Zimpapers Logo

Talking Strategy, With Dr Julius Tapera

STRATEGIC management can be defined as a set of managerial decisions and actions that determines the long-run performance of a corporation. 

The process comprises five interrelated and integrated phases; 1) environmental scanning (internal and external), 2) strategy formulation, 3) strategy implementation, 4) monitoring and evaluation, and 5) control. 

It entails identification and evaluation of external business opportunities and threats in light of an organisation’s strengths and weaknesses. It is within the context of the strategic management process that organisational managers are expected to deploy strategic planning capabilities in effectively and efficiently driving organisational performance. The five phases of the strategic management process are briefly explained below:

Environmental Scanning

Environmental scanning entails an analysis of the organisation’s operating environments; both internally and externally. This involves collecting, synthesysing, monitoring, evaluating and disseminating information from the external and internal environments to strategists within the organisation for sound decision making. 

Scanning the business environment in which an organisation is operating is important in determining the scope of development, identifying current and forecasting future factors that will influence the success or failure of the enterprise. 

The process entails acquiring and utilizing information on events, patterns, trends, and relationships within the organisation’s internal and external environments. The business environment continues to be dynamic and unpredictable and as such environmental scanning assists organisational leaders to map the firm’s trajectory. 

One of the environmental scanning tools that are commonly used is the SWOT Analysis, wherein the organisation evaluates its internal environment as well as its external environment. Through this tool, an organisation to should be able to identify its internal strengths and weaknesses while also identifying threats and opportunities that characterise the external environment. 

The other environmental analysis tool that is also commonly used is the ‘PESTLE Analysis’ whereby the organisation will be analysing the political, economic, socio-cultural, technological, legal and environmental aspects, which impact the organisation’s operations. In addition, organisations can also scan the industry environment, particularly through competitor analysis. One of the tools that have been widely used for this type of industry analysis is the ‘Porter’s Five Forces Model’, in which he asserts that companies can analyse the following factors: 1) threat of new entrants into the industry, 2) rivalry amongst existing competitors, 3) bargaining power of suppliers, 4) bargaining power of buyers, and 5) the threat of substitute products. 

An understanding of these factors is critical if an organisation is to create a competitive advantage and improve its performance.

Strategy formulation 

Strategy formulation is the process of developing and establishing an organisation’s strategic vision and mission, setting objectives, key performance indicators, and choosing among alternative strategies for achieving the set objectives. 

In strategy formulation, four interrelated disciplines prominently emerge and these require strategic managers’ dynamic capabilities to synchronise for sustainable competitive advantage; strategic intent, market insight, innovation focus, and business design. Strategic intent entails vision-casting, which gives direction to the organisation and clarity on the future product, market and customer technology focus while also setting the objectives that become standards for measuring the company’s performance. 

The crafted strategies to achieve organisational objectives should be designed in such a way as to move the organisation along the strategic path that the organisation’s management would have charted. Market insight calls for the continuous gathering and analysis of market information for informed decision-making and creating and maintaining an edge of competitors. 

Innovation focus involves consistent challenging of the status quo, unconventional thinking, experimentation and exploring broad sources of information in shaping organisational and industry change. 

The role of strategic managers, thus, becomes the facilitation of creativity in new product development, unique service offering and the design and development of innovative business models and operational systems that set the organisation ahead of its competitors. 

The business design focuses on how the business will compete in its market, based on the external insights gathered through strategic intent, market insight and innovation focus. 

It entails selecting market segments in which the organisation can effectively compete, designing the unique value proposition to the chosen market segment(s), strategies for effective value capture and the scope of specific activities that will ensure the sustainability of the value generation process. 

Strategy formulation, therefore, requires organisations to develop dynamic capabilities that can facilitate an integrative strategy formulation process for the creation of competitive advantage and improved organisational performance. 

Dr Julius Tapera holds a PhD in Strategic Management and is currently the assistant to the Vice-Chancellor at Lupane State University. He is a strategic management consultant, motivational speaker and author. He can be contacted on mobile: +263773586037; Email: [email protected] or [email protected]