ATOMIC BUSINESS & TECHNOLOGY

COLLEGE

STRATEGIC MANAGEMENT AND

BUSINESS POLICY
(BUMA-372)
Distance Education

August 2022
 CHAPTER ONE
INTRODUCTION TO STRATEGIC MANAGEMRNT
Contents of the unit
1.0 Objectives
1.1 Introduction
1.2 Strategic Management
1.3 Importance of Organizational Strategy
1.4 Benefits of Strategic Management
1.5 The Nature of Strategy and Strategic Decisions

1.1 Introduction
Strategy management is the set of managerial decision and action that determine the long
term performance of an organization. The decision and action includes environmental
analysis, strategic formulation, strategic implementation, evaluating and control.
1.2 Strategic Management
Definitions
“Strategic Management: - is a process by which Top-management determines the long run
direction and performance of the organization by ensuring that careful formulation,
effective implementation, and continue evaluation of strategy takes place.”
“Strategic Management is the set of managerial decisions and action that determines the
long-term performance of a corporation.”
According to Pearce and Robinson,
 Strategic management involves attention on the following nine critical areas.
1. Determination of mission of the company
2. Developing a company profile. (Profile that reflects internal conditions and
capabilities)
3. Assessment of the companies’ external environment. (Assessment in terms of both
competitive and general contextual factors)
4. Analysis of possible options. Uncovered matching of the company profile with the
external environment
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 5. Identify the desired options. Uncovered possible options considering in the light of
the company mission
6. Strategic choice. A particular set of long-term objectives and grand strategies needed
to achieve the desired option.
7. Develop of annual objectives and short-term strategies compatible with long-term
objectives and grand strategies.
8. Implementing strategic choice decision. Based on budgeted resources allocation and
emphasizing the matching of tasks, people, structures, technologies, and reward
systems.
9. Review and evaluation.
Strategic process to serve as a basis for control and as an input for future decision-making.
Strategy has been defined briefly as follows a strategy:
 as a means to achieve ends.
 as a link to all the parts of an organization.
 which covers all the majors’ aspects of an organizations.
 as a long-term plan.
 a means to ensure that all parts of the plan are compatible.
 A strategy is the result of analyzing the strength and weakness of the organization,
determining opportunities and threats and come up with appropriate course of
action.
 A strategy is an organization’s planned response to its environment overtime.
“Strategy is the determination and evaluation of alternatives available to an
organization for achieving its objectives and mission and the selection of the
alternative to be pursued. (Byars, Rue and Zahra 1996)

1.3 Importance of Organizational Strategy

Organizational strategy is important because it deals with the major, fundamental issues that
affect the future of organizations.
A company that develops a viable organizational strategy is able to prosper.
Strategies are important for the following reasons:

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 1. Organizational strategy involves the entire organization. It covers all areas and
functions of the business. It borrows best practice form each part and combines
these, thus creating more than just the sum.
2. Organizational strategy is likely to concern itself with the survival of the business as
a minimum objective and the creation of value added as a maximum objective.
3. Organizational strategy covers the range and depth of the organization’s activities,
corporations expected to conduct a fundamental reappraisal of all its activities if it
was to survive. No major area was left untouched. Some companies may be able to
continue investing and broadening its areas of activist through new links, such as the
internet.
4. Organizational strategy directs the changing and evolving relationship of the
organization with its environment. At the root of many of the problems of companies
may come as a result of rapidly changing environment; I help organization to be able
to cope better.
5. Organizational strategy central to the development of sustainable competitive
advantage. At a given time companies may offer nothing that was sufficiently
different form its competitors.
6. Organizational strategy development is crucial to adding value, rather than sales,
profitability, market share, earnings per share or other indicators.
In conclusion, it is evident with hindsight that IBM made a number of strategic mistakes.
Most commentators would argue that this can be used to demonstrate the importance of
corporate strategy.

1.4 Benefits of Strategic Management

Strategic management offers the following benefits it:
 allows for identification, prioritization and exploitation of opportunities
 provides an objective view of management problems
 represents a framework for improved coordination and control of activities
 minimizes the effects of adverse conditions and changes
 allows major decisions to better support established objectives
 allows more effective allocation of time and resources to identified opportunities
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  allows fewer resources and less time to be devoted to correcting erroneous or ad hoc
decisions
 creates a framework for internal communication among personnel
 helps to integrate the behavior of individuals into a total effort
 provides a basis for the clarification of individual responsibilities
 gives encouragement to forward thinking
 provides a cooperative, integrated, and enthusiastic approach to tackling problems
and opportunities
 encourages a favorable attitude toward change
 gives a degree of discipline and formality to the management of a business

Even successful companies will have strategic problems that are difficult to resolve.
Organizational strategy may involve conflicting and ambiguous outcomes
1.5 The Nature of Strategy and Strategic Decisions
The characteristics of strategic decisions
The characteristics usually associated with the words ‘strategy’ and ‘’strategic decisions are:
 Strategic decisions are normally about trying to achieve some advantage for
the organization over competition. In other situations advantage may be achieved in
different ways and may also mean different things.
 Strategic decisions are likely to be concerned with the scope of an
organization’s activates. For example, does (and should) the organization concentrate
on the area of activity, or should it have many? The issue of scope of activity is
fundamental to strategy because it concerns the way in which those responsible for
managing the organization conceive the organization’s boundaries. Strategy can be seen
as the matching of the resources and activities of an organization to be environment in
which it operates.
 However, strategy can also be seen as building on or ‘stretching’ an
organization’s resources and competences to create opportunities or to capitalize on
them. Strategy development by ‘stretch’ is the leverage of the resources and
competences of an organization to provide competitive advantage and / or yield new

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 opportunities. For example, a small business might try to change the ‘rules of the game’
in its market to suit its own companies entered established sectors..
 Strategies may require major resource change for an organization. For
example, decisions to expand geographically have significant implications in terms of
the need to build and support a new customer base. Sometimes this might be seen as
high risk – for example for AOL/Time Warner..
 Strategic decisions are likely to affect operational decisions. After the merger,
new structures and management controls would be needed to deal with the much more
diverse set of activities. Human resources policies and practices would also have to be
reviewed.
 The strategy of an organization is affected not only by environmental forces
and resource availability, but also by the values and expectations of those who have
power in and around the organization.
In general, of course, there are other stakeholders who have influence: financial institutions,
the workforce, buyers and perhaps suppliers and the local community. The beliefs and value
of these stakeholders will have a more or less direct influence on the strategy development of
an organization
There are a number of consequences of these characteristics:
 Strategic decisions are likely to be complex in nature. It will be emphasized
that this complexity is a defining feature of strategy and strategic decisions.
 Strategic decisions may also have to be made in situations of uncertainly they
may involve taking decisions with views of the future about which it is impossible for
managers to be sure.
 Strategic decisions are also likely to demand an integrated approach to
managing the organization. Unlike functional problems, there is no one area of
expertise, or one perspective, that can define or resolve the problems.
 Strategic decisions will very often involve change in organizations which may
prove difficult because of the heritage of resources and because of culture. These
cultural issues are heightened following mergers as two very different cultures need to
be brought closer together – or at least learn how to tolerate each other
Summary
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Strategic Management is a process by which Top-management determines the long run
direction and performance of the organization by ensuring that careful formulation,
effective implementation, and continues evaluation of strategy takes place.

Organizational strategy is important because it deals with the major, fundamental issues that
affect the future of organizations.

Strategy is the direction and scope of an organization over the long term which activities
advantage for the organization through its configuration of resources within a changing
environment and to fulfill stakeholder expectations.

CHAPTER TWO
LEVELS OF STRATEGY AND KEY ELEMENTS OF STRATEGIC DECISIONS
Contents of the unit
2.0 Objectives
2.1 Introduction
2.2 Levels of Strategy
2.3 Strategic Management Vs Operational Management
2.4 The Strategic Position
2.5 Strategic Choices
2.6 Key Elements of Strategic Decisions
2.1 Introduction
Strategies exist at a number of levels in an organization; individuals may say they have a
strategy- to do with their career. This may be relevant when considering influences on
strategies adopted organizations; hence it is possible to distinguish the different levels of
organizational strategy.

2.2 Levels of Strategy

The different levels of strategy are:
1. Corporate –level strategy is concerned with the overall purpose and scope of an
organization and how value will be added to the different parts (business units) of the
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 organization. This could include issues of geographical coverage diversity of
products/services or business units and how resources are to be allocated between the
different parts of the organization.
Corporate-level strategy is also likely to be concerned with the expectations of owner
– the shareholders and the stock market. Benign clear about corporate level strategy is
important: it is a basic of other strategic decisions..
2. The second level can be thought of in terms of business unit strategy which is about
how to compete successful in particular markets.
A Strategic business unit is a part of an organization for which there is a distinct
external market for goods or services for that is different from another SBU. In public
sector organizations a corresponding definition of a SBU might be a part of the
organization or service for which there is a distinct client group.

2.3 Strategic Management Vs Operational Management

The scope of strategic management is greater than that of any area of operational
management. Strategic management is concerned with complexity arising out of ambiguous
and non-routine situations with organization-wide rather than operation-specific implications.
2.4 The Strategic Position
Understanding the strategic position is concerned with impact on strategy of the eternal
environment, internal resources and competences, and the expectations and influence of
stakeholders. The sports of questions this raises are central to future strategy. What changes
are going on in the environment, and how will they affect the organization and its activities?

Competences of the Organization

The competences of the organization and the expectations of stakeholders are discussed
briefly below.
 The environment organization exists in the context of a complex commercial,
political, economical, social, technological, environmental and legal world. This
environment changes is more complex for some organizations than for others. The aim is
to form a view of the internal influences- and constraints- on strategic choice for the
future. On occasions, specific resources – for example, the particular location of an
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 organization – could provident which competitive advantage. However competences
which provide real advantage – in this book we refer to these as core competences – are
more like to be activates, know –how and skills which in competition provide advantage
for that organization which others find difficult to imitate.
 There are a number of influences on an organization’s purpose. Formally, the issue of
corporate governance is important. Here the question is: who should the organization
primary serve and how should managers be held responsible for this? The expectations
on different stake holders affect purpose and what will be seen as acceptable in terms of
strategies advocated by management.
Together, considerations of the environment, strategic capability, the expectations and the
purpose within the cultural and political framework of the organization provide a basis for
under sting the strategic position of an organization. Such as understanding needs to take the
future in to account.
2.5 Strategic Choices
Strategic choices involves understanding the underlying bases for future strategy at both the
corporate and business unit levels (discusses above) and the options for developing strategy
in terms of both the directions in which strategy might move and the methods of
development.

At the highest level in an organization there are issues of corporate level stratagies, which are
concerned with the scope of an organization, the relationship between the separate parts of
the business and how the corporate centre adds value to these various parts. For example, the
corporate centre, as a parent to the business units, could add value by looking for synergies
between business units, by challenging resources – such as finance – or through particular
competences – such as marketing or brand building. There is a danger, of course, that the
centre does not add value and is therefore destroying value.

2.6 Key Elements of Strategic Decisions

Any organization strategy requires strategic decision. There are five key characteristics
elements of strategic decisions that are related primarily to the organization’s ability to add
value and compete in the market place. These elements are:

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 1. Sustainable. Decisions that can be maintained over time. For the long-term survival
of the organization, it is important that the strategy is sustainable.
2. Develop processes to deliver the strategy. Strategy is at least partly about how to
develop organizations or allow them to evolve towards their chosen purpose.
3. Offer competitive advantage. A sustainable strategy is more likely if the strategy
delivers sustainable competitive advantages over its actual or potential competitors.
Corporate strategy usually takes place in competitors. Corporate strategy usually
takes place in a competitive environment.
4. Exposit linkages between the organizations and its environment. Links that
cannot easily be duplicated and will contribute to superior performance. The strategy
has to explicit the any linkages that exist between the organization and its
environment: suppliers, customers, competitors and often the government itself.
5. Vision. The ability to move the organization forward in a significant way beyond the
current environment. This is likely to involve innovative strategies. In the fast-
changing telecommunications scene, it is vital to have a vision of the future. This
may involve the environment but is mainly for the organization itself.
Summary
Corporate level strategy is concerned with the overall purpose and scope of an organization
and how value will be added to the different parts (business units) of the organization.
Understanding the strategic position is concerned with impact on strategy of the eternal
environment, internal resources and competences, and the expectations and influence of
stakeholders.
There are five key characteristics elements of strategic decisions that are related primarily to
the organization’s ability to add value and compete in the market place. These elements are:
 Sustainable
 Develop processes to deliver the strategy
 Offer competitive advantage
 Exposit linkages between the organizations and its environment
 Vision
CHAPTER THREE

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DEVELOPING STRATEGIC VISSION AND MISSION
Contents of the unit
3.0 Objectives
3.1 Introduction
3.2 Establishing Objectives
3.3 Definitions of Vision, Mission and Objectives
3.4 Mission Statement
3.5 Corporate/Business Value Chain Analysis

3.1 Introduction
This section will look at ways in which organizations attempt to explicitly communicate
purposes, for example through statements of mission, vision, intent and objectives. In some
instances such statement may be a formal requirement of corporate governance.

3.2 Establishing Objectives

Objectives are statement of specific outcomes that are to be achieved objectives – both at the
corporate and business unit level – are often expressed in financial terms. They could be the
expression of desired sales or profit levels, rates of growth, dividend levels or share
valuations. But organizations also have market-based objectives, many of which are
quantified as targets – such as market share, customer-services, repeat business and so on.

3.3 Definitions of Vision, Mission and Objectives

A. Vision It is a more dram ant of that is articulated and also aspirations, expressed as a
strategic intent. It is what the firm or a person would ultimately like to become.
B. Mission It is enduring statement of purpose that distinguish one business form other
similar firms. A mission statement identifies the scope of a firm's operations in
product or market terms.

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C. Objectives are the end results of planned activity. They state what is to be accomplished,
by when and should be quantified possible. The achievement of corporate objectives should
result in the fulfillment of a corporation's mission. In effect, this is what society gives back
to the corporation when the corporation does a good job of fulfilling its mission. The term"
goal" is often used interchangeably with the term "objective", we prefer to differentiate the
two terms.

3.4 Mission Statement

A mission statement is a generalized statement of the overriding purpose of an organization.
It can be through of as an expression of its raison deter. If there is substantial disagreement
within the organization or with stakeholders as to its mission, it may well give rise to real
problems in resolving the strategic direction of the organization.
Mission statements usually attempt to address some of the following issues.
 A vision that is likely to persist for a significant period of time as bacon in the
distance to wards which an organization can strive.
 Provide clarity on the main intentions and aspirations of an organization. Hamel and
preheat prefer the term strategic intent to that of vision or mission; they see it as an
‘animating dream’. They argue that a powerful strategic intent is one that encapsulates
the desired future state or aspiration of an organization – the sense of discovery and
destiny – that motivates man agars and employees alike thought the organization. The
view taken here is that, in practice, mission, vision and strategic intent are used fairly
interchangeably by managers.
 Describe the organization’s main activities and the position it wishes to attain in its
industry. Many statement talk about being ‘the leader’ or ‘the best’
 Be a statement of the key values of the organizations, particularly regarding attitudes
to wards stakeholder groups and the ethical agenda discussed earlier.
Mission statements are used differently by organizations in different circumstances. If
strategy is driven by managers who see other stakeholders and the corporate governance
requirements largely as constraints, they may be secretive about organizational purposes and
see little value in mission statements.

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Organizational Purposes for a Social Services Department
Organizations are finding it useful to publish a statement of their purposes. This is usually
done at several levels of detail.
As part of its strategic plan for 2000-2003, Sheffield city council social Services department
outlined its purposes, priorities and targets. The following are extracts from this plan.
1. Statement of purpose
We will work within the framework of the law and our resources to:
 Protect and strengthen the well-being of people and families in Sheffield,
focusing on the most vulnerable;
 Work together with people, their families and with other organizations to
ensure the provision of helpful, timely and good value social services.

2. Primary objective for 2000

We will:
 Ensure all; our statutory duties are fulfilled;
 Ensure that people can easily and quickly contact us for advice and help;
 Make timely and accurate assessments of need, taking in to account people’s
circumstances, culture, age, sex, health disability and sexuality;
 Apply the rules for arranging services (eligibility criteria) fairly and consistently;
 Provide clear care plans (to clients) to explain how we will arrange and provide help
and support;
 Regularly check that help support are being provided and are of an acceptable
standard;
 Ensure our workforce is effectively supported and managed and that expenditure is
controlled within cash limits.
3. Service prioritizes-People with mental health problems
Priorities for 2000/2001 are to:
 Develop an integrated adult mental health service community health Sheffield;
 Reorganize community mental health teams to focus on access and assessment and
provide effective services for people with serious mental illness;

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 Continue implementation of the Government’s national services framework
development plan in conjunction with our partners;
 Ensure that investment from the mental health grant is allocated in line with
government framework.

4. Targets (mental health)

We will be meeting our objectives if we see:
 Fewer people readmitted to hospital:
 All service users with an identified care coordinator:
 An increase in the number of community support and short term care places.

Notes
1. There were annual service plans for each area – this is one example.
2. This is a health care agency.
3. this plan concerned improvements in mental health care through better inter-agency
working

Source: Sheffield city council.

Questions
1. How useful are these various statements of purpose to the shaping and
implementation of the department’s strategy? In answering the question, ensure that
you give a critique of each of the various ‘levels’ of statement in order to establish:
a. what it is meant to achieve
b. whether you feel that it does so;
c. Any improvements you would suggest.
2. Comment on the extent to which these various levels of purpose are consistent with
each other.
When they do exist, they are simply paid lip – service and are not powerful influences on the
strategic development of the organization.
 In contrast, managers who have a missionary zeal for the organization are likely to
use the mission statement in an evangelical way to ‘sell’ purposes to other stakeholders.

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 The mission of the organization is closely aligned to the strategic intent of these
managers.
 Where strategy is dominated by powerful external stoker holders whose main concern
is that the organization complies with the corporate governance argument. Complying
with regulations and procedures becomes the purpose and any sense of mission may be
lost.
 In contrast, if strategy is dominated by external stakeholder(s) with missionary zeal,
the purposes of the organization may become highly politicized so the ability to
produce a mission statement acceptable to all stakeholders can be difficult.

3.5 Corporate/Business Value Chain Analysis

Each corporation has its own internal value chain of activities. Porter proposes that a
manufacturing firm's primary activities usually begin with inbound logistics (raw materials
handling and warehousing), go through an operations process in which a product is
manufactured, and continue on to outbound logistics (warehousing and distribution),
marketing and sales, and finally to service (installation repair, and sale of parts
Because most corporations make several different products or services, an internal analysis
of the firm involves the following three steps:

1. Examine each product line's value chain in terms of the various activities involved
in producing that product or service. Which activities can be considered strengths
(core competencies) or weakness (core deficiencies)?
2. Examine the "linkages" within each product line's value chain. Linkages are the
connections between the way one value activity quality control. A seeking ways for
a corporation to gain competitive advantage in the marketplace, the same function
can be performed in different ways with different results.
3. Examine the potential synergy among the value chains of different product lines or
business units. Each value element such as advertising or manufacturing has an
inherent economy of scale in which activities are conducted at their lowest possible
cost per unit of output. If a particular product is not being produced at a high
enough level to reach economic of scale in distribution, another product could be
used to share same distribution channel.

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Summary
 Expectations and purposes are influenced by four main factors: corporate governance,
stakeholders expectations, business ethics and culture.
 The corporate governance arrangements determine whom the organization is there to
serve and how the purposes and priorities should be decided. Corporate governance has
become more complex for two main reasons: first, the separation of ownership and
management control, and second, the first, the separation of ownership and
management control, and second, the increasing tendency to make organizations more
visible accountable to a wider range of stakeholders.
 Purposes are also influenced by the ethical stance taken by the organization about its
relationships with wider society within with in operates. This stance may very from a
narrow view that the short-term interests of share holders should be paramount, thought
to some organizations that would see themselves be paramount, through to some
organizations that would see themselves as shapers of society.
 Organizational purposes can be communicated levels of detail, from an overall
mission statement through to detailed operational objectives for the various parts of the
organization.
CHAPTER FOUR
EVALUATING COMPANY RESOURCE AND COMPETITIVE ABILITIES
Contents of the unit
4.1 Introduction
4.2 The Root of Strategic Capability
4.3 The Strategic Importance of Resources
4.4 Identifying Company’s Strengths, Weakness, Opportunities and Threats

[Link]
Competence is created when resources are ‘deployed’ in to separate activities of the
organization and into the processes through which these activities are linked together
4.2 The Root of Strategic Capability
This chapter is concerned with understanding strategic capability with both these ‘fit’ and
‘stretch’ perspectives in mind. These will be a particular emphasis on knowledge and
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knowledge management as increasingly important resources at ones for successful
organizations.
 Strategic Capability is about providing products or services to customers that are
valued – or might be valued in the future. This is concerned with the product features –
remembering that this includes not just the product itself but aspects of service too.
 First are the threshold product features that all potential providers must be able to
offer if they are not to stay in a particular market or market segment.
 Second are the critical success factors, which are the product features that are
particularly valued by a group of customers and, therefore where the organization
must excel to outperform competition.
 Illustration 4.1
Strategic capability – the terminology
TERM DEFINITION EXAMPLE (THE OLYMPIC
RELAY TEAM)
Threshold product Product features and performance standards all Meet qualifying standard
features of which must be met by providers Pass drug tests
Be selected into national team (for
individuals)
Critical success factors Features that are particularly valued by Run fastest in final(in some events,
customers and used distinguish between e.g. gymnastics, there are
positional providers subjective factors too)
B. Strategic Capability
Strategic Capability The ability to perform at the level required for Athletic ability in chosen sport.
success. It is underpinned by the resources and
competences of the organization
Threshold resources Resources needs to stay in the business A healthy body (for individuals)
Medical facilities and practitioners
training venues and equipment
food and supplements
Unique resources Resources that create competitive advantage and Individuals with
are difficult to imitate  Exceptional heart and
lugs
 Height or weight

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 World –class coaches
Inadequate resources Resources that do not adequately underpin the Injured body
meeting of threshold product features. They may poor training facilities
be adequate for other segments poor coaches
Threshold competences Activities that underpin the meeting of threshold Individual training regimes
product features physiotherapy/injury management
Diet planning
Core competences Activities that under pin the meeting of critical Squad coaching
success factors and hence give competitive Teamwork
advantage
Redundant Activities where performance standard are Psychological therapy
competences below the level needed to stay in business. They
may be adequate for other segments
C. Outcomes and
responses
Business failure Failure to meet threshold requirements Not selected for games
Repositioning Addressing other segments with different Try for selection to European or
threshold requirements Common wealth games
Staying in business Meeting the threshold product features Selected for the games
Out performing Satisfying the critcal success factors better than Winning the gold medal
competitors competitors
Exploting other Other areas that already value the same CSFs Playing American Football
opportunities
Creating new Where the CSFs could be valued Presentations to managers
opportunities

The discussion then moves to whether an organization has the resources and competences
to provide products/services that meet these customer requirements:
 What resources are available to an organization, from both within and outside, to
support its strategies?
 What is the thresholds level of resources needed to support particular strategies? If
an organization does not possess these resources it will be unable to meet
customers’ threshold requirements on one or more product feature. For the relay
team these are healthy athletes, medical and training facilities etc.
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  What unique resources might organizations have to meet the critical success factors
of a particular segment and gain competitive advantage? The relay team may have
individuals with exceptional physical characteristics that help them run faster.
 Some organizations might have inadequate resources and be unable to meet the
threshold requirements of customers. This occurs not only because resources
dissipate (for example, the individual runners get older or injured) but, more
importantly, because customer requirements are constantly rising.
 Usually, the key to good or poor performance is found here rather than in the
resources per se. This is because activities and processes may be more difficult to
imitate than is the acquisition of resource, as discussed below; for example, training
regimes and diet planning for the athletes are more difficult to imitate than
acquainting training facilities and food/supplements.
 Although an organization’s will need to reach a threshold level of competence in all
the activities that it undertakes, only some of these activities are core competences.
Core competences are those competences that underpin the organization’s ability to
outperform competition by meeting the critical success factors better than
competitors.
 Core competences might also provide the basis on which strategies may be built to
exploit opportunities in other markets where the same critical success factors are
valued. Olympic athletes are often signed up other sports where speed is important
– such as American football.
 Core competences might also be the basis of creating opportunities in new arenas
where the same CSFs would be valued above those that currently prevail. In other
words, to change the rules of the game in those new areas. Olympic athletes
sometimes exploit the frame that comes from success to break into new careers. For
example, they are employed to help break the mindset about teamwork, catching
and endurance in management development programmers.

4.3 The Strategic Importance of Resources

4.3.1 Available Resources

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 Strategic capability is underpinned by the resources available to an organization since it is
resources that are deployed into the activities of the organization to create competences.
From a strategic perspective an organization’s resources include both that are owned by the
organization and those that can accessed to support its strategies. Some strategically
important resources may be outside an organization’s ownership, such as its network of
contents or customers.

Typically resources can be grouped under the following headings.

 Physical resources – such as machines buildings or production capacity the nature
of these resources, such as the age, condition, capability and location of each resources,
will also determine the usefulness of the resources.
 Human resources – including knowledge, skills of people and adaptability of
human resources. This applies both to employees and to other people in an
organization’s networks. In knowledge- based economies people do genuinely become
‘the most valuable assets’. But to gain advantage of this will required a strong link
between overall businesses straggles and human resources strategies.
 Financial capital is the intangible resources of an organization and is often over
looked or undervalued. This would include the knowledge that has been captured in
patents, brands, business systems, customer date bases and relationships with partners.
There should be no doubt that these intangible resources have a value.
 Threshold resources. A set threshold resources are needed to exist as a provider to
any market segment (see exhibits 4.1 and 4.2).
Exhibit 4.2 Resources competences and competitive advantage
Same as competitors Better than competitors
or and
easy to imitate difficult to imitate

Threshold Unique
RESOURCERES Resources resources

COMPETENCES Threshold Core

Competences Competences

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 The problem for established organizations is that they may experience step change in the
businesses environment that can make a large part of their resources base redundant. But
unless an organization is able to dispose of those redundant resources they may be unable to
see up sufficient funds to invest in the new resources that are needed and their cost base will
be too high.
4.3.2 Unique Resources
The ability of an organization to meet the critical success factors in a particular market
segment may be underpinned by unique resources as shown in Exhibits 4.1 and 4.2 unique
resources are those resources which critically underpin competitive advantage. They sustain
the ability to provide value in the product, are better than competitors’ resources and are
difficult to imitate.
4.4 Identifying Company’s Strengths, Weaknesses, Opportunities and Threats
SWOT Analysis
The issues discussed in the preceding sections provide insights into the strategic capability of
an organization. The key strategic messages from both the business environment and this
chapter can often be summarized in the form of a SWOT analysis. SWOT stands for
strengths, weaknesses, opportunities and threats. SWOT analysis summaries the key issues
from the business environment and the strategy development. This can also be useful as a
basic against which to judge future course of action, as seen.
Purpose of SWOT Analysis
As a starting point for the development of strategic options, professor Kenneth Andres first
identified the importance of connecting the organization’s mission and objectives with its
strategic options and subsequent activities.
1. Strengths and Weaknesses-explored in the resource-based analysis
2. Opportunities and threat- explored in the environment-based analysis
Each analysis will be unique to the organization for which it is being devised, but some
general pointers and issues can be drawn up.

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In devising a SWOT analysis, there are several factors will enhance the quality of the
material:
 Keep it brief-pages of analysis are usually not required.
 Relate strengths and weaknesses, wherever possible, to critical success factors,
 Strengths and weakness should also be stated in competitive terms, if possible. It is
reassuring to be “good” at something, but it is more relevant to be “better than the
competition’.
 Statements should be specific and avoid blandness-there is little point in stating ideas
that everyone believes in
 Analysis should distinguish between where the company wishes to be and where it is
now. The gap should be realistic.
 It is important to be realistic about the strengths and weaknesses of one’s own and
competitive organizations.

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Table 4.3 Some Possible factors in a SWOT

Internal
Strengths Weaknesses
 Market dominance  Share weakness
 Core strengths  Few core strengths and low on key skills
 Economies of scale  Old plant with higher costs than competition
 Low-cost position  Weak fiancés and poor cash flow
 Leadership and management skills  Management skills and Leadership lacking
 Financial and cash resource  Poor record on innovation and new ideas
 Manufacturing ability and age of equipment  Weak organization with poor architecture
 Innovation process and results  Low quality and reputation
 Architecture network  Products not differentiated and dependent
 Reputation on few products
 Differentiated products
 Product or service quality
External
Opportunities Threats
 New markets and segments  New market entrants
 New products  Increased competition
 Diversification opportunities  Increased pressure form customers and
 Market growth suppliers
 Competitor weakness  Substitutes
 Strategic space  Low market growth
 Demographic and social change  Economic cycle downturn
 Change in political or economic  Technological threat
environment  Change in political or economic
 New takeover or partnership opportunities environment
 Economic upturn  Demographic change
 International growth  New international barriers to trade

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The aim is to identify the extent to which the current strength and weaknesses are relevant to
capable of dealing with the changes taking place in the business environment. It can also be
used to assess whether there are opportunities to exploit further the unique resources or core
competence of the organization. For example, Illustration 4.2 shows that Renault already has
many of the competence needed to meet a changing market; in particular, its track record in
innovation and its development of new models (such as people carries and leisure vehicles).
A SWOT analysis explores the relationships between the main environmental influences
and the strategic capability of an organization.

The table below shows a SWOT analysis of the car manufacturer Renault around the end of
1998. After having been close to bankruptcy in the mid 1980s, Renault had managed to
establish a good reputation in Europe, thanks to their TQM policy, numerous Formula one
victories, and a range of products that were both attractive and innovative (Espace, Twingo,
Scenic, Kangoo, etc,). Centered around the concept ‘lifestyle Cars’. The company regained
its financial health in 1994, despite the failure of an alliance with the Swedish car
manufacturer Volvo, and made a net profit of E l.6bn in 1998. The National Renault
Automobile Company was privatized in 1996 and become anonymously the Renault
Company. However, in 1998, only 16 per cent of sales were made outside Europe, and its
success was due solely to newly launched mid-range cars.
Source: The French translation of Exploring Corporate Strategy by F. Frery, pubil union,
2000, p. 219.
STRENGTHS AND WEAKNESSES KEY ENVIROMENTAL DEVLOPMENTS
Saturation of Growing Potential for Growing
developed environmen growth in demand for
markets tal and developing recreational
fiscal markets (Asia vehicles
pressure in , Latin +-
Europe America)
Main strengths
 Product range + ++ +++ 6
 Capacity for innovation ++ + + 4
 Formula one image + + + 3
Main weaknesses
 Sales concentrated in Europe --- -- -- 7

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  Small size compared with -- - 3
main competitors
 Poor performance in the top
–of-the-range sector - - 2
+ 4 0 4 5
- 6 2 3 1

Table 4. 4 Exploring Corporate Strategy

Summary
 Strategic capability is about the ability to provide products or services with features
that are valued by customers. Competitive advantage will be achieved by organizations
that are able to do this better than their competitors in ways that are difficult to imitate.
 Understanding what customers value – or might value in the future – is important.
This includes customers’ thresholds requirements – which must be met by every
potential provider. Even these are changing, and becoming more demanding over time.
It also includes critical success factors – those factors that customers particularly value
and, therefore, where and organization must excel to outperform competition.
 Strategic capability starts with resources. A lack of the threshold level of resources
will preclude organizations from servicing particular markets. Some resources may be
unique to an organization and be the basis of competitive advantage.
 Resources are important because they nee to be ‘deployed’ into the activities that an
organization undertakes in order to create competence in those activities. Organization
must reach a threshold level of competence in all activities to stay in business and this
threshold ‘standard’ rises with time.
 Some activities or processes may be core competences that underpin an
organization’s competitive advantage. To achieve this, an activity or process must
satisfy three criteria. First, it fundamentally contributes to value for money in the
product, in the eyes of the customers; second, it must be performed better than
competitors; and third, it must be relatively difficult to imitate.
 Delivering value for many requires the management of both cost and product
features. There are several sources of potential advantage on each of these factors.

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 Value for many is also determined by activities that are undertaken outside an
organization – in the value chain (or supplies or channels). Competence is needed in
managing these linkages in the value chain.
 What customer’s value will change with time, so core competences will be eroded.
However, there may be opportunities to exploit core competences in new markets or
new arenas.
 It is important to understand in the performance standards that need to be achieved to
outperform competitors. This can be done by bench marketing – but this must not be
done in a narrow or parochial way.
 There may be several reasons why competences might be robust (difficult to imitate).
For example, rarity, complexity, uncertainty as to how and why advantage is gained or
because competence is embedded in the organizational culture
CHAPTER FIVE
STRATEGY AND COMPETITIVE ADVANTAGE
Contents of the unit
5.1 Introduction
5.2 Sustaining Low Price Advantage
5.3 Competitive Advantages
5.4 Improving Competitive Advantage

5.1. Introduction
In developing strategy, it is in any case dangerous to assume a direct link between relative
market share advantage and sustainable advantage in the market because there is little
evidence of sustainability; dominant firms lose market share and others overtake them.
5.2 Sustaining Low Price Advantage
It was earlier that achieving and sustaining completive advantage through low price is
dependents on low cost but that is difficult to sustain, so, how might it be achieved and what
are the problems?
 The most ambitious aim is for an organization to seek to sustain reduced prices over
competition on the basis of having the lowest cost base such that competitors cannot

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 hope to emulate it – of being a cost leader and being prepared to sustain and win a price
battle if necessary. The likelihood is that it needs to be very substantial.
 Porter actually defines cost leadership as ‘the low-cost producer in is industry … a
low – cost producer must find and exploit all sources of cost advantage’. So here the
concern is with cost advantages through organizationally specific competences driving
down cost throughout the value chain.

5.3 Competitive Advantages

Categories of Competitive Advantage
There are many kinds of competitive advantage, and they can be divided into two categories:
advantages based on the firm's position and advantages based on the firm's capabilities.

I. Positional based advantages

A firm can have many specific kinds of positional advantage, but any positional advantage
takes one of three main forms:
 Positional advantage from an attractive industry structure. Sometimes all the
firms in an industry benefit from the industry's structure.
 Positional advantage from heterogeneity within the industry. Often positions
within an industry create advantage for the firms occupying them.
 Positional advantage from a network of relationships. A firm may derive
positional advantage from its relationships with buyers, suppliers, or competitors.

Examples of positional advantage

There are many specific positional advantages, some of which can easily be assigned to one
category. Others, however, are more complex and are derived from more than one category.
 Brand name: a firm with a widely recognized and appreciated brand name has
positional advantage over other firms in its industry whose brands are weaker.
 Customer relationships: A firm with an established reputation for "fair dealing" has
a positional advantage over competitors whose customers are concerned about
opportunistic behavior.

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  Government protection and support: A firm can derive positional advantage from
government intervention in many ways. For example, a firm may gain advantage
from being the sole domestic producer in a country where the government's
commercial policies favor domestic firms.
 Status: Investment banks that compete with one another to underwrite commercial
debt issues can gain positional advantage from their status within the banking
community.
 Distribution channels: A firm may have a dominant position with the major firms in
its distribution channels. Procter and Gamble makes many leading consumer
products that are sold through supermarkets.
 Geographic incumbency: Sometimes the geographic location of a firm is a source
of advantage, Wal-Mart, for example, was the first mass merchant to locate its outlets
in small towns.
 Installed base and de facto standards: In markets where product compatibility is
important, firms with a large installed base have a positional advantage
 Gatekeepers in the flow of goods or information: Sometimes a firm gains
positional advantage from controlling a key connection between other firms or
consumers. Form example; consider the owner of the only bridges across a river.

II. Capabilities based advantage

Firms, like individuals, differ in their abilities. Consider a firm's ability to manufacture
products at low cost. Some might be able to do this because they have special access to low-
cost inputs, such as raw materials or labor, or because they are the favored recipients of
government subsidies. These firms' low costs are due to positional advantages. Other firms,
however, are low-cost producers because they have learned how to combine their inputs
more efficiently than do other firms.

Elements Sustainable Competitive

We should note that competitive advantage is not necessarily enduring: A firm's competitive
advantages may erode over time. For example, once outsiders recognize that its capabilities
earn Global Capabilities superior returns, existing rivals or new entrants will attempt to

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understand and reproduce those capabilities, or find new miniaturization and design-for-
manufacturing techniques that give them competitive advantage over Global Capabilities.

Durability is the rate at which a firm's underlying resources and capabilities (core
competencies) depreciate or become obsolete. New technology can make company's score
competency absolute or irrelevant. For example, Intel's skills in using basic technology
developed by others to manufacture and market quality microprocessors was a crucial
capability until management realized that the firm has taken current technology as far as
possible with the Pentium chip. Without basic R&D of its own, it would slowly lose its
competitive advantage to others

Transparency is the speed with which other firms can understand the relationship of
resources and capabilities supporting a successful firm's strategy. For example, Gillette has
always supported its dominance in the marketing of razors with excellent R&D. a competitor
could never understand how the Sensor or Mach 3 razor was produced simply by taking one
apart.
Immutability is the rate at which a firm's underlying resources and capabilities (core
competencies) can be duplicated by others. To the extent that a firm's distinctive competency
gives imitate that set of skills and capabilities. Competitors' efforts may range form reverse
engineering (taking a part a competitor's product in order to find out how it works), to hiring
employees from the competitors, to outright patent infringement
Transferability is the ability of competitors to gather the resources and capabilities
necessary to support a competitive challenge. For example, it may be very difficult for a
wine maker to duplicate a French winery's resources of land and climate, especially if the
imitator is located in Iowa.

Explicability is the ability of competitors to use duplicated resources and capabilities to

imitate the other firm's success. For example, even though many companies have tried to
imitate Procter and Gamble's success with brand management by hiring brand mangers away
form P and G, they have often failed to duplicate P and G's success.

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Resources must not be easy to imitate if they are to have competitive advantage. Although
many resources can eventually be copied, such a process can be delayed by a number of
devices:
o Tangible uniqueness- some form of specific differentiation, such as a branding
of a specific geographic location or patent protection, will delay limitability.
o Causal ambiguity. It may not be obvious to competitors what causes a resource
to contain its competitive edge. There may be some complex organizational
processes that have taken years to develop that are difficult for outside
companies to learn or acquire.

Investment deterrence. When the market has limited or unknown growth prospects and it is

difficult to make a small initial investment, a substantial investment by the organization in

the new strategy may well deter competitors form entering the market.

 Prior or acquired resources. Value creation is more likely but it is a major starting
point. Starting point. Moreover, building on existing strengths wall exploit any real
uniqueness that has been built as a result of the organizations history bad investment over
maybe years- economists call this path dependency it may be vary difficult for
competitors to develop the same complex resources.
Furthermore, the following elements could be additional elements of resource-based
sustainable competitive advantage
 Innovative capabilities. Some organizations are better able to innovate than others.
Innovation is important because it is particularly likely to deliver area breakthrough in
competitive advantage that others will have difficulty in matching for a lengthy period..
 Truly competitive. It is essential that any resource delivers true advantage over the
competition. Emphasizes that identifying the resource, as being a real strength is not
enough: the resource must be comparatively better than competition..
 Substitutability. Resources are more likely to be competitive if they cannot be
substituted. Sometimes unique resources can be replaced by totally new alternatives.

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 Appropriability. Resources must deliver the results of their advantage to the individual
company and not be forced to distribute at least part of it to others. Just because a
resource has competitive advantage does not necessarily mean that its benefits will come
to the owners. They could be forced to give up some profits to others by the bargaining
power of the various stakeholders of the organization customers, employees, suppliers
and so on.

5.4 Improving Competitive Advantage

After analyzing resources, organizations often find that they have few assets that are truly
competitive. This is quite normal since most organizations will consist of a range of
resources, many being similar to competitors with just a few being exceptional. In this
context, the long lists of "core competencies' seen in some analyses suggest that the compiler
has not been sufficiently rigorous rather than that the company is multitalented. Regardless
of length, the identification of the truly competitive resources based only on the analysis
undertaken so far in this chapter may be misleading. The reason is that the approach so far
has been largely static:
 The analysis of value added represents the picture at a point in time;
 The identification of the seven elements of RBV is usually based on current
resources.
Any enhancement of value added and competitive advantage will come about through a
course of action over time. It is convenient and relevant to consider three elements now:
1. Benchmarking
2. Exploiting existing resources-leveraging
3. Upgrading resources

1. Benchmarking

One approach to the task of assessing the comparative performance of parts of an

organization is benchmarking - the comparison of practice with other organizations in order
to identify areas for improvement. Such practice does not necessarily have to be with
another organization in the same industry. The comparison simply has to be with another

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whose practices are recognized as being a leader in that particular aspect of the task or
function.

2. Exploiting Existing Resources-Leveraging

In any organization, it is essential to exploit its existing resources to the full - this is
sometimes called learning resources. For example, for many years after Walt Disney died,
his film company continued to make good films but made no attempt to exploit the many
characters in any other medium. It took the arrival of Michael Eisner at the head of Disney
in the 1980s to exploit the Disney resources an move the company into hotels, brand
merchandising and publishing. More generally, existing resources can be exploited in five
areas:

1. Concentration - Focusing resources on the key objectives of the organization and

targeting, in particular, those that will have the largest influence on value added
2 Conservation- using every part of the resource, perhaps recycling where possible,
with the aim of exploiting every aspect available to the organization.
3 Accumulation- digging deep into the resources of the organization to discover
every scrap old accumulated knowledge and skill coupled with the acquisition of
outside skills and expertise , where appropriate.
4 Complementarily- analyzing resources from the perspective of blending new
elements together, such as marketing and operations, and supporting stronger
elements so that that do not suffer from weaknesses elsewhere in the organization.
5 Recovery– ensuring that resources generate cash quickly where possible, thus
achieving the full benefit of new and existing resources sooner rather than later.

3. Upgrading Resources
Unfortunately the results of a competitive analysis may show that an organization has little or
no competitive advantage although it continues to add some value to its inputs this situation
is common in some industries, such as those involved with commodity products where there
is little differentiation between products are three main ways to respond:

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 a. Add resources to support an existing product or service area. Some organizations
have trod to brand their commodities- for example, Intel Corporation with inlet inside
and its Pentium computer chip. A programmer of product develop-mint would also be
relevant here.
b. Enhance directly the reserves that are threatened by competition. This could be
done by baying net more cost-efficient machinery or negotiating anew joint venture -
for example, the 1998 merger that formed Daimler Chrysler has transformed
(potentially at least) thee resources of two medium-sized car companies into global
player.
c. Add complementary resources that wall take the organization beyond its current
competition. Sometimes the industry wall remain unattractive and it may be better to
develop resources that will eventually allow the organization to move beyond its
current competitors.
Upgrading resources raises the whole issue of how an organization moves forward over time
with regard to the resources at its disposal, the purpose of the organization and the moves by
its competitors.
Summary
Competitive advantage is the ability to do something that competitors can not do or at least
do nearly as well. Competitive advantage is based on the firm’s position and capabilities.
Competitive advantage may erode over time. Competitive advantage to be sustainable should
resist competition
CHAPTER SIX
STRATEGIC EVALUATION AND IMPLEMENTATION

Contents
6.1 Introduction
6.2 Strategic Evaluation
6.3 The Process of Evaluating Strategies
6.4 Measuring Organizational Performance
6.5 Strategic Implementation
6.6 Communication of Strategy as a Tool For Implementing Strategy
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 6.7. Resources Allocation and Strategy
6.8 Strategic Control
6.1 Introductions
The development of strategic plan does not end by deciding what strategy or strategies to
pursue. There must be a translation of strategic decisions into strategic action. Strategic
implementation effort requires understanding and commitment of all level managers the
impact of the implementation affects an organization from top to bottom.

6.2 Strategic Evaluation

The starting point: current strategy
Even though, analysis may show the ability of the present strategy, a different strategy may
be required in some circumstance to seize a new opportunity created by change in a firm’s
environment.

Identify the present strategy

Identifying the present strategy is often difficult. The strategy may be only implied and not
articulated or articulated but not adhered to or worse may not even seem to exist. If
management has stated little or nothing to identify objectives or policies the strategy must be
assumed from actual events.

Areas for analysis

Identifying the strategy of an ongoing institution requires analysis of both internal and
external factors
a. mission and other strategic objectives
b. product – markets consideration
c. plant and operation facilities
d. financial considerations
e. human resource consideration

These factors must be assessed in the context of the firm, its management and its
environment.
Mission and other strategic objectives

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Some organizations operate without either implied or explicitly stated objectives. The
mission of the organization should be identified first, for all other elements of the strategy it
should emanate from the bedrock of aspirations.

Basic objectives should be identified in the areas of:

 Financial target
 Growth or survival and
 Social contribution

Product – market consideration: since an organization’s strategy is so involved with

product, market and consumers, its present product – market policy must be identified.

The company should assess its product line and determine why consumers are buying its
products rather than competitors.

Plant and operating facilities

This includes plant and other operational facilities and the production process. The firms
technological approach is another key consideration. There must all be recognized and
related to each other by the analyst when identifying the strategy.

Financial considerations
The financial area and financial implication of strategy are usually observed more readily
than those in any other area. The policy guiding, Capital investment, Cash level, Current
ratio, Be it – equity ratio, and the like.

Human resources
Policy must be formulated for both management and labor. In order to integrate these
important resources into the overall corporate strategy, questions that should be answered
are:
 If various skills are required?
 Has the company sought appropriate people in sufficient number?
 Is the quality of the work force consistent with other needs in the firms?
 Are the firm’s resources in the sales and other areas consistent with the quality
product’s setting requirement?

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6.3 The Process of Evaluating Strategies
Strategic evaluation is necessary for all sizes and kinds of organizations.
 Strategy evaluation would initiate managerial questioning of expectations and
assumptions, should trigger a review of objectives and values, and should stimulate
creativity in generating alternatives and formulating criteria of evaluation.
 Regardless of the size of the organization, a certain amount of management y
wondering annual at all levels is essential to effective strategy evaluation. Strategy-
evaluation activities should be performed on a continuing basis rather than at the end
of specified periods of time or just after problems occur.
 Evaluating strategies on a continuous rather than a periodic basis allows benchmarks
of progress to be established and more effectively monitored. Some strategies take
years to implement: consequently, associated results may not become apparent for
years.
 Successful strategists combine patience with a willingness to take corrective actions
promptly when necessary that strategy-evaluation actives would be conducted more
frequently as environmental complexity and instability increase
 Top mangers in dynamic environments performed strategy evaluation activities less
frequently, than those in stable environments. Lindsay and Rue concluded that
forecasting is more difficult under complex and unstable environmental conditions.
Strategy-evaluation activities in terms of key questions that should be addressed, alternative
answers to those questions, and appropriate actions for an organization to take. Notice that
corrective actions are almost always needed except when:
(1) External and internal factors have not significantly changed and
(2) The firm is progressing satisfactorily toward achieving stated objectives.

Reviewing the underlying bases of an organization's strategy could be approached by

developing a revised.

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Strategic revision should indicate how effective a firm's strategies have been in response to
key opportunities and threats. This analysis could also address such questions as the
following:
1. How have competitors reacted to our strategies?
2. How have competitors' strategies changed?
3. Have major competitors' strengths and weaknesses changed?
4. Why are some competitors' strengths and weaknesses changes?
5. Why are some competitors' strategies more successful than others?
6. How satisfied are our competitors with their present market positions and
profitability?
7. How far can our major competitors be pushed before retaliating?
8. How could we more effectively cooperate with our competitors?
Numerous external and internal factors can prohibit firms form achieving long-term and
annual objectives. Externally, actions by competitors, changes in demand, changes in
technology, economic changes, demographic shifts, and governmental actions may prohibit
objectives from being accomplished. Internally, ineffective strategies may have been chosen
or implementation activities may have been poor. Objectives may have been too optimistic.
Thus, failure to achieve objectives may not be the result of unsatisfactory work by mangers
and employees.

External opportunities and threats and internal strengths and weaknesses that represent the
bases of current strategies should continually be monitored for change. It is not really a
question of whether these factors will change but rather when they will change and in what
ways.

Some key questions to address in evaluating strategies are given here.

1. Are our internal strengths still strengths?
2. Have we added other internal strengths? Is so, what are they?
3. Are our internal weaknesses still weaknesses?
4. Do we now have other internal weaknesses? If so, what are they?
5. Are our external opportunities still opportunities?
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 6. Are there now other external opportunities? If so, what are they?
7. Are our external threats still threats?
8. Are there now other external threats? If so, what are they?
9. Are we vulnerable to a hostile takeover?

6.4 Measuring Organizational Performance

Another important strategy-evaluation activity is measuring organizational performance. This

activity includes comparing expected results to actual results, investigating deviations from
plans, evaluating individual performance, and examining progress being made toward
meeting stated objectives. Both long-term and annual objectives are commonly used in this
process. Criteria for evaluating strategies should be measurable and easily verifiable.
Quantitative criteria commonly used to evaluate strategies are financial ratios, which
strategists use to make three critical comparisons:
(1) comparing the firm’s performance over different time periods
(2) comparing the firm’s performance to competitors, and
(3) Comparing the firm’s performance to industry averages. Some key financial ratios
that are particularly useful as criteria for strategy evaluation are as follows:
1. Return on investment 5. Debt to equity
2. Return on equity 6. Earnings per share
3. Profit margin 7. Sales growth
4. Market share 8. Asset growth

Deriving quantitative criteria. For these and other reasons, qualitative criteria are also
important in evaluating strategies. Human factors such as high absenteeism and turnover
rates. Poor production quality and quantity rates, or low employee satisfaction can be un
darling causes of declining performance. Seymour Tilles identified six qualitative questions
that are useful in evaluating strategies:

1. Is the strategy internally consistent?

2. Is the strategy consistent with the environment
3. Is the strategy appropriate in view of available resources?

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 4. Does the strategy involve an acceptable degree of risk?
5. Does the strategy have an appropriate time framework?
6. Is the strategy workable

Some additional key questions that reveal the need for qualitative or intuitive judgments in
strategy evaluation are as follows:

1. How good is the firm's balance of investments between high-risk and low-risk
projects?
2. How good is the firm's balance of investments between long-term and short-term
projects?
3. How good is the firm's balance of investments between slow growing markets and
fast-growing market?
4. How good is the firm's balance of investments among different divisions?
5. To what extent are the firm's alternative strategies socially responsible?
6. What are the relationships among the firm's key internal and external strategic
factors?
7. How major competitors are likely opt respond to particular strategies?

Evaluation criteria
The first job of the analyst is to identify current objective; policies and plans and to describe
them as fully and accurately as possible.

A determination of “WHY” the current strategy was followed allows the analyst to focus on
resource or environment changes that may call for altering it or it may indicate that
conductions remain stable enough to retain the strategy.

a) Value of managers and owners

The current strategy may well lie in the background; need; desire and value of the owners or
managers (or whoever has formulate the strategic direction of the organization. An
evaluation of the managers of company. Would have be inadequate without focusing on the
value of central management the company founders or owners. .

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Personal, managerial and owner characteristics and their influence on strategy are often
obvious, in smaller companies. In large companies; depending on the amount of actual
control in hands of care or few individuals can influence the strategy and may act in
accordance with their own personal needs and values.

b) Market Opportunity
A second reason for a particular strategy may be that an organization is taking advantage of a
selected opportunity in the environment. A major reason for adopting strategy is in response
to or integration of such changes.

However, changes in environment destroy time opportunities and create another. Some more
opportunities have developed because of changes in the technical and other environmental.
c) Organizational competence
The rationale for a current strategy may have stemmed from taking advantage of a special
competence or resource within the organization. An organization might use its managerial or
technical strength to identify opportunities.
The distinct competence of an organization may be found in its ability to trade on its
reputation, trademark or image.

The danger of resource competence based strategy that the company might develop a product
that the market is not ready to accept.
d) Timing and risk
Time has been recognized as a critical ingredient in any personal or organizational strategy.

Being in the right place at the right time is synonymous with good "luck" in the eye of some
people. Timing however should be an explicit part of any strategy.

Risk is a corollary of timing. Being first with a new product or investing too heavily early in
a product’s life cycle may very risky. But if risk is managed properly and is combined with
timing as true element of strategy, it may be used to advantage.

6.5 Strategic Implementation

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Strategy implementation is the sum total of the activities and choices required for the
execution of a strategic plan. It is the process by which strategies and policies are put into
action through the development of programs, budgets, and procedures. This process might
involve changes within the overall culture, structure, and / or management system of the
entire organization. Except when such drastic corporate – wide changes are needed, however,
the implementation of strategy is typically conducted by middle and lower level managers
with review by top management. Sometimes referred to as operational planning, strategy
implementation often involves day – to – day decisions in resource allocation.

To begin the implementation process, strategy makers must consider these questions:
 Who are the people who will carry out the strategic plan?
 What must be done to align the company’s operations in the new intended direction?
 How is everyone going to work together to do what is needed?

These questions and similar ones should have been addressed initially when the pros and
cons of strategic alternatives were analyzed. They must also be addressed again before
appropriate implementation plans can be made. Unless top management can answer these
basic questions satisfactorily, even the best planned strategy is unlikely to provide the desired
outcome.

A survey revealed that over half of the corporations experienced the following problems
when they attempted to implement a strategic change. These problems are listed in order of
frequency.
 Implementation took more time than originally planned
 Unanticipated major problems arose
 Activities were ineffectively coordinated
 Competing activities and crises took attention away from implementation
 The involved employees had insufficient capabilities to perform their jobs
 Lower – level employees were inadequately trained
 Uncontrollable external environmental factors created problems
 Departmental managers provided inadequate leadership and direction
 Key implementation tasks and activities were poorly defined
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  The information system inadequately monitored activities

The basic concerns that must be addressed when attempting to implement new strategies or
to improve the implementation of current strategies are:
1) The strategies and their requirements must be communicated and clearly defined
for all affected employees;
2) All affected employees must receive the management and organization support
necessary to implement the strategies; and
3) The corporate and business unit strategies must be translated into annual
objectives and functional strategies.
6.6 Communication of Strategy as a Tool for Implementing Strategy
The factors that affect the desirability of using direct communication of strategy as a tool of
implementation are:
o Proprietary nature of the strategy: If the strategy will divulge proprietary
information, it should be shared only on a need-to-know basis.
o Political impact of the strategy: Strategy communication that sparks infighting will
hinder implementation more than it will help.
o Expectations raised by the strategy: Communication of strategy should be
preceded by consideration of the expectations and resulting responses by stakeholders
that may be generated.
o Motivational impact of the strategy: If communicating strategy is more likely to
reduce morale or drive away good managers than to inspire action, a comprehensive
strategy announcement is usually undesirable.
o Decisional impact of the strategy: Before top management announces a strategy,
the managers should be certain that closure of the formulation phase is desired.
A. Structure Follows Strategy
Structure follows strategy- that is, changed in corporate strategy lead to changes in
organizational structure. It is concluded that Organizations follow a pattern of development
from 1 kind of structural arrangement to another as they expand. According to Chandler,
these structural changes occur because the old structure, having been pushed too far, has
caused inefficiencies that have become too obviously detrimental to bear. Chandler,
therefore, proposed the following as the sequence of what occurs:

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 1. New strategy is created.
2. New administrative problems emerge
3. Economic performance deadlines.
4. New appropriate structure is invented
5. Profit returns to its previous level.

Research generally proposition that structure follows strategy (as well as the reverse
proposition that structure influences strategy). As mentioned earlier, changes in the
environment tend to be reflected in changes in a corporation's strategy, thus leading to
changes in a corporation's structure. Strategy, structure, and the environment need to be
closely aligned; otherwise, organizational performance will likely suffer. For example, a
business unit following a differentiation strategy needs more freedom form headquarters to
be successful than does another unit following a low cost strategy.

The five basic types of organizational structures are functional, geographic, division,
strategic business unit (SBU), and matrix. Organization should assess the appropriateness of
its structure.

Three points at which the management of an organization should assess the appropriateness
of its structure are whenever:-
(1) The organization is introducing a new strategy or making major adjustments to
its strategy,
(2) The organization is having problems achieving its objectives, or
(3) Leadership changes, such as with retirements, resignations, or termination.

Guidelines for designing effective organizational structures.

Four general guides for designing effective organizational structures include:
o A single-product organization or an organization with a single dominant business
should normally use a functional structure.
o An organization with regional, national, or international locations should normally
use some type of geographical structure.

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 o An organization with a manageable number of related lines of business should
normally use a divisional structure.
o An organization with several unrelated lines of business should normally be
organized into strategic business units.

B. Matching Policies with strategies

Policies serve numerous purposes in organizations. They provide definite guidelines to
follow and communication channels between organizational units. They ensure that the
different elements within the organization are all operating within the same boundaries and
foster individual initiative and eliminate the need to reanalyze certain situations each time
they arise.

Changes in a firm’s strategic direction do not occur automatically. On a day-to-day basis,

policies are needed to make a strategy work. Policies facilitate solving recurring problems
and guide the implementation of strategy. Broadly defined, policy refers to specific
guidelines, methods, procedures, rules, forms, and administrative practices established to
support and encourage work toward stated goals. Policies are instruments for strategy
implementation. Policies set boundaries, constraints, and limits on the kinds of administrative
actions that can be taken to reward and sanction behavior; they clarify what can and cannot
be done in pursuit of an organization’s objectives. For example, Carnival’s new paradise ship
launched in the fall 1998 has a no-smoking policy anywhere, anytime aboard ship. It is the
first cruise hip to comprehensively ban smoking. Another example of corporate policy relates
to surfing the web while at work. About 40 percent of companies today do not have a formal
policy preventing employees from surfing the Internet, but software is being marketed now
that allows firms to monitor how, when, where, and how long various employees use the
internet at work.

The managers of division and functional areas work with their fellow managers to develop
programs, budgets, and procedures for the implementation of strategy. They also work to
achieve synergy among the divisions and functional areas in order to establish and maintain a
company’s distinctive competence.

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Strategy implementation is composed of establishing programs to create a series of new
organizational activities, budges to allocate funds to the new activities, and procedures to
handle the day – to – day details.

(i) Programs
A program is a statement of the activities or steps needed to accomplish a single – use plan.
It makes the strategy action oriented. It may involve restructuring the corporation, changing
the company’s internal culture, or beginning a new research effort. For example, consider
Intel Corporation, the microprocessor manufacturer, realizing that Intel would not be able to
continue its corporate growth strategy without the continuous development of new
generations of microprocessors, management decided to implement a series of programs:
 They formed an alliance with Hewlett – Packard to develop the successor to the
Pentium Pro chip.
 They assembled an elite team of engineers and scientists to do long – term, original
research into computer chip design.

The purpose of a program is to make the strategy action – oriented. For example, PepsiCo
recently made a strategic decision to grow in areas where the company could dominate.
Instead of competing with Coca – Cola in every market, PepsiCo decided to concentrate on
supermarkets where Pepsi had its greatest sales.

Budgets
A budget is a statement of a corporation’s programs in terms of Birrs. Used in planning and
control, a budget lists the detailed cost of each program. Many corporations demand a certain
percentage return on investment, often called a “hurdle rate,” before management will
approve a new program. This ensures that the new program will significantly add to the
corporation’s profit performance and thus build shareholder value. The budget thus not only
serves as a detailed plan of the new strategy in action, but also specifies through pro forma
financial statements the expected impact on the firm’s financial future.

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(iii) Procedures
Procedures, sometimes termed Standard Operating Procedures (SOP), are a system of
sequential steps or techniques that describe in detail how a particular task or job is to be
done. They typically detail the various activities that must be carried out in order to complete
the corporation’s programs. For example an Airlines used various procedures to cut costs. To
reduce the number of employees, the airline asked technical experts in hydraulics, metal
working, avionics, and other trades to design cross – functional work teams..

Distinguish between procedures and rules

A procedure is a series of related steps or tasks expressed in chronological order to achieve a
specific purpose. Procedures specify in step-by-step fashion the manner in which a recurring
activity must be accomplished. Rules require that specific and define actions be taken or not
taken with respect to a given situation. Rules leave little doubt about what to do.
(C) Annual Objectives
Establishing annual objectives is a decentralized activity that directly involves all managers
in an organization. Active participation in establishing annual objectives can lead to
acceptance and commitment.
Annual objectives are essential for strategy implementation because they
(1) represent the basis for allocating resources:
(2) Are a primary mechanism for evaluating mangers?
(3) are the major instrument for monitoring progress toward achieving long-
term objectives: and
(4) Establish organizational, divisional, and departmental priorities.
Considerable time and effort should be devoted to ensuring that annual
objectives are well conceived. Consistent with long-term objectives, and
supportive of strategies to be implemented. Approving, revising, or rejecting
annual objectives is much more than a rubber stamp activity.

Clear stated and communicated objectives are critical to success in all types and sizes of
firms. Annual objectives, stated in terms of profitability, growth, and market share by
business segment, geographic area, customer groups, and product are common in
organizations. Company could establish annual objectives based on long-term objectives.
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Objectives should be consistent across hierarchical levels and form a network of supportive
aims. Horizontal consistency of objectives is as important as vertical consistency. For
instance, it would not be effective for manufacturing to achieve more than its annual
objectives of units produced if marketing could not sell the additional units.

D. Matching organizational leaders with strategy

Many contend that, without a linkage between manager selection and strategy, an
organization risks either sacrificing a well-planned strategy to a manager who is ill suited to
implement it or hiring a key manager without a clear rationale for that particular choice. The
assumption here is that the style of managers can and does influence their effectiveness in
carrying out particular strategies. On the other hand, matching managerial style to an
organization's unique situation is a most difficult and challenging task. It is apparent,
however, that certain organizational cultures and strategies are better suited for certain styles
of leadership.

A critical ingredient in strategy implementation is the skills and abilities of the organization’s
leaders. A leader is an individual who is able to influence the attitudes and opinions of others.
Unfortunately, too many senior managers are merely able to influence employee actions an
decisions. Leadership is not a synonym for management; it is a higher order of capability.

Organizational leadership-the ability to influence the attitudes and opinions of others in order
to achieve a coordinated effort from a diverse group of employees- is a difficult task.
However, one of the key methods available to management is creating an overall sense of
direction and purpose through effective strategic planning.

E. Matching culture to strategy

The concept of organizational culture and the necessity for an organization’s culture to be
compatible with its strategy. Because organizational culture is difficult to change, it is
important to consider events in the environment in relation to the organizational culture to
determine what responses may be feasible for a particular organization. The management
Analysis Center (MAC), a consulting group that specializes in corporate culture, has
developed a means for evaluating the risk associated with attempting to implement a new
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strategy within the existing culture. A planned change resulting from a while massive cultural
reorientation may be unreasonable in most situations, it is possible to strengthen, or fine-tune,
the culture. A statement of corporate mission, which is consistently reinforced by systems,
structures, and policies, is a useful tool for strengthening the culture. Special attention to
people who exhibit key values also spreads the message effectively.
MAC has developed and successfully used the following six-step process for changing
culture:
1. Start by having senior managers reexamine the company’s history, culture, and skills,
as well as the traits of the business they are in.
2. Have the CEO announce a vision of the new strategy and the shared values to make it
work. The CEO should then spread the gospel through speeches, memos, and
informal contracts.
3. Confront mismatches between present behavior patterns and those required by the
future strategy. This may entail designing new organizational incentives and controls
to encourage different behavior.
4. Have executives promulgate and reinforce the new values in everything they do.
5. Reshuffle power to elevate people who implement the new ways, including outsiders
hired mainly for their values.
6. Use levers of change, such as the budgeting process and internal public relations, to
keep people moving toward the desired behaviors.

F. Motivational system and strategy

The organizational reward system is one of the most effective motivational tools available to
organizations. The design and use of the organizational reward system reflects
management's attitude about performance and significantly influences the entire
organizational climate. Few things in an organization evoke as much emotion as the
organizational reward system. The way that management recognizes outstanding
performance-or fails to recognize it - sends signals throughout the organization about what is
desired and what it is worth to try to achieve it. These signals should support the overall
strategic direction of the firm.

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Non-monetary Rewards.
Status, recognition, and attention are highly prized by most individuals. They can be
conveyed in support of a strategy throughout the organization. Management is limited only
by its own creativity in devising these types of rewards. While formal rewards are often
distributed on a schedule that corresponds with accounting cycles, non-monetary rewards can
be given immediately to reinforce desired behavior.

Many other organizational factors influence the motivation level of employees. Ultimately,
the management team is the key element in determining the level of motivation in an
organization. Motivated employees are something that some organizations have, and many
others wish they had. However, motivated employees play a significant role in the successful
implementation of organizational strategy.

Encouraging employees to work hard toward the achievement of organizational objectives is

one of the most significant challenges for any management team. There is little doubt that
highly motivated employees can significantly increase the likelihood that organizational
strategies will be successfully implemented. In fact, one study on the relationship between
middle management and strategy implementation found that middle mangers could redirect,
delay, or even sabotage the implementation of a strategy that they believe compromises their
self-interest.

In most cases, the organizational reward system is one of the most effective motivational
tools available to organizations. The design and use of the organizational reward system
reflects management’s attitude about performance and significantly influences the entire
organizational climate. Few things in an organization evoke as much emotion as the
organizational reward system.

Organizational rewards include all types of rewards, both intrinsic and extrinsic, that are
received as a result of employment by the organization. Intrinsic rewards are internal to an
individual and are generally derived from involvement in certain activities or tasks. The
feelings of satisfaction and accomplishment that are derived from doing a job well are
examples of intrinsic rewards. On the other hand, extrinsic rewards are tangible rewards that
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are directly controlled and distributed by the organization. An employee’s pay and
hospitalization insurance are examples of extrinsic rewards.
Incentive pay plans attempt to tie pay to performance and are used by many organizations to
motivate employees to work toward organizational objectives. Unfortunately, most incentive
programs are designed only for top management. Lower levels of management and operative
employees do not normally participate. For pay to be and effective motivator in strategy
implementation, it should be tied to performance and used at all levels in the organization.

Two major problems seem to exist in the design of most management incentive pay
programs:
1. The plans are not coupled to the industry’s performance. Thus, managers may receive
a high reward for achieving a 15 percent growth rate while the industry is growing at
a rate of 25 percent.
2. The plans are one-dimensional. For example, if compensation is based solely on
return on assets, mangers may be tempted to eliminate assets or investments critical to
long-term growth.

Thus, incentive programs must be properly designed or they can actually work against
successful strategy implementation.
Some organizations, in an attempt to relate individual rewards to organization performance,
have designed stock option programs in which all employees can participate. This indirectly
ties individual rewards to organizational performance.

6.7. Resources Allocation and Strategy

Resource allocation is a central management activity that allows for strategy execution. In
organizations that do not use a strategic-management approach to decision making, resource
allocation is often based on political or personal factors. Strategic management enables
resources to be allocated according to priorities established by annual objectives. Nothing
could be more detrimental to strategic management and to organizational success than for
resources to be allocated in ways not consistent with priorities indicated by approved annual
objectives.

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The real value of any resource allocation program lies in the resulting accomplishment of an
organization’s objectives effective resource allocation does not guarantee successful strategy
implementation because programs, personnel, controls, and commitment must breathe life
into the resources provided. Strategic management itself is sometimes referred to as a
“resource allocation process.”
6.8 Strategic Control
Strategic control is concerned with tracking the strategy as it is being implemented, detecting
problems or changes in underlying premises, and making necessary adjustments.

Managers responsible for a strategy and its success are typically concerned with two sets of
questions.

o Are we moving in the proper direction? Are key things falling the place?
o How are we performing? Are we meeting objectives and schedules?

Measurement and control process

The measurement and control process ensures that the company is achieving what it set out
to accomplish. It compares performance with desired results and provides the feedback
necessary for management to evaluate results and take corrective action, as needed. This
process can be viewed as a five – step feedback model.
a. Determine what to measure. Top managers and operational managers need to
specify what implementation processes and results will be monitored and
evaluated. The processes and results must be capable of being measured in a
reasonably objective and consistent manner.
b. Establish standards of performance. Standards used to measure performance
are detailed expressions of strategic objectives. They are measures of acceptable
performance results. Each standard usually includes a tolerance range, which
defines acceptable deviations. Standards can be set not only for final output, but
also for intermediate stages of production output.
c. Measure actual performance. Measurements must be made at predetermined
times.

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 d. Compare actual performance with the standard. If actual performance results
are within the desired tolerance range, the measurement process stops here.
e. Take corrective action. If actual results fall outside the desired tolerance range,
action must be taken to correct the deviation. The following questions must be
answered:
i. is the deviation only a chance fluctuation?
ii. are the processes being carried out incorrectly?
iii. are the processes appropriate to the achievement of the desired standard?
action must be taken that will not only correct the deviation, but will also
prevent its happening again?
iv. who is the best person to take corrective action?

Measurement and control information consists of performance data and activity reports. If
undesired performance results because the strategic management processes were
inappropriately used, operational managers must know about it so that they can correct the
employee activity. Top management need not be involved. If, however, undesired
performance results from the processes themselves, top managers, as well as operational
managers, must know about it so that they can develop new implementation programs or
procedures. Evaluation and control information must be relevant to what is being monitored.
One of the obstacles to effective control is the difficulty in developing appropriate measures
of important activities and outputs.

Types of Controls
Controllers can be established to focus on actual performance results (output), the activities
that generate the performance (behavior), or on resources that are used in performance
(input).
Behavior controls specify how something is to be done through policies, rules, standard
operating procedures, and orders from a superior.
Output controls specify what is to be accomplished by focusing on the end result of the
behaviors through the use of objectives and performance targets or milestones.

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Input controls focus on resources, such as knowledge, skills, abilities, values, and motives
of employees.

1. Behavior, output, and input controls are not interchangeable. Behavior controls (such
as following company procedures, making sales calls to potential customers, and
getting to work on time) are most appropriate when performance results are hard to
measure but the cause – effect connection between activities and results is clear.
2. Output controls (such as sales quotas, specific cost reduction or profit objectives, and
surveys of customer satisfaction) are most appropriate when specific output measures
have been agreed on but the cause – effect connection between activities and results is
not clear.
3. Input controls (such as number of years of education and experience) are most
appropriate when output is difficult to measure and there is no clear cause – effect
relationship between behavior and performance (such as in college teaching).
Corporations following the strategy of conglomerate diversification tend to
emphasize output controls with their divisions and subsidiaries (presumably because
they are managed independently of each other); whereas, corporations following
concentric diversification use all three types of controls (presumably because synergy
is desired). Even if all 3 types of control are used, one or two of them may be
emphasized more than another depending on the circumstances. For example,
Muralidharan and Hamilton propose that as a multinational corporation moves
through its stages of development, its emphasis on control should shift from being
primarily output at first, to behavioral, and finally to input control.
Activity – based costing (ABC) is a new accounting method for allocating indirect and fixed
costs to individual products or product lines based on the value – added activities going into
that product. This accounting method is thus very useful in doing a value – chain analysis of
a firm’s activities for making outsourcing decisions. Traditional cost accounting, in contrast,
focuses on valuing a company’s inventory for financial reporting purposes. To obtain a unit’s
cost, cost accountants typically add direct labor to the cost of materials. Then they compute
overhead from rent to R&D expenses, based on the number of direct labor hours it takes to

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make a product. To obtain unit cost, they divide the total by the number of items made during
the period under consideration.

The four basic components of a strategic control

1. Premise control
Every strategy is based on assumed or predicted conditions. These assumptions or
predications are planning premises; a firm's strategy designed these predict conditions
premise control is designed to check.

What premise should be monitored?

o Environmental factors
o Industry factors

How are premise controls enacted?

o Key premise should be identified
o Premises should be recorded
o Responsibility for monitoring them should be assigned
o Emphasis should place on key success premise so as to avoid information over load
o Premises should be updated (new prediction) based on updated information
o Key areas within the company or aspects of the strategy that the predicted change
may significantly impact should be determined and initiated.

2. Implementation Control
The two basic types of implementation control are:
a) Monitoring strategic thrusts Two approaches are useful in enacting
implementation control focused on monitoring strategy trusts.
o To agree early in the planning processed on which thrusts or phases of those
thrusts, are critical factors in the success of the strategy or of that thrust
o To use stop (go assessments linked to a serious of meaningful thresholds
(time, cost, research development, success etc.) associated with particular
thrusts.

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 b) Milestone Reviews It involves a full-scale reassessment of the strategy and the
advisability of continuing or refusing the direction of the company.

3. Strategic Surveillance
It is designed to monitor a broad range of events inside and outside the company that are
likely to threaten the firm's strategy.

Strategic surveillance requires

o Identifying the firm's environmental sectors that should be monitored
o Collecting and analyzing the data, and interpreting the result
o Feeding the data into the control process and later identify threats to the company's
successful execution of the strategy.
iv. Special alert control
A special alert control is the need to thoroughly and often rapidly reconsider the firm's basic
strategy based on a sudden; unexpected event. This component serves as an early warning
signal of potential crises; which may affect the company or the implementation of the
strategy.

Why have strategic controls?

Companies small and large use strategic controls to accomplish the following:
a. Determine the accuracy of the assumptions on which the strategy has been
formulated
o Environmental forces such as markets Technology change rapidly managers
periodically need to ascertain the validity of their strategy
b. Determine that the chosen strategy is being implemented effectively on time, and
with in the constrains of available resources
o Control provide information on the progress of implementation
o It help answer questions
o Information helps to take corrective action
c. Ensure that the company is preferring according to plan and expectations.
o Defeat information about companies operation

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 o Provide data valid data that assures stakeholders
o Provide feedback to managers on their units performance
d. Generate data for evaluating executive performance and marking compensation
decide
o Source of information about executive performance
o The data helps to develop fair and motivating compensation package
o Currently board of directors are pressured to align the compensation package
of executives with record of market achievement
e. Enhance organizational learning
o As plans are put into act
o It allows managers to examine their response the new situations encounter
o Help to improve future strategic formulation
Summary
To implementation new strategies or to improve the implementation of current strategies, the
strategy and their requirement must be communicated and clearly defined for are affected
employee.

Strategic implementation is the sum total of the activities and choices required for the
execution of a strategic plan. People from all organizational level should involve in the
formulation and in the implementation of strategy.

Organization structure, organizational policy leadership style, organizational culture, rewards

system must be made to match the new strategy. The measurement and control of strategy
helps to ensure that the firms to achieve what it set out to accomplish. It measurer
performance using output, in put and behavior aspects.

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