INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF RWANDA CPA A1.1 STRATEGY & LEADERSHIP Study Manual 2nd edition February 2020, INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF RWANDA Advanced Level A1.1 STRATEGY & LEADERSHIP 2nd Edition February 2020 This Manual has been fully revised and updated in accordance with the current syllabus/ curriculum. It has been developed in consultation with experienced tutors and lecturers. © ICPAR All copy right reserved All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of ICPAR. Acknowledgement We wish to officially recognize all parties who contributed to revising and updating this Manual, Our thanks are extended to all tutors and lecturers from various training institutions who actively provided their input toward completion of this exercise and especially the Ministry of Finance and Economic Planning (MINECOFIN) through its PFM Basket Fund which supported financially the execution of this assignment Table Of Contents Units Title Page Introduction to the Course 6 1. Strategy process 9 Strategic Management and Operational Management 20 Perspectives on Strategy 22 The Marketing Dimension 22 The leadership and strategy leadership 48 2. The environment scanning and strategy position 53 Environmental Analysis 53 Assessing Strategic Capability 58 Measuring Stakeholder Expectations 63 3. Strategic choices 71 Corporate Level 71 Business Level 76 Strategy Development 83 4. Strategy implimentation and evaluation 87 Structure and Processes 87 Managing Key Enablers 95 Managing the Change Process 122 Understanding Groups and Teamwork 128 Organisational Communications 137 Project Management 143 Post stratgy evalution 150 5. Leading a strategy 152 The leaders in strategic thinking and decision-making 153 The leaders in strategic analysis 154 The leaders in setting direction 155 The leaders in strategy formulation and selection 155 The leaders in implementing strategy 157 Key Leadership actions for strategy implementation 157 Glossary 159 CPA EXAMINATION A1.1 Strategy & Leadership 5 STUDY MANUAL INTRODUCTION TO THE COURSE Stage: Advanced Level 1 SUBJECT TITLE: A1.1 STRATEGY & LEADER- SHIP Aim The aim of this subject is to provide students with the ability to contribute effectively to the strategic management of enterprises through the objective analysis of business situations, the critical evaluation of strategic options and the implementation of change programmes. Strategy & Leadership as an Integral Part of the Syllabus Strategy & Leadership integrates and expands the knowledge acquired in many of the subjects at the earlier examination stages. This subject provides a framework for future leaders to analyse, develop and implement strategies for entrepreneurial activities in both growing and established entities. Learning Outcomes On successful completion of this subject students should be able to: • Display a detailed understanding of strategic development, marketing and market place strategy. • Integrate and apply theories and concepts from strategic management and related disciplines effectively to solve business problems in complex and diverse situations. • Identify, develop and lead appropriate business strategies, in support of entrepreneurial activities and existing organisations (this will include the public sector). • Evaluate the importance of knowledge management in strategy implementation, and advise on the implementation of appropriate systems, processes and solutions. • Develop and promote a business case. • Initiate and lead complex projects successfully. • Communicate effectively to a variety of audiences. Syllabus: 1. Introduction to strategy and leadership • The Concept of Strategy: – Levels of strategy and planning. – Setting mission, aims, goals & objectives. – Matching strategy and structure. – The competitive environment. – Ethical, political & social considerations. • Strategic Management and Operational Management. • Perspectives on Strategy: – Deliberate and emergent strategy. • The Marketing Dimension: 6 A1.1 Strategy & Leadership CPA EXAMINATION STUDY MANUAL – Marketing management concepts. – Analysing marketing opportunities. – Market segmentation. – The marketing mix. – Strategic planning and marketing management. – Market place models. • The ledership and strategic leadership – Leadership – Strategic leadership – Leadership and strategic planning in the Baldrige Criteria – A Strategic Role for Leaders – Key Strategic Leadership Actions 2. The environment scanning and strategic position • Environmental Analysis: – The macro environment. – Industry/Sector analysis. – Market analysis. – Opportunities & threats. • Assessing Strategic Capability: – Critical success factors. – Assessing resources. • Measuring Stakeholder Expectations: – Corporate governance. – Stakeholder analysis. – Identifying stakeholder expectations. – Business ethics. – Cultural considerations. 3. The strategic formulation and choices • Corporate Level: – The role of the corporate centre: – Portfolio manager. – Corporate core competencies. – Manager. – Restructurer. – Synergy manager. – Parental developer – The Corporate Portfolio. – The Growth/Share Matrix. – The Directional Policy Matrix. – The Relatedness Matrix. – Corporate Diversification. • Business Level: – Bases of competitive advantage (Price, differentiation, etc.). – Sustaining competitive advantage. – Game theory. – Competition and collaboration. – Value Innovation. – Business ecosystems. – Business case development. – Supporting the entrepreneur & New Venture Creation. CPA EXAMINATION A1.1 Strategy & Leadership 7 STUDY MANUAL • Strategy Development: – Directions. – Methods. – Success criteria. 4. Strategy Implementation and evalution • Structure and Processes: – Organisation structure. – Planning & control systems (incl. ERP, Balanced Scorecard). – Market mechanisms. – Social/cultural process. • Managing Key Enablers: – People – H.R. Management. – Organisational Behaviour. – Leadership: – Culture change. – Knowledge creation. – Information & Technology: – Knowledge management. • Managing the Change Process. – Change management: – Analysing the change situation. – The nature of change. – Changing organisational culture. – Organisational communications. – Project management. – Project objective and scope. – Project teams, sponsors and responsibilities. – Project timeline and milestones. – Allocation of resources. – Critical path analysis. – Project reporting procedures. – Project evaluation • Post strategy evaluation 5. Leading a strategy – The role of leaders in strategic thinking and decision - making – The role leaders in strategic analysis – The role of leaders in setting direction – The role of leader in strategy formulation and selection – The role of leaders in implementing strategy 8 A1.1 Strategy & Leadership CPA EXAMINATION STUDY MANUAL Study Unit 1 Study Unit 1 Contents A The Concept of Strategy B Strategic Management and Operational Management C Perspectives on Strategy D The Marketing Dimension E The leadership and strategy leadership THE STRATEGY PROCESS A. THE CONCEPT OF STRATEGY Strategic management can be traced back to earliest civilisation where people began to organise themselves socially, politically and commercially. The term strategy is derived from the Greek ‘stratos – army ; agein – to lead’ where it was used to describe the preparation and conduct of military campaigns. There are numerous examples of great strategic leaders throughout history who won military campaigns based upon good strategic decisions. An army’s strategies are patterns of actions in which it engages. This also applies to business organisations. Until the advent of WW11 commerce was intrinsically linked to military/state power. Following WW11 many of the strategic thinking employed in the battlefield was used independently in the business environment to maintain or overcome competition. There is currently much debate among academics as to the relevance of planning in strategic management however it should be noted that strategic management is not a science but an art. There is rarely one right way, strategic management is about selecting the optimal solution for a particular situation. Strategy: A Definition Strategy: 1. a plan designed to achieve a particular long-term aim, 2. the skill of planning the movements of armies in a battle or war, Oxford Dictionary (2010). Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholders’ expectations, Johnson & Scholes (2005). In other words, strategy is about: • Where is the business trying to get to in the long-term (direction) • Which markets should a business compete in and what kind of activities are involved in such mar- kets? (markets; scope) • How can the business perform better than the competition in those markets? (advantage)? CPA EXAMINATION A1.1 Strategy & Leadership 9 STUDY MANUAL • What resources (skills, assets, finance, relationships, technical competence, facilities) are re- quired in order to be able to compete? (resources)? • What external, environmental factors affect the businesses’ ability to compete? (environment)? • What are the values and expectations of those who have power in and around the business? (stakeholders)