Overall View of Strategic Management-Mr.Muhammad Nazim Abd Rahman

STRATEGIC MANAGEMENT (1)STRATEGIC MANAGEMENT (1)

Muhammad Nazim Bin Abd RahmanSenior Programme Coordinator

Strategic Management ProgrammeNational Institute of Public Administration (INTAN)

Public Service Department

Updated June 2010

Strategic Management (1) Outline (1)

1. What is ‘Strategy’?2. Five ‘P’s for Strategy 3. Types of Strategy [Hierarchical / Miscellaneous /

Mintzberg & Waters categories] 4. Definitions of Strategic Management5. Pros and Cons of Strategic Management?6. Four Elements / Phases in Strategic Management

Process7. Link between Strat. Thinking, Strat. Planning and Strat. Mgmt.

Strategic Management (1)Outline (2)

8. Strategic Analysis9. Strategy Formulation 10. Strategy Implementation / Execution11. Strategy Evaluation 12. Summation + Conclusion + Q & A

Session13. Suggested Reading & Viewing

Definition, Essential Questions To Be Answered & Suggested Strategic Tools

What is ‘Strategy’?

Almost everyday we hear the word ‘strategy’ being used. One comes to

wonder… what is it exactly?

What is ‘Strategy’?

Strategy = i. A plan of actions designed to achieve a

particular goal

ii. Originated from the Greek word ‘strategos’ meaning ‘the art of the general’ or ‘general’s view’ which refer to the act of maneuvering troops into position, deployment of troops before the enemy is actually engaged

iii. Answers the question of: “What are the ends we seek and what are the means to achieve them?”

iv. 5P = A plan, a ploy, a pattern, a position and a perspective (Henry Mintzberg)

Five ‘P’s for Strategy

Five ‘P’s for Strategy by Henry Mintzberg

Some interesting quotes on ‘Strategy’1. “Strategy is when you are out of

ammunition, but keep on firing so that the enemy won’t know” (Unknown)

2. “Strategies are the means by which long-term objectives will be achieved ” (Fred David, 2007)

3. “Strategy is essentially, a way of channeling resources to achieve a goal” (Nigel Nicholson, 2004)

Types of Strategy (Hierarchical Category)

Types of Strategy [1]Type of Strategy

Definition Example

1 International /Regional

Strategy which involves the cooperation of multiple nations usually within a particular continent or region

In 1999 EU strategy to create a single European Currency (As of 2009, 13 out of 27 EU countries are using Euro)

‘ASEAN’ strategy on widening cooperation to become ‘ASEAN + 3’

‘ASEAN’ strategy on widening cooperation to become ‘ASEAN + 3’

Types of Strategy [2]

Type of Strategy

Definition Example

2. National The main strategies of a particular nation

- Introducing Vision 2020 in 1991

- Introducing 6 National Key Result Area (NKRA) in 2009

Malaysia that is a fully developed

nation by the year 2020

Example of Malaysian National Strategy

1. 1Malaysia: People first, Performance Now

2. Government Transformation Programme

3. New Economic Model4. The 10th Malaysia Plan

1. Inculcating Creativity and Innovation

2. The Importance of Fast Action and Decision Making

3. The Value of Integrity

4. Value for Money 

Our Prime Minister during MAPPA XI on 9 March 2010 has introduced:

Example of Malaysian National Strategy

1. Gagasan 1Malaysia: Rakyat Didahulukan, Pencapaian Diutamakan

2. Program Transformasi Kerajaan

3. Model Ekonomi Baru4. Rancangan Malaysia Ke 10

1. Pembudayaan Kreativiti dan Inovasi

2. Kepentingan dalam Kepantasan Bertindak dan Membuat

Keputusan 3. Nilai Integriti 4. Nilai untuk Wang 

Y.A.B Perdana Menteri semasa Majlis Perdana Perkhidmatan Awam (MAPPA XI) pada 9 Mac 2010 telah menengahkan:

Types of Strategy [3]

Type of Strategy

Definition Example

3. Industry / Sectoral

Strategy which is focused on a particular industry or sector in a particular nation

- In 2005 Malaysia established a National Biotechnology Policy which provides a comprehensive framework to guide biotechnology development efforts in the country

Types of Strategy [4]Type of Strategy

Definition Example

4. Organisation / Company / Corporate

Strategy which guides the particular organisation to achieve its goals

- UPM offering development services in the field of agriculture and biotechnology + offering agriculture-based entrepreneur programmes for those interested in order to achieve one of its goals that is strengthening the U’s position as The Center of Excellence for Agricultural Education and Research

Types of Strategy [5]Type of Strategy

Definition Example

5. Business / Service

Certain organisations are involve in more than one business or services. For each business or service, it is wise to have specific strategies.

- Ministry of Energy, Green Technology and Water has separate strategies for energy, green technology and water in order to achieve the goals for the whole organisation.

Types of Strategy [6]Type of Strategy

Definition Example

6. Functional Specific strategy for each function that exists in the business or service of a particular organisation

- Each functions in the organisation, such as HR, Finance, Logistics and others need to have its own strategies to ensure goals achievement.

Types of Strategy [Miscellaneous]

Mintzberg & Waters (1985) Categorization of Strategy

Mintzberg & Waters (1985) taken from MINTZBERG, H., AND WATERS, J. 1985. “Of strategies, deliberate and emergent.” Strategic Management Journal 6, 3, 257-272.

A Classic Example of Emergent Strategy

A classic example of embracing emergent strategy when the situation or circumstances have changed could be seen in the “Honda Success Story”

Definitions of Strategic Management (1)

“Strategic Management is the process by which an organisation manages the formulation and implementation of its strategy”

Mason Carpenter & William Sanders (2006)

“Strategic Management consist of analysis, decisions and actions an organisation undertakes in order to create and sustain competitive advantages”

Gregory Dess, Tom Lumpkin & Alan Eisner (2008)

Definitions of Strategic Management (2)

“Strategic Management is the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives”

Fred R. David (2007)

“Without a strategy, an organisation is like a ship without a rudder, going around in circles. ”

Joel Ross and Michael Kami (1973)

Definitions of Strategic Management (3)

Why is Strategic Management so important? [The Arguments for Strategic Mgmt ] (1)

1. Sets direction and focuses effort;

2. Ensures a more concerted and coordinated effort;

3. Ensures better and faster decision making;

4. Shortens the learning curve period;

5. Increases stakeholders confidence;

6. Reduces wastage;

7. Ensure limited resources are put to good use;

8. Help organisations achieve their intended goals and uncover opportunities along the way;

Proponents of Strategic Management argues that Strategic is of utmost important due to the following reasons:Strategic Management -

Why is Strategic Management so important? [The Arguments for Strategic Mgmt ] (2)

9. Ensures organisational survival;

10. Measures organisation’s performance so that the necessary corrective and preventive actions and continuous improvement efforts could be made;

11. Helps shape the desired future;

12. Encourages better participation;

13. Encourages the process of ‘kaizen’ or continuous improvement

14. Helps achieve and maintain competitive advantage (Best illustrated by the story of “Two CEO and the Bear.”)

The Story of “Two CEO and The Bear”

CEO ‘A’ CEO ‘B’ + THE BEAR

“Two CEO and the Bear” (1)

Once there were two CEOs of two companies which competed in the same automotive industry.

These two CEOs decided to go on a camping trip to discuss a possible merger. They hiked deep into the woods and stumble into a cave. It was already late in the evening so they decided to have a rest and set up their tent in the cave.

As they came nearer to the cave they hear a deep growl and saw a big grizzly bear. The bear growl and rose on its hind legs at the mouth of the cave.

“Two CEO and the Bear” (2)

Instantly, CEO ‘A’ took off his knapsack and got out a pair of jogging shoes. So CEO ‘B’ said, “Hey! You can’t outrun that bear. He is fast and furious!”

CEO ‘A’ responded, “Maybe I can’t outrun that bear, but I could surely outrun you!”

The Arguments Against Strategic Management

Although strategic management has its benefits we should also be aware of some of its potentially damaging effects. These include: i.Organisation may become rigid and inflexible in decision making which contradicts the original intended strategy even though the situation and also the environment show that the original intended strategy needs to be re-evaluated

ii. The potential for ‘groupthink’ whereby there may be no peripheral vision to open up for other possibilities. A given strategy can become too heavily embedded in the fabric of the organisation

The Four (4) Elements/Phases in Strategic Management Process

Link between Strategic Thinking, Strategic Planning & Strategic Management (1)

Strategic Thinking is a thinking skill in ‘seeing’ issues, problems and opportunities in a larger and broader perspective and being able to understand the inter-relation of all the elements involved so that the best course of action could be formulated to achieve the desired goals

Connection between Strategic Thinking, Strategic Planning & Strategic Management (2)

Strategic Planning is the combination of strategic analysis and strategy formulation

Connection between Strategic Thinking, Strategic Planning & Strategic Management (2)

Strategic Management is the process of analyzing, formulating, implementing and evaluating various strategies in order to achieve organisation’s goals

Strategic Management Process

Strategic Management Process consist of:

• Strategic Analysis• Strategy Formulation• Strategy

Implementation• Strategy Evaluation

Strategic Analysis

Strategic Analysis = process of gathering, analyzing, and communicating internal as well as external information in order to formulate organisational strategies. Strategic Analysis search to find the answer for these questions – “Where is the organisation now, at the present?” “What are the vision, mission and objectives held by the organisation at this particular moment?” “What are the internal and external information that need to be considered before revising our goals and formulate our strategies?” “Who are the stakeholders involved?”“What are the stakeholder’s views on the matter?”

StrategicAnalysis

Strategic Analysis (2)

The following are strategic tools that could be used during the Strategic Analysis phase:i. Re-evaluating the present VMO

ii. SWOT Analysis

iii. PESTEL Analysis

iv. McKinsey 7S

iv. Stakeholders Analysis

v. Media Research

vi Inventory of Vital Resources

vii Establishing KRA

StrategicAnalysis

Re-evaluating the present VMO

In order to have a clear sense of where we are and where we would like to be, it is wise to re-evaluate the present Vision, Mission and Objectives (VMO)

If the VMO ’s are still relevent, proceed with it. If not, formulate a new one

Vision = The desired mental image of the future

Mission = The main goals of the organisation = The purpose why the organisation exist

Objective = A specific sets of targets to operationalize the mission

StrategicAnalysis

SWOT Analysis

The general idea of SWOT analysis is to help organisation to formulate strategies so that organisations could:i. Build on its strengthii. Try to remedy the weaknesses or work around themiii. Take advantage of the opportunities presented by the environmentiv. Protect itself from threats

The general idea of SWOT analysis is to help organisation to formulate strategies so that organisations could:i. Build on its strengthii. Try to remedy the weaknesses or work around themiii. Take advantage of the opportunities presented by the environmentiv. Protect itself from threats

StrategicAnalysis

PESTEL Analysis

For this particular external environment analysis, we try to uncover whether these six (6) variable – Political, Economy, Social, Technology, Environment and Legal could give significant impact to the running of the organisation and the achievement of its goals

StrategicAnalysis

McKinsey 7S Analysis (1)

McKinsey 7S helps to ensure that all parts of your organization work in harmony

It is a very useful tools to guide organisation change initiatives

It is also very useful in troubleshooting which part is at fault when organisation initiatives failed

StrategicAnalysis

McKinsey 7S Analysis (2)The 7S are:

Strategy: the plan devised to maintain and build competitive advantage over the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the job done.

Shared Values: the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.

StrategicAnalysis

The Stakeholders Analysis (1)

Using this strategic tool organisations need to identify & list down all the organisations’ stakeholders

Rank them in the order of importance

And for each of them formulate suitable strategies to handle them

Using this strategic tool organisations need to identify & list down all the organisations’ stakeholders

Rank them in the order of importance

And for each of them formulate suitable strategies to handle them

Malaysian People

All the GLC’s

The PM

The Minister

of Finance

All the Investors

The Treasury

The Media

All the GLCs Customers

All the Staffs at

Khazanah and GLC’s

Khazanah’s Board of Directors

StrategicAnalysis

Is this list of Khazanah’s Nasional

stakeholders complete?

The Stakeholders Analysis (2) – Example of A Model

StrategicAnalysis

Media Research (1)

In this day and age, the need for Media Research is very important because media acts as the agent of public perception. Public perception, the way people think and the way people make everyday decisions are easily based and influenced by the media

It is extremely important that organisations carry out a detailed media research to know which way all the various media are ‘leaning’ towards. Is it positive or negative in regards to the business of the organisation?

Internet Applications

Blogs

Vlogs

TV

Magazines

Newspapers

Twitter

Facebook

YouTube

BooksWeb Portal

Film

StrategicAnalysis

Radio

Inventory of Vital Resources

Organisation have to take a full inventory of all the vital resources organisation needs so that its intended strategies could run smoothly until its completion hence, ensuring organisation’s success

Organisation have to take a full inventory of all the vital resources organisation needs so that its intended strategies could run smoothly until its completion hence, ensuring organisation’s success

High Quality

Workforce

Superb Leadership

Sufficient Budget

Unlimited Motivation

or Drive

The Right Attitude

through out the

Organisation

Expertise

A Worthwhile Goals and a

S.M.A.R.T.E.R. Objectives

Integrity

Time

Conducive External &

Internal Environment

Information

StrategicAnalysis

Energy

Suitable Policies & Guidlines

Establishing Key Result Area (KRA)

Realizing that in order to achieve organisational goals, it is wise that the organisations effort and limited resources are focused on its important target area. Hence, Key Result Area (KRA) must be established

Realizing that in order to achieve organisational goals, it is wise that the organisations effort and limited resources are focused on its important target area. Hence, Key Result Area (KRA) must be established

Malaysia is a good example where by we have the Six (6) NKRA to guide the effort, the strategies and the usage of our vital resources in our quest for National success

Combating Corruption

Reducing Crime

Raising The Living Standards of Low-Income Citizens

Widening Access to Education

Improving Infrastructure in Rural Areas

Upgrading Public Transport

StrategicAnalysis

Strategy Formulation (1)

Strategy Formulation = the process of finding the best and most suitable strategy to implement so that the organisations goals are met.

Strategy Formulation search to find the answer for these questions –

i. “In view of where the organisation is at the moment, how can we ensure that the organisation becomes the organisation that we want it to be?”

ii. “What is the best possible way for the organisation to move from its current situation to its intended destination?”

StrategyFormulation

Strategy Formulation (2)

The following are strategic tools that could be used during the strategy formulation phase:

i. Benchmarking against the best organisation in regards to the achievement of the desired goals

ii Best Practices Analysis

iii. Organisation-Environment Compatibility Analysis

iv. McKinsey 7S Analysis

v. Media Research

vi. Establishing Key Performance Indicators (KPIs) with respect to Key Result Areas (KRAs) that have been agreed upon

vii. Formulating Blue Ocean Strategy

StrategyFormulation

Benchmarking

Benchmarking allows organisations to compare their performance to other "like" businesses / services / industries and identify areas in which they could do better to emulate

However the are those who are against benchmarking due to the simple reasons that the ‘benchmarkee’ will always be a step behind those being benchmarked upon

StrategyFormulation

Best Practice Analysis

Best Practice Analysis = the process of analyzing, developing and following a standard way of doing things that multiple organizations have been successful in doing especially in the area of management, policy setting, and software systems

StrategyFormulation

Organisation-Environment Compatibility Analysis

External Environment

Organisation

StrategyFormulation

McKinsey 7S Analysis & Media Research

StrategyFormulation

Establishing Key Performance Indicators (KPIs)

StrategyFormulation

Establishing Key Performance Indicators (KPIs) with respect to Key Result Areas (KRAs) that have been agreed upon and the strategies being formulated

It is a tool to measure the performance of the organisation in regards to the goals it has set up.

Whatever Key Performance Indicators are selected, they must reflect the organization's goals, they must be key to its success and they must be quantifiable (measurable)

Formulating Blue Ocean Strategy StrategyFormulation

Based on a study of 150 strategic moves in more than thirty industries, W. Chan Kim and Renee Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth

Organisations could also adopt the Blue Ocean Strategy tools in order to achieve organisations goals. Blue Ocean tools and frameworks includes Value Innovation; Red vs Blue; Strategy Canvas; 4 Actions Framework; ERRC Grid; PMS Map; BEC/BUM; 3 Tiers Noncustomers; Sequence of BOS; 4 Hurdles to Execution; Fair Process and Tipping Point Leadership

Strategy Implementation (1)

Strategy Implementation = process of implementing all the intended strategies and ensuring the quality of its execution. Strategy Implementation search to find the answer for these questions – “Is the strategy implementation on track as what was formulated?”“What is the course of action that we should take if we encounter shortfalls or opportunities along the way? ?” “Have we measure the impact of our strategy implementation correctly?”

StrategyImplementation

Strategy Implementation (2)

The following are strategic tools that could be used during the strategy implementation phase:

i. Monitor diligently Key Performance Indicators (KPIs) with regard to Key Result Areas (KRAs)

ii. Use Gantt Chart as a monitoring device

iii. Use Statistical Analysis as an indicator

iv. Monitor the Complaint and Feedback Channel

v. Media Research

StrategyImplementation

Monitor KPI with regards to KRA StrategyImplementation

Monitor all the KPIs with regards to KRA. Readjust the strategies, programmes or plan of actions if the need arises

Use Gantt Chart StrategyImplementation

A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the start and finish dates of the critical elements of the project in the form of work breakdown structure

Example of Gantt Chart StrategyImplementation

Use Statistical Analysis StrategyImplementation

Use statistical analysis to monitor the implementation of the strategies

A good and timely statistical data would help tremendously the decision making process during strategy implementation

Monitor the Complaint and Feedback Channel

StrategyImplementation

During strategy implementation it is wise to monitor the complaint and feedback channel

Whether it is the formal complaint channel or there is a crowd picketing beyond the fences, all should be closely monitored and solved

Media Research StrategyImplementation

Again, Media Research is also important during Strategy Implementation in order to gauge whether the stakeholders have a positive or negative reaction towards the organisations strategies

Strategy Evaluation (1)

Strategy Evaluation = process of evaluating the effectiveness of the intended strategies in achieving organisation goals Strategy Evaluation search to find the answer for these questions – “How successful is the strategy?”“If in the end, the goals are not met, what are the course of action that we will take to ensure success?”

“If it is a success, how could we improve on it? How could

we replicate it for other goals?

StrategyEvaluation

Strategy Evaluation (2)

The following are strategic tools that could be used during the strategy implementation phase:

i. Comparing End Results with KPIs in regard to the KRAs

ii. Comparing ‘Planned Timeline’ vs. ‘Real Timeline’ in the Gantt Chart

iii. Stakeholders’ Feedback

iv. Media Research

v. Statistical Analysis

vi. Rewards and Recognition

StrategyEvaluation

Comparing End Results with KPIs in regard to the KRAsIn the end of Strategy Implementation, all results must be compared to KPIs in regard to the KRAs

If, the goals are not met, corrective action must be taken

If, it is a success, continuous improvement initiatives should be triggered and the successful strategies should be replicated to other goals

StrategyEvaluation

Gantt Chart’s Planned vs. Real Timeline From the Gantt Chart, the real timeline should not overshot the planned timeline in regards to the duration of the strategies or the programmes

StrategyEvaluation

Stakeholder’s Feedback

The feedbacks from various stakeholders must be gathered, analyzed and acted upon wisely

StrategyEvaluation

Media Research and Statistical Analysis

Once again, Media Research and Statistical Analysis could be used as tools to correctly evaluate the successfulness of organisations strategies

StrategyEvaluation

Rewards and Recognition

Quantity & Quality of the Rewards & Recognition received by the Organisation could be a tool to assess the strategies executed

StrategyEvaluation

Summation of what we have learned so far …

Conclusion: Excerpt from “The Art of War”

If you know the enemy and know yourself, you need not fear the result of a hundred battles.

If you know yourself but not the enemy, for every victory you gained, you will also suffer a defeat.

If you know neither the enemy nor yourself, you will succumb in every battle.

- Sun Tzu

Q&A Session

Is there any questions or concepts that needed clarification?

Suggested Reading & Viewing for the Topics of Strategic Management

1. All recently published Strategic Management text book

2. Sun Tzu – The Art of War3. Website:

www.mindtools.com4. Mintzberg, Ahlstrand &

Lampel (2005) – “Strategy Bites Back”

5. Mintzberg, Ahlstrand & Lampel (1998) – “Strategy Safari”

6. Website: www.transformation.gov.my

Muhammad Nazim Bin Abd. RahmanStrategic Management Programme

National Institute of Public Administration (INTAN)nazim@intanbk.intan.my

Tel: 03-2084 7378

Updated: June 2010

All the best for the future. May all of us reached the desired destination…

Thank You

Lastly, remember that …

is always within our grasp!