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Making Strategy
Explicit
COURSE: BUS6150 A
COURSE INSTRUCTOR: DR. NJAMBI ESTHER, DBA
SEMESTER: SPRING 2019
GROUP 3 PRESENTATION
Team Members
Group 3 2
Lilian
Sheila
Leah Grace
Sharon
Arnold
Evaline
Group 3 3
Concept of Strategy
Diff. in Formulating
Strategy
Strategy &
Performance
When to Formulate
Strategy
Summary &
Conclusion
6:55 – 7:00 PM6:45 – 6:55 PM6:30 – 6:45 PM6:15 – 6:30 PM6:00-6:15 PM
Presentation Outline
Concept of
Strategy
How it entered the business
vocabulary…
Group 3 4
Concept of Strategy
• As observed by Ansoff and McDonnell (1990),
the meaning of strategy was not clear prior
to the 1950s as the business environment
was stable.
• With the growing environmental discontinuities,
strategy became an important concept that
entered the business vocabulary prior to which
businesses relied on military style of management
(militarymaxims).
Group 3 5
01
• According to Mintzberg, Ahlstrand and
Lampel (1998), they describe this wave as the
search for consulting imperatives which lead
to the establishment of strategy boutiques
such as McKinsey and Company, SRI and
more specifically which focused on
strategy.
Group 3 6
01 Concept of Strategy (Cont’d…)
• In the many definitions of strategy, it is evident that they not only attempt to
define what strategy is, but they also give importance on how the strategy is
created and what it attempts to achieve.
Group 3 7
01 Concept of Strategy (Cont’d…)
Porter (1996) for instance described strategy as a
creation of a unique and value position involving
different set of activities.
Ohmae (1988) on the other hand defines strategy as
working hard to understand customer’s inherent
needs and then rethinking what a category of product
is all about.
• As opined by Love, Priem, & Lumpkin, (2002) when a
company is seeking advice on strategy management,
they find themselves facing the “control vs.
empowerment” dilemma.
• Proponents of making a strategic intent explicit and well
articulated view it as a motivating and control function
that contributes to consistency and unity of direction
within an organization.
• Opponents however view it as a bottleneck that could
lead to organizational inertia that could in turn limit
flexibility and slow down the organization’s response.
Group 3 8
01 Concept of Strategy (Cont’d…)
• It is therefore imperative that a balance between control
and empowerment is found so as to ensure a smooth
strategy process.
The balance will depend on a number of factors as will be
elaborated in this presentation.
Group 3 9
01 Concept of Strategy (Cont’d…)
Your Date Here Your Footer Here 10
1. Measuring standards of current and future performance of the firm.
Their quality are the objectives; the intended quantity, the goals.
2. How the firm builds up its relationship with the external
environment, the stakeholders, contribution and maintaining its
relevance all add up to business strategy.
3. Organizational concept – rules for establishing central, internal
relations and daily processes of the firm.
4. Operating policies – how the firm runs day to day.
Group 3 11
01
Ansoff & McDonnell (1990) stated that there are 4 types of strategic decision
making rules that guide organizational behavior as follows:-
Strategic Decision Making Rules
Characteristics of Strategy
While articulating on why strategy should be made explicit, Ansoff & McDonnell
(1990) state that business strategy has several markedly distinct characteristics as
follows:-
Group 3 12
01
1. The process of business strategy articulation sets the general
courseinwhichthefirmwillexpandandadvance.
2. Through a search process, strategy is used to create strategic
projects. The search will ensure that strategy focuses on
sections defined by the strategy and filter out possibilities
whicharenotadheringwiththestrategy.
Group 3 13
01
3. For an already well thought out search process in history, strategy becomes
unimportant as the previous successful working mechanisms of an
organizationwilltakeitwhereveritwantstogo.
4. At the time of strategy formulation it is not possible to enumerate all the
project possibilities which will be uncovered, hence strategy formulation
must be based on highly integrated, incomplete and uncertain information
aboutclassesofalternatives.
5. When the search uncovers specific alternatives, the more precise, less
aggregated information which becomes available may cast doubts on the
wisdom of the original strategy choice hence the need for strategic feedback
soastousestrategyeffectively.
Characteristics of Strategy (Cont’d…)
Group 3 14
01
6. Since both strategy and objectives are used to filter projects, they
may appear alike yet they are distinct. Objectives represent the
ends which the firm is seeking to attain, while strategy is the
means to those ends. The objectives are higher level decision rules.
A strategy which is justified under one set of objectives may lose
its validity when the objectives of the organization are changed.
7. Strategy and objectives are interchangeable; at different points in time and
different points in the firm. Hence an attribute can be in the objective and
strategy of a firm. From this, a hierarchical relationship results in which a
strategyatahighermanageriallevelisanobjectivesatalowerlevel.
Characteristics of Strategy (Cont’d…)
Strategy
&
Performance
Group 3 15
Strategy and Performance
• Performance:
• The execution of an assignment measured against specifically set
objectives.
• How well a certain task is done as far as accomplishing a
goal is concerned.
• Goals and Objectives
• What the firm is seeking to accomplish, and the strategy is
how they intend to achieve these goals.
Group 3 16
02
• Management:
• Is observed by Ansoff & McDonnell (1990) to generally be
goal and result oriented, whereby certain strategies
are employed with the end game being the achievement
of certain goals and objectives.
• The accomplishment of the set goals is the performance
and we can therefore say that a strategy contributes to
the firm’s performance.
Group 3 17
02 Strategy and Performance (Cont’d…)
Proponents of Making
Strategy Explicit
Ansoff and McDonnell (1990) point out that
employees make significant contributions to the
formation of strategy and are in the forefront of its
implementation.
It is necessary that strategy be made a matter of
concern to the other employees within the firm, and
not be treated as a reserve of the management as
this can aid in better execution of the strategy.
Group 3 18
02
Opponents of Making
Strategy Explicit
Some managers are of a contrary opinion, stating
that strategy typically ought not to be made
explicit and therefore must remain private in
order to maintain a unique position and gain a
competitive advantage.
Group 3 19
02
Group 3 20
Let your plans be DARK AND
IMPENETRABLE AS NIGHT, and
when you move, FALL LIKE A
THUNDERBOLT
-- Sun Tzu--
Guru Critique Against Making
Strategy Explicit
• Mintzberg, (1985) is quoted to have reiterated that
for goals to be achieved, strategy ought to facilitate
adaptability and that change has to be continuous.
• He therefore generally comes out strongly in
opposing the need to make strategy explicit; stating
that doing so only creates opposition to strategic
change, inertia and rigidity, consequently negatively
affecting performance.
Group 3 21
02
Paradox on
Making Strategy Explicit or Not
• A paradox or a dilemma therefore presents itself here,
because there exists evidence of great firms that have
succeeded without making strategy explicit as well as others
who have done well, having employed a deliberate course of
strategyformulation.
• Strategy offers direction and a plan toward goal attainment,
so then one may wonder how certain firms can be able to
attain coherence and ultimately attain their goals without
making their strategiesexplicit.
Group 3 22
02
• Ansoff and McDonnell (1990) elaborate on growth and change as
the reasons why firms do well without making strategy explicit.
If a firm’s scope of operations is in a growing market where
demand characteristics change slowly and the technology is
stable then the strategy needs to change slowly and
incrementally.
• Coherence can be attained through informal organizational
learning and adaptation, whereby the employees acquire an
intuitive awareness of the firm’s strategic guidelines through their
learning of the business and their progression through the firm.
Group 3 23
02
Guru Critique Against Making
Strategy Explicit
• The absence of strategy in the early 1900s era is
therefore understandable because that was a
period of stable growth; this explains why firms in
the early years excelled.
• The past few decades however have been an
entirely different scenario as Ansoff &
McDonnell(1990) point out because sticking to
historical practices has proven to result in
stagnations and so strategy has emerged as a tool
for reorienting the organizational thrust.
Group 3 24
02
Guru Critique Against Making
Strategy Explicit
Manufacturing Firms
Case Study
• A study carried out by Love et al. (2002) on
manufacturing firms reiterated that both high and low
levels of explicitness in strategy can be effective.
• Moderate explicitness is linked with low performance in
both centralized and decentralized firms.
In centralized firms, attempts to be moderately explicit
regarding strategy may be pointless, inefficient and even
confusing to the stakeholders. In decentralized firms,
moderate efforts to make strategy explicit may not
deliver adequate information for empowered
employees to act effectively.
Group 3 25
02
• Managers should either be forthcoming about strategy or wholly discreet about
it because to be moderately or “intermediately” explicit is not appropriate.
Group 3 26
02
Manufacturing Firms
Case Study (Conclusion)
OR
• The intentional and precise preplanning of acquisition
strategy results in a considerably better financial
performance and goal accomplishment compared to
an unplanned opportunistic adaptive approach.
• Conclusively, we can emphasize that explicit strategy
formulation can improve performance. Love et al.
(2002) also find that full articulation of strategy is
essential for great performance.
Group 3 27
02
Implication of Explicitness on
Performance
Strategy and Performance
Toyota Example
• Toyota is a Japanese automobile manufacturing company that has been
performing well and has maintained a top 3 position amongst automobile
manufacturers over the past 5 years.
Group 3 28
02
Strategy and Performance
Toyota Example (Cont’d…)
• According to the Toyota Annual Report (2017), the company noticed the lack
of synergy and goal congruence and recognized that several subsections were
operating in an isolated manner, not sharing their tasks, directions, and
strategies outside their own division and so they took measures to ensure
strategic transparency and to ascertain that its employees were aware of the
general direction in which it intends to head.
Group 3 29
02
Strategy and Performance
Toyota Example (Cont’d…)
• Toyota has its long term strategy clearly defined and detailed on
their website and has made this strategy explicit to its entire
workforce, establishing goal congruence and synergy.
Group 3 30
02
Group 3
Strategy and Performance
The Toyota Way
31
02
Strategy and Performance
Toyota Example – Goals and Strategies
• Toyota outlines how they seek to achieve their goal of meeting the customer of
the future’s utility need by stating their plan as expanding on to other directions
of social infrastructure and personal living.
Group 3 32
02
Reduction of CO2 emissions
Strategy
1. Toyota Annual Report (2017) states that the company is exploring
all available alternatives in powertrain development, and are
actively working towards achieving zero Carbon dioxide (CO2)
emissions from its vehicles, in order to help create a sustainable
world.
2. Working to develop and upsurge the use of fuel cell vehicles
(FCVs).
3. Accelerated their development of electric vehicles.
Strategy and Performance
Toyota Example – Goals and Strategies
(Cont’d…)
Group 3 33
02
Big Data and Information
Strategy
•Toyota in their Toyota Annual Report (2017) elaborates
their intention to connect all cars in order to construct a
data gathering platform. Utilization of big data to
revolutionize Toyota’s business and their collaboration
with partners in various other industries and IT
companies to produce new mobility services.
•These ought to help in the prediction of accidents and
breakdowns, and also assist in vehicle tracking using
GPS; helping users drive safely and comfortably.
Strategy and Performance
Toyota Example – Goals and Strategies
(Cont’d…)
Group 3 34
02
Intelligence
Strategy
•They are creating automated systems that can execute
full-time driving and are utilizing their advanced safety
technological know-how to encourage the rapid uptake
of new safety technologies in the market.
•They have established the Toyota Research Institute
and set up a related venture capital fund that seeks to
speedup initiatives in areas such as automated driving,
artificial intelligence and robotics.
Strategy and Performance
Toyota Example – Goals and Strategies
(Cont’d…)
Group 3 35
02
Advancing Business Structure
Strategy
• Toyota is working to improve its competitive position in the vehicle
manufacturingbusiness,andtomovetonewbusinessmodels.
• They are cultivating an adequate number of people who can lead
withquickjudgment,aswellasmakerapiddecisionsandtakequick
action.
• They are also reducing the time and effort being spent by
establishing work processes and procedures that will allow
them to focus on making better automobiles.
When to
Formulate
Strategy
Group 3 36
When to Formulate Strategy
• Recourse to an explicit strategy becomes essential when
rapid and discontinuous changes occur in the environment
ofthefirm(Ansoff&McDonnell,1990).
• Organizations face a challenging future where managers
need to work smarter to achieve growth and profit targets.
The marketplace is perceived as becoming more complex
and challenging. The increase in environmental turbulence
has challenged the way an organization plans and
implementsitsstrategy.
Group 3 37
03
Group 3 38
In the midst of CHAOS look
for OPPORTUNITY
-- Sun Tzu--
• Tackling strategic issues requires greater responsibilities as
well as the balance of power and decision-making
betweenthose who manage and those who govern.
• Management and board members ought to discuss
perceptions of environmental turbulence from time to
time to formulate decisions regarding strategic position
and future directions of the organization(Mason, 2007).
Group 3 39
03
When to Formulate Strategy
(Cont’d…)
When to Formulate Strategy
(Cont’d…)
• Ansoff & MacDonell (1990) further explain that firms
need to balance the conditions of the environment,
their business and marketing strategies and their
capability to implement them for survival.
• This calls for enhanced tracking, monitoring and
management of priority strategic issues. Through
managing the strategic issue processing, managers get
the opportunity to identify issues and plan
appropriate actions that will enable them to maintain
an alignment with the demands of the external
environment, no matterhow turbulent.
Group 3 40
03
Internal Factors Leading to
Increased Rapidity in the Environment
1. Struggle constantly for increased productivity through better planning.
2. More efficient organization of work and need to do more with less money.
3. Automation of production and changing the firms technology.
4. Continually contend with union demands and still maintain the level of productivity.
5. Retain competitive position on the market.
6. Pay confidence – inspiring dividends to stockholders.
7. Generate sufficient retained earnings to meet the company’s growth needs.
8. Change in employees’ attitude who are more empowered.
Group 3 41
03
1. Technology
2. Economic
3. Competition
4. Government regulations
5. Saturation of markets
6. Social-cultural factors
Group 3 42
03
External Factors Leading to
Increased Rapidity in the Environment
• According to Mason (2007), the result of
this growth in environmental turbulence
has been the increased competition, an
increasing need for information, innovation
and quicker cycles of development, and
more difficulty in predicting customer,
product and service requirements.
Group 3 43
03
Result of
Increased Rapidity in the Environment
Formulating Strategy
in a Rapid Environment
• When confronted with discontinuities, the firm is
faced with two very difficult problems:
1. Choosing the right directions for further
growth from among many and imperfectly
perceived alternatives.
2. Harnessing the energies of a large number
of people in the new chosen direction.
Group 3 44
03
• Wall (2005) states that strategic formulation has evolved
to meet these changing conditions through more
participation of people in the process, delegating to
those closest to the customers and using cross-
functional teams.
• It was suggested by Stacey (1992) that strategy
formulation should be a spontaneous self-organizing
process, with groups of managers informally discussing
strategicissues.
Group 3 45
03
Formulating Strategy
in a Rapid Environment (Cont’d…)
• Sengupta et al. (2000) recommend a reactive learning
approach that monitors environmental deviations instantly,
communicates the problem or opportunity, and empowers
individuals for prompt decision making, instead of strategic
planning.
• Eisenhardt and Sull (2001) provide a prescriptive
recommendation that explicit strategy in turbulent
environments must be flexible but disciplined. Strategy
formulation in a fast changing environment is to achieve
“adaptive innovation” while still achieving consistent and
reliable execution of the strategy.
Group 3 46
03
Formulating Strategy
in a Rapid Environment (Cont’d…)
• Prof. Thenmozhi writes that, strategy formulation is the process in which a
firm develops long term plans for effective exploitation of environmental
opportunities and management of threats in relation to the firm’s
strengths and weaknesses.
• Strategy formulation includes defining an organization’s mission, developing
objectives and developing strategies .
I) Situational Analysis
• This is whereby a firm undertakes a SWOT analysis which is a framework
that was developed by Albert Humphrey.
• It’s defined as a model that’s used to evaluate a firm’s competitive position
by assessing and analyzing a firm’s internal and external factors and its
current and future potential Grant (2019).
Group 3 47
03
Steps in Formulating Explicit
Strategies
II) Mission and Vision
a) Mission
• According to Prof. Thenmozhi, a firm’s mission is the rationale or purpose
for its existence. A well-constructed mission statement defines the
significant and novel purpose that sets a firm apart from its competitors
and also stipulates the scope of firm.
b) Vision
• Fernandes (2018) writes that a vision statement shows what a firm hopes
to be and attain in the long term.
• A vision statement provides a specific direction for stakeholders more so
employees to comprehend the meaning and purpose of a firm’s business.
• In the same article Fernandes (2018) highlights that if employees find
their firm’s vision meaningful, their level of engagement stands at 68%
which is 19% above average.
Group 3 48
03
Steps in Formulating Explicit
Strategies (Cont’d…)
III) Development of Objectives
• Objectives are the results of a planned activity i.e. they state
what is to be achieved, its timeline and if possible they
should be quantified as written by Prof. Thenmozhi.
• Objectives should meet the SMART criteria i.e. Specific,
Measurable, Achievable, Reasonable and Time-bound.
• Prof. Thenmozhi points out that the accomplishment of an
organization’s objective should result in the realization of its
mission.
• The areas in which a company might establish its goals and
objective are profitability, growth, shareholders wealth,
utilization of resources etc.
Group 3 49
03
Steps in Formulating Explicit
Strategies (Cont’d…)
IV)Strategy Development
• A firm’s strategy forms an elaborate master plan that states how it will achieve
its mission and objectives with a focus on achieving competitive advantage
• Prof. Thenmozhi identifies three types of strategies namely;
A. Corporate Strategy
B. Business Strategy
C. Functional Strategy
A. Corporate Strategy
• Corporate strategy is described as an organization’s general direction and
approach towards growth and management of its various business units and
product lines.
Group 3 50
03
Steps in Formulating Explicit
Strategies (Cont’d…)
B. Business Strategy
• This occurs at the business unit level and focuses on enhancement
of the competitive position of a firm’s products within a particular
industry or market segment.
• This is where a firm develops a competitive strategy for
competitive advantage using Michael Porter’s generic strategies i.e.
cost leadership, differentiation and focus.
C. Functional Strategy
• This is whereby a functional area or department of a firm develops
a strategy to achieve corporate and business unit strategies and
objectives through maximizing resource productivity as written by
Prof. Thenmozhi.
• Functional strategy focuses on developing and nurturing specific
competences to provide a firm with competitive advantage.
Group 3 51
03
Steps in Formulating Explicit
Strategies (Cont’d…)
Difficulties
Encountered
in
Formulating
Strategy
Group 3 52
Difficulties Encountered
in Formulating Strategy
1. Majority of businesses politicize the pre-strategy
decision making process.
The most natural reaction for a business is to fight
against the disruption to its historical power
structures rather than face the challenges brought
about by the changing environment.
Group 3 53
04
According to Ansoff and McDonnell (1990), the following can be seen as some of
the difficulties encountered when formulating strategy:-
2. The introduction of strategic planning within a
business often times causes conflict between
existing profit making activities and the new
innovativeactivities.
Businesses in most cases, do not have the
capabilities, capacities and the motivational
systems to aid them in thinking and acting
strategically.
Group 3 54
04
Difficulties Encountered
in Formulating Strategy (Cont’d…)
3. Businesses usually lack adequate
information about themselves and the
environment as information about
themselves and their environment is a
necessity for effective strategic planning.
They also lack the managerial expertise in
formulating and implementing strategy.
Group 3 55
04
Difficulties Encountered
in Formulating Strategy (Cont’d…)
Summary and Conclusion
• Ansoff and McDonnell (1990), state that strategy is a great instrument for
dealing with the ever changing environment which encompass businesses
today; it is important to note that it is complex, costly to introduce and use.
However there is evidence that shows that strategy pays off for itself.
• Strategy helps businesses to cope with turbulence in their environments.
It therefore deserves serious attention as a managerial tool for businesses and
a wide range of social firms such as Schools, Universities and NGOs.
Group 3 56
05
Group 3 57
Thank You !THANK YOU !

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Making Strategy Explicit

  • 1. 1 Making Strategy Explicit COURSE: BUS6150 A COURSE INSTRUCTOR: DR. NJAMBI ESTHER, DBA SEMESTER: SPRING 2019 GROUP 3 PRESENTATION
  • 2. Team Members Group 3 2 Lilian Sheila Leah Grace Sharon Arnold Evaline
  • 3. Group 3 3 Concept of Strategy Diff. in Formulating Strategy Strategy & Performance When to Formulate Strategy Summary & Conclusion 6:55 – 7:00 PM6:45 – 6:55 PM6:30 – 6:45 PM6:15 – 6:30 PM6:00-6:15 PM Presentation Outline
  • 4. Concept of Strategy How it entered the business vocabulary… Group 3 4
  • 5. Concept of Strategy • As observed by Ansoff and McDonnell (1990), the meaning of strategy was not clear prior to the 1950s as the business environment was stable. • With the growing environmental discontinuities, strategy became an important concept that entered the business vocabulary prior to which businesses relied on military style of management (militarymaxims). Group 3 5 01
  • 6. • According to Mintzberg, Ahlstrand and Lampel (1998), they describe this wave as the search for consulting imperatives which lead to the establishment of strategy boutiques such as McKinsey and Company, SRI and more specifically which focused on strategy. Group 3 6 01 Concept of Strategy (Cont’d…)
  • 7. • In the many definitions of strategy, it is evident that they not only attempt to define what strategy is, but they also give importance on how the strategy is created and what it attempts to achieve. Group 3 7 01 Concept of Strategy (Cont’d…) Porter (1996) for instance described strategy as a creation of a unique and value position involving different set of activities. Ohmae (1988) on the other hand defines strategy as working hard to understand customer’s inherent needs and then rethinking what a category of product is all about.
  • 8. • As opined by Love, Priem, & Lumpkin, (2002) when a company is seeking advice on strategy management, they find themselves facing the “control vs. empowerment” dilemma. • Proponents of making a strategic intent explicit and well articulated view it as a motivating and control function that contributes to consistency and unity of direction within an organization. • Opponents however view it as a bottleneck that could lead to organizational inertia that could in turn limit flexibility and slow down the organization’s response. Group 3 8 01 Concept of Strategy (Cont’d…)
  • 9. • It is therefore imperative that a balance between control and empowerment is found so as to ensure a smooth strategy process. The balance will depend on a number of factors as will be elaborated in this presentation. Group 3 9 01 Concept of Strategy (Cont’d…)
  • 10. Your Date Here Your Footer Here 10
  • 11. 1. Measuring standards of current and future performance of the firm. Their quality are the objectives; the intended quantity, the goals. 2. How the firm builds up its relationship with the external environment, the stakeholders, contribution and maintaining its relevance all add up to business strategy. 3. Organizational concept – rules for establishing central, internal relations and daily processes of the firm. 4. Operating policies – how the firm runs day to day. Group 3 11 01 Ansoff & McDonnell (1990) stated that there are 4 types of strategic decision making rules that guide organizational behavior as follows:- Strategic Decision Making Rules
  • 12. Characteristics of Strategy While articulating on why strategy should be made explicit, Ansoff & McDonnell (1990) state that business strategy has several markedly distinct characteristics as follows:- Group 3 12 01 1. The process of business strategy articulation sets the general courseinwhichthefirmwillexpandandadvance. 2. Through a search process, strategy is used to create strategic projects. The search will ensure that strategy focuses on sections defined by the strategy and filter out possibilities whicharenotadheringwiththestrategy.
  • 13. Group 3 13 01 3. For an already well thought out search process in history, strategy becomes unimportant as the previous successful working mechanisms of an organizationwilltakeitwhereveritwantstogo. 4. At the time of strategy formulation it is not possible to enumerate all the project possibilities which will be uncovered, hence strategy formulation must be based on highly integrated, incomplete and uncertain information aboutclassesofalternatives. 5. When the search uncovers specific alternatives, the more precise, less aggregated information which becomes available may cast doubts on the wisdom of the original strategy choice hence the need for strategic feedback soastousestrategyeffectively. Characteristics of Strategy (Cont’d…)
  • 14. Group 3 14 01 6. Since both strategy and objectives are used to filter projects, they may appear alike yet they are distinct. Objectives represent the ends which the firm is seeking to attain, while strategy is the means to those ends. The objectives are higher level decision rules. A strategy which is justified under one set of objectives may lose its validity when the objectives of the organization are changed. 7. Strategy and objectives are interchangeable; at different points in time and different points in the firm. Hence an attribute can be in the objective and strategy of a firm. From this, a hierarchical relationship results in which a strategyatahighermanageriallevelisanobjectivesatalowerlevel. Characteristics of Strategy (Cont’d…)
  • 16. Strategy and Performance • Performance: • The execution of an assignment measured against specifically set objectives. • How well a certain task is done as far as accomplishing a goal is concerned. • Goals and Objectives • What the firm is seeking to accomplish, and the strategy is how they intend to achieve these goals. Group 3 16 02
  • 17. • Management: • Is observed by Ansoff & McDonnell (1990) to generally be goal and result oriented, whereby certain strategies are employed with the end game being the achievement of certain goals and objectives. • The accomplishment of the set goals is the performance and we can therefore say that a strategy contributes to the firm’s performance. Group 3 17 02 Strategy and Performance (Cont’d…)
  • 18. Proponents of Making Strategy Explicit Ansoff and McDonnell (1990) point out that employees make significant contributions to the formation of strategy and are in the forefront of its implementation. It is necessary that strategy be made a matter of concern to the other employees within the firm, and not be treated as a reserve of the management as this can aid in better execution of the strategy. Group 3 18 02
  • 19. Opponents of Making Strategy Explicit Some managers are of a contrary opinion, stating that strategy typically ought not to be made explicit and therefore must remain private in order to maintain a unique position and gain a competitive advantage. Group 3 19 02
  • 20. Group 3 20 Let your plans be DARK AND IMPENETRABLE AS NIGHT, and when you move, FALL LIKE A THUNDERBOLT -- Sun Tzu--
  • 21. Guru Critique Against Making Strategy Explicit • Mintzberg, (1985) is quoted to have reiterated that for goals to be achieved, strategy ought to facilitate adaptability and that change has to be continuous. • He therefore generally comes out strongly in opposing the need to make strategy explicit; stating that doing so only creates opposition to strategic change, inertia and rigidity, consequently negatively affecting performance. Group 3 21 02
  • 22. Paradox on Making Strategy Explicit or Not • A paradox or a dilemma therefore presents itself here, because there exists evidence of great firms that have succeeded without making strategy explicit as well as others who have done well, having employed a deliberate course of strategyformulation. • Strategy offers direction and a plan toward goal attainment, so then one may wonder how certain firms can be able to attain coherence and ultimately attain their goals without making their strategiesexplicit. Group 3 22 02
  • 23. • Ansoff and McDonnell (1990) elaborate on growth and change as the reasons why firms do well without making strategy explicit. If a firm’s scope of operations is in a growing market where demand characteristics change slowly and the technology is stable then the strategy needs to change slowly and incrementally. • Coherence can be attained through informal organizational learning and adaptation, whereby the employees acquire an intuitive awareness of the firm’s strategic guidelines through their learning of the business and their progression through the firm. Group 3 23 02 Guru Critique Against Making Strategy Explicit
  • 24. • The absence of strategy in the early 1900s era is therefore understandable because that was a period of stable growth; this explains why firms in the early years excelled. • The past few decades however have been an entirely different scenario as Ansoff & McDonnell(1990) point out because sticking to historical practices has proven to result in stagnations and so strategy has emerged as a tool for reorienting the organizational thrust. Group 3 24 02 Guru Critique Against Making Strategy Explicit
  • 25. Manufacturing Firms Case Study • A study carried out by Love et al. (2002) on manufacturing firms reiterated that both high and low levels of explicitness in strategy can be effective. • Moderate explicitness is linked with low performance in both centralized and decentralized firms. In centralized firms, attempts to be moderately explicit regarding strategy may be pointless, inefficient and even confusing to the stakeholders. In decentralized firms, moderate efforts to make strategy explicit may not deliver adequate information for empowered employees to act effectively. Group 3 25 02
  • 26. • Managers should either be forthcoming about strategy or wholly discreet about it because to be moderately or “intermediately” explicit is not appropriate. Group 3 26 02 Manufacturing Firms Case Study (Conclusion) OR
  • 27. • The intentional and precise preplanning of acquisition strategy results in a considerably better financial performance and goal accomplishment compared to an unplanned opportunistic adaptive approach. • Conclusively, we can emphasize that explicit strategy formulation can improve performance. Love et al. (2002) also find that full articulation of strategy is essential for great performance. Group 3 27 02 Implication of Explicitness on Performance
  • 28. Strategy and Performance Toyota Example • Toyota is a Japanese automobile manufacturing company that has been performing well and has maintained a top 3 position amongst automobile manufacturers over the past 5 years. Group 3 28 02
  • 29. Strategy and Performance Toyota Example (Cont’d…) • According to the Toyota Annual Report (2017), the company noticed the lack of synergy and goal congruence and recognized that several subsections were operating in an isolated manner, not sharing their tasks, directions, and strategies outside their own division and so they took measures to ensure strategic transparency and to ascertain that its employees were aware of the general direction in which it intends to head. Group 3 29 02
  • 30. Strategy and Performance Toyota Example (Cont’d…) • Toyota has its long term strategy clearly defined and detailed on their website and has made this strategy explicit to its entire workforce, establishing goal congruence and synergy. Group 3 30 02
  • 31. Group 3 Strategy and Performance The Toyota Way 31 02
  • 32. Strategy and Performance Toyota Example – Goals and Strategies • Toyota outlines how they seek to achieve their goal of meeting the customer of the future’s utility need by stating their plan as expanding on to other directions of social infrastructure and personal living. Group 3 32 02 Reduction of CO2 emissions Strategy 1. Toyota Annual Report (2017) states that the company is exploring all available alternatives in powertrain development, and are actively working towards achieving zero Carbon dioxide (CO2) emissions from its vehicles, in order to help create a sustainable world. 2. Working to develop and upsurge the use of fuel cell vehicles (FCVs). 3. Accelerated their development of electric vehicles.
  • 33. Strategy and Performance Toyota Example – Goals and Strategies (Cont’d…) Group 3 33 02 Big Data and Information Strategy •Toyota in their Toyota Annual Report (2017) elaborates their intention to connect all cars in order to construct a data gathering platform. Utilization of big data to revolutionize Toyota’s business and their collaboration with partners in various other industries and IT companies to produce new mobility services. •These ought to help in the prediction of accidents and breakdowns, and also assist in vehicle tracking using GPS; helping users drive safely and comfortably.
  • 34. Strategy and Performance Toyota Example – Goals and Strategies (Cont’d…) Group 3 34 02 Intelligence Strategy •They are creating automated systems that can execute full-time driving and are utilizing their advanced safety technological know-how to encourage the rapid uptake of new safety technologies in the market. •They have established the Toyota Research Institute and set up a related venture capital fund that seeks to speedup initiatives in areas such as automated driving, artificial intelligence and robotics.
  • 35. Strategy and Performance Toyota Example – Goals and Strategies (Cont’d…) Group 3 35 02 Advancing Business Structure Strategy • Toyota is working to improve its competitive position in the vehicle manufacturingbusiness,andtomovetonewbusinessmodels. • They are cultivating an adequate number of people who can lead withquickjudgment,aswellasmakerapiddecisionsandtakequick action. • They are also reducing the time and effort being spent by establishing work processes and procedures that will allow them to focus on making better automobiles.
  • 37. When to Formulate Strategy • Recourse to an explicit strategy becomes essential when rapid and discontinuous changes occur in the environment ofthefirm(Ansoff&McDonnell,1990). • Organizations face a challenging future where managers need to work smarter to achieve growth and profit targets. The marketplace is perceived as becoming more complex and challenging. The increase in environmental turbulence has challenged the way an organization plans and implementsitsstrategy. Group 3 37 03
  • 38. Group 3 38 In the midst of CHAOS look for OPPORTUNITY -- Sun Tzu--
  • 39. • Tackling strategic issues requires greater responsibilities as well as the balance of power and decision-making betweenthose who manage and those who govern. • Management and board members ought to discuss perceptions of environmental turbulence from time to time to formulate decisions regarding strategic position and future directions of the organization(Mason, 2007). Group 3 39 03 When to Formulate Strategy (Cont’d…)
  • 40. When to Formulate Strategy (Cont’d…) • Ansoff & MacDonell (1990) further explain that firms need to balance the conditions of the environment, their business and marketing strategies and their capability to implement them for survival. • This calls for enhanced tracking, monitoring and management of priority strategic issues. Through managing the strategic issue processing, managers get the opportunity to identify issues and plan appropriate actions that will enable them to maintain an alignment with the demands of the external environment, no matterhow turbulent. Group 3 40 03
  • 41. Internal Factors Leading to Increased Rapidity in the Environment 1. Struggle constantly for increased productivity through better planning. 2. More efficient organization of work and need to do more with less money. 3. Automation of production and changing the firms technology. 4. Continually contend with union demands and still maintain the level of productivity. 5. Retain competitive position on the market. 6. Pay confidence – inspiring dividends to stockholders. 7. Generate sufficient retained earnings to meet the company’s growth needs. 8. Change in employees’ attitude who are more empowered. Group 3 41 03
  • 42. 1. Technology 2. Economic 3. Competition 4. Government regulations 5. Saturation of markets 6. Social-cultural factors Group 3 42 03 External Factors Leading to Increased Rapidity in the Environment
  • 43. • According to Mason (2007), the result of this growth in environmental turbulence has been the increased competition, an increasing need for information, innovation and quicker cycles of development, and more difficulty in predicting customer, product and service requirements. Group 3 43 03 Result of Increased Rapidity in the Environment
  • 44. Formulating Strategy in a Rapid Environment • When confronted with discontinuities, the firm is faced with two very difficult problems: 1. Choosing the right directions for further growth from among many and imperfectly perceived alternatives. 2. Harnessing the energies of a large number of people in the new chosen direction. Group 3 44 03
  • 45. • Wall (2005) states that strategic formulation has evolved to meet these changing conditions through more participation of people in the process, delegating to those closest to the customers and using cross- functional teams. • It was suggested by Stacey (1992) that strategy formulation should be a spontaneous self-organizing process, with groups of managers informally discussing strategicissues. Group 3 45 03 Formulating Strategy in a Rapid Environment (Cont’d…)
  • 46. • Sengupta et al. (2000) recommend a reactive learning approach that monitors environmental deviations instantly, communicates the problem or opportunity, and empowers individuals for prompt decision making, instead of strategic planning. • Eisenhardt and Sull (2001) provide a prescriptive recommendation that explicit strategy in turbulent environments must be flexible but disciplined. Strategy formulation in a fast changing environment is to achieve “adaptive innovation” while still achieving consistent and reliable execution of the strategy. Group 3 46 03 Formulating Strategy in a Rapid Environment (Cont’d…)
  • 47. • Prof. Thenmozhi writes that, strategy formulation is the process in which a firm develops long term plans for effective exploitation of environmental opportunities and management of threats in relation to the firm’s strengths and weaknesses. • Strategy formulation includes defining an organization’s mission, developing objectives and developing strategies . I) Situational Analysis • This is whereby a firm undertakes a SWOT analysis which is a framework that was developed by Albert Humphrey. • It’s defined as a model that’s used to evaluate a firm’s competitive position by assessing and analyzing a firm’s internal and external factors and its current and future potential Grant (2019). Group 3 47 03 Steps in Formulating Explicit Strategies
  • 48. II) Mission and Vision a) Mission • According to Prof. Thenmozhi, a firm’s mission is the rationale or purpose for its existence. A well-constructed mission statement defines the significant and novel purpose that sets a firm apart from its competitors and also stipulates the scope of firm. b) Vision • Fernandes (2018) writes that a vision statement shows what a firm hopes to be and attain in the long term. • A vision statement provides a specific direction for stakeholders more so employees to comprehend the meaning and purpose of a firm’s business. • In the same article Fernandes (2018) highlights that if employees find their firm’s vision meaningful, their level of engagement stands at 68% which is 19% above average. Group 3 48 03 Steps in Formulating Explicit Strategies (Cont’d…)
  • 49. III) Development of Objectives • Objectives are the results of a planned activity i.e. they state what is to be achieved, its timeline and if possible they should be quantified as written by Prof. Thenmozhi. • Objectives should meet the SMART criteria i.e. Specific, Measurable, Achievable, Reasonable and Time-bound. • Prof. Thenmozhi points out that the accomplishment of an organization’s objective should result in the realization of its mission. • The areas in which a company might establish its goals and objective are profitability, growth, shareholders wealth, utilization of resources etc. Group 3 49 03 Steps in Formulating Explicit Strategies (Cont’d…)
  • 50. IV)Strategy Development • A firm’s strategy forms an elaborate master plan that states how it will achieve its mission and objectives with a focus on achieving competitive advantage • Prof. Thenmozhi identifies three types of strategies namely; A. Corporate Strategy B. Business Strategy C. Functional Strategy A. Corporate Strategy • Corporate strategy is described as an organization’s general direction and approach towards growth and management of its various business units and product lines. Group 3 50 03 Steps in Formulating Explicit Strategies (Cont’d…)
  • 51. B. Business Strategy • This occurs at the business unit level and focuses on enhancement of the competitive position of a firm’s products within a particular industry or market segment. • This is where a firm develops a competitive strategy for competitive advantage using Michael Porter’s generic strategies i.e. cost leadership, differentiation and focus. C. Functional Strategy • This is whereby a functional area or department of a firm develops a strategy to achieve corporate and business unit strategies and objectives through maximizing resource productivity as written by Prof. Thenmozhi. • Functional strategy focuses on developing and nurturing specific competences to provide a firm with competitive advantage. Group 3 51 03 Steps in Formulating Explicit Strategies (Cont’d…)
  • 53. Difficulties Encountered in Formulating Strategy 1. Majority of businesses politicize the pre-strategy decision making process. The most natural reaction for a business is to fight against the disruption to its historical power structures rather than face the challenges brought about by the changing environment. Group 3 53 04 According to Ansoff and McDonnell (1990), the following can be seen as some of the difficulties encountered when formulating strategy:-
  • 54. 2. The introduction of strategic planning within a business often times causes conflict between existing profit making activities and the new innovativeactivities. Businesses in most cases, do not have the capabilities, capacities and the motivational systems to aid them in thinking and acting strategically. Group 3 54 04 Difficulties Encountered in Formulating Strategy (Cont’d…)
  • 55. 3. Businesses usually lack adequate information about themselves and the environment as information about themselves and their environment is a necessity for effective strategic planning. They also lack the managerial expertise in formulating and implementing strategy. Group 3 55 04 Difficulties Encountered in Formulating Strategy (Cont’d…)
  • 56. Summary and Conclusion • Ansoff and McDonnell (1990), state that strategy is a great instrument for dealing with the ever changing environment which encompass businesses today; it is important to note that it is complex, costly to introduce and use. However there is evidence that shows that strategy pays off for itself. • Strategy helps businesses to cope with turbulence in their environments. It therefore deserves serious attention as a managerial tool for businesses and a wide range of social firms such as Schools, Universities and NGOs. Group 3 56 05
  • 57. Group 3 57 Thank You !THANK YOU !