Transcript Slide 1

Tutorial 01 & 02
a. Direct such SBEs to have their accounts re-audited or
were such accounts have been published, to republish
them or to include suitable corrections in its accounts for
the following year.
SMP
PROCESS
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SMP
Business management is a complex process. It
requires skills, knowledge and experience
Strategic management is a responsibility of the
business management
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Strategic Management” has emphasized a
warlike philosophy.
The term "strategic” comes primarily from
the literature on war.
From this perspective,

Business is a battle,

Competitors are the enemy, and

Government makes and enforces the rules
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Luck
Having right mix of products and/or services at the right time
Acquire, develop, and manage resources and capabilities that
provide competitive advantages
Manage relationships with a wide range of organizations, groups,
and people that have a stake in their firms
(Stakeholders)
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Competitors
Local
Communities
Activist Groups
Suppliers
The Organization
Customers
Owners/BOD
Managers
Employees
Unions
The Media
Financial
Intermediaries
Rf 01;page 12 (1.3)
Government
Agencies &
Administrators
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Why do firms succeed or fail?
 Why do firms have varying levels of
performance?
Strategic management finds solutions for above
questions

People use strategic management concepts and
techniques to reach higher levels of
performance
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
organizations of all types and sizes continually face changing
situations

Being able to cope effectively with these uncertainties in the
external and internal environments and achieve expected
levels of performance is a real challenge

However, this is where strategic management comes in

strategic decision makers examine all the important aspects
in order to determine the most appropriate decisions and
actions
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
In the past, the topics of ·strategy and strategic management
became major research thrusts in many business schools across
the United States and elsewhere

By the early 1970s,in the field of business policy and how they
should respond to them

Then, in May 1977, a major conference was held at the
University of Pittsburgh
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Strategic management is a process through which
organizations

analyze and learn from their internal and external
environments,

establish strategic direction,

create strategies that are intended to move the
organization in that direction,

and implement those strategies,
all in an effort to satisfy key stakeholders.
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Strategic thinking involves the
generation and application of unique
business insights and opportunities
intended to create competitive
advantage for a firm or organization
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1) Traditional Perspective
2) Resource – Based View
3) Stakeholder View
Comparison - Refer the tutorial
Page 6 (Table 1)
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Situation Analysis
Evaluation of the
external environment
and the organization
Rf 01;page 7 ( 1.1)
Strategic Direction
Creation of
organizational mission
and goals
Strategy Formulation
Development of
strategies to take
advantage of strengths
and opportunities or
overcome or neutralize
weakness and threats
Strategy
Implementation
Development and
execution of
implementation plans,
including organizational
design, control systems,
and management
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1)“Enactment ’’- Broad view
Large firms (influencing firms)
 This basically an argument that firms may choose their environments.
 They may compete in a given environment.
Or
as an alternative,
 they may attempt to influence the environment
This process is called “Enactment”.
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Enactment- a firm can influence its environment

Characteristics
 They do not have to submit to existing forces in the
environment.
 They can create their environments through strategic
alliances with stakeholders, investments in leading
technologies, advertising, political lobbying, and a
variety of other activities.
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Smaller firms (non-influencing firms)
 limited in their ability to influence some components of their
environments.
Example:
A small firm may have a difficult time influencing
national government agencies and administrators.

Characteristics
 band together into trade groups to influence government.
 form alliances
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• The environment is the primary determinant of the best strategy- This
is called “Environmental Determinism”.
• good management is associated with determining which strategy will
best fit environmental, technical, and human forces at a particular
point in time
Characteristics
• Align the skills and other resources of the organization with the needs
and demands of the environment can be a source of competitive
advantage.
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
Managers plan to pursue an intended strategic course.

In some cases, strategy simply emerges from a stream
of decisions.

Managers learn as they go.
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
An emergent strategy is one that was not planned or
intended.

According to this perspective, managers learn what will
work through a process of trial and error.
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
When Honda executives decided to market a small
motorcycle, they had no idea it would be so successful.

In fact, the prevailing wisdom was that small motorcycles
would not sell very well.

But Honda executives broke the rules and made the
decision to market a small motorcycle.

As sales expanded, they increased marketing, and
ultimately captured two thirds of the American motorcycle
market.
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"Why do some firms persistently outperform
other firms?“
 Ability to develop distinctive competencies in particular areas
 Capabilities of general management
 Have "high quality" general managers
 Effective leadership
although leaders are an important source of competence for an
organization, they are not t he only important resource that makes a
difference.
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 Having superior resources
Example
 Farmer with the most-fertile land has a sustained performance advantage
over other farmers
 various skills and abilities possessed by firms can lead to superior
performance
 coordinates the activities of numerous groups and individuals, and as a
bundle of productive resources
 a wide range of skills and resources can influence competitive
performance
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
Financial Resources :all of the monetary resources from which a firm can draw

Physical Resources :plants, equipment, location s, and access to raw materials

Human Resources
:pertains to the skills, background, and training of managers
and employees, as well as the way they are organized

Organizational Knowledge and Learning

General Organizational Resources :firm reputation, brand names, patents,
contracts, and relationships with external stakeholders.
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General Organizational Resources
Physical Resources
Firm Reputation
Plants & Equipments
Brand names & Patents
Organizational Locations
Contracts
Access to Raw Materials
Stakeholder Relationship
Organizational
Knowledge & Learning
Financial Resources
Human Resources
Internal& External Source of Financing
Skills, Background and Training of Managers
& Employees
Financial Strength
Organizational Structure
Rf 01;page 10 (1.2)
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
The most important role of a manager becomes that of
acquiring, developing, managing, and discarding resources.

Superior Resources
 not easy to substitute.
 If a particular resource is also costly or impossible to imitate, then the
competitive advantage may be sustainable. A sustainable competitive
advantage may lead to higher-than average organizational performance
over a long time period.
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
A core competency is a concept in management theory
originally advocated by two business authors, C. K.
Prahalad and Gary Hamel.

It fulfills three key criteria:
 It is not easy for competitors to imitate
 It can be reused widely for many products and markets
 It must contribute to the end consumer's experienced benefits and the value
of the product or service to its customers
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
Initiative and Creativity
Plans work and carry out tasks without detailed instructions;
makes constructive suggestions;
prepares for problems or opportunities in advance;
 undertakes additional responsibilities;
responds to situations as they arise with minimal supervision;
creates novel solutions to problems;
evaluates new technology as potential solutions to existing
problems.
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
Judgment
Makes sound decisions;
bases decisions on fact rather than emotion;
analyzes problems skillfully;
uses logic to reach solutions.
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
Cooperation/Teamwork
Works harmoniously with others to get a job done;
 responds positively to instructions and procedures;
able to work well with staff, co-workers, peers and managers;
shares critical information with everyone involved.
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
Quality of Work

Maintains high standards despite pressing deadlines;

does work right the first time;

corrects own errors;

regularly produces accurate, thorough, professional work.
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
Reliability
Personally responsible;
completes work in a timely, consistent manner;
works hours necessary to complete assigned work;
 is regularly present and punctual;
arrives prepared for work;
is committed to doing the best job possible;
 keeps commitments.
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
Support of Diversity
 Treats all people with respect; values diverse perspectives;
 participates in diversity training
 Opportunities; provides a supportive work environment for the
multicultural workforce;
 shows sensitivity to individual differences; treats others fairly without
regard to race, sex, color, religion, or sexual orientation;
 recognizes differences as opportunities to learn and gain by working
together;
 values and encourages unique skills and talents;
 seeks and considers diverse perspectives and ideas.
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
Job Knowledge/Technical Knowledge
It demonstrates knowledge of techniques, skills, equipment,
procedures and materials
 Applies knowledge to identify issues and internal problems
 works to develop additional technical knowledge and skills
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
Communication
 Writes and speaks effectively, using conventions proper to the situation;
 states own opinions clearly and concisely;
 demonstrates openness and honesty;
 listens well during meetings and feedback sessions;
 explains reasoning behind own opinions;
 asks others for their opinions and feedback;
 asks questions to ensure understanding;
 exercises a professional approach with others using all appropriate
tools of communication;
 uses consideration and tact when offering opinions.
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
Customer Service
 Listens and responds effectively to customer questions;
 resolves customer problems to the customer’s satisfaction;
respects all internal and external customers;
 uses a team approach when dealing with customers;
 follows up to evaluate customer satisfaction;
 measures customer satisfaction effectively;
 commits to exceeding customer expectations.
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
Problem Solving
 Anticipates problems;
 sees how a problem and its solution will affect other units;
 gathers information before making decisions;
 weighs alternatives against objectives and arrives at reasonable
decisions;
 adapts well to changing priorities, deadlines and directions;
 works to eliminate all processes which do not add value;
 willing to take action, even under pressure, criticism or tight
deadlines;
 takes informed risks;
 recognizes and accurately evaluates the signs of a problem;
 analyzes current procedures for possible improvements;
 notifies supervisor of problems in a timely manner.
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
Flexibility

Remains open-minded and changes opinions on the basis of new
information;

performs a wide variety of tasks and changes focus quickly as
demands change;

manages transitions from task to task effectively;

adapts to varying customer needs.
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
Organization
 Able to manage multiple projects;
 able to determine project urgency in a practical way;
 uses goals to guide actions;
 creates detailed action plans;
 organizes and schedules people and tasks effectively.
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
Staff development

Works to improve the performance of oneself and others by
pursuing opportunities for continuous learning/feedback;

Constructively helps and coaches others in their professional
development;

Exhibits a “can-do” approach and inspires associates to excel;
develops a team spirit.
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
Innovation
 Able to challenge conventional practices;
 adapts established methods for new uses;
 pursues ongoing system improvement;
 creates novel solutions to problems;
 evaluates new technology as potential solutions to
existing problems.
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The existing strategy models were not particularly
helpful to managers who were trying to create new
opportunities during a period of such radical change.
It was developed as a direct response to the concerns
of managers who were being buffeted by increasing
levels of complexity and change in the external
environment
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In summary
It envisions the firm at the center of a
network of constitutes called
stakeholders; firms can gain competitive
advantage though superior stakeholder
management
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
Advantages
 Relative to a model that includes only a few
stakeholders, it more accurately depicts the
complicated nature of the management task by
enlarging the group of relevant constituencies to
which managerial attention is drawn.
This accuracy is important so that managers
understand the many forces that
influence
organizational behavior and success.
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
Consideration of a broader group of stakeholders during the
strategic management process can help prevent an
organization from being surprised by a dissatisfactory
stakeholder.
Examples
 By looking at a new strategy from the perspective of a union
can help a company prevent a strike.
 By considering the needs of a local community can prevent
bad press, lawsuits, and adverse legislation.
.
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
Third, the stakeholder model provides more choices when
selecting strategic options
Example
 An organization that has fostered excellent
relationships with many stakeholders has more
options to consider when difficulty is
experienced and success.
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•
Stonyfield Farm, Inc. (Londonderry, New
Hampshire) was in trouble when the company
that manufactured its yogurt went bankrupt
•
Stonyfield responded with an innovative
recovery plan that involved several key
stakeholders, including employees, suppliers,
a government agency, stock holders,
managers, and customers
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
Example (Contd.)
 First, the company ran its product-development plant on a
seven-day, three-shift schedule to maintain volume until a new
plant could be built. This required the sup port of employees,
which management fostered through weekly meetings

Due to financial strain during construction, workers were
asked to take lower wages with the expectation of future
bonuses. The company instituted flexible-time scheduling,
improved benefits, increased training, and participative
decision making in an effort to maintain good relationships
with employees
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
Example (contd.)
•
After the new plant was opened, the company was still
strapped for cash, resulting in a small marketing budget
•
The company decided to involve their customers directly,
and created a "Moo Patrol" program, complete with a
newsletter and an "Adopt-a-Cow" program for children.
•
These efforts resulted in a growth rate of more than 60
percent in some customer groups, and the introduction of
several new product lines to be distributed nationally
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
Reference
1) Jefferey S.Harrison,
Strategic Management of Resources and Relationships,
United States of America
2) Core competency,
http://en.wikipedia.org/wiki/Core_competency,
Viewed 25, 09,2013
3) Description of competencies,
http://wdrs.fnal.gov/elr/competencies_04.pdf,
viewed 25,09, 2013
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