THURSDAY: 2 September 2021. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question.
PQR ENERGY (PQRE)
PQR Energy (PQRE) is a government agency (parastatal) in the energy sector. The parastatal recently adopted strategic planning practice with the first strategic plan being developed in the year 2019.
The board of directors had actually considered the possibility of developing a strategic plan in the year 2018 and had provided the leadership commitment needed to make strategic planning a reality. The efforts of developing the first strategic plan were led by the Chief Executive Officer (CEO) working with a 12 member strategic planning team, facilitated by an external consultant. Using the balanced scorecard approach, the planning team developed ten objectives. These objectives were spread across the four quadrants of the balanced scorecard and were formulated along the lines of profit making organisations.
For each of the developed objectives, one or more types of performance measures were identified for tracking success. In addition, for each strategic objective, strategies were identified whose accomplishment would lead to achieving the overall strategic objectives. Furthermore, for each identified target, the strategic plan identified specific initiatives to be undertaken to accomplish the target.
Once the organisation level strategic plan was approved by the Board, PQRE established a training division and constituted office teams made up of a cross section of managers and employees. Employees were trained on strategic planning and the use of the balanced scorecard model. All the agency’s scorecards were to be reviewed at least annually and updated as appropriate. Each of the scorecards was assigned a champion who would ensure implementation of the entire plan. Typically, the champion was the head of the organisational unit for which the balanced scorecard perspective was derived from. The framework was then cascaded to lower levels.
To track overall success, PQRE used performance measures for each objective and encouraged the use of more focused measures at each successive lower level of planning. Random surveys for both customers and employees conducted in the first few months showed that the results of the strategic planning activities were paying off in nearly all departments. The cost-benefit analysis, projects that all start-up costs of the strategic planning initiative will have been recovered a year before the end of the planning cycle primarily through process improvements to be brought about by the implementation of the strategic plan.
Towards the end of year 2020, a new Board assumed office with the responsibility of charting a strategic direction of the agency. The new Board assembled a new executive team. The Board however, decided to retain the strategic process and the senior management team closely associated with it during the tenure of the previous Board, even though it was considering altering strategic priorities going forward. This was expected to help provide a sense of continuity in an agency that was operating in a changed environment.
Having initiated its first strategic plan in 2019, the agency may not, like other experienced parastatals have all the elements in place. The parastatal presents a success story of hard work from dedicated people who are committed to achieving successful long-term outcomes. It relies primarily on action plans developed for individual strategic objectives and targets as a means of implementing strategic plans at each level of the organisation. PQRE places great importance on assigning individual managers to take the lead responsibility for implementing strategies and achieving strategic objectives. The performance measures for each strategic objective includes a mix of output and outcome indicators.
Training has been provided to managers regarding strategic planning, performance measurement and related elements of strategic management. The Board of PQRE has put in place a process for reviewing strategic agenda and environmental circumstances, refreshing relevant data collected both internally and externally and revalidating or upgrading the first strategic plan.
1. Identify four environmental obstacles that could pose special challenges to effective strategic planning at PQRE. (4 marks)
Propose how each of the identified obstacle in (a) (i) above could be addressed. (4 marks)
2. The Board of PQRE is planning to undertake a comprehensive review of the current strategic plan.
Advise the Board on the following:
The strategic role of managers at different levels in the organisation. (6 marks)
Six non-financial benefits for an organisation engaging in strategic management. (6 marks)
Five benefits of policies in enforcing strategy implementation. (5 marks)
Five principles of policy formulation which could determine the effectiveness of policies developed by PQRE in relation to strategy implementation. (5 marks)
Four roles of the Board in strategy development. (4 marks)
3. Identify six limitations of using the approach of strategic planning adopted by PQRE. (6 marks)
(Total: 40 marks)
1. Examine Henry Mintzbertg’s 5Ps of strategy. (5 marks)
2. Explain four internal factors which may influence an organisation’s mission statement. (4 marks)
3. Discuss six critical tasks that could determine successful implementation of a strategy in an organisation. (6 marks)
(Total: 15 marks)
1. With regard to strategic management, suggest five reasons why a company might use the Boston Consulting Group (BCG) matrix. (5 marks)
2. Explain five reasons for increased focus on continuous improvement by organisations. (5 marks)
3. Examine five ways of enhancing a learning culture in an organisation. (5 marks)
(Total: 15 marks)
1. With respect to environmental analysis, distinguish between “SWOT analysis” and “SOAR approach”. (10 marks)
2. Summarise five benefits of formulating clear strategic objectives. (5 marks)
(Total: 15 marks)
1. Strategic planning does not provide a ready to use prescription for success; instead, it takes the organisation through a journey and offers a framework for addressing questions and solving problems.
With reference to the above statement, enumerate eight pitfalls to avoid in the strategic planning process. (8 marks)
2. In most organisations, the transition from strategy formulation to strategy implementation requires a shift in responsibility from strategists to divisional and functional managers.
List seven management issues central to strategy implementation in a large organisation. (7 marks)
(Total: 15 marks)