2 A 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'
4 Strategic 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.
5 Why 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
6 What 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
7 What 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
8 Strategic 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.
9 SP 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?
10 In other words ---Strategic planning should help us envision our desired future and then put us on course to realize that vision.
11 Strategic planning is not a substitute for: LeadershipStrategic thinking and actingCompetenceThey will work together for the benefit of the members of the organization and stakeholders.
12 Overall process often includes: InitiationAwareness of needTrainingCommitment by key peopleEstablishment of key committee(s)Identification of resources neededDiscussion of what is to be accomplished
13 Overall process often includes: Formation of planning groupsCoordinating committeeWorking groupOther groups as neededEnvironmental scanInternal and external contextsPlanning assumptionsMandatesVision/vision of successValues/guiding principlesMission
14 Overall 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
15 A 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
16 Identifying 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
17 Strategic 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
18 Strategic 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
19 Strategic 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
20 Components of the General Environment EconomicDemographicSocioculturalCompetitiveEnvironmentIndustry EnvironmentPolitical/LegalGlobalTechnological10
23 Basic 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)
24 summarise the results of analyses The SWOT diagram maysummarise the results of analysesInternalAnalysesStrengthsWeaknessesOpportunitiesThreatsExternalAnalyses
25 The 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.
26 The 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
27 SWOT 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.
28 The External Environment: SWOTAnalysisThe External Environment:1
29 The External Environment: Opportunities, Threats, e.g.: Industry Competition, and Competitor Analysis1
30 OpportunitiesAn 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
31 ThreatsA 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
32 Opportunities 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.
33 Opportunities 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.
34 Questions 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?
35 The Internal Environment: SWOTAnalysisThe Internal Environment:1
36 The Internal Environment: e.g.: Resources, Capabilities and Strengths, Weaknesses,e.g.: Resources, Capabilities andCore Competencies1
37 StrengthsA 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
38 WeaknessesA 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
39 Strengths 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.
40 Realistic 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?
41 Consider 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?
44 Getting 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.
45 Suggestions 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.
46 Using 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.
47 Expanding 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.
48 Simple 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
49 Drawbacks 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
50 ConclusionA 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
52 PESTPolitical: 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!
53 PEST 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
54 Five-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?
57 RESPONSIBILITIES FOR MANAGERS Establishing the missionFormulating an organizational philosophyEstablishing policiesSetting ObjectivesDeveloping a strategyPlanning the organizational structureProviding personnel
58 RESPONSIBILITIES FOR MANAGERS Establishing proceduresProviding facilitiesProviding capitalSetting standardsEstablishing management programmes and operational plansProviding control informationActivating people
59 HOW CAN WE APPLY STRATEGIC PLANNING IN THE JUDICIARY (THE CASE OF LESOTHO)