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Chapter 4 Literature Review and Theoretical Framework

By Julie Sanders,2014-05-16 18:04
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SWOT, KSFs, Driving Forces, and Business Strategy analysis will help theThe related processes of business objectives formulation, SWOT analysis,

Siam University

     SIAM UNIVERSITY

     Strategic Management at New Economy in University

บทความในการประช?มทางว?ชาการสออ.

    ในประเทศไทย คร??งท?? 11 Dr. Nut-tapon Paul Nimmanphatcharin (ดร. ณ?ฐพล น?มมานพ?ชร?นทร?)

    BB.A., GD.Mgt., MB.Mgt., MBA (Inter Bus), Ph.D. (Mgt) Faculty of Business Administration, Siam University

Strategic Management at New Economy in University 1 Dr. Nuttapon Nimmanphatcharin @ 2003

Siam University

    235 Petkasem Road, Phasicharoen, Bangkok 10163 Tel. (662) 457-0068 FAX (662) 457-3982, 467-3174

     Strategic Management at New Economy in University

     1 INTRODUCTION

Several research studies have defined strategic management as the process of setting and accomplishing goals

    through the use of human, technical, and financial resources within the context of the environment variables.

    Additionally, strategic management as the process of sharing goals & values, strategy, structure, systems, staff,

    skills, styles, and succession. However, most of the research maintains that strategic management is driven by

    the top level of an organisation.

     2 STRATEGIC MANAGEMENT

The literature review will begin with the strategic management process that can be viewed as containing

    similar processes to a formalised strategic planning system and then focus on environmental and resource

    aspects. This paper will also continue with the development of corporate strategy by some tools and

    techniques.

     2.1 Strategic management process

Many research studies define the strategic management process in different ways, but the aim of the process is

    to build a market position strong enough and an organisation capable enough to produce successful

    performance despite unforeseeable events, potent competition, and internal problems.

    Figure 2.1: Five tasks of strategic management

     Task 1: Task 2: Task 3: Task 4: Task 5: Develop a Setting Crafting Implementing Evaluating Strategic Objectives Strategy to and executing the Performance, Vision and Achieve the Strategy Reviewing New Objective Business Developments and Mission Initiating Corrective Adjustments.

     Revise as Needed Improve/Change as Recycle to Tasks 1,2,3, and Needed 4 as needed

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Siam University

    It would suggest that the strategic management process as being involved with identifying environmental problems and opportunities and internal strengths and weaknesses. This step is called “Analysis and Diagnosis”. Then follows “Choice”, “Implementation”, and “Evaluation”. These three steps are concerned with generating alternative solutions to the problem, making the strategy work by building the structure to support the strategy and developing appropriate plans and policies, and getting feedback to determine whether the strategy is working or taking steps to make it work.

     2.2 Environmental and resource analysis

    The analysis of the environment is a major stage of the strategic management process, which is concerned with providing an understanding of the current situation that the organisation faces. Let say, the analysis of the environment the impact of internal and external factors is assessed. These influences can play a major role in the development of strategies, as they help identify potential opportunities and threats to the organisation.

    Environmental analysis can be undertaken in three parts: the general environment analysis, the immediate environment analysis, and the internal environment analysis.

2.2.1 External environment

    The following discussion will cover the two major divisions, namely general environment and immediate environment.

A) General environment

    The general environment, that which is outside the university control and happening in the broader area can be considered under the following headings:

    P Political ,

    E Economic ,

    S Social ,

    T Technological .

B) Immediate environment

    The immediate competitive environment for university is its industry. In the industry, the universities need to examine their competitors and competitive forces that might be a direct or indirect influence on their products

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Siam University 1and services. The universities will get some idea from the examination of the general environment of the

    impact of these factors on the competitive environment at the industry level. In addition, the impact could best

    be understood by focusing on who the distinctive actors are and how they behave competitively. Let say, the

    factors in the immediate environment, an organisation might be concerned with include the role of the

    government, state owned universitys, competitors, business groups (industry), and multinational corporations.

    The characteristics of the immediate environment model into two main groups industry activities and the industry actors. The first examination concentrates on the big picture of the industry, with a focus on the size

    of the industry, characteristics of the industry, the stage in life cycle of the industry, future challenges to the

    2industry, the market of the industry, and competitive forces (the five forces of the industry). Secondly, the

    examination concentrates on the industry actors, which are divided into two main groups direct actors and indirect actors. The direct actors are participants who are heavily involved in the industry such as competitors,

    buyers, suppliers, substitutes, and potential competitors. On the other hand, the indirect actors could possibly

    345be the government, the general environment factors, and related business groups. The examination of the immediate environment is shown in figure 2.2.

    Figure 2.2: Examination of immediate environment model

    Indirect Actors Government Related Business Groups General Environments

    Bargaining Power of Buyers

     Root of the Industry Size Barriers to Entry Characteristic Intensity of Rivalry Stage Life Cycle Future Challenges

    Market

     Substitution pressures Bargaining power of Suppliers

     Direct Actors Buyers Suppliers Competitors Potential Competitors Potential Substitutes Government

     1 Consist of Political, Economic, Social/Culture, and Technological Factors. 2 Note that, the competitive forces are intensity of rivalry, barriers to entry, substitution pressures, bargaining power of suppliers and buyers. 3 Note that, it could be the impact of the government policies to the universities. 4 The impact from PEST factors to the industry. 5 The related business group could be the enterprise in other industries who doing the business with our industry.

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    2.2.2 Internal environment A) Vision and mission statements It would suggest that the vision of the university should describe the purpose of the organisation. Let say,

    the vision need not be grandiose, but it should be an articulate statement about where you would like to

    see the university in the future.

    On the other hand, the mission statement is a declaration of how the organisation’s customers, products, services, markets, and philosophy all contribute to the achievement of the university's vision.

Significantly, an organisation’s objective, strategies and performance measures should then flow from its

    vision and mission, as shown in figure 2.3.

    Figure 2.3: Objectives strategies and performance measures flow from vision and mission

     Vision Strategies Performance measures

    Mission Short term objectives

     Long term objectives Strategies

B) Internal analysis

    Once the external analysis is complete, the strategist's attention can turn directly to the internal environment

    analysis of the university. The guidelines as shown in figure 2.4 will assist the university to analyse all of the

    internal factors that are involved with its business. It would suggest that the information from an internal

    analysis will depend on the age of the university, its size, and the breadth of its activities.

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     Siam University

    Figure 2.4: Internal environment analysis for successful business

    1) History 2) Skill and Resources

    2.1) Management 2.4) Quality Management ? Organisational Structure and Size ? Quality Control ? Management Profiles and Ownership ? Quality Assurance ? Management Style and Culture ? Quality Accreditation ? Strategic management ? Performance Measures ? Current University Goals 2.5) Innovation Management ? Problem Perceived by Management ? Product Innovation 2.2) Marketing ? Process Innovation ? Products and Services ? Resource Allocation ? Pricing Policies ? R & D Capabilities ? Promotion ? Performance Measures ? Distribution/Place 2.6) Human Resource Management ? Marketing Strategy ? Organisation Culture ? Performance Measures ? Employee Moral and Motivation 2.3) Operations ? Communication and Information System ? Potential Clients ? Training and Development ? Layout and flow lines ? Reward and Incentive systems ? Equipment ? OH &S Management ? Facility location and Size ? Performance Measures ? Process Technologies 2.7) Finance ? Information Systems ? Profit and Loss Statements ? Performance Measures ? Current Balance Sheet

    ? Cash Flow ? Financial Ratio Analysis

    ? Funding Requirements

    2.2.3 University situation analysis and techniques A) SWOT analysis

    Strategic management involves aligning an organisation’s opportunities and threats with its strengths and weaknesses.

Strengths and weaknesses will be generated from internal factors such as, the univeristy's people,

    products/services, operations and facilities, and so forth. On the other hand, opportunities and threats will be

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Siam University picked up from external factors like its markets, the environment, and competitors. These aspects are shown in

    figure 2.5. Many researchers identify that an organisation needs to focus on internal differential strengths and

    weaknesses by comparing themselves with competitors and key external opportunities and threats.

    Figure 2.5: Identify strategy by SWOT analysis

     SWOT Analysis Matrix Model

     Internal Strengths Weakness External Factors Factors Opport… Threats

    Conclusion

    Develop Strategy by using SWOT Analysis.

B) Key success factors analysis

    KSFs are business aspects that all universities in the industry must pay close attention to in order to achieve

    the specific outcomes crucial to market success and the competencies and competitive capabilities with the

    most direct bearing on university profitability.

C) Driving forces analysis

    One tool that might help the university in establishing its business strategies is Driving and Restraining

    Forces, shown in figure 2.6.

    Figure 2.6: Driving and restraining forces analysis

    Identify the driving and restraining forces.

    Help Impacts Hinder Impacts

     Determine Strategy

    Decision-makers agree or disagree on overall strategies the university is willing to commit to

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D) Sustainable competitive advantage analysis

    SWOT, KSFs, Driving Forces, and Business Strategy analysis will help the university identify its sustainable

    competitive advantages, which are particular capabilities that will enable the university to maintain a

    sustainable position against its key competitors. The university will use all these analyses and sustainable

    competitive advantages to establish its new business strategies to meet the organisation’s visions, missions,

    and objectives. The related processes of business objectives formulation, SWOT analysis, KSFs analysis,

    driving force analysis, and environment variable analysis are shown in figure 2.7.

    Figure 2.7: Related processes of business objectives, SWOT analysis, KSFs, sustainable competitive advantage,

    and strategies.

     General and Immediate Internal Environment

    Environment Analysis Analysis

    Opportunities and Strengths and

    Threats Analysis Weaknesses Analysis

     SWOT Analysis Key Success Factors

     Sustainable Business's Competitive Objectives Advantage

     Options

    Driving Forces

    Business's Strategies

     3. STRATEGY

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    The university management team needs to undertake a process, which will allow it to assess three key questions through the use of the tools shown in figure 2.8.

    Figure 2.8: Key questions and tools

     Answered by

     SWOT Analysis Where is the university now? Key Success Factors (Present)

    Answered by

     Where does the university want to Business long-term objectives be? (Long-term objectives)

    Answered by Business Strategies, Driving Forces Analysis, Sustainable Competitive How does the university get Advantage there? (Strategies)

    3.1 Planning techniques

    Planning techniques are required at each level of the management. However, this part analyses the models and techniques that should be used to help facilitate decision-makers and analysts (university management teams or corporate level).

A) TOWS technique

    TOWS matrix builds on the analysis provided by SWOT. This is a technique to help management teams formulate strategy. Opportunity, strengths and weaknesses of the companies are identified in the TOWS matrix. Let say, the management teams could possibly use internal strengths to take advantage of opportunities and to overcome internal weaknesses. This technique is shown in figure 2.9.

    Figure 2.9: TOWS matrix framework

    Strengths (S) Weakness (W) (List of internal strengths) (List of internal weaknesses)

    Opportunities (O) SO Strategies WO Strategies (List external opportunities) (Use internal strengths to take (Take advantage of external advantage of opportunities) opportunities to overcome weaknesses)

    Threats (T) ST Strategies WT Strategies (List of external threats) (Use internal strengths to avoid (Minimise internal weaknesses external threats) and avoid external threats)

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    In addition, the management teams are able to generate strategies by using internal strengths to avoid threats, while minimizing weaknesses will also help them to deal with external threats. Finally, Several research

    studies conclude that the TOWS matrix is the combination of external and internal environments in order to

    identify best strategies, which could be used in corporate and business levels of the organisations.

3.2 Strategy evaluation

    Several studies state that corporate strategy evaluation at the widest level involves seeking answer to the

    following questions:

    ? Are the current objectives of the organisation appropriate?

    ? Are the strategies created previously and which are currently being implemented to achieve these

    objectives still appropriate?

    ? Do current results confirm or refute previous assumptions about the feasibility of achieving the objectives

    and the ability of the chosen strategies to achieve the desired results?

In conclusion, in simple terms the corporate strategy evaluation is to analyse the strategies which meet the

    needs and preferences of the organisation and its key decision-makers and influences ideally better than any

    other strategic alternatives. At the same time, the corporate strategy evaluation also will help the management teams identify the future strategy that could possibly be implemented successfully.

3.3 Strategy implementation

    Several research studies state that implementation incorporates a number of aspects, some of which can be

    changed directly and some of which can only be changed indirectly. Let say, the major implementation themes

    concern organisation structure, strategies, planning system, policies, control system, and environmental

    conditions.

    It would suggest that to be successful in strategy implementation, university should meet the following criteria: ? Clear responsibility for the successful outcome of planned strategic change should be allocated, ? The number of strategies and availability being pursued at any time should be limited. The ability of the

    necessary resources to cope with the changes should be seen as a key determinant of strategy and should

    not be overlooked,

    ? Necessary action to implement strategies should be identified and planned and again responsibility should

    be allocated, and

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