UNIVERSITY FOR DEVELOPMENT STUDIES

SCHOOL OF BUSINESS AND LAW

STRATEGIC MANAGEMENT ASSIGNMENT

MOHAMMED ABU SHAIBU

UDS/MPC/0103/16

AUGUST 2018
Question 2

Discuss the elements of the strategic management process? How are they interrelated?

Solution

Introduction

The strategic management process is made up of three elements: strategy formulation, strategy

implementation, and strategy evaluation. These elements are steps that are performed, in order,

when developing a new strategic management plan. Existing businesses that have already

developed a strategic management plan will revisit these steps as the need arises, in order to

make necessary changes and improvements.

Strategy Formulation

Strategy formulation involves designing and developing the company strategies. Determining

company strengths aids in the formulation of strategies. Strategy formulation is generally broken

down into three organizational levels: operational, competitive, and corporate.

Operational strategies are short-term and are associated with the various operational departments

of the company, such as human resources, finance, marketing, and production (Coulter, 2005).

These strategies are department specific. For example, human resource strategies would be

concerned with the act of hiring and training employees with the goal of increasing human

capital.

Competitive strategies are those associated with methods of competing in a certain business or

industry. Knowledge of competitors is required in order to formulate a competitive strategy. The

company must learn who its competitors are and how they operate, as well as identify the

strengths and weaknesses of the competition. With this information, the company can develop a

strategy to gain a competitive advantage over these competitors.

Corporate strategies are long-term and are associated with deciding the optimal mix of

businesses and the overall direction of the organization (Coulter, 2005). Operating as a sole

business or operating as a business with several divisions are both part of the corporate strategy.

Strategy Implementation

Strategy implementation involves putting the strategy into practice. This includes developing

steps, methods, and procedures to execute the strategy. It also includes determining which

strategies should be implemented first. The strategies should be prioritized based on the

seriousness of underlying issues. The company should first focus on the worst problems, then

move onto the other problems once those have been addressed.

The approaches to implementing the various strategies should be considered as the strategies are

formulated (Coulter, 2005). The company should consider how the strategies will be put into

effect at the same time that they are being created. For example, while developing the human

resources strategy involving employee training, things that must be considered include how the

training will be delivered, when the training will take place, and how the cost of training will be

covered.

Strategy Evaluation

Strategy evaluation involves examining how the strategy has been implemented as well as the

outcomes of the strategy (Coulter, 2005). This includes determining whether deadlines have been

met, whether the implementation steps and processes are working correctly, and whether the

expected results have been achieved. If it is determined that deadlines are not being met,

processes are not working, or results are not in line with the actual goal, then the strategy can and

should be modified or reformulated.

Both management and employees are involved in strategy evaluation, because each is able to

view the implemented strategy from different perspectives. An employee may recognize a

problem in a specific implementation step that management would not be able to identify.

The strategy evaluation should include challenging metrics and timetables that are achievable. If

it is impossible to achieve the metrics and timetables, then the expectations are unrealistic and

the strategy is certain to fail.

Relationship between the components of the strategic management process

These components are steps that are carried, in chronological order, when creating a new

strategic management plan. Present businesses that have already created a strategic management

plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Strategic management is an ongoing process. Therefore, it must be realized that each component

interacts with the other components and that this interaction often happens in chorus. The

development of vision and mission statements is an essential part of the strategic management process.

Having clearly defined the vision and mission of the organization, managers then can set strategic

objectives that are aligned with the company's long-term goals. Managers translate these strategic

objectives into an operational strategy that can be implemented, monitored and evaluated. The outcome of

the evaluation will determine whether any revision of the vision statement, mission statement, objectives

or operational strategy is required.

Conclusion

The strategic management process is a continuous process. As performance results or outcomes

are realized - at any level of the organization - organizational members assess the implications

and adjust the strategies as needed (Coulter, 2005). In addition, as the company grows and

changes, so will the various strategies. Existing strategies will change and new strategies will be

developed. This is all part of the continuous process of improving the business in an effort to

succeed and reach company goals.

Question 5

What are vision and mission? What is their value for the strategic management process?

Solution

Vision Statement

A vision statement sets out a company's long-term goals and aspirations clearly and concisely. A

vision statement is intended to inspire and motivate the company's workforce by providing a

picture of where the organization is heading. It also provides a reality check for managers, who

can compare their strategic objectives and operational plans to the vision statement. If a planned

course of action doesn't move the company toward its vision, it may need to be revised.

Mission Statement

A mission statement defines the business sector in which a company operates and sets out its key

purpose. It summarizes what the company does and why. It also sets out how the company

conducts its business and identifies key stakeholders, such as shareholders, customers and

employees. A mission statement helps employees understand where their contribution fits into

the company's objectives. It also helps other stakeholders decide whether they want to do

business with the organization.

Strategic Management Process

The development of vision and mission statements is an essential part of the strategic

management process. Having clearly defined the vision and mission of the organization,

managers then can set strategic objectives that are aligned with the company's long-term goals.

Managers translate these strategic objectives into an operational strategy that can be

implemented, monitored and evaluated. The outcome of the evaluation will determine whether
any revision of the vision statement, mission statement, objectives or operational strategy is

required.

Roles Played by Mission and Vision

Mission and vision statements play three critical roles: (1) communicate the purpose of the

organization to stakeholders, (2) inform strategy development, and (3) develop the measurable

goals and objectives by which to gauge the success of the organization’s strategy. These

interdependent, cascading roles, and the relationships among them, are summarized in the figure.

Key Roles of Mission and Vision

First, mission and vision provide a vehicle for communicating an organization’s purpose and

values to all key stakeholders. Stakeholders are those key parties who have some influence over

the organization or stake in its future. You will learn more about stakeholders and stakeholder

analysis later in this chapter; however, for now, suffice it to say that some key stakeholders are

employees, customers, investors, suppliers, and institutions such as governments. Typically,

these statements would be widely circulated and discussed often so that their meaning is widely

understood, shared, and internalized. The better employees understand an organization’s

purpose, through its mission and vision, the better able they will be to understand the strategy

and its implementation.

Second, mission and vision create a target for strategy development. That is, one criterion of a

good strategy is how well it helps the firm achieve its mission and vision. To better understand

the relationship among mission, vision, and strategy, it is sometimes helpful to visualize them

collectively as a funnel. At the broadest part of the funnel, you find the inputs into the mission

statement. Toward the narrower part of the funnel, you find the vision statement, which has

distilled down the mission in a way that it can guide the development of the strategy. In the

narrowest part of the funnel you find the strategy —it is clear and explicit about what the firm

will do, and not do, to achieve the vision. Vision statements also provide a bridge between the

mission and the strategy. In that sense the best vision statements create a tension and restlessness

with regard to the status quo—that is, they should foster a spirit of continuous innovation and

improvement. For instance, in the case of Toyota, its “moving forward” vision urges managers to

find newer and more environmentally friendly ways of delighting the purchaser of their cars.

Third, mission and vision provide a high-level guide, and the strategy provides a specific guide,

to the goals and objectives showing success or failure of the strategy and satisfaction of the

larger set of objectives stated in the mission. In the cases of both Starbucks and Toyota, you

would expect to see profitability goals, in addition to metrics on customer and employee

satisfaction, and social and environmental responsibility.

Question 3

What are the differences between the general environment and the industry environment?
Why are these differences important?

Solution

The general environment represents those elements in the broader society that can influence all

(or most) industries and the firms that compete in those industries; it represents elements or

segments that firms cannot directly control. The general environment is composed of the

following segments: demographic, economic, political/legal, sociocultural, technological, and

global.

The industry environment is the constellation of factors that directly influences a firm and its

competitive actions and responses. Firms are influenced by these factors and should attempt to

establish a position in the industry that enables the firm to favorably influence the factors or to

successfully defend against the factors’ influence. These factors are: threat of new entrants,

bargaining power of suppliers, bargaining power of buyers, threat from substitute products, and

intensity of rivalry among competitors.

Importance of Differences in Environment Analysis

The external environment influences the firm’s strategic options as well as the decisions made in

light of them. The firm’s understanding of the external environment is especially useful when it

is matched with knowledge about its internal environment. Matching the conditions of the two

environments is the foundation the firm needs to form its vision, mission, and to take strategic

actions in the pursuit of strategic competitiveness and above average returns. The importance of

understanding the external environment is further underscored by the fact that the environmental

conditions facing firms in the global economy of the 21st century differ from those firms faced

previously. For example, technological changes and the explosion in information gathering and
processing capabilities demand more timely and effective competitive actions and responses. The

rapid sociological changes occurring in many countries affect labor practices and the nature of

products demanded by increasingly diverse consumers. Governmental policies and laws affect

where and how firms choose to compete. Competitive advantage goes to those firms who know

their external environment and plan their strategies so they are relevant to these conditions.

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