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Summary MNG4801 - Strategic Management (MNG4801)
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This document is a comprehensive summary of the MNG4801 model. It also includes past exam questions and answers for each chapter.
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2020/21MNG4801 SUMMARY NOTES
Nicolene Basson
STRATEGIC MANAGMENT
2020/21
,MNG4801 SUMMARY NOTES 2020/21
Table of Contents
Chapter 1: Introduction – the nature of strategic management.........................................................................10
1. The nature of strategy / Five P’s................................................................................................................... 10
1.1. Strategy as a plan.................................................................................................................................. 10
1.2. Strategy as a position............................................................................................................................ 10
1.3. Strategy as a perspective...................................................................................................................... 10
1.4. Strategy as a ploy.................................................................................................................................. 11
1.5. Strategy as a pattern.............................................................................................................................. 11
2. Measurements of strategic success.............................................................................................................. 11
3. Perspectives on managing stratecically........................................................................................................ 11
3.1. The inside-out perspective..................................................................................................................... 11
3.2. Resource-based and dynamic capabilities viewpoints...........................................................................12
3.3. The outside-in perspective..................................................................................................................... 12
4. Tests for a winning strategy.......................................................................................................................... 12
5. Strategic paradoxes...................................................................................................................................... 13
5.1. Paradox 1: Past and Future................................................................................................................... 13
5.2. Paradox 2: Intended and emergent strategy..........................................................................................13
5.3. Paradox 3: Reactive or proactive approach to strategy.........................................................................13
5.4. Paradox 4: Inside-out or outside-in driven strategy................................................................................13
5.5. Paradox 5: Profitability vs Sustainability................................................................................................ 13
6. Strategic management terminology.............................................................................................................. 14
Chapter 2: Sustainable organisation................................................................................................................. 15
1. Sustainable development.............................................................................................................................. 15
2. Sustainable enterprise/organisation.............................................................................................................. 15
3. A strategic approach to sustainable organisation......................................................................................... 15
4. The business case and institutional drivers.................................................................................................. 15
4.1. The business case as a response to critics and sceptics.......................................................................15
4.2. Key elements of the business case for CSR and sustainable organisation...........................................16
4.3. The business case is multifaceted......................................................................................................... 16
4.4. Ethics and institutions as drivers of the sustainable organisaion...........................................................16
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5. The role of leadership................................................................................................................................... 17
6. Corporate Sustainability................................................................................................................................ 18
Chapter 3: Strategic Direction........................................................................................................................... 20
1. Strategic direction framework....................................................................................................................... 20
2. Strategic intent.............................................................................................................................................. 20
3. Vision Statements......................................................................................................................................... 20
3.1. Vision statement defined........................................................................................................................ 20
3.2. Characteristics of an effectively worded vision statement......................................................................21
3.3. Common shortcoming in company vision statements............................................................................22
3.4. The visionary process............................................................................................................................ 22
4. Mission statements....................................................................................................................................... 23
4.1. Mission statement defined..................................................................................................................... 23
4.2. Components of a mission statement...................................................................................................... 23
4.3. Content of a mission statement............................................................................................................. 24
4.4. Formulating the mission statement........................................................................................................ 24
5. Value Statement........................................................................................................................................... 24
6. Stakeholder analysis and its purpose........................................................................................................... 24
6.1. Stakeholders defined............................................................................................................................. 24
6.2. Stakeholder analysis and strategy......................................................................................................... 25
7. Operational issues related to strategic direction...........................................................................................27
7.1. Benefits of a clear strategic direction..................................................................................................... 27
7.2. Challenges of creating a clear strategic direction...................................................................................27
7.3. Translating strategic direction into operational terms’............................................................................27
7.4. Balanced scorecard............................................................................................................................... 28
8. Exam questions on the topic......................................................................................................................... 29
8.1. Jan/Feb 2019......................................................................................................................................... 29
8.2. Jan/Feb 2018......................................................................................................................................... 31
8.3. May/June 2018...................................................................................................................................... 33
Chapter 5: Analysing the macroenvironment / external environment................................................................37
1. Introduction................................................................................................................................................... 37
1.1. Definition of external environment.......................................................................................................... 37
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1.2. Definition of macro environment............................................................................................................ 37
2. Process of analysing the environment.......................................................................................................... 38
3. Composition of the macroenvironment / PESTEL......................................................................................... 38
4. Analysis of the macro-environment............................................................................................................... 42
4.1. Assessing macroenvironmental turbulence...........................................................................................42
4.2. Guidelines for macro-environmental analysis........................................................................................ 43
5. Conducting macro-environmental analysis................................................................................................... 43
5.1. PESTEL approach................................................................................................................................. 44
5.2. The Issues Priority Matrix...................................................................................................................... 44
5.3. Scenario analysis and planning/forecasting........................................................................................... 44
6. Benefits and limitations of macro-environmental analysis.............................................................................45
6.1. Benefits.................................................................................................................................................. 45
6.2. Limitations.............................................................................................................................................. 45
7. Exam questions on the chapter.................................................................................................................... 46
7.1. Jan/Feb 2019......................................................................................................................................... 46
7.2. May/June 2018...................................................................................................................................... 47
Chapter 6: Analysing the industrial environment...............................................................................................49
1. Introduction................................................................................................................................................... 51
2. Industry analysis........................................................................................................................................... 51
2.1. Defining the industry.............................................................................................................................. 51
3. Industry key success factors......................................................................................................................... 51
3.1. Industry key success factors in mature and declining industries............................................................52
3.2. Industry key success factors in technology-intensive industries............................................................53
3.3. Industry key success factors in not-for-profit settings............................................................................53
4. Basic forms of competition............................................................................................................................ 54
5. Porter’s five forces........................................................................................................................................ 54
5.1. The Porter’s five forces framework........................................................................................................ 55
5.2. Limitations to the five forces model........................................................................................................ 56
6. The value net – Complementary relationships..............................................................................................56
7. Industry regulation as a competitive force..................................................................................................... 58
8. Industry evolution – Competition over time................................................................................................... 58
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8.1. Development phase:.............................................................................................................................. 58
8.2. Growth phase:....................................................................................................................................... 58
8.3. Maturity:................................................................................................................................................. 59
8.4. Decline:.................................................................................................................................................. 59
9. Intra-industry analysis................................................................................................................................... 59
9.1. Competitor analysis............................................................................................................................... 59
9.2. Customer analysis................................................................................................................................. 60
10. Examples of exam questions on the chapter..............................................................................................61
10.1. Jan/Feb 2019....................................................................................................................................... 61
10.2. May/June 2018.................................................................................................................................... 62
Chapter 7: Analysing the internal environment................................................................................................. 65
1. Identification of resources and capabilities in a Resource Based View (RBV)..............................................66
1.1. Resources.............................................................................................................................................. 66
1.2. Capabilities............................................................................................................................................ 66
2. Frameworks for identifying capabilities and key capabilities.........................................................................67
2.1. Functional analysis as a framework for identifying distinctive capabilities.............................................67
2.2. The value chain as a framework for identifying capabilities...................................................................67
2.3. Architecture, reputation, and innovation.................................................................................................69
2.4. Knowledge and capabilities................................................................................................................... 69
3. Strategic importance of resources and capabilities.......................................................................................70
3.1. Competitive Advantage.......................................................................................................................... 70
3.2. Appropriability........................................................................................................................................ 71
3.3. Sustainability.......................................................................................................................................... 72
3.4. Exploitability........................................................................................................................................... 73
4. VRINE........................................................................................................................................................... 73
5. Dynamic view of strategy.............................................................................................................................. 74
6. A practical framework for the appraisal of resources and capabilities..........................................................74
7. Examples for exam questions on this chapter.............................................................................................. 75
7.1. Jan/Feb 2019......................................................................................................................................... 75
7.2. Jan/Feb 2018......................................................................................................................................... 77
7.3. May/June 2018...................................................................................................................................... 79
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TYPES OF STRATEGIES................................................................................................................................ 82
Chapter 8: Business level strategy................................................................................................................... 83
1. Introduction................................................................................................................................................... 84
2. Porter’s Generic strategies........................................................................................................................... 84
2.1. Low-cost provider strategy (cost leadership strategy)............................................................................85
2.2. Broad differentiation strategy (differentiation strategy)...........................................................................86
2.3. A focused (or market niche) low-cost strategy.......................................................................................86
2.4. A focused (or market niche) differentiation strategy...............................................................................87
2.5. A best-cost provider strategy (best value strategy)................................................................................88
2.6. Conclusion............................................................................................................................................. 88
3. Evaluating strategies.................................................................................................................................... 89
3.1. Appropriateness (suitability)................................................................................................................... 89
3.2. Feasibility............................................................................................................................................... 89
3.3. Desirability............................................................................................................................................. 90
3.4. Consistency........................................................................................................................................... 90
3.5. Validity................................................................................................................................................... 90
3.6. Attractiveness to stakeholders............................................................................................................... 90
4. Examples of previous exam questions on the chapter..................................................................................91
4.1. Jan/Feb 2019......................................................................................................................................... 91
4.2. Jan/Feb 2018......................................................................................................................................... 92
4.3. Jan/Feb 2017......................................................................................................................................... 93
Chapter 10: Corporate Leve Strategy............................................................................................................... 95
1. What corporate strategy entails.................................................................................................................... 96
2. An overview of corporate strategy options.................................................................................................... 96
3. Growth strategies.......................................................................................................................................... 97
3.1. Organic growth strategies...................................................................................................................... 97
3.2. Diversification strategies........................................................................................................................ 98
3.3. Integration strategies............................................................................................................................. 99
4. Cooperative or corporate combination strategies......................................................................................... 99
4.1. Merger/acquisition.................................................................................................................................. 99
4.2. Strategic alliances.................................................................................................................................. 99
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4.3. Joint Venture........................................................................................................................................ 100
5. Defensive strategies................................................................................................................................... 100
5.1. Turnaround strategy............................................................................................................................. 100
5.2. Defensive strategy............................................................................................................................... 101
6. Examples of exam questions on the chapter.............................................................................................. 102
6.1. Jan/Feb 2018....................................................................................................................................... 102
6.2. Jan/Feb 2017....................................................................................................................................... 103
6.3. May/June 2017.................................................................................................................................... 104
Strategy implementation................................................................................................................................. 108
1. Requirements for strategy implementation................................................................................................. 108
2. Challenges of strategy implementation....................................................................................................... 108
3. Barriers of strategy implementation............................................................................................................ 108
3.1. Vision barrier........................................................................................................................................ 109
3.2. Management barrier............................................................................................................................. 109
3.3. Resource barrier.................................................................................................................................. 109
3.4. People barrier...................................................................................................................................... 109
Chapter 12: Strategic leadership.................................................................................................................... 110
1. Concept of strategic leadership.................................................................................................................. 111
2. Competencies of an effective strategic leader............................................................................................111
2.1. Strategic thinking................................................................................................................................. 111
2.2. Emotional intelligence and behavioural complexity..............................................................................112
2.3. Transformational leadership................................................................................................................ 112
2.4. African leadership................................................................................................................................ 113
3. Other leadership competencies/styles that strategic leaders can have......................................................114
3.1. Transactional leadership...................................................................................................................... 114
3.2. Managerial leadership.......................................................................................................................... 114
3.3. Visionary leadership............................................................................................................................. 114
3.4. Western Leadership............................................................................................................................. 114
4. The role/tasks of strategic leaders.............................................................................................................. 114
4.1. Set organisational direction.................................................................................................................. 114
4.2. Leadership to drive the strategy........................................................................................................... 115
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4.3. Staff the organisation and manage social capital.................................................................................115
4.4. Build and use distinctive organisational capabilities.............................................................................115
4.5. Create organisational alignment.......................................................................................................... 116
4.6. Creating an organisational culture and values supportive of the strategy............................................116
4.7. Lead and manage change................................................................................................................... 116
5. Examples of exam questions on this chapter..............................................................................................117
5.1. Jan/Feb 2019....................................................................................................................................... 117
5.2. Jan/Feb 2018....................................................................................................................................... 118
5.3. May/June 2018.................................................................................................................................... 120
Chapter 13: Organisational alignment and strategy implementation through organisational architecture.......123
1. Instruments in strategy implementation...................................................................................................... 123
1.1. Short-term objectives........................................................................................................................... 123
1.2. Functional tactics................................................................................................................................. 123
1.3. Policies................................................................................................................................................ 124
2. Organisational culture................................................................................................................................. 124
2.1. Types of culture................................................................................................................................... 125
2.2. Role of organisational culture in the strategic management process...................................................125
2.3. Tight culture-strategy-fit....................................................................................................................... 125
2.4. Unhealthy culture................................................................................................................................. 126
3. Organisational architecture......................................................................................................................... 126
3.1. Organisational architecture and organisational alignment in strategic implementation........................126
3.2. Components of the Lee, Venter and Bates (2004) model for organisational architecture....................126
3.3. Processes are central to the organisational architecture and are instrumental in delivering the
capabilities.................................................................................................................................................. 127
4. Reward systems......................................................................................................................................... 130
4.1. Role of rewards in strategy implementation.........................................................................................131
4.2. Different types of reward...................................................................................................................... 131
4.3. Principles associated with a strategically aligned reward systems.......................................................132
Chapter 14: Strategic performance management and control........................................................................134
1. ‘Strategic control’, and the two greatest challenges associated with it........................................................135
2. Types of Strategic control methodologies and approaches........................................................................135
2.1. Assumption/premise control................................................................................................................. 135
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2.2. Implementation control......................................................................................................................... 136
2.3. Special alert control............................................................................................................................. 136
2.4. Environmental scanning/strategic surveillance....................................................................................136
3. Business performance management.......................................................................................................... 136
4. Balanced Scorecard................................................................................................................................... 137
4.1. The role of the balanced scorecard in strategic control........................................................................137
4.2. Benefits/advantages to using the balanced scorecard.........................................................................138
5. Risk management....................................................................................................................................... 138
6. Examples of exam questions on this chapter..............................................................................................139
6.1. Jan/Feb 2019....................................................................................................................................... 139
6.2. Jan/Feb 2018....................................................................................................................................... 140
6.3. May/June 2018.................................................................................................................................... 142
6.4. Jan/Feb 2017....................................................................................................................................... 144
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TOPIC 1:
DEVELOPMENT OF
STRATEGIC
MANAGEMENT AS A
MANAGEMENT
APPROACH
CHAPTERS 1 AND 2
1.1.
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