Department Management AND ACF

Instructor’s- Yohannes Embiyalew (MBA)

Course Name-Strategic Management
Year-2016E.C

Strategic Management

Strategic
CONCEPTS AND CASES
AAaHTagement
CONCEHUIUY8IUIUGBFHYUI9O98PTS AND CASES
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 Core Course Description
The course emphasizes the value and process of
strategic management. In addition to familiarizing
students with new subject matter, students are expected to
integrate and apply their prior learning to strategic
decision making in organizations. The Strategic
Management course is designed to explore an
organizations vision, mission, examine principles,
techniques and models of organizational and
environmental analysis, discuss the theory and practice
of strategy formulation and implementation for the
development of effective strategic business leadership
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 LEARNING OBJECTIVES
On completion of this course, students will be able to:
•Understand the strategic decisions that organizations make and have an ability to
engage in strategic planning.
•Explain the basic concepts, principles and practices associated with strategy
formulation and implementation.
•Integrate and apply knowledge gained in basic courses to the formulation and
implementation of strategy from holistic and multi-functional perspectives.
•Analyze and evaluate critically real life company situations and develop creative
solutions, using a strategic management perspective.
•Conduct and present a credible business analysis in a team setting
•Understand the crucially important role of strategic management for competitive
advantages of business organizations
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 Course Topics:

Chapter One
Strategic Management
An Introduction
1.1.Strategic thinking Vs. Strategic management Vs. Strategic planning
1.2. Meaning of Strategic Management,
1.3. Nature of Strategic Plan and Strategic Decision
1.4. Approaches to Strategic Decision Making
1.5. Levels of Strategies
1.6. The Strategic Management Process
1.7. Strategic Management: Merits and Demerits

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 History
The strategic management concept was known as Business Policy. It
was first introduced at Harvard Business School in 1911. Many of the
concepts and techniques that deal with strategic management have been
developed and implemented successfully by business corporations
such as General

Electric and the Boston Consulting Group. Over time, business

practitioners and academic researchers have expanded and refined these
concepts. Initially, strategic Mgt
was of most use to large corporations operating in multiple industries.

5 We operate our business ethically

Sound ethics is good business. At McDonald‘s, we hold ourselves and

conduct our business to high standards of fairness, honesty, and integrity.
We are individually accountable and collectively responsible.
 BCG
 Boston Consultant Group(BCG)
Is an American global management consulting
firm founded in 1963
Headquartered in Boston
BCG partners with leaders and in business and
society to tackle their most important challenge
and capture their greatest opportunity
 BP vs SM
• Business strategy
Focus on integrated knowledge gained in functional
areas, mainly looks inward to solve organization
problems
• Strategic management:
Modern name for BP, focus on organization capabilities
and environmental opportunities, mainly looks outward
to gain competitive advantage in market

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 Definitions
Strategic management is a set of managerial decisions and actions
that determines the performance of a corporation in the long run.
It includes environmental scanning (both external and internal),
strategy formulation (strategic or long-range planning), strategy
implementation, and evaluation and control.
The study of strategic management, therefore, emphasizes the
monitoring and assessment of external opportunities and threats in
light of a corporation's strengths and weaknesses.
This is initiated with the set-up of mission, vision, goals and
objectives of a company.
****strategic management focuses on integrating management,
marketing, finance/accounting, production/operations, research and
development, and information systems to achieve organizational
success.

*** The term strategic management in this text is used synonymously

/identically/ with the term strategic planning. The latter term is more
often used in the business world, whereas the former is often used in
academia. Sometimes
 A strategic plan
A strategic plan is, in essence, a company‘s game plan. Just as a football
team needs a good game plan to have a chance for success, a company must
have a good strategic plan to compete successfully. Profit margins among firms
in most industries have been so reduced by the global economic recession that
there is little room for error in the overall strategic plan.
A strategic plan results from tough managerial choices among numerous
good alternatives, and it signals commitment to specific markets, policies,
procedures, and operations in lieu of other, ―less desirable‖ courses of action
*****Strategies*****
Strategies are the means by which long-term objectives will be achieved.
Business strategies may include geographic expansion, diversification,
acquisition, product development, market penetration, retrenchment,
divestiture, liquidation, and joint ventures. Strategies currently being pursued
by some companies are described.
Strategies are potential actions that require top management decisions and
large amounts of the firm‘s resources. In addition, strategies affect an
organization‘s long-term prosperity, typically for at least five years, and thus are
future-oriented. Strategies have multifunctional or multidivisional
consequences and require consideration of both the external and internal factors
facing the firm.
• SM integrates rather activities like planning, organizing, leading and
controlling with respect to environment and organization direction.
• SM is stream of decisions and actions which lead to the development of
an effective strategy to help achieve corporates objective (Glueck and
Jauch, 1984)
• SM is set of decisions and actions resulting in the formulation an
• implementation of plans designed to achieve company objectives (Pearce
and Robinson, 1988)
SM vs Operational Management
 SM: long range planning, top management job
 OM: short term, middle level, routine decisions, target functional areas
i.e.
• Recruitment
• Production planning and
• Sales planning
 Strategic Mgt vs Operational Management
Strategic Mgt Operational Management

 Organization-wide ,Holistic ** Functional , Routinized

 Conceptualization of issue ** Techniques, Process, Actions
 Creating new direction ** Managing Existing resources
 Creating new resource allocation ** Optimizing Existing resources
 Developing New Resource ** Functionally and Operationally Specific
 Ambiguous/uncertain ** Day to Day issues, annual Operating
 Long term perspective

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 SM Characteristics, Benefits and Limitations
SM Characteristics
**Long-term Direction
** Change will occur
** Future oriented and proactive
** Significant risks
** Affect operational decisions
** Competitive advantages
Benefits of SM
**Reduces uncertainty
** Links short and long term objectives
** Facilitates control –Take a corrective actions
**Facilitates measurement-
 Benefits of SM
(Cont’d)
**Proactive
Initiate and influence activities
**Principal Benefit
Formulate better strategies
Systematic, logical, and rational approach
**Communication
Key to successful strategic management
**Financial Benefits
More profitable and successful
Improvements in sales, profitability, and productivity
 Benefits of SM
(Cont’d)
***Nonfinancial Benefits
*Enhanced awareness of external threats
*Understanding of competitors’ strategies
*Increased employee productivity
*Reduced resistance to change
*Clear performance-reward relationships
*Order and discipline to the firm
*View change as opportunity
 Limitations of SM(Cont’d)
Limitations:
• Expensive
• Unrealistic Expectation
• Resistance or lack of commitment in implementation
stage

We operate our business ethically

Sound ethics is good business. At McDonald’s, we hold ourselves
and conduct our business to high standards of fairness, honesty,
and integrity. We are individually accountable and collectively
responsible.
 Types of Strategies

Forward
Integration

Vertical
Integration
Strategies Backward
Integration
Backward Vertical Integration
A backward vertical integration strategy involves a firm moving back
along the value chain and entering a supplier’s business.
value chain

Some firms use this strategy when executives are concerned that a
supplier has too much power over their firms.
In the early days of the automobile business, Ford Motor Company
created subsidiaries that provided key inputs to vehicles such as rubber,
glass, and metal.
This approach ensured that Ford would not be hurt by suppliers holding
out for higher prices or providing materials of inferior quality.

NB:- Seeking ownership or increased control of a firm’s

suppliers
 Forward Integration
A forward vertical integration strategy involves a firm
moving further down the value chain to enter a buyer‘s business.
Disney has pursued forward vertical integration by operating
more than three hundred retail stores that sell merchandise based
on Disney‘s characters and movies.
This allows Disney to capture profits that would otherwise be
enjoyed by another store. Each time a Hannah Montana book
bag is sold through a Disney store, the firm makes a little more
profit than it would if the same book bag were sold by a retailer
such as Target.
NB-Gaining ownership or increased control over
distributors or retailers(EX. franchising)
 Vertical integration
(Cont’d)
• Vertical integration occurs when a firm gets
involved in new portions of the value chain. By
entering the domain of a supplier (backward
vertical integration) or a buyer
• (forward vertical integration), executives can
reduce or eliminate the leverage that the
supplier or buyer has over the firm.
Horizontal Integration Strategy
Horizontal Integration
Gaining ownership or increased
control over competitors through merger
or acquisition . It is taken as growth
strategy
N.B. firm capacity as compared to
competitors and government monopoly
rules are vital to pursue the above
strategy.
 Types of Strategies
Cont’d
Market
Penetration

Market
Intensive Development
Strategies

Product
Development
 Intensive Strategies
Cont’d
Market Penetration
• Seeking increased market share for present products
or services in present markets through greater
marketing efforts
Market Development
• Introducing present products or services into new
geographic areas
Product Development
• Seeking increased sales by improving present
products or services or developing new ones
 Types of Strategies
Cont’d
Types of Strategies
Related
Diversification

Diversification
Strategies
Unrelated
Diversification
 Types of Strategies
Cont’d

Related Diversification
Adding new but related products or
services
Unrelated Diversification
Adding new, unrelated products or
services
 Types of Strategies
Cont’d
Retrenchment

Defensive Divestiture
Strategies

Liquidation
 Defensive Strategies
Retrenchment
Regrouping through cost and asset
reduction to reverse declining sales and
profit
Divestiture
Selling a division or part of an organization
Liquidation
Selling all of a company’s assets, in parts,
for their tangible worth
 Quote
"A firm that continues to employ a previously successful strategy
eventually and inevitably falls victim to a competitor."
—William Cohen
Strategic management allows an organization to be more proactive than
reactive in shaping its own future; it allows an organization to initiate and influence
(rather than just respond to) activities—and thus to use control over its own
intention. Small business owners, chief executive officers, presidents, and
managers of many for-profit and nonprofit organizations have recognized and
realized the benefits of strategy Mgt

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 CANOE THEORY
• Think of your organization as a long canoe
• The canoe has a destination
• Everyone in the canoe has a seat and paddle
• Everyone is expected to paddle
• Those who won’t paddle have to get out of the canoe
• Those who prevent others from paddling have to re-adjust or
get out of the canoe
• There are no passengers in the canoe
• The canoe theory understands crisis
• The canoe theory says you have the right to be happy

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 Strategic Management
Versus
Strategic Thinking
Features of Successful Strategic Management
*Is fresh and continuous, not fixed and old.
*Leads to resources decisions.
*Engages and motivates all staff.
*Is user friendly.
*Is participatory,
*Is flexible.
*Is Proactive
*Not a Quick Fix
*Part of Quality Management
*Remunerations Increase over Time

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 Strategic Thinking
Think Outside-In:
• Market
• Competition
• Company
• Often leaders start by thinking of themselves,
then competition, and lastly
• Marketplace
• Strategic thinkers always think from the
outside-in and avoid thinking in
• Reverse
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 Strategic Thinking
 Refers to the ability to analyze multipart situations
 Expect potential out come
 Formulate well-considered plan to achieve long term objective
 It involves a proactive and forward/headfirst/ looking approach
 Mental or cognitive process utilized by individual to plan for the future
 Forecasting
 Visionary mindset
 Decisiveness
 Efficient Resource Allocation
 Brainstorming
 Delegating task based on strength and expertise
 Analyze customer feedback
 Setting the best methods of communication
 Types Strategic Thinking
 Divergent
 Convergent
 Logical Thinking

Divergent
 Divergent –Moving or extending in different direction from a common
points.
Convergent
 Convergent---when two or more things come together to form anew
whole.
Logical Thinking

 Logical Thinking—is analyze the situation or a problem using reason and

coming up with potential solution
 Strategic planning
Strategic planning is a process of looking into the future
and identifying trends and issues against which to align
organizational priorities of the Department or Office.
Within the Departments and Offices, it means aligning/arrange/a
division, section, unit or team to a higher-level strategy.
Strategy is about achieving a mission comparatively better than
another organization (i.e. competition). For everyone, strategic
planning is about understanding the challenges, trends and issues;
understanding who are the key beneficiaries or clients and what they
need; and determining the most effective and efficient way possible
to achieve the mandate.
A good strategy drives focus, accountability, and results.

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 Strategic planning cont’d
Mission:-What we do be current to do
Sense of urgency:-Why we need a strategy
Vision:-Where we need to go

Customer/stakeholders/
Service/Program How we will achieve it
Processes
People/Knowledge/
Financial
Values:-Beliefs we will follow
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 Why Some Businesses Do No Strategic Planning
Some firms do not engage in strategic planning, and some firms do
strategic planning but receive no support from managers and employees.
Some reasons for poor or no strategic planning are as follows:
• Lack of knowledge or experience in strategic planning—No training in
strategic planning.
• Poor reward structures—When an organization assumes success, it often
fails to reward success. When failure occurs, then the firm may punish.
• Firefighting—An organization can be so deeply embroiled in resolving crises
and firefighting that it reserves no time for planning.
• Waste of time—Some firms see planning as a waste of time because no
marketable product is produced. Time spent on planning is an investment.
• Too expensive—Some organizations see planning as too expensive in time and
money.
• Laziness—People may not want to put forth the effort needed to formulate a plan.
• Content with success—Particularly if a firm is successful, individuals may feel
there is no need to plan because things are fine as they stand. But success today
does not guarantee success tomorrow.
• Fear of failure—By not taking action, there is little risk of failure unless a problem
is urgent and pressing. Whenever something worthwhile is attempted, there is some
risk of failure.
 Cont’d
• Overconfidence—As managers amass experience, they may rely less on
formalized planning. Rarely, however, is this appropriate. Being overconfident
or overestimating experience can bring demise. Forethought is rarely wasted and
is often the mark of professionalism.

• Prior bad experience—People may have had a previous bad experience with
planning, that is, cases in which plans have been long, cumbersome, impractical,
or inflexible. Planning, like anything else, can be done badly.

• Self-interest—When someone has achieved status, privilege, or self-esteem

through effectively using an old system, he or she often sees a new plan as a
threat.
• Fear of the unknown—People may be uncertain of their abilities to learn new
skills, of their aptitude with new systems, or of their ability to take on new roles.
• Honest difference of opinion—People may sincerely believe the plan is wrong.
They may view the situation from a different viewpoint, or they may have
aspirations for themselves or the organization that are different from the plan.
Different people in different jobs have different perceptions of a situation.
• Suspicion—Employees may not trust management.
 Strategic plans
Strategic plans should integrate, drive and connect to the
organizational budgeting process, providing the inputs to the
‘regular budget’ (or ‘programme budget’) via the Strategic
Framework model.
The Strategic Framework, on a regular basis, captures the
objectives, expected accomplishments and indicators of
achievement for each sub-programme, which would, by definition,
be found in a strategic plan.
Strategic plans should also integrate with work-planning efforts.
Work-plans (also called operational plans)
outline the specific, shorter-term operational objectives, outputs,
projects and processes of an entity.

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 Strategic plans Cont’d
A strategic plan is usually attended by the
development of annual working plans that define the
responsibilities in terms of its execution, deadlines and
required resources in more detail.
It may include the organizational and operational
steps to be taken in order to achieve the goals defined by
the plan.
 NATURE AND CHARACTERISTICS OF BUSINESS

STRATEGY

1. Objective Oriented:
a)To increase market share.
b) To increase customers satisfaction.
c) To enhance the goodwill of the firm.

2. Future Oriented:
a) Success of the business in future.
b) The productivity of the business in future.
c) The opportunity to develop and grow in future in different business

3. Availability and Allocation of Resource

To implement strategy properly there is need of adequate resources and proper

allocation of resources. If it is done then business can attain its objectives.
There are three types of resources required by business namely physical resources, i.e
plant and machinery, financial resources i.e capital, and human resources i.e manpower. If
these resources are properly audited/evaluated and find out its strength and weaknesses
and coordinate well then management can do better strategy implementation.
 Cont’d
4. Influence of Environment:
The environmental factors affect the formulation and implementation
of strategy. The business unit by analyzing internal and external
environment can find out its strength and weaknesses as well as
opportunities and threats and can formulate its strategy properly

5. Universally Applicable:
Strategies are universally applicable and accepted irrespective of
business nature and size. Every business unit designs strategy for its
survival and growth.
The presence of strategy keeps business moving in right direction
 Building a Strategic Plan
Input Gathering from outside

External Issues Scanning and Client Segmentation Analysis

The first step in strategic planning is to gather the information needed to

understand and identify the issues, challenges and trends that will shape and affect
a department, office, mission, or programme strategy. The result of such input
gathering is commonly thought of as external environmental scanning.

―External‖ issues refer to all factors with roots outside the entity; they do not
necessarily relate to issues that come from outside the company. It is also important
to gather information about the target clients (i.e. those who are the recipients and
beneficiaries of the services delivered).
Such inputs help to identify and understand how to group clients, and more
importantly, how to characterize their desired outcomes that would result from
receiving the services.

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 Nature strategic decisions
***Strategic decisions usually
**Have a long-term power on the business
**Have an impact on the whole organization
**On its future direction
**On the opportunity of its activities
**On the limitations of the firm
**Define the basis on which the firm competes or co-operates:
**Based on which competencies and / or advantages
**In which markets
**By providing which value for the customer
**Align the organizational activities with its environment, its resources and
capabilities.
**Are taken at top-management level
**Have a significant impact on resource allocation
**Require irreversible commitments and hence risk some sunk cost investments
**Involve major change
**Are taken under uncertainty / under incomplete information
Difference between strategic, tactical and operational decisions

Strategic decisions
 Support the organizations vision, mission, and values
 Have significant resource allocation impact
 Set precedents for decisions further down in the organization
 occur infrequently, may be irreversible
 have a potentially material effect on the organizational competitiveness,
 Are made by top managers
Tactical decisions
 Are less all-encompassing than strategic ones
 Involve formulation and implementing policies for the organization
 Are usually made by mid-level managers
 Often materially affect particular business functions such as marketing of production, or
a business unit
 Have fewer resource implications
Operational decisions
 Support day-to-day decisions needed to operate the organization
 Take effect over a few days of weeks
 Are made by lower-level managers
 Are made regularly and often on the fly
 Tend to be highly structured, often with well-defined procedure manuals or within readily understood
parameters/Limitation/
 Levels of strategy
Levels of strategy
**There are companies that are working in different business lines
with regards to products /services, markets or technologies and are
managed by same top management. In this case such companies need
to frame different strategies.

**The strategies are executed at three different levels such as-

A)Corporate level

b) Business level

c) Functional/operational level

–
 Corporate level
Corporate level strategies are overarching plan of action covering the various
functions that are performed by different strategic business unit, which involved in a
signal line of business the plan deals with the objectives of the company, allocation
of resource and co-ordination of SBUs for best performance.
Corporate Strategy is regarded as encompassing the aims and objectives of the
organization together with the means of how these are to be achieved. It is, by definition,
holistic, i.e., it embraces all of the company‘s different businesses and functions. Andrews
defined corporate strategy as: ‗the pattern of major objectives, purposes or goals and essential
policies or plans for achieving those goals, stated in such a way as to define what business the
company is in or is to be in and the kind of company it is or is to be‘.
Chandler believed that it should also be concerned with ‗the allocation of resources
necessary for carrying out these goals‘. In defining its corporate strategy, the firm has to
satisfy the sometimes-contradictory expectations of several differing constituencies including,
obviously, customers as well as suppliers, shareholders, and employees.
It is widely believed that corporate strategy should address the essentials of the
organization, namely, the ―what‖, ―why", "how‖, and ―when‖, of the organization.
It is concerned with ―what businesses is the company in or would like to be in?‖ Secondly,
it embraces ―why the company is in business?‖ i.e., the specific sales, profit, and rate of return
and growth targets it has or should have. Thirdly, the company needs to define ―how‖ it aims
to achieve those targets, such as the technologies it will use, the markets it is or should be
operating in, and the products it markets or should market in order to achieve those objectives.
Finally, the company needs to decide ―when‖ it aims to achieve those goals and the period
over which it defines its strategy.
 Business strategy or competitive strategy
Business strategy or competitive strategy is empowered to make key decisions
about current and future strategy within the framework of the overall corporate strategy.
It seeks to determine how an organization should compete in each of its businesses.
For a small organization in only one line of business or the large organization that has
not diversified into different products or markets, the business-level strategy typically
overlaps with the organizations corporate strategy.
The essence/principle/ of business strategy is achieving sustainable
competitive advantage. It has three aspects:
(1) deciding what product/service attributes (lower costs and prices, a better product, a wider
product line, superior customer service, emphasis on a particular market niche) offer the
best chance to win a competitive edge;
(2) developing skills, expertise, and competitive capabilities that set the company apart from
rivals; and
(3) trying to insulate the business as much as possible from the effects of competition

BS or CS
Focus on Cost leadership strategy ,Differentiations, Better Strategy
 Functional Strategy
Functional Strategy seeks to determine how to support the business-level strategy. A
firm needs a functional strategy for every competitively relevant business activity and
organizational unit – Production, Marketing, Customer service, Distribution, Finance,
HR, IT, and so on.
Functional strategies, while narrower in scope than business strategies, add relevant
detail to the overall business game plan by setting forth the actions, approaches, and
practices to be employed in managing a particular functional department or business
process or key activity.
They aim at establishing or strengthening specific competencies and competitive
capabilities calculated to enhance the company‘s market position and standing with its
customers
Example
•Marketing Strategy: A company like Coca-Cola might have a marketing strategy to
strengthen its brand image by associating it with happiness and fun
•Financial Strategy: A startup capacity have a financial strategy of securing additional capital
to fuel/enrgy/ its rapid growth.
Most common functional strategies used in management are: financial strategy,
marketing strategy, production strategy, human resources strategy (personnel strategy) and
research and development strategy.
 Process of Strategic Management

1/ Development of Vision and Mission

2/ External Environment Analysis
3/Internal Environment Analysis
4/ Establish Long-Term Objectives
5/ Generate, Evaluate and Select the Best Strategy
6/ Implementation of Strategy
7/ Strategy Evaluation and Control
 Developing Organization Vision and Mission
Strategic management process begins with recognizing and formulating
the vision and mission of the organization. The vision describes where the
business wants to reach and mission tells us the business values and its
purpose of existence.

Analysis of Organization
The second step is concerned with performing a strategic analysis of the
organization. It involves scanning all internal and external forces influencing the
operation of the business. In this sufficient information is gathered regarding the
environment within which business operates for setting objectives.

Setting Objectives
It means deciding objectives to be accomplished for reaching the vision. These
objectives serve as the means for evaluating the performance and progress of
organization Managers at different positions within the organization decide the
varied set of objectives as per their position. These objectives are linked to each
other in a way that those set by managers at lower level helps in achieving the one
which is decided by senior managers.
 Strategy Formulation
After deciding various objectives to be achieved, the next step is choosing the
most appropriate action among different alternatives available for attaining them.
Managers after detailed analyses of various options, selects the best strategy for
performing organization activities.

Strategy Implementation
In this step, strategies framed by managers are put into action by successfully implementing
them within the organization. Strategic implementation is a crucial step in this process because
unless the chosen strategies are properly implemented, the intended work cannot be achieved.
It involves properly organizing structure of the organization, fixing roles and responsibilities and
developing an efficient decision-making process.

Strategy Evaluation and Control

The sixth step in the strategic management process is concerned with evaluating and
monitoring the performance for ensuring that all activities go as per the plan. It is the one which
helps in keeping all operations on track by informing about all required changes from time to
time to management. Managers are able to take all remedial measures timely in case of any
deviations.

SWOT Analysis
This is a crucial part of the strategy management process. A SWOT analysis focuses on
evaluating the strengths, weakness, opportunities and threats of an organization
 The Advantages of Strategic Management
Discharges Board Responsibility
The first reason that most organizations state for having a strategic management process is
that it discharges the responsibility of the Board of Directors.
Forces an Objective Assessment
Strategic management provides a discipline that enables the board and senior management to actually take a step
back from the day-to-day business to think about the future of the organization. Without this discipline, the
organization can become solely consumed with working through the next issue or problem without consideration of
the larger picture
Provides a Framework for Decision-Making
Strategy provides a framework within which all staff can make day-to-day operational decisions and
understand that those decisions are all moving the organization in a single direction. It is not possible
(nor realistic or appropriate) for the board to know all the decisions the executive director will have
to make, nor is it possible (nor realistic or practical) for the executive director to know all the
decisions the staff will make. Strategy provides a vision of the future, confirms the purpose and
values of an organization, sets objectives, clarifies threats and opportunities, determines methods to
leverage strengths, and mitigate weaknesses (at a minimum).
Enables Measurement of Progress
A strategic management process forces an organization to set objectives and measures of
success. The setting of measures of success requires that the organization first determine
what is critical to its ongoing success and then forces the establishment of objectives and
keeps these critical measures in front of the board and senior management.
 The Disadvantages of Strategic Management
The Future Doesn’t Unfold As Anticipated
One of the major criticisms of strategic management is that it requires the organization to
anticipate the future environment in order to develop plans, and as we all know, predicting
the future is not an easy undertaking. The belief being that if the future does not unfold as
anticipated then it may invalidate the strategy taken.
It Can Be Expensive
There is no doubt that in the not-for-profit sector there are many organizations that cannot
afford to hire an external consultant to help them develop their strategy. Today there are
many volunteers that can help smaller organizations and also funding agencies that will
support the cost of hiring external consultants in developing a strategy. Regardless, it is
important to ensure that the implementation of a strategic management process is
consistent with the needs of the organization, and that appropriate controls are
implemented to allow the cost/benefit discussion to be undertaken, prior to the
implementation of a strategic management process.

Long Term Benefit vs. Immediate Results

Strategic management processes are designed to provide an organization with long-term
benefits. If you are looking at the strategic management process to address an immediate
crisis within your organization, it won’t. It always makes sense to address the immediate
crises prior to allocating resources (time, money, people, opportunity, cost) to the strategic
management process.