2A Definition of Strategy ‘Strategy is the direction and scope of an organisation over the long term which achieves advantages for the organisation through its configuration of its resources within a changing environment and to fulfil stakeholder expectations’Johnson and Scholes (2002)
3“What is strategy anyway?” "Strategy is the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectations.”Johnson & Scholes 'Exploring Corporate Strategy: Text and Cases'
4Strategic planning is a process which takes into account an organization’s external and internal environments while helping it define its purposes, what it intends to become, and how it will attain its goals.
5Why Some Firms Do No Strategic Planning Poor RewardFire-fightingWaste of TimeToo ExpensiveLazinessContent with SuccessFear of FailurePrior Bad ExperienceSelf-InterestFear of the UnknownHonest Difference of OpinionSuspicion
6What if we don’t plan? Decision-making by crisis Plans driven by budgetWasted/inefficient use of resourcesUnnecessary conflict – mostly over resource allocationsNo clear direction/visionUnable to quickly respond to opportunities and threats
7What makes planning strategic? Considers the environment – external and internal in relation to the organizationInvolves issues of significance having an impact on the organization's futureInvolves both analysis and insight
8Strategic planning is a process. Purpose is not to produce a document but to result in strategic thinking and acting by the people doing the work in the organization.Documents are used to record both intentions and accomplishments – but they are not the goal of strategic planning.
9SP should answer the following questions: Where should the organization be going?Why and how has a particular direction/vision been chosen?What strategies and actions will be necessary to reach our vision?How will resources be marshaled?
10In other words ---Strategic planning should help us envision our desired future and then put us on course to realize that vision.
11Strategic planning is not a substitute for: LeadershipStrategic thinking and actingCompetenceThey will work together for the benefit of the members of the organization and stakeholders.
12Overall process often includes: InitiationAwareness of needTrainingCommitment by key peopleEstablishment of key committee(s)Identification of resources neededDiscussion of what is to be accomplished
13Overall process often includes: Formation of planning groupsCoordinating committeeWorking groupOther groups as neededEnvironmental scanInternal and external contextsPlanning assumptionsMandatesVision/vision of successValues/guiding principlesMission
14Overall process often includes: Identification of strategic issues/initiatives and selection of issues for actionOutcome criteria/expectations for each action itemStrategies and action plansPlan for monitoring progress and revisingWrite the documentImplement the process
15A strategic issue is:A significant challenge or situation the organization can do something about.Involves factors (e.g., mission, mandates, SWOT’s) that make the issue strategic.Entails consequences of not addressing the issue
16Identifying strategic issues is useful because: Focuses attention on what is really important.Emphasizes issues rather than answers.Can create “useful tension” necessary for true change.Helps in identifying solutions.Process becomes real for some at this point
17Strategic Planning The Vision Aims and Objectives: Communicating to all staff where the organisation is going and where it intends to be in the futureAllows the firm to set goalsAims and Objectives:Aims – long term targetObjectives – the way in which you are going to achieve the aim
18Strategic Planning Example: Aim may be for a chocolate manufacturer to break into a new overseas marketObjectives:Develop relationships with overseas suppliersIdentify network of retail outletsConduct market research to identify consumer needsFind location for overseas sales team HQ
19Strategic Planning Once the direction is identified: Analyse position Develop and introduce strategyEvaluate:Evaluation is constant and the results of the evaluation feeds back into the vision
20Components of the General Environment EconomicDemographicSocioculturalCompetitiveEnvironmentIndustry EnvironmentPolitical/LegalGlobalTechnological10
23Basic Assumption of a SWOT Analysis Align internal activities with external realitiesThe SWOT analysis provides a framework for analyzing:strengths and weaknesses (internal); andopportunities and threats (external)
24summarise the results of analyses The SWOT diagram maysummarise the results of analysesInternalAnalysesStrengthsWeaknessesOpportunitiesThreatsExternalAnalyses
25The GAP / SWOT Analysis “GAP” What you have to do to get there. The Vision3-5 yearsSituationAuditWhere youare today.Where youwant to go.What you haveto do to get there.
26The purpose of SWOT Analysis It is an easy-to-use tool for developing an overview of a company’s strategic situationIt forms a basis for matching your company’s strategy to its situation
27SWOT is the starting point It provides an overview of the strategic situation.It provides the “raw material” to do more extensive internal and external analysis.
29The External Environment: Opportunities, Threats, e.g.: Industry Competition, and Competitor Analysis1
30OpportunitiesAn OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment.Possible Opportunities:Emerging customer needsQuality ImprovementsExpanding global marketsVertical Integration
31ThreatsA THREAT is a factor in your company’s external environment that poses a danger to its well-being.Possible Threats:New entry by competitorsChanging demographics/shifting demandEmergence of cheaper technologiesRegulatory requirements
32Opportunities and Threats form a basis for EXTERNAL analysis By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification.By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.
33Opportunities and Threats Primarily external in nature Represent characteristics of:the research environmentgrowth in potential marketschanges in the competitive, economic, political/legal, technological, or socio-cultural environmentsA threat to some is an opportunity to another.
34Questions on opportunities: Is there a product/service area that others have not yet covered?Are there emerging trends that fit with your company's strengths?Questions on threats:Are your competitors becoming stronger?Are there emerging trends that amplify one of your weaknesses?
37StrengthsA STRENGTH is something a company is good at doing or a characteristic that gives it an important capability.Possible Strengths:Name recognitionProprietary technologyCost advantagesSkilled employeesLoyal Customers
38WeaknessesA WEAKNESS is something a company lacks or does poorly (in comparison to others) or a condition that places it at a disadvantagePossible Weaknesses:Poor market imageObsolete facilitiesInternal operating problemsPoor marketing skills
39Strengths and Weakness form a basis for INTERNAL analysis By examining strengths, you can discover untapped potential or identify distinct competencies that helped you succeed in the past.By examining weaknesses, you can identify gaps in performance, vulnerabilities, and erroneous assumptions about existing strategies.
40Realistic and not modest One’s strength is another’s weakness StrengthsConsider from both the view of the firm (product) as well as from customers and competitorsRealistic and not modestOne’s strength is another’s weaknessQuestions:What are the firm’s advantages over others?What does the firm do well?What makes you stand out from your competitors?
41Consider from internal and external viewpoint WeaknessesConsider from internal and external viewpointBe truthful so that weaknesses may be overcome as quickly as possibleOne’s strength is another’s weaknessQuestions.What is done poorly?What can be improved?What should be avoided?
44Getting Started Be realistic about the strengths and weaknesses Analysis should distinguish between where you are today and where you could be in the futureBe specific. Avoid grey areas.Keep the SWOT short and simple. Avoid complexity and over analysisSWOT is subjective.
45Suggestions for conducting SWOT Analysis: Be realistic; no need to inflate strengths or be in denial about shortcomings.Distinguish between where your technology is today, and where it could be in the future.Be specific. Avoid grey areas.Always analyze in the context of your competitive environment.Keep your SWOT short and simple.
46Using the SWOT Analysis Weaknesses should be looked at in order to convert them into strengths.Try to match your strengths with external opportunities.Threats should be converted into opportunities.Strengths and opportunities should be matched.
47Expanding Your SWOT Analysis Delve deeper into the details of the technology.Include more detailed competitor information in the analysis.Take a closer look at the business environment.Expand the reach of a SWOT analysis through surveys.
48Simple rules for a successful SWOT analysis Establish the objectivesEstablish the teamAllocate research and information gathering tasksEvaluate listed ideas against ObjectivesEvaluate the ListAction PlanBuild the StrategiesReview the SWOT
49Drawbacks of SWOT Usually reflects an existing position and viewpoint Can look for 'fit' rather than to 'stretch'SnapshotSWOT analysis can very subjectiveMay be too close or far away from the actual activities of the organizationFocusing on the internal state vs. The externalAlign internal efforts with external opportunitiesCaution:Do not rely on it too muchTwo people rarely come-up with the same final version of SWOT
50ConclusionA SWOT analysis when correctly applied, is one tool that could provide an overall picture of the current situation and the outstanding requirements for business organizations.Used creatively, SWOT can form a foundation upon which to construct strategic plans for implementation
52PESTPolitical: Local, national and international political developments – how will they affect the organisation and in what way/s?Economic: what are the main economic issues – both nationally and internationally – that might affect the organisation?Social: what are the developing social trends that may impact on how the organisation operates and what will they mean for future planning?Technological: changing technology can impact on competitive advantage very quickly!
53PEST Examples: Growth of China and India as manufacturing centres Concern over treatment of workers and the environment in less developed countries who may be suppliersThe future direction of the interest rate, consumer spending, etc.The changing age structure of the populationThe popularity of ‘fads’ like the Atkins DietThe move towards greater political regulation of businessThe effect of more bureaucracy in the labour market
54Five-ForcesDeveloped by Michael Porter: forces that shape and influence the industry or market the organisation operates in.Strength of Barriers to Entry - how easy is it for new rivals to enter the industry?Extent of rivalry between firms – how competitive is the existing market?Supplier power – the greater the power, the less control the organisation has on the supply of its inputs.Buyer power – how much power do customers in the industry have?Threat from substitutes – what alternative products and services are there and what is the extent of the threat they pose?
57RESPONSIBILITIES FOR MANAGERS Establishing the missionFormulating an organizational philosophyEstablishing policiesSetting ObjectivesDeveloping a strategyPlanning the organizational structureProviding personnel
58RESPONSIBILITIES FOR MANAGERS Establishing proceduresProviding facilitiesProviding capitalSetting standardsEstablishing management programmes and operational plansProviding control informationActivating people
59HOW CAN WE APPLY STRATEGIC PLANNING IN THE JUDICIARY (THE CASE OF LESOTHO)