

4. Objectives

The term objective is often used interchangeably with goal but usually refers to specific targets for which measurable results can be obtained.

Organizational objectives are the end points of an organization's mission. Objectives refer to the specific kinds of results the organizations seek to achieve through its existence and operations. Objectives define what it is the organization hopes to accomplish, both over the long and short term.

5. Tactics

In contrast, tactics are specifics actions the organization might undertake in carrying its strategy.

6. Strategists Strategists are the individuals who are involved in the strategic management process. Several levels of management may be involved in strategic decision making. Strategists have various job titles such as CEO, President, Owner, Chair of the board, Executive Director, Chancellor, Dean, Entrepreneur.7. Competitive Advantage

Anything that a firm does especially well compared to rival firms.

Getting and keeping competitive advantage is essential for the long term success in an organization.A firm must strive for sustained competitive advantage.

8. Vision statement• Answers the question “what do we want to become” • It is the first step in strategic Management. • Many vision statements are single statements“Our vision is to take care of your vision”

9. Mission Statements Are enduring statements of purpose that distinguish one business firm from other similar firms.A mission statement identifies the scope of a firm’s operations.

10. External Opportunities and Threats• Are factors which could harm or benefit the organization.

• Comprise of the following:• Economic • Social • Political• Technological • Cultural • Demographic Environment 11. Internal Strengths and Weaknesses• Controllable activities that are performed especially well or poorly.• Relate to functional area• Marketing • Management • Finance/Accounting• Production/Operations• Strengths and weaknesses are determined relative competitors. • Relative deficiency or superiority is important information12. Long Term Objectives• Objectives can be defined as specific results that an organization seeks to achieve.

• Long term means more than five years.Objectives are essential for organizational success13. Strategies Are the means by which long term objectives will be achieved.Levels of Strategies a. Corporate Strategyb. Business Strategyc. Functional strategyd. Operational Strategy 14. Annual Objectives• Annual objectives are short term milestones that organizations must achieve to reach long term objectives.• Annual objectives should be stated in terms of management, marketing, finance/accounting, production/operations, research and development and MIS accomplishment.15. Policies• Policies are the means by which annual objectives will be achieved. • Policies include guidelines, rules, and

procedures established to support efforts to achieve stated goals.

THE NATURE AND VALUE OF STRATEGIC MANAGEMENT

Strategic Management 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.

3. Assess the company’s external environment, including both the competitive and 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.

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 strategic choices by means of budgeted 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.

Benefits of Strategic Management

Chance favors the prepared mind --Louis Pasteur

      1. Strategy formulation activities enhance the firm’s ability to prevent problems.

      2. Group-based strategic decisions are likely to be drawn from the best available alternatives.

      3. The involvement of employees in strategy formulation improves their understanding of the productivity-reward relationship in every strategic plan and thus heightens their motivation.

      4. Gaps and overlaps in activities among individuals and groups are reduced as participation in strategy formulation clarifies differences in roles.

      5. Resistance to change is reduced.