Explanation and Analysis of the Strategic Management Process

1. Introduction:

Strategic management is concerned with preparing, implementing and assessing decisions that facilitate a firm to achieve its goals. It focuses on integrating marketing, finance, production, research and development to improve an enterprise performance (David, 2008). The strategic management process consists of three stages: strategy development, strategy execution and strategy evaluation. This assignment will focus on strategy development and strategy execution.

1.1 Strategy in Action

Strategy in action refers activities which are carried out in organizations on daily basis. These activities must be appropriate to an enterprise strategy. One of the key activities is strategic capability.

1.2 Strategic Capability

Strategic capability is defined as the capability of an enterprise to successfully carry out an action that is anticipated to have an effect on its long term growth and development (Lenz, 1980). It is also defined as the ability to change the enterprise and its business environment. A capability is strategic if it brings change and has the potential to (Johannesson & Palona 2010). The key resources and competences that are needed for developing strategic capability as strategy in action are: organizational structure, organizational resources and managing strategic change.

1.2.1 Organizational structure

The firm structure plays an important role in the execution of a strategy. The organization’s structural design refers to formal roles, responsibilities and lines of reporting in an enterprise (Johnson, Scholes and Whittington 2009). The structure also state that how objectives and policies will be formulated (David 2008). For example objectives and policies stated are different for manufacturing firms than for service organization. Structure also reflect how resources will be allocated. If an enterprise’s structure is based on customer groups, then resources will be allocated in that way. Similarly if an enterprise structure is based on functional business lines, then resources will be allocated based on functional areas (p. 234). Thus structure must be based according to firm’s strategy(Deresky, 2000).

Moreover, changes in strategy lead to changes in enterprise structure. Structure facilitates the strategic aspect of an organization. An enterprise without a strategy should face difficulty in designing an appropriate structure. On the other hand, structure also affect strategy. Strategies must be formulated according to organizational design. If a new strategy needs a lot of changes in organizational structure and design, it would not be an appropriate strategy. Thus structure shape strategy formulation. It is also important to identify what type of structural changes are required to implement new strategy and how these changes can be made (David 2008).

1.2.2 Organizational resources

The key organizational resources that can affect the execution of strategy are: people, information, finance and technology.

1.2.2.1 People as a resource

The people in the organization are vital to achieve high performance (Barney 1991) .People influence strategy both through their competence and through their collective behavior (Johnson et al. 2008). People plays an important role in designing an effective strategic management system. The strategy execution may cause human resource problems due to: disruption in social and political structure, failure to match people’s aptitude with assignment of task, insufficient support from top management during execution of strategy (David 2008).

Strategy execution can be a threat to many people in the organization. The relationship between power and status are expected to be changed. New formal and informal groups and values and beliefs are also unknown to people. The people may show resistance as their role and power changes due to new strategy execution. The affect on social and political structure must be considered before formulating and implementing a new strategy. (David 2008).

1.2.2.2 Information as a resource

Information strategies may adversely affect the capability and competitive advantage of an enterprise. The information technology might impact the three key elements of a capability are: ensuring that customers are satisfied with the products and services; leading competitors and building capabilities hard to imitate. The availability of information might also help to learn more about competitors (Johnson et al. 2008).

1.2.2.3 Finance as a resource

The management of finance plays key role in the execution of a strategy. There are three concerns for all types of organizations. These issues are: managing for value, funding strategic developments, and financial expectations of stakeholders.

Managing for value refers to the maximization of long term cash generating capability of an enterprise. One of the main responsibilities of manager is to create value for shareholders and ensuring the good use of their money. This objective can only be achieved if finance is well managed and controlled. Moreover, finance is also needed for strategic developments in an organization. The source of financing to be used for execution of strategy depends upon the goals and objectives of an enterprise. For example, a firm will have different financial needs if it follows a strategy of rapid growth, as compare to those who follow to consolidate its past performance (Johnson et al. 2008).

1.2.2.4 Technology as a resource

Technological developments also affect the competitive forces and strategic capability of an enterprise. The successful execution of a new strategy depends upon the way technology is developed, exploited and managed. Moreover, it is important for a manager to understand the affect of technological developments on the five market factors which are: barriers to entry, substitution, the relative power of suppliers and buyers and competitive rivalry (Johnson et al. 2008).

1.2.3 Managing strategic change

The management of strategic change is an important aspect of strategy execution process. The employee’s interaction patterns may be affected if there is a change in organization design, employees, technology or strategies. The strategy execution process can entail major changes on employees and processes. That is why people show resistance to change.

Resistance to change is a major threat for successful execution of a strategy. For example, employees show resistance in the form of absenteeism, showing grievances and unwillingness to cooperate. Another reason for resistance to change is that employees have no idea that what is going on in the organization or why changes are taking place. In such type of situation employees need awareness about change. Thus it is important for managers to create a conducive environment to change (David 2008).

Employees can resist change at any stage or level of execution of strategy process. In this regard, mangers can take a number steps to minimize resistance to change. Fore example, employees can be involved in the decision making process of change and also how to implement change. It is important for managers to anticipate strategic change and provide training workshops to employees so that change (strategy execution) can easily be adopted (David, 2008, p. 247).

1.3 Application of key concepts to the case organization

The case organization for this assignment is Quetta Serena Hotel. The back ground information for this organization is attached with appendix.

1.3.1 Management Strategies of Quetta Serena Hotel

Management Strategies for Quetta Serena Hotel link up with the functional strategies to ensure that the supporting infrastructure is available to effectively implement the plans. The Quetta Serena Hotel also focus on strengthening its Business Continuity Process , enhancing its Management Information System (MIS), streamlining its procedures through Business Process Re-engineering (BPR), and a stronger risk based and IT audit function (Quetta Serena Hotel 2009).

1.3.2 Human Resource Development Strategy

Human resource management is an important component in the hotel industry for the past few years (Nolan, 2002). This important element can build competitive advantage for the firm (Barnet, 1995; Pfeffer, 1994; 1998). In this regard, the Quetta Serena Hotel plans to increase employee attraction, retention and motivation by reducing recruitment timelines, devising innovative compensation and benefit plans, establishing employee counseling, providing equitable training opportunities and enhancing the Performance Management System (PMS). The Quetta Serena Hotel also plans to further enhance the PMS to bring transparency and objectivity to decisions regarding employee career management (Quetta Serena Hotel 2009).

In addition to the present training opportunities, employees will be encouraged to spend some time acquiring on-the-job experience of other branches of Serena hotel. This objective will be achieved through a variety of methods, like, deputation, short-term assignments, attachment, and leave without pay. To enhance the career prospects of well-qualified staff, who will eventually assume leadership positions in the Quetta Serena Hotel , job opportunities of specific duration with international branches of Serena hotel such as Kabul Serena hotel etc. Quetta Serena Hotel also plans to play a proactive role in introducing best HR practices in the hotel industry (Quetta Serena Hotel 2009).

1.3.5 Strengthening of Legal Framework Strategy

A number of new areas are emerging where Quetta Serena Hotel plans to venture or has already initiated work. Quetta Serena Hotel plans to help formulate and strengthen the legal framework governing these areas. Many of the functional strategies listed above encompass either updating/changing the existing legal frameworks or facilitation of enactment of new laws.

Question No.2

1. Strategy development processes

Planning plays a vital role in business. It is an activity which entails decisions (objectives /goal setting) about ends and results. It describes the organization’s strengths and weaknesses as well as opportunities and threats (Fening, Pesakovic & Amaria 2008, p.698). More over the strategic planning process refers to the processes undertaken by a firm to develop strategies and to gain direction for the enterprise. (Tapinos, Dyson, & Meadows, 2005). The objectives set in the planning process can only be achieved through strategy development. The Strategy development process is a step- by step process to develop and formulate a firm strategy (Johnson et al. 2008).There are two broad levels of strategy that is corporate level strategy and business level strategy.

Corporate level strategy refers to the overall growth, stability or economizing of an enterprise (Wheelen and Hunger, 2008). It includes issues regarding geographical coverage, products and services and how resources will be allocated among different business units. However, business level strategy is concerned with various types of business units. It includes pricing strategies, innovation, differentiation and distinctive distribution channel (Johnson et al. 2008).

Perspective of strategy

1.1.1 Intended strategy

Intended strategy refers to the formulation of strategy with clear goals and objectives planned by the core employees of an organization. This strategy is developed in a systematic way by using the formal techniques and processes with the aim of implementing set objectives. The intended strategy is developed through strategic leaders. These leaders influence others by their personalities. These individuals determine the vision and mission of an organization. They also create a conducive for other employees that motivate them to work together for achieving shared objectives of an organization (Johnson et al. 2008).

1.2 Emergent Strategy

Emergent strategy refers to the formulation of strategy based on the activities and processes carried every day. Such activities and processes lead towards the future direction of an organization. The emergent strategy involves experimentation and learning from environment to find the best way to pursue the organizational objectives. In this way, the organization’s actual strategy becomes more obvious. The factors that leads to the development of emergent strategy are: environmental uncertainty; mangers views about future based on day to analysis of the market; seeking flexible business practices; the influence of organizational culture; the political processes and prior decisions (Johnson et al. 2008).

1.3 Challenge of complexity

Sometimes the intended strategy does not work well and the planned objectives cannot be achieved due to unexpected environmental factors and the mangers decide not to follow the planned strategy. However, these circumstances lead towards a realized strategy that is the strategy that should actually be followed. The mangers/strategists can handle this challenge by taking step to check if the planned strategy and realized strategies are different. They should also get sufficient feedback from customer and market about implementing the realized strategy. Secondly this challenge also demands that the people in organizations should be encourage to show their willingness to challenge and change their views and ideas of carrying out their tasks ((Johnson et al. 2008, p. 420-21).

1.4 The Learning organization and strategy development

The learning organization refers to the continuous regeneration of skills and knowledge and experience of employees and encouraging them to challenge the vision, mission of the organization. This process also helps the organization to develop dynamic strategies. The mangers should create an environment of sharing and promoting information among employees so that every individual in the organization should be aware of the changes taking place within or outside the organization. In this regard, employees should also be able to identify opportunities and threats for an organization that can help to design a planned or emergent strategy (Johnson et al. 2008). Moreover, managers should welcome the conflicting ideas and should put them for debate. Also experimentation should be adopted for new ideas and its execution as a strategy (p. 422).

1.5 Justification of improvements to the case organization

The strategic planning process employed by Quetta Serena Hotel is participative, consultative and result-oriented. While the overall direction is provided by senior management the action plans are evolved at the departmental level to ensure ownership and commitment of those charged with implementing the plan. The role of the Strategic Planning Unit (SPU) is that of catalyst, facilitator and synthesizer, to guide the planning process effectively (Quetta Serena Hotel 2009).

Individual departments are requested to do their respective environmental scans through a SWOT analysis whereby they identified their internal strengths and weaknesses as well as the external opportunities and threats. All departments of Quetta Serena Hotel along with other branches are grouped into five clusters. The individual department’s SWOT analyses are consolidated by the cluster representatives (Quetta Serena Hotel 2009).

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1.6 Evaluation of Quetta Serena Hotel’s strategic planning Process

Environmental scan is an important element that involves gathering information about demographic, economic, industry/workforce, socio-cultural, and education factors that influence the execution of a strategy of an organization (Wheelen and Hunger, 2008).

The environmental scan involves the identification of strengths, weaknesses, opportunities, and threats (SWOT) and draws on both internal and external information. The outcome of this scan can be used to measure performance.

The outcome of the environmental scan is in the form of a SWOT analysis. This analysis provides a framework for identifying critical issues and objectives that will likely aid and constrain the consortium’s ability to address the strategic issues and objectives .

1.6.1 SWOT Analysis of Quetta Serena Hotel

Quetta Serena is located in a very critical region which presents various opportunities and threats from time to time. But if handled tactfully by the management, the threats may turn into the opportunities.

The SWOT analysis gives us the following facts (Quetta Serena Hotel 2009; http://www.serenahotels.com/serenaquetta/).

1.6.1.1 Strengths:

The only 4 star delux International Chain hotel

Highest number of rooms available

Beautiful Garden & Fruit orchards

Modern Health Club Facilities

Safety & Security

International Service Standard

Unique Architecture & Décor

Central Air-conditioning & Heating

Cable TV Network

Presidential Suites/ Executive Suites, Executive Club/ Non-Smoking Floor

In-house Laundry

24 hrs Room Service

24 hrs Business Center

24 hrs Doctor on Call

Out door Swimming Pool

Variety of Restaurant

Web Site

Online Internet Service

Constant upgrade of Product & Service

Specious parking area

Large function area

Important strategic location near Afghanistan

1.6.1.2 Weakness:

Restricted Population of Quetta

Business dependent on arriving flights

Checking-in time is limited due to non arrival of night flights.

Non- Availability of trained and qualified staff

Limited entertainment & Tourist attractions

Low income of people of the region

Lack of hoteling awareness in local people which ultimately affects its business

Lack of cooperation among the staff and different departments

Local market Sensitive to price

Employees’ stress due to long working hours

De-motivation among the staff due to low salary

Element of biasness traced

1.6.1.3Opportunities:

Growing Chain

Revival of Govt. projects

Large Banquet area

Government Stability

Influx of NGO’s

Service Standards

Value of money

Completion of Gawadar project

Peace and stability in Afghanistan

The announcement of commencing night flights in Quetta by the president of Pakistan

1.6.1.4 Threats:

Market perception of price

Opening up of Guesthouses

Increase in low price restaurants

Limited number of Hotel going Guests

Worsen Law and order situation in the region

Limited arrival of foreigners in Quetta due to some security lapses

Destabilized economic policies