MNG301-A/103/2/2006
STREPIESKODE
BAR CODE
UNISA P248(A)
DEPARTMENT OF
BUSINESS MANAGEMENT
MODULE: STRATEGIC PLANNING
MODULE CODE: MNG301-A
TUTORIAL LETTER MNG301-A/103/2/2006
2 MNG301-A/103
CONTENTS
1 Introduction
2 Feedback on the discussion classes
3 The October/November 2006 examination
4 Tutorial letter MNG301-A/104/3/2006
5 In closing
Appendix A: Copy of discussion class presentation
Dear Student
1 INTRODUCTION
This tutorial letter provides brief feedback on the discussion classes that were held during August
2006 in Pretoria, Durban and Cape Town. It also contains information on the forthcoming
October/November 2006 examination and tutorial letter MNG301-A/104/3/2006. I have included the
presentation used during the discussion classes as Appendix A to accommodate those who were
unable to attend the discussion classes.
This tutorial letter should be read in conjunction with tutorial letters MNG301-A/101/3/2006, MNG301-
A/102/3/2006 and MNALLE-Q/301/4/2006.
2 FEEDBACK ON THE DISCUSSION CLASSES
The discussion classes held earlier this semester were a great success, with more than 200 students
attending in the various centres across the country. If you were unable to attend, it is important to
remember that the discussion classes are only one of many activities in which you can become
involved as a way of achieving the outcomes of this module. The discussion classes on their own
are by no means sufficient to achieve the learning outcomes of this module.
The proceedings of the discussion classes can be summarised as follows:
• The discussion classes provided an overview of each of the eight MNG301-A topics. This overview
was based on the information in your study guide and your prescribed textbook by Ehlers and
Lazenby.
• Group exercises were undertaken to identify strategic planning concepts in organisations.
Students were required to identify organisational stakeholders, evaluate a mission statement,
compile a new mission statement, identify competitors, identify organisations that pursue one of
the three generic strategies and evaluate the grand strategies of a South African pharmaceutical
retailer. It is important to note that these practical group exercises were used to link the theory with
the business environment. Also note that you will not be assessed on case studies in the
examination, as these do not form part of the learning outcomes for this module.
• The discussion classes ended with a brief discussion of the forthcoming examination. Please refer
to section 3 below.
3 THE OCTOBER/NOVEMBER 2006 EXAMINATION
3.1 Admission to the examination
Students who did not submit the compulsory assignment by the relevant due date will not be admitted
to the examination and must re-register for MNG301-A.
3 MNG301-A/103
3.2 Preparing for the October/November 2006 examination
Many students have asked which chapters from the prescribed book should be studied for the
forthcoming MNG301-A examination. This module is about achieving outcomes, not about studying a
list of chapters.
Tutorial letter MNG301-A/102/3/2006 contained a table linking the topics in the study guide with the
relevant chapters in the prescribed textbook. Only chapters 1–6 form part of the MNG301-A syllabus.
As part of your preparation for the MNG301-A October/November 2006 examination you should:
• ensure that you have achieved all the learning outcomes and learning outcome standards in your
study guide.
• understand the key concepts used for examining (see tutorial letter MNALLE-Q/301/4/2006).
Remember to read the examination questions carefully, to answer the whole question and to plan your
time according to the mark allocation.
IT IS YOUR RESPONSIBILITY TO ENSURE THAT YOU HAVE COPIES OF ALL THE TUTORIAL
LETTERS AND THE STUDY GUIDE. LECTURERS ARE NOT ABLE TO E-MAIL OR FAX COPIES
OF THE TUTORIAL LETTERS TO YOU THE DAY BEFORE THE EXAMINATION. YOU MAY
OBTAIN THE TUTORIAL LETTERS FROM DESPATCH OR DOWNLOAD THE TUTORIAL
LETTERS FROM myUnisa (go to [Link]).
3.3 Sample examination questions
Past examination papers are not available. The learning outcome standards as well as the self-
evaluation assignments provide ample opportunity to practise writing essays.
The sample questions below were briefly discussed at the discussion classes and are included in this
tutorial letter only to illustrate how questions are typically asked in the examination. Kindly note that
there are no ‘model’ answers for these questions, and please do not phone the department or
the lecturers in this regard. Rather try to answer these questions yourself.
3.3.1 An example of a possible essay-type question
“Strategic management is defined as the set of decisions and actions that result in the formulation and
implementation of plans designed to achieve a company’s objectives.”
Discuss the statement above according to the following assessment criteria:
1. Identify and discuss the logical flow of activities in strategic management. (15)
2. Discuss the value of strategic management in a contemporary organisation by referring to the
benefits and risks of strategic management. (10)
3.3.2 Examples of multiple-choice questions
Question 1
Complete the following statement:
The term “triple bottom line” …
1. is an accounting term for financial reporting.
2. refers to the three important accounts that make up an organisation’s financial statements.
3. indicates the legal requirements, in terms of the King II Report, concerning the social and
environmental reporting of organisations.
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4. is an approach that embraces the economic, environmental and social aspects of an
organisation’s activities.
Question 2
The following is NOT a benefit of strategic management:
1. Higher profitability
2. Higher salaries
3. Increased profitability
4. Empowerment of participants
These sample questions merely provide an indication of the way in which questions are typically
asked in the examination, and are therefore included in this tutorial letter purely for illustrative
purposes.
Please note that there are no ‘model answers’ for these sample questions, and model
answers will NOT be made available to students. Please do not phone the department or the
lecturers regarding this matter.
4 TUTORIAL LETTER MNG301-A/104/3/2006
You will soon receive tutorial letter MNG301-A/104/3/2006. This tutorial letter provides an interesting
overview of corporate citizenship and how it relates to some of the MNG301-A topics. However,
corporate citizenship does not form part of the learning outcomes for this module, and so you need not
study the content of tutorial letter MNG301-A/104/3/2006 for examination purposes.
5 IN CLOSING
Do ensure that you have received all your tutorial matter well before the examination takes place.
Lecturers seldom have electronic copies available in the correct format and are therefore unable to fax
or e-mail copies to students. All tutorial letters are available from Despatch (012 4294104) and are
loaded onto the myUnisa website, which can be accessed at [Link].
We wish you all the best for the October/November 2006 examination.
Kind regards
Ms A van Rensburg
Ms S Cronjé
Prof PN Palmer
Department of Business Management
Unisa
5 MNG301-A/103
Appendix A Copy of presentation of MNG301-A discussion classes
• These slides were used as a framework for the discussion classes and should not be used as a
framework for preparation for the examination, as the discussion classes did not cover all the
topics.
• The diagrams included in this presentation appear in the textbook.
6 MNG301-A/103
The strategic management
Strategic Management process (figure 1.2 on p. 6)
• The process whereby all the organisational 1. Strategy formulation
functions and resources are integrated and
coordinated to implement the formulated • Vision, mission, external and internal analysis,
strategies which are aligned with the long-term objectives, strategic choices
environment, in order to achieve the long-term 2. Strategy implementation
objectives of the organisation
• Annual objectives, policies, resource allocation,
• Competitive advantage organisational structure
3. Strategy evaluation
• Wealth maximisation versus profit • Review internal and external factors, measure
maximisation performance, corrective action
1 2
Strategic direction and corporate Contemporary corporate
governance governance issues
• Refers to the formal system of • Social responsibility
accountability of the board of directors to • Environmental responsibility
shareholders • Sustainability
• Formal and informal relationships between • Stakeholder engagement
the corporate sector and its stakeholders
and the impact of the corporate sector on • The triple bottom line
society in general
1 4
Conduct a stakeholder analysis
ABSA Stakeholders
for SASOL
• Absa is committed to creating value for all its stakeholders.
• Sasol is a competitive company • Shareholders
– Delivering sustainable earnings growth.
that is driven to excel. Our • Customers
– Creating lasting and mutually beneficial relationships.
intent is to be a respected • Employees
– Creating a positive, supportive, healthy and diversity-friendly working
global enterprise and we aim to •
environment.
The community
generate sustainable growth – To be a partner in growing South Africa’s prosperity through responsible
corporate citizenship.
• Governments and regulators
for stakeholders. – Building a better South Africa and Africa by supporting transformation
and the development of financial services markets.
• [Link] viewed on 07/08/06
• [Link] viewed on 07/03/06
Copyright: Annemarie van Rensburg 10 6
UNISA
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The claims and expectations of
Setting strategic direction
stakeholders
• Figure 2.1 on page 46 • The vision statement - 1st step in
1. Employees
strategic planning; what do we want to
2. Suppliers
3. Shareholders
become?
4. Government • Strategic intent – gives a sense of
5. General community direction and forms a basis for resource
6. Financial institutions allocation
7. Customers
8. Media and press
• The mission statement – what is our
9. Competitors business?
7 8
Components of a mission
Vision statements
statement
• what do we want to become? • Product/service, market and technology
• 1st step in strategic planning (Core components)
• Provides for the integration of a variety of • Survival, growth and profitability
goals, dreams, challenges and ideas into • Philosophy of the organisation
one theme • Public image
• UNISA: “Towards the African university in • Organisational self-concept
the service of humanity” • Customers and quality
Copyright: Annemarie van Rensburg 14 9
UNISA
Woolworths Evaluate City Lodge’s mission
• We aspire to being the most trusted and • We will be recognised as
respected modern South African retail brand. the preferred Southern African hotel group.
Through dedicated leadership and teamwork
We will achieve this by nurturing and building we will demonstrate our consistent commitment
lifetime relationships with our customers. These to delivering caring service with style and grace.
relationships will be earned by us all making the
Woolies difference. We will constantly enhance our Guest experience
through our passionate people, ongoing innovation
Each one of us has a part to play by making our and leading edge technology.
customers' shopping experience a delight. Every Our integrity, values and ongoing investment in
day, we make the Woolworths difference and our people and hotels will provide exceptional
earn our customers' loyalty: it might be with a returns to stakeholders and ensure continued,
smile, a friendly greeting or a helping hand. sustainable growth.
• [Link] viewed on 07/08/06
Copyright: Annemarie van Rensburg 16 Copyright: Annemarie van Rensburg 17
UNISA UNISA
Internal strengths and weaknesses
• Controllable activities that are performed
especially well or poorly
• A strength is a resource or a capability that the
organisation has which is an advantage relative
to what competitors have
• A weakness is the lack of or deficiency in a
resource that represents a relative disadvantage
to an organisation in comparison to what
competitors have
12
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Internal analysis SWOT analysis
• Task of identifying, developing and • Opportunities are favourable situations in the
deploying resources, capabilities and core organisation’s external environment
• A threat is an unfavourable situation in the
competencies is challenging organisation’s external environment
• Important to identify resources and • Limitations of SWOT:
capabilities that really contribute to the 1. Focus on external environment is too narrow
competitive advantage of the organisation 2. Static assessment
• Figure 3.1 on page 62 3. Strength identified may perhaps not lead to an
advantage
4. Overemphasis of a single feature
13 14
Internal analysis for effective
Resource-based view (RBV)
strategy development
• Methods: • An organisation’s resources are more
1. Resource-based view (RBV) important than the industry structure in an
attempt to gain and keep its competitive
2. Value chain analysis advantage
3. Functional approach • Three categories of resources: tangible
4. Internal factor evaluation matrix assets, intangible assets and
organisational capabilities
• See characteristics of valuable resources
on page 69-70
15 16
Value chain analysis (VCA) Functional approach
(table 3.2 p. 74-75)
• Figure 3.3 on p. 71 • The usual business functions are:
• Finance
• Look at the organisation as a chain of • Accounting
activities to determine where value is • Marketing
really added to the product/service • Production
• Two categories of activities: primary and • Purchasing
secondary • Public relations
• HR
• Administration
• Research and development
17 18
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External analysis The external environment
• Opportunities and threats • Figure 4.2 on p86 & figure 4.3 on p89
• Components of external environmental • Political, governmental and legal forces
analysis: (Figure 4.1 p. 85) • Economic forces
1. Scanning • Social, cultural and demographic forces
2. Monitoring • Technological forces
3. Forecasting • Ecological forces
4. Assessing
19 20
Figure 4.4: The Five Forces model for industry analysis
Industry environment
• Industry = A group of organisations that
produces products which are close
substitutes for one another or which
customers perceive to be substitutable for
one another and which influence one
another in the course of competition
21 22
Limitations of the five forces
Market or task environment
model of Porter
• Model claims to assess the profitability of the • Suppliers
industry
• Distributors or intermediaries
• Model implies that the five forces apply equally
to all competitors in the industry • Market / customers
• Product and resource markets are not • Competitors
adequately covered by the model
• Model can never be applied in isolation
• Model assumes that the relationship between
competitors is always hostile
23 24
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How to identify competitors Identifying competitors
• Similarity of scope • Identify the competitors of the following
• Similarity of benefits customers derive organisations:
from the products or services • Unisa
• How committed the organisations are to • Pick’nPay
the industry • [Link]
• Holiday Inn Garden Court
• Ster-Kinekor movie theatres
• The Nelson Mandela Children’s Fund
25 26
The industry life cycle Long term goals
• Figure 4.7 on p. 107 • Should be measurable, realistic-but challenging,
understandable and congruent
1. Introduction
• Provide direction
2. Growth
• Allow synergy
3. Shake-out • Aid in evaluation
4. Maturity • Establish priorities
5. Decline • Reduce uncertainty
• Minimise conflicts
• Aid in allocation of resources and jobs
27 28
Generic strategies: bases for
Low cost leadership
creating competitive advantage
• Figure 5.1 p. 123 • attempt to maximise sales by minimising costs
per unit and hence prices
• Low Cost leadership
• Highly standardised products, price sensitive
• Differentiation customers
• Focus • Exploit cost-reduction benefits from:
• High-capacity utilisation
• Economies of scale
• Technological advances
• Economies of learning and experience
29 30
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Differentiation Focus
• differentiation may be in terms of quality, • focus on a specific product line or a segment of
the market that gives an organisation a
the production process, design or competitive edge
reputation • circumstances: market segment is big enough to
• Consumers are price-insensitive ensure profitability; market segment has
excellent growth potential; organisation has the
• Product/service appeals to many market necessary resources and skills
sectors
• Durable source of uniqueness
31 32
Focus strategy based on Focus strategy based on lowest
differentiation cost
• Products and services provided to this niche • Sufficient market segment
market come at a high price premium
• The market segment identified by the
• Extensive differentiation is accompanied by high
organisation is not crucial to the success
costs
of other major competitors
• Market segment must be large enough
• Consumers are willing to pay a high premium
• Consumers in the market share are very
prices sensitive
• Brand loyal consumers
• Consumers identify strongly with the specific
brand/product/service
33 34
Identifying generic strategies Grand strategies
• Identify organisations that clearly follows: • “business strategies”
1. low cost leadership strategy • More specific strategies that organisations
2. Differentiation strategy can pursue in order to achieve cost
3. Focus strategy leadership, differentiation or focus
• Figure 6.1, p. 139
35 36
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Internal growth strategies External growth strategies
• Concentrated growth = market • Diversification – related or concentric
penetration diversification
• Conglomerate or unrelated diversification
• Market development
• Integration
• Product development • Vertical integration
• Innovation • Backward vertical integration
• Forward vertical integration
• Horizontal integration
37 38
Corporate combination
Decline strategies
strategies
• “defensive strategies” • Joint ventures
• Turnaround or retrenchment • Strategic alliances
• Divestiture
• Consortia
• Liquidation
• Bankruptcy
39 40
Dis-Chem Naspers
• "Our exponential growth can be attributed to • Naspers has made substantial investments in recent
strong branding, a good product range that years to upgrade and enhance its subscriber platforms.
Naspers intends to consolidate the leading positions it
meets our customers' pharmaceutical, health holds in many markets and to expand into new ones.
and beauty needs, low prices and valuable Most of Naspers’ pay-television platforms offer digital
customer relationships. That is not enough subscriptions and feature interactive or enhanced
services. Naspers has expanded its printing facilities by
though, in order to stay competitive in the future, investing in advanced printing and related facilities.
we are continuing to pioneer by being the first to Additional newspaper and magazine titles have been
offer a loyalty programme (within in the launched when market opportunities present
themselves. Naspers also has launched several internet
pharmaceutical industry) - the Benefit related businesses.
Programme." • [Link]
• [Link]
Copyright: Annemarie van Rensburg 46 Copyright: Annemarie van Rensburg 47
UNISA UNISA
