Acknowledgement

First and for most,we would like to convey our best regards from the bottom of our heart to
those who have supported our group throughout the course of our research contributed toward
this thesis.with out them this thesis would definitenly not have been possible.
We would sincerely like to thank our instructor Abel A. on behalf of our group member for the
opportunity to pursue this project and for his guidance,patience and invaluable ideas that enables
this research to be successfully completed.
We also would like to thank those staffs at private companies like wegagen bank and yirgalem
construction PLC. Who allowed as to distribute the questionnaire among them and also collected
questionnaire.
Specially our group member kaleb zelalem he gives as more information about yirgalem
construction PLC. .
Finally we would also like to take this opportunity to thank our group members for their
continuous envolvement and encouragement for our study.

Abstract
Our thesis is based on wegagen bank Hawassa Branch for non-construction companies and
yirgalem construction PLC for construction how they implement strategic management through
organizational structure. We get important information from customer service supervisor branch
level. both company has strategies management system.
Wegagen bank has concept about it. Their strategy management is more focus man power
administration and employed education capacity building. The first advantages of strategy
management the bank procedure apply smoothly and the second progress of the bank any
direction. Their is no any difficulty to apply strategy management.
Wegagen Company employed good costumer. Handling by different circumstance. Like:-
internet banking with internet banking you can view your balance and recent Transaction
Go”paperless” and move money between your account. You financier are at your fingertips
The business environment can be defines as the sum of variable impacting on the
competitiveness and ultimate the survival and growth of a firm. Despite the experience of
construction and non-construction organization it is possible to turn strategic management in to
individual action. Necessary to produce a great business performance but it is not easy many
companies reputedly fail to truly to implement strategic management but most companies and
organization knows there business and the strategy require for success specially large once
struggle to translate the theory in to action plane that will enable the strategy to be success fully
implemented and sustained there are some leading edge methods for effective strategic corporate
implementation.

chapter one
Introduction
Research back ground
The construction industry is one of the key contributors to most economies. The importance of
the construction industry to the economy can be measured by its contribution to the gross
domestic product (GDP); its contribution to investment; and the volumeV of labour employed.
Internationally, the construction industry contribution to GDP is from 3% to 10%; typically
lower in developing countries and higher in developed countries.besides this non construction
companys has also agreat role on the development of one contry and contribution to GDP.
CHAPTER 2
LITERATURE REVIEW
This chapter reviews the different streams of strategic management theories. First, it explores
general strategic management concept and theories including different schools of thought in
strategy, it then focuses on theories and past research on strategy that is related to construction in
general and the Indonesian construction industry in particular. Finally, the chapter reviews those
theories that provide a theoretical foundation for the conceptual model to be constructed later in
this research.

2. 1 Strategy and Strategic Management Concepts

Since the 1980s, the field of strategic management has advanced dramatically in both the
theoretical domain and empirical research. It is now considered as an important field not only in
business, but also in other disciplines. Ansoff is believed to develop the term “strategic
management” (Mason, 1986), but the term was actually coined at a conference at Pittsburgh
University in 1977 (Lyles, 1990; Pettigrew, 2006). The conference renamed “business policy” to
“strategic management” and defines it in conjunction of Schendel and Hofer’s (1979, p.11)
definition as follows:
Strategic management is a process that deals with the entrepreneurial work of the organisation,
with organisational renewal and growth, and more particularly, with developing and utilising
strategy, which is to guide the organisation’s operations.
Before the Pittsburgh conference, Schendel and Hatten (1972) have proposed to change the name
of the field from “business policy” to “strategic management”.
According to Nag et al. (2007) , the field of strategic management deals with (a) the major
intended and emergent initiatives (b) taken by general managers on behalf of owners, (c)
involving utilisation of resources (d) to enhance the performance (e) of the firms (f) in their
external environments. Hence, these six elements make up the consensual definition of the
strategic management field.
The first element of definition refers to relatively deliberate, planned and emergent initiatives
that occur in a firm. The second element reflects the key actors within the firm such as managers,
directors, and owners. The third definitional element represents usage of the resources and its
link to the firm’s environment. The fourth element refers to the main objectives or outcomes of
the firm. The fifth definitional element reflects the focal unit of analysis of strategic
management. The last element refers to the immediate environment of the firm.
In order to best understand the central arguments of the concept, it is helpful to look at the
history of the strategic management field. Hitt et al. (2004) suggest that derivation of the field of
strategic management can be traced back to several different dates e.g. 1980, 1978, 1962, and
320BC. The year of 1980 was a determining year because it marked the publication of Porter’s
book of “Competitive Strategy” (1980), as well as the initiation of the Strategic Management
Society. Hofer and Schendel’s (1978) published “Strategy Formulation” which became the first
textbook for the field. Alfred Chandler’s “Strategy and Structure” (1962) and Igor Ansoffs
“Corporate Strategy” (1965) was pioneering work on strategy. Finally, the roots of the field can
perhaps be traced as early as 320 BC to the work of Sun Tzu on military strategy. Tzu wrote in
“The art of War” (Hawkins and Rajagopal, 2005, p.23):
The one who figures on victory at headquarters before even doing battle is the one who has the
most strategic factors in his side. The one who figures on inability to prevail at headquarters
before doing battle is the one with the least strategic factors on his side.... Observing the matter
in this way, I can see who will win and who will lose.
Similarly, Furrer et al. (2008) divide the historical development of strategic management into
three periods: (1) the precussors; (2) birth in the 1960s; and (3) transition towards a research
orientation in the 1970s. The first period is the prehistory of strategic management as academic
field started from studies of economic organisation and bureaucracy. These studies were to find a
linkage between the study of organisation and economic ideas. The second period is
characterised by the contingent perspective where organisations need to adapt to their external
environment, and these studies were managerially oriented under a normative prescription. In the
third period, a transition began towards a research orientation with two sets of different research
perspectives. While one perspective utilise descriptive studies of strategy formation and
implementation (process approach), another perspective with deductive studies seeks
relationships between strategy and performance (structural approach).
Furthermore, Hoskisson et al. (1999) traced the pendulum-like swings in the emphasis of
strategic management field on firms’ external environments and internal resources. The period
from the mid 1960s to the late 1990 is portrayed as four periodic swings from internal firm focus
to external firm focus and then back again. Thus focus of the field moved from the 1960s and
1970 work in the business policy tradition to externally emphasised era in the 1980 dominated by
Industrial Organisation (IO) economics, then in the mid 1980 organisational economics try to
combine inside and outside perspectives, and finally with the rise of the resource- and
knowledge-base theories n the 1990s, a swing back to an internal focus in explaining competitive
advantage and/or performance of the firm.
As the field of strategic management is still very young, De Wit and Meyer (1998) identify
strategy paradox that represents disagreeing opinions on most of the key issues within the field
of strategic management, as illustrated in Table 2.1.
Strategy Paradoxes (De Wit and Meyer, 1998)

Strategy Strategy Topics Strategy Paradoxes

Strategy Process Strategic Thinking Logic vs. Creativity
Strategic Formation Deliberateness vs. emergence
Strategic Change Revolution vs. Evolution
Strategy Content Business Level Strategy Market vs. Resources
Corporate Level Strategy Responsiveness vs. Synergy
Network Level Strategy Competition vs. Cooperation
Strategy Context Industry Context Compliance vs. Choice
Organisational Context Control vs. Chaos
International Context Globalisation vs.
Localisation

Consequently those disagreements run so deep that even a common definition of the term of
strategy is illusive. Thus, it is difficult to find a single clear and commonly accepted definition of
strategy. However, management theorists and practitioners agree that strategy deals with the
long-term direction of an organisation. For instance, Johnson et al. (2006) define strategy as the
direction and scope of an organization over the long term, which achieves advantage in a
changing environment through its configuration of resources and competencies with the aim of
fulfilling stakeholder expectations. Similarly, Hubbard et al. (2008) define strategy as those
decisions that have high medium-term to long-term impact on the activities of the organisation,
including the analysis leading to the resourcing and implementation of those decisions, to create
value for key stakeholders and to outperform competitors.
Besanko et al. (2007) argue that a firm should confront four broad classes of issues to
successfully formulate and implement strategy (framework of strategy): (1) Boundaries of the
firm - what should the firm do, how large should it be, and what business should it be in?; (2)
Market and competitive analysis .
the markets in which the firm competes and the nature of competitive interactions among firms
in those markets?; (3) Position and dynamics - How should the firm position itself to compete,
what should be the basis of its competitive advantage, and how should it adjust overtime?; and
(4) Internal organisation - How should the firm organise its structure and system internally?
Most of the theoretical work of strategy has come from one of two discipline sources: economics
or organisational psychology. Base on the strategy theorist’s background, French (2009) identify
two group categories of school of strategic thought. First, strategy scholars with an organisation
or management theory background e.g. Chaffee (1985); Whittington (1993); McKierman (1996);
Feurer and Chaharbaghi (1997); Mitzberg, Ahlstrand, and Lampel (1998).
The second scholars come from an economic theory background based on the “Economic Theory
of the Firm” such as Porter (1980); Jacobson (1992); Teece (1997); Rindova and Fombrun
(1999); Foss (1999); Phelan and Lewin (2000). French argues that allocating the ideas of strategy
into “schools” models is a better approach than seeking definitions, however in terms of
epistemological perspective, the models are neither postmodernism or Critical Theory, but it is
essentially Modernist.
With regard to the first category, Mintzberg (1998) has been a significant contributor to the
discussion of strategic ideas. In the second category, Porter (1980; 1985; 1991) has had the
greatest influence on strategic theory from economist.
Mitzberg et al. (1998) classified ten concepts that typically dominate current thinking on strategy
and that can be categorized under the three major types: prescriptive schools, descriptive schools
and one configuration school. Table 2.1 illustrates these ranges of concepts.
Ten School of Thoughts in Strategy (Mintzberg et al., 1998)
1 Design
2 Planning
3 Positioning
4 Entrepreneurial
5 Cognitive
6 Learning
7 Power
8 Culture
9 Environment
10 Configuration

Prescriptive schools have a normative character of how a strategy should be developed and
describe its consequences to an organisation. Design, planning and
position schools assume that strategy is a result of analysis and process. Descriptive schools
describe how strategies are developed and pursued. Entrepreneur and cognitive schools put
strategy as an entrepreneurial act and an organisational decision process. In configurational
schools, theory of organisational configuration and resulting strategies is described. This school
analyses strategy development as an interplay between organisational constraints and strategic
requirements.
Further, Mintzberg et al (2003) make a link between recent approaches to strategy to these ten
schools in an eclectic and interesting way. For example, research on strategic manoeuvring (first-
mover advantage) links the power and positioning school, whereas the work of resources-based
theory connects the cultural to the learning school - and dynamic capabilities approach of Hamel
and Prahalad (1994) as a hybrid of design and learning schools.
Porter (1980, p.6) in his book “Competitive Strategy” put a foundational quest for strategic
management theory by stating that
“The essence of formulating strategy is relating a company to its
environment”
From this statement, there are three conceptual entities that clarify relationships between the
economics and strategic management, i.e. (1) strategy; (2) company (firm); and (3) environment
(market). These threes are interdependent and interacting. Strategy is formed to fit and connect
varying organisational and/or environmental characteristics. In other words, the theory of
strategic management requires theory of market and theory of the firm to explain strategic
phenomena.
Another approach to strategy concepts is provided by Whittington (2001) and Barney (2008).
Whittington (2001) categorises four generic approaches to strategy: rational, fatalistic,
pragmatic, and relativist. These four distinct schools of thought could basically be mapped
alongside two axes: outcomes of strategy in the vertical axis and the process by which it is made
in the horizontal axis
•
• 2.2 Strategic management defined
the term strategic management is used to refers to the entire scope of strategic decision
making activity in an organization strategic management as concept has evolved over time
and will continue to evolve as result there are a variety of meaning and interpretation
depending on the author and sources .strategic management are strategy and policy
formulation and business polices.
• The following statement serves as a number of workable definitions of strategic
management.
Strategic management is the process of managing the porsuifef organizational
mission while managing the relationship of the organization to its environment
(James m, urgings).
• Strategic management is defined as the set of decisions and action resulting in the
formulation and implementation of strategies designed to achieve the objective of
the organization (john apiaries 2 and Richard b.robinson)
• Strategic management is the process of examining both present and future
environment formulating the organizations objectives and making , implementing
and controlling decision focused on achieving these objectives in the present and
future environment (germy d,smith,danny r,amold boob.g,bizzeu).
• Strategic management is a continuous process that involves attempts to match or fit
the organization with its changing environment in the most advantageous may
possible.(lester,a,digman)
• Strategic management is a management field focusing on long term planning and
direction of the organization used to ensures that thing, do not happen randomly but
according to pre planned, long term plan.
• “What business strategy is all about distinguished it from all other kind of business
planning is on a word competitive advantage, with out competition there would be
no need for strategy, for the sole purpose of strategic planning is to enable the
company to gain as efficiently as possible a sustainable edge ever its competitors
(kenichiohmac)
 What is strategic management?

• The systematic analysis of the factor associated with eustromens and competition (the
external environment )and the organization it self (the internal environment ) to provide
the basis for maintaining optimum management practrees
• The objective of strategies management to achieve better assignment of corporate
policies and strategies priorities.
• Strategic management involves the formulation and implementation of the major goals
and initiatives taken by a company’s top management on are half of owner, based on
consideration of resources and assessment of the internal and external environment in
which the organization competes.
• Strategies management provides over a direction to the enter pries and plan designed to
achieve those objectives and then allocating resources to implement the plans. Academics
and practicing managers have developed the context of complex environments and
competitive dynamics strategic management is not states in nature.
• (Michael Porter) identifies three principles underlining
• Strategies: creating “a unique and valuable [market] position ’’ making trade off by
choosing” what not to do” and creating “fit” by aligning company activities with one
another to support the chosen strategy (Dr.vladimr kvint)defines strategy as” a system of
finding formulating and developing a doctrine that will ensure long-term success if
followed faithfully”
• Corporate strategy involves answering a key questions from a port folio prospective
answering the question “How shall we compete in this business?”
• Strategies are established to set direction focus effort defines or clarify the
Organization and provide consistency or guidance in response to the eviro
nment
• The whole process of strategic management takes place in 4 primary
recurrent phase these called strategic cycle
1.strategy formulation :organization mission Its vision and strategic objectives are formulated
2. Strategy planning: establishment strategic plane and schedule implementation are planned
3. strategic implementation: resource allocation implementation of prospect activities and
measures to meet strategic objectives are implemented
4. Strategic contra status monitoring and strategy evaluation: strategy evaluation and possible
update are controlled
• Advantage of strategic management
1.discharge board responsiblity
the first reason that most organization state for having a strategic management process is that it
discharges the responsibility of the board of directors
2. Forces an objective assessment
Strategic management provides discipline that enables the board and senior management to
actually take sate back from the day to day business to think about the future of the organization
with out this discipline the organization can becomes solely consumed with working through the
next issue or problem with out consideration the larger picture
3. Provide frame work for decision making
Strategy provides frame work with in which all staff can make day to day expirational decision
and understand that those decision are all moving the organization in a single
direction .providing a frame work with in which the executive director and staff can make those
decision helps them better focus their efforts on those thing that will best support the organs
success.

4. Support under standing & buy in

Allowing the board and staff participation in the strategic discussion enables them to better
understanding direction.
_why that direction was chosen and the associated benefit for some people simply knowing is
enough for many people their full support requires them to understand.
5. Enables measurement of progress
A strategic management processes an organization to set objective and measure of success. The
setting of measures of success requires that the organization first determine what is critical to its
engaging success and then forces the establishment of objective and keeps those critical
measures in front of the board and senior management.
6. Provides an organizational perspective
Addressing operational issue nearly looks at the whole organization and the
interrelatedness of its varying component. Strategic management take an organizational
perspective and looks at all the component and the interrelationships between those
component’s in order to develop a strategy that is optimal for the whole organization and
a single components.
• The disadvantage of strategic management
• The future doesn’t unfold as anticipated
One of the major criticisms of strategic mgs is that it requires the organ to anticipate the future
environment in order to develop plans and as we all know, predicting the future is not an easy
under taking the belief being that if the future doesn’t unfold as anticipated then it may invalidate
the strategy taken.
2. It can be expensive
There is no doubt that in the not for profit sector there are many organs that cannot afford to hire
an external consultant to help them develop their strategy.it is important to ensure that the
implementation of a strategic mgs process is consistent with the needs of the organ & that
appropriate controls are implemented to allow the cost /implementation of a strategic mgs
process.

3. Long term benefit vs. immediate results

Strategic mgs process is designed to provide an organ with long term benefits. If you are looking
at the strategic mgs process to address an immediate crisis with in your organ it won’t, it always
makes sense to address the immediate crises prior to allocating resources (time, money, people,
opportunity, and cost) to the strategic mgs process.
Like any process or tool, there are both advantage & disadvantage to a strategic management
process .unfortunately many of the disadvantages are because of in appropriate application (often
by poor consultants) as opposed to inherent limitations.
The Importance and Value of Strategic Management
A number of reasons are given by authors to as why organizations should engage in strategic
management. Many research studies show both financial and nonfinancial benefits which can be
derived from a strategic-management approach to decision making.

Financial Benefits

The question "Why should an organization engage in strategic management?" must be answered
by
looking at the relationship between strategic management and performance.
Research performed by Eastlack and McDonald (1970), Thune and House (1970), Ansoff et. al.
(1971), Karger and Malik (1975), and Hofer and Schendel (1978) indicate that formalized
strategic management (strategic planning) does result in superior performance by organizations.
Each of these studies was able to provide conceiving evidence of the profitability of strategy
formulation and implementation. The formalized strategic management process does make a
difference in the recorded measurements of profits, sales, and return on assets. Organizations that
adopt a strategic management approach can expect that the news system will lead to improved
financial performance.
Nonfinancial Benefits
Regardless of the profitability of strategic management, several behavioral effects can be
expected to improve the welfare of the firm. yoo and Digman emphasize that strategic
management is needed to cope with and manage uncertainty in decision making. They present
several benefits of strategic management:
It provides a way to anticipate future problems and opportunities.
It provides employees with clear objectives and directions for the future of the organization.
It results in more effective and better performance compared to non-strategic management
organizations.
It increases employee satisfaction and motivation.
It results in faster and better decision making and
It results on cost savings.
Moreover, Greenley stresses that strategic management offers the following proc cess and
personal benefits:
It allows for identification, prioritization, and exploitation of opportunities.
It provides an objective view of management problems.
It represents a framework for improved coordination and control of activities.
It minimizes the effects of adverse conditions and changes.
It allows major decisions to better support established objectives.
It allows more effective allocation of time and resources to identified opportunities.
It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions.
It creates a framework for internal communication among personnel.
It helps to integrate the behavior of individuals into a total effort.
It provides a basic for the clarification of individual responsibilities.
It gives encouragement to forward thinking.
It provides a cooperative, integrated, and enthusiastic approach to tackling problems and
opportunities.
It encourages a favorable attitude towards change.
It gives a degree of discipline and formality to the management of a business.
These and other research studies have concluded that strategic management is an integral and
important function of organization life. However, successful organizations are successful for
many reasons: adequate resources, good products and services, and so on. While not a panaceas,
the strategic management process is only a powerful tool. It value lies with executive and the
ability to use this strategic management tool in effectively managing the enterprise.

Why Is Strategic Management Needed?

Strategic management helps businesses hone in on their core competencies.Most business
owners want to make wise decisions, but they sometimes are at a loss of where to begin. This is
where strategic management comes into play. An important concept for business owners and
managers to grasp, strategic management entails evaluating business goals, objectives and plans
in light of your company focus on effectiveness and efficiency.Small makers to Big Plants. All!
Directly from Manufacturing Company
Defining Strategic Management
Strategic management is an oft-used and sometimes ill-understood concept in business. It helps
to consider the two words separately first. Strategies are the initiatives a company takes to
maximize its resources and to grow its business. This might involve financial planning, human
resources management or focusing on a mission statement. Management is the process of
operating the business on a day-to-day basis and planning for future success. When you put the
two words together, strategic management is about driving t Corporate Governance
An effective organization is often one that has initiated programs and services within its structure
that ensure open communication, good management and effective leadership. Without these
hallmarks of corporate governance, it is difficult to manage strategically because the basic
framework of goal-setting and decision-making are missing. Setting up a control and reporting
mechanism is also important to strategic management as part of a wider corporate governance
push. This allows the organization to make changes when they are needed to constantly monitor
its own progress.
Core Competencies
Strategic management can help your business to identify and capitalize on its core competencies
-- things within your business that you do best. As Edward Russell-Walling notes in his book "50
Management Ideas You Really Need to know," a core competency has three key factors: it is not
easy for competitors to duplicate, your business can use it in a number of different products or
services and it provides a benefit to your customers. For some companies, a core competency is
the brand name: People buy the products simply because they carry the organization's name,
which is associated with quality and prestige. For others, the core competency might be the cost
of production. Whatever your core competencies are, Russell-Walling is quick to note that most
companies only have a few. If you think your business has strengths in multiple areas, it's
important to get at the root of what causes these successes.
Setting Goals
Strategic management is vitally important even on the small scale within a business. However,
strategic management is difficult to accomplish without a clearly defined set of goals for the
business' operation. Knowing what your core competencies are is good from the standpoint of
understanding your strengths in the marketplace, but this also helps you to identify areas for
improvement and set goals and objectives based on those weaknesses. If you know, for instance,
that your business is lagging behind in utilizing the power of the Internet to sell its products, one
of your goals can be to introduce an online trading platform within the next six months.
Importantly, the goals your business sets should be measurable, specific and have a time frame
attached to them. Setting goals in this way helps you to strategically position your business for
future success.
Importance and Benefits of the Strategic Management process
Organizational strategic management process refers to the continuous planning, monitoring,
analysis, and assessment that is necessary to meet its goals and objectives successfully. Strategic,
managerial decisions and actions are critical to determining the organizational long-run
performance and requires constant monitoring for any external changes, opportunities or threats.
It is a formal stepwise process that include first, environmental analysis to understand the current
position of the organization, then strategic planning, formulation, or choices for making
important strategic decisions, and finally strategic implementation to translate strategy into
action and beyond. Health care organizations operates in a dynamic environment that is changing
unpredictably and thus creating many challenges for the health care providers to deliver and
maintain the delivery of quality health care services. It is imperative for the health care
organizations to be able to develop and implement strategic planning’s to take advantage of any
changing environment. Health care organization with strategic management processes are always
more successful than those without. Through strategic organization planning, health care
organization can take advantage of the available opportunities that offers clear purpose, support,
resources, and commitment and overcome the challenges successfully to maintain smooth
business operations. Other benefits include improved decision-making, setting priorities, focus
energy, resources availability, encouraging staff members to take an active role and motivation.
Strategic management process can also help the organizations to establish new objectives or
directions to bring in necessary changes to be in compliance with the external regulatory
requirements and maintain customer satisfaction at the highest level. Such benefits are making
the strategic management process an essential element for every health care organization to
sustain and maintain smooth business operations in the long run.
Jasper, M., & Crossan, F. (2012). What is strategic management?. Journal Of Nursing
Management, 20(7), 838-846. doi:10.1111/jonm.12001 Roohul Amin MHA, MD, ARMA
Strategic management.
Strategic management involves the formulation and implementation of the major goals and
initiatives taken by a company's top management on behalf of owners, based on consideration of
resources and an assessment of the internal and external environments in which the organization
competes.
Strategic management provides overall direction to the enterprise and involves specifying the
organization's objectives, developing policies and plans designed to achieve these objectives, and
then allocating resources to implement the plans. Academics and practicing managers have
developed numerous models and frameworks to assist in strategic decision making in the context
of complex environments and competitive dynamics Strategic management is not static in nature;
the models often include a feedback loop to monitor execution and inform the next round of
planning.
Michael Porter identifies three principles underlying strategy: creating a "unique and valuable
[market] position", making trade-offs by choosing "what not to do", and creating "fit" by
aligning company activities with one another to support the chosen strategy. Dr. Vladimir Kvint
defines strategy as "a system of finding, formulating, and developing a doctrine that will ensure
long-term success if followed faithfully."
A new conceptual model for corporate strategy in the construction industry is presented that is
derived from two principal inputs. First, the fundamental components of the model are based
upon observations drawn from an empirical study of 24 international firms competing in global
engineering and construction markets. Second, the accumulated intellect of different strategic
theories developed over four decades of strategic management research helps to fortify the model
with theoretical propositions and establish linkages among the model's basic components. The
proposed model is comprised of seven strategic fields, two organizational mechanisms and a
boundary notion that divides a firm's internal setting from its external environment. The model's
development leads to two central propositions: strategic fields and organizational mechanisms
should function as variables to react with external dynamics, and the interaction of these
variables consequently promotes higher order differentiation factors that will enhance the
strategic outlook of a firm.

2.3 Strategic Management in Construction

Numerous studies have been developed to explore the concept of strategic management and
practice in the construction industry. Construction researchers have built their own framework to
answer the central question in strategic management which is how to create and sustain
competitive advantage by adopting two mainstream paradigm in strategic management, i.e. the
external-focus and internal- focus paradigms. Price and Newson (2003) found that despite the
variety of definition of strategy in the construction industry, Johnson’s (2006) definition is
commonly accepted. According to Brown (2004), the UK construction and engineering industry
has shown a high commitment to strategic management development.
Despite this, Chinowsky and Meredith (2000) and Betts, Clark, and Ofori (1999) noted that
strategic management application to the construction context remains limited and lags behind
that in other industries. Cheah and Garvin (2004) found that operational strategy has dominated
strategic management research in the construction industry. Indeed, strategic management
capabilities are being broadly developed by many large construction firms, however, there are
considerable limitations which need to be addressed (Price et al., 2003). After identifying all
eight schools of thoughts in business management, Huovinen (2004) concluded that there is no
established tradition in construction-related business management research.
Among the numerous scholars who have investigated the application of strategic management in
the construction context are Betts and Ofori (1992; 1993; 1994; 1999) who introduced the idea of
strategic planning and a five-framework level of strategic management in construction; Male and
Stocks (1991) who developed an organisation model for the construction company; and Langford
and Male (1991; 2001) who developed a basic framework for the contingency model of strategic
management in construction. These authors provide a systematic way of thinking about how
construction organisations should develop and sustain their competitive advantage. However,
Lansley (1987; 1994) and Hillebrandt and Cannon (1989; 1990; 2000) remain as foundation-
stone scholars for corporate strategy in the construction context. Lansley (1994) and Hillebrandt
(2000) introduced Williamson’s (1985) transaction cost approach as a strategic perspective in
construction. This is the first momentous work in relation to economic ideas.
Betts and Ofori (1992; 1999) made an important contribution with their linkage of the study
Porter’s framework of five competitive forces (Porter, 1980), and generic strategies (Porter,
1980) in a construction business environment. They suggested a Five-level framework at which
strategic management may be applied in the construction context: (1) National construction
industry, (2) Professional Institution, (3) Construction Enterprise, (4) Construction project, and
(5) Construction product. While recognising the importance of professional institution and trade
associations, they argue that the corporate or enterprise level is a most significant example of
strategic management and business process analysis.
Though Bett’s (1999) work focuses primarily on exogenous factors in determination of
competitive advantage, he also considers slight endogenous factor i.e. “core competencies” as an
alternative strategic approach to business by a construction firm, following Prahalad and Rumelt
(1990), who are resource-based theorist. However, Betts et al. (1999) suggested the importance
of a new approach to the management of construction enterprises due to the dynamic nature of
environment in the construction industry.
While Betts and Ofori’s (1992; 1994) work mostly represent the economic theory of the firm,
Male and Stocks (1991) and Langford and Male (1991; 2001) primarily address strategic ideas
from an organisational/management perspective. Male and Stock (1991) proposed a preliminary
model of a construction company based on Mitzberg’s (1983) component model of a large
organisation and nominated the strategic apex, the middle line, and the operating core as
important elements in a construction firm.
Langford and Male (1991; 2001) identify organisational structure; reputation and innovation are
primary sources of distinctive capabilities stem. These capabilities may lead to a competitive
advantage, as Male and Stocks (1991) note that innovation as one of specific-firm advantage for
construction enterprise. In presenting their contingency model of strategic management for
construction, Langford and Male (1991) described the importance of the human capital for
strategic flexibility under a given set of environmental evolutions. According to them, to
translate those into strategic management behaviour, the construction firm should cooperate with
others in the market to achieve competitive advantage.
From 2000 onward, strategy research in construction started to spread with some researchers
explicitly addressing the endogenous view of strategy, with a focus on internal structure,
resources, and capabilities of the construction firm. However, prior to that period, Junnonen
(1998) and Winch (1998) had pointed out that the resource-
based view (RBV) and Transaction Cost Economics (TCE) were appropriate for analysing
construction companies, both in terms of their operations and strategy formation.
Among the most relevant research of strategic management in construction that followed the
firm-specific model are those offering a competence-based approach (Lampel, 2001; De Haan,
Voordijk & Joosten, 2002; Huovinen, 2005; Chew, Yan & Cheah, 2008), Transaction cost
approach (Bang, 2002; Bridge and Tisdell, 2004), and resource-based view (Liu and Wu, 2004;
Jaafar and Abdul-Aziz, 2005; Phua, 2006). Jaafar and Abdul-Aziz (2005) offer a dynamic
version of resource-based approach and confirmed that managerial capability is determinant of
the construction firm’s success.

2.4 Strategic Planning in Construction Companies

Abraham Warszawski,.Strategic planning is an essential function of senior management in any
business firm. Planning involves the firm's behavior in a competitive market and adaptation of
the company's resources towards the selected market strategy. This paper presents a
methodological procedure for strategic planning in a construction company. This procedure
consists of the following stages. First, examine the company's mission. The mission reflects the
owners' views with regard to the company's scope of activities and objectives. Second, survey
the company's business environment. The environment includes both general economic factors
that affect all types of business activity and additional factors, specific to the construction sector.
This survey should reveal the specific “packages” of prospective project opportunities and
highlight potential threats to a company's orderly activity. Third, analyze the company's main
resources. The main resources in this respect include the construction capacity, the procurement
system, the marketing system, the organization, personnel, finances, and knowledge. The relative
strengths and weaknesses of each resource, in light of market needs, are identified. Fourth,
develop a strategy. The development of a strategy is based on “mapping” of the relative
attractiveness of the various possible activity areas. This strategy can follow one of several
generic types that must be adapted to particular conditions of the market and company. It affects
the subsequent choice of a strategy for development of the company's own resources. The choice
of the optimal strategy, from several available alternatives, should follow a careful analysis of the
costs and benefits inherent in the implementation of each.Permalink
The management of an organization’s resources in order to achieve its goals and objectives.
Strategic management involves setting objectives, analyzing the competitive environment,
analyzing the internal organization, evaluating strategies, and making sure that the strategies are
rolled out across the organization.

BREAKING DOWN 'Strategic Management'

At its heart, strategic management involves recognizing opportunities and threats facing an
organization, whether coming from within the organization or from competitors, and identifying
how the organization stacks up compared to its competitors. This requires the ability to both look
externally and internally.
Strategic management is divided into several schools of thought. A prescriptive approach to
strategic management outlines how strategies should be developed, while a descriptive approach
focuses on how strategies are made in practice. These schools differ over whether strategies are
developed through an analytic process in which all threats and opportunities are accounted for, or
are more like general guiding principles that have to be applied.

Business culture, the skills and competencies of employees, and organizational structure are
important factors that influence how an organization can achieve its stated objectives. Companies
that are inflexible may find it difficult to succeed in a changing business environment. Creating a
barrier between the development of strategies and their implementation can make it difficult for
managers to determine whether objectives were efficiently met.
While an organization’s upper management is ultimately responsible for its strategy, many times
the strategies themselves are sparked by actions and ideas from lower level managers and
employees. An organization may have several employees devoted to strategy rather than relying
on the CEO. Organization leaders focus on learning from past strategies and examining the
environment at large. This knowledge is then used to develop future strategies and to guide the
behavior of employees to ensure that the entire organization is moving forward.
The Scope And Dimension Of Strategic Management
Strategic management focuses on the total enterprise. It involves the planning, directing,
organizing, and controlling of the strategy-related decisions and actions of the business.
The Scope Of Strategic Management
J. Constable has defined the area addressed by strategic management as "the management
processes and decisions which determine the long-term structure and activities of the
organization". This definition incorporates five key themes:
* Management process. Management process as relate to how strategies are created and changed.
* Management decisions. The decisions must relate clearly to a solution of perceived problems
(how to avoid a threat; how to capitalize on an opportunity).
* Time scales. The strategic time horizon is long. However, it for company in real trouble can be
very short.
* Structure of the organization. An organization is managed by people within a structure. The
decisions which result from the way that managers work together within the structure can result
in strategic change.
* Activities of the organization. This is a potentially limitless area of study and we normally shall
centre upon all activities which affect the organization.
These all five themes are fundamental to a study of the strategic management field and are
discussed further in this chapter and other part of this thesis.

The Nature and Value of Strategic Management

This chapter will introduced us to the world of strategic management. Strategic management is a
process which determine whether an organization excels, survives, or dies.
All organizations engage in the strategic management process either formally or informally.
Strategic management is equally applicable to public, private, not-for-profit, and religious
organizations. An attempt is made in this thesis to show the applicability of strategic
management to all types of organizations, but the emphasis is on private-enterprise
organizations.
Organizations usually employ one of the three general decision-making processes:
Managers want to resolve current problems. Firms often face problems resulting from falling
sales, low profit rates, or production inefficiencies. Managers try to identify the sources of those
problems and resolve them as best they can.
Managers want to solve current problems and prevent future problems. For example, faced with
rising production costs, managers may apply statistical techniques to create an optimal solution.
Managers want to design or create a better relationship between the firm and its operating and
general environments. That involves the firm in strategic decision making.

Three factors distinguish strategic decisions from other business considerations:

Strategic decisions deal with concerns that are central to the livelihood and survival of the entire
organization and usually involve a large portion of the organization's resources.
Strategic decisions represent new activities or areas of concern and typically address issues that
are unusual for the organization rather than issues that lend themselves to routine decision
making.
Strategic decisions have repercussions for the way other, lower-level decisions in the
organization are made.
To summarize, there are two essential areas of management tasks: strategic management and
operating management. Operating management deals with the ongoing, day-to day "operations"
of the business. However, my concern here is with the strategic management alone.
Planning and Strategic Planning: An Overview
Strategic planning represents part of strategic management. It is process of analyzing the
opportunities and threats in the marketplace, building the strengths and correcting the
weaknesses within the firm. Strategic planning also includes tasks of defining the mission,
setting objectives, and crafting a strategy. Together, they constitute a strategic plan. Therefore,
the strategic plan may be viewed as a framework for strategic decision making.
Foundation of Planning
Planning is an attempt to manage the future: what is to be accomplished and how.
In essence, "planning is the process of determining objectives and assessing they way these
objectives can best be achieved." This process determines where the organization should be
going, why, and how.
As stated by Koontz and O'Donnel, the fundamental purpose of planning is to "facilitate the
accomplishment of enterprise and objectives." All other purposes of planning are simply spinoffs
of this primary purpose
Corporate Social Responsibility
One of an organization's primary goals is its obligation to operate in a socially responsible
manner. Therefore, the recognition that the vast power of the modern corporation carry with it an
equally large responsibility to use that power responsibly is an important message for managers.
This chapter examines corporate social responsibility and the related area of managerial ethics.
The Social Responsibilities Ideas
Corporate social responsibility has been a topic of academic study for several decades (Friedman
Ackerman & Bauer, 1976: Carrol, 1979: Davis, 1973, Frederick, 1978: Freeman , 1984, Miles,
1987; Preston & Post, 1975; Wartick & Cochran, 1985, Anderson 1989).
Numerous studies have tried to arrive at consensus definition of social responsibility but have
failed to do so. Although it difficult to present a precise definition of social responsibility, much
of the research attempts to identify various kinds of socially responsive activities, present the list
of these activities to the business manager, and then measure and tabulate the relative frequency
of response to which the activities are practiced by those agencies or people being questioned.
Moreove, the concept of social responsibility is a continually evolving concept and means
different things to different people.
The first comprehensive approach to modern era social responsibility was ushered in 1953 with
the publication of Howard R. Bowen's book Social Responsibility of the Businessman. Bowen
felt that public responsibility, social obligations, and business morality were synonyms for social
responsibility and described the term social responsibilities of businessmen as:
"It [social responsibility] refers to the obligation of businessmen to pursue those policies, to
make those decisions, or to follow those lines of action which are desirable in terms of objectives
and values of our society."
Archie Carroll observed that
"the social responsibility of business encompasses the economic, legal, ethical, and discretionary
expectations that society has of organizations at a given point in time."
W.Frederick summed up the position as follows:
"The fundamental idea of corporate social responsibility is that business corporations have an
obligation to work for social betterment."
The Classical View
Some observers, ranging from Adam Smith to Milton Friedman, have argued that social
responsibility should not be part of management's decision making process. Milton Friedman has
maintained that business functions best when it sticks to its primary mission - producing goods
and services within society's legal restrictions. It sole responsibility is to attempt to maximize
returns. Friedman states his theory about social responsibilities of business in the following
passage from Capitalism and Freedom:
In such an economy, there is one and only one social responsibility of business - to use its
resources and engage in activities designed to increase its profits so long as its stays within the
rules of the game, which is to say, engages in open and free competition without deception or
fraud.
Peter Drucker argues business have a role in society which is "to supply goods and services to
customers and an economic surplus to society...rather than to supply jobs to workers and
managers, or even dividends to shareholders". The latter, he argues, are means not ends. Drucker
contends that it is mismanagement to forget that a hospital exists for its patients and a university
for its student. This classical view holds that business should not assume any social
responsibility, thus, the one and only obligation of business is to maximize its profits without
deception or fraud.
The Contemporary View
The contemporary view is that business, as important and influential members of society, are
responsible to help maintain and improve the society's overall welfare. Kenneth Dayton argues,
that:
In maintain that business must change its priorities. We are not in business to make maximum
profit four our shareholders. We are in business for only one reason - to serve society. Profit is
our reward for doing it well. If business does not serve society, society will not tolerate our
profits or even our existence.
A strong advocate of corporate social responsibility, Keith Davis offered a classic definition of
corporate responsibility as
"the firm's consideration of, and response to, issues beyond the narrow economic, technical, and
legal requirements of the firm... (to) accomplish social benefits along with the traditional
economic gains which the firm seeks."
He elaborates on this view in terms of the following five propositions:
* Proposition 1: Social responsibility arises from social power.
* Proposition 2: Business shall operate as a two-way open system with open receipt of inputs
from society and open disclosure of its operation to the public.
* Proposition 3: Both the social costs and the social benefits of an activity, product, or service
shall be thoroughly calculated and considered in order to decide whether or not to proceed with
it.
* Proposition 4: Social costs related to each activity, product, or service shall be passed on to the
consumer.
* Proposition 5: Business institutions, as citizens, have the responsibility to become involved in
certain social problems that are outside of their normal areas of operation.
Comparison of the Two Views
The question of wether or not it is proper for a corporation to pursue social responsibilities
objectives has long been a subject of controversy among researchers and managers.
Argument for Voluntary Actions by Corporations. According to Steiner and Steiner, there are
three major ideas in the argument that business should assume social responsibilities:
- Society expects business to assume social responsibilities.
- The long-run self-interests of business are best served when business assumes responsibilities.
- The assumption of social responsibilities serves to reduce government regulation and public
criticism.
Arguments against Voluntary Actions by Corporations. This view is founded on four related
ideas:
- Profit maximizing is the only legitimate purpose of business.
- Social responsibility subverts the market system.
- The roles of government and business will be confused.
- The pursuit of social programs as well as economic goals could make corporations too
powerful.
Managers today feel that a once clear separation between public and private sectors has broken
down.
In order to respond effectively and efficiently to the major social issues and demands of the day,
corporate social policy must be integrated into corporate strategy; at the same time many of these
stakeholders feel that much of the business community has not and is not adequately dealing
with many of these social problems of concern.
Introduction to Management
Organizations pervade every aspect of our lives. Organizations seem to be everywhere.
We are born in organizations, educated by organizations, and most of us spend much of our lives
working for organizations. ... Most of us will die in an organization, and when the time comes for
burial, the largest organization of all - the state - must grant official permission (Amitai Etzioni).
Organizations come in a variety of sizes and types - corporations, schools, governments, and so
on, - and they serve a wide range functions. Related to this, all organizations try to reach their
common goals. It would be impossible to image a modern society without organized effort or
without people who oversee and synchronize that effort. The purpose of this thesis is to promote
excellence of all persons in organizations, but especially managers.

This introductory chapter lays put the general dimensions of the manager's job. It introduces the
role and the function of managers in the organization, identifies requisite management skills, and
examines the historical development of management knowledge.

Key Terms in Strategic Management

Strategic management, like many other subjects, has developed terminology to identify
important concepts. Each of the following definitions is amplified and supplemented with
additional examples in subsequent chapters.
Purpose
The organization's purpose outlines why the organization exists; it includes a description of its
current and future business (Leslie W. Rue, and Loyd L.Byars) The purpose of an organization is
its primary role in society, a broadly defined aim (such as manufacturing electronic equipment)
that it may share with many other organizations of its type.
Mission
The mission of an organization is the unique reason for its existence that sets it apart from all
others (A. James, F. Stoner, and Charles Wankel) The organization's mission describes why the
organization exists and guides what it should be doing. Often, the organization's mission is
defined in a formal, written mission statement. Decisions on mission are the most important
strategic decisions, because the mission is meant to guide the entire organization. Although the
terms "purpose" and "mission" are often used interchangeably, to distinguish between them may
help in understanding organizational goals.
Goals
A goal is a desired future state that the organization attempts to realize (Amitai Etzioni).
Objectives
The term objective is often used interchangeably with goal but usually refers to specific targets
for which measurable results can be obtained. Organizational objectives are the end points of an
organization's mission. Objectives refer to the specific kinds of results the organizations seek to
achieve through its existence and operations (William F. Glueck, and Lawrence R. Jauch)
Objective define what it is the organization hopes to accomplish, both over the long and short
term.
In this paper the terms "goals" and "objectives" are used interchangeably. Specifically, where
other works are being referred to and those authors have used the term goal as opposed to
objective, their terminology is retained.
Strategy
Strategies are the means by which long-term objectives will be achieved. "A strategy is a unified,
comprehensive, and integrated plan that relates the strategic advantages of the firm to the
challenges of the environment. It is designed to ensure that the basic objectives of the enterprise
are achieved through proper execution by the organization" (William F. Glueck, and Lawrence R.
Jauch). The role of strategy is to identify the general approaches that the organization utilize to
achieve its organizational objectives. Therefore, the choice of strategy is so central to the study
and understanding of strategic management.
Tactics
In contrast, tactics are specifics actions the organization might undertake in carrying its strategy
Policy
In years past it was common practice to title courses and books in the strategic management
areas as "Business policy," if one wished to take up broader range of organizations. In one sense,
what has happened is that word strategy has replaced policy. But there is another sense in which
the term policy is used that differentiates it from strategy, and from tactics as well. In this view,
policies are the means by which objectives will be achieved. "Policies are guide to action. They
include how resources are to be allocated and how tasks assigned to the organization might be
accomplished ... (William F. Glueck, and Lawrence R. Jauch "
Strategists
The final key term to be highlighted here is "strategists". Strategists are the individuals who are
involved in the strategic management process. Several levels of management may be involved in
strategic decision making. However, the people responsible for major strategic decisions are the
board of director, president, the chief executive officer, the chief operating officer, and the
division managers.
The Strategic Decision Makers
The strategic management process requires competent individuals to ensure its success.
Therefore, to understand strategic management, we must know where strategic decisions are
made in organizations.
Inputs to strategic decisions can be generated in a number of ways. Overall, top management,
board of directors, and planning staff tend to be those positions that have the most significant
involvement and influence in the strategic management process of organizations. The failure of
an organization to achieve its objectives can often be traced to a breakdown at the level of the
board or top management. However, the final responsibility rests with top management. Some of
the strategic management responsibilities are outl
Top Management
The term "top management" refers to a relatively small group of people include president, chief
executive officer, vice president, and executive vice president. Because the insights of these
executives play such a critical role, a number of writers have stressed the importance of matching
the characteristics of these executives with the firm's strategies.
Other Managers and Staff Members
In many organizations, the job of strategic management can become so overwhelming, that the
chief executive must assign individuals, usually called planning staff personnel, to help with the
tasks. Recent theory and studies suggest that middle-level managers attempt to influence
business strategy and often initiate strategic proposals.

Board of Directors
The business which exists in corporate form has a board of directors, elected by stockholders and
given ultimate authority and responsibility. Boards typically elect a chairperson who is
responsible for overseeing board business, and they form standing committees which meet
regularly to conduct their business. A strategy committee is a board committee that works with
CEO to develop strategic management process.

It is common practice for organizations to have boards of directors consisting of both outsiders
and insiders. One approach used to reconcile the differing roles of outside directors and inside
strategic decision makers is agency theory.
Agency theory defines as a nexus of contractual relationships among various stakeholders,
including shareholders, managers, employees, and customers, each motivated by self-interest. In
this view, a firm exists to exploit the potential advantages of cooperative behavior among
stakeholders, and strengthening the link between the company and its environments.
Board of directors it plays an important role in the strategic management process. A strategy
committee commonly audits various components of an organization's strategic management
process in order to make it more effective and efficient. For example, the board can demand
reexamination of the company's mission, its long-term goals, its corporate strategy, and its
approach to the competition.

Agency theory defines as a nexus of contractual relationships among various stakeholders,

including shareholders, managers, employees, and customers, each motivated by self-interest. In
this view, a firm exists to exploit the potential advantages of cooperative behavior among
stakeholders, and strengthening the link between the company and its environments.
Board of directors it plays an important role in the strategic management process. A strategy
committee commonly audits various components of an organization's strategic management
process in order to make it more effective and efficient. For example, the board can demand
reexamination of the company's mission, its long-term goals, its corporate strategy, and its
approach to the competition.
To quote Kenneth Andrews, "A responsible and effective board should require of its management
a unique and durable corporate strategy, review it periodically for its validity, use its as the
reference point for all other board decisions,""
The boards guides the affairs of corporation and protects stockholder interests.
A growing literature suggests that boards can make a difference in the way the firms is managed.
Each of the four cells in the matrix can be labelled according to type: caretaker, statutory,
proactive, and participative boards.
The Strategic Management Process
There probably is general acceptance of the idea that strategic management is concerned with the
strategic processes that produce desired responses to an organization's changing environment.
The strategic management process is concerned with a long-run perspective. The time horizon
involved often is at least 3 years and normally may be 5 or 10 years into the future. However, in
certain extremely dynamic industries, the strategic management process could be concerned with
much shorter time frames.
Strategic management is the management of change. This involves the system of corporate
values, the corporate culture, and all managerial process of change, such as leadership, planning,
control, and human resources management.
Hence, strategic management can be viewed as a series of steps in which top management should
accomplish at least five tasks that C. West Churchman suggested in The Systems Approach
(1968):
Identify the business's fundamental values and the goals and objectives that arise from them.
Assess the business's environment - forces outside the business itself that may be opportunities
or threats.
Assess the business' resources and capabilities - those things within the control of the business,
such as people, machinery, facilities, contracts, image, and goodwill - that can be allocated to
achieve goals and objectives.
Identify or form the organization's component's (a) internal units that receive allocated resources
and carry out the business's work and (b) an organizational structure that includes the units
themselves and the relationships of authority, responsibility, and communication that they have
with one another.
Develop the management and decision-making structure: the process used to allocate the
business's resources to its components so as to realize goals and sustain values within constraints
of environment.
At the center of the model is embedded Churchman's first imperative: to identify the
organization's values. Without knowledge of its values, an organization cannot develop a
mission, goals, and objectives. Churchman's remaining four imperatives can be found within the
four boxes in the circle. The arrows in Figure 2-3 shows important interdependency among the
four factors of strategic management: strategic planning, resource requirements, organizational
structure, and strategic control.
Strategic planning is the key link between strategic management and the organization's external
environment. Resource requirement is the factor that links strategic management to the
organization’s resources, including finances, facilities and equipment, land, access to
information, goodwill, and personnel.
Strategic control relates to the implementation of a strategy.
Organizational structure links strategic management to organizational realities.
According to this model, environmental demands are met through a strategic planning process,
involving the formulation of missions, goals, and objectives.
Strategic management can thus be seen as a "total" system perspective and not merely as the
process of choosing from among alternative long-range plans. It reflects the organization's
"strategic capability" to balance the demands imposed by external and internal forces and to
integrate the overall functioning of the organization so as to allocate resources in a manner best
designed to meet goals and objectives (Alan Rowe, Richard O. Mason, and Karl E. Dickel).
Today's manager is faced with an accelerating rate of change in technical, social, political, and
economic forces. As a result of these changing forces, the management process has become more
difficult, requiring greater skills in planning, analysis, and control. Thus, the concept of strategic
management is still involving and will continue to undergo change

Stages of Strategic Management

The strategic management process represents a logical, systematic, and objective approach for
determining an enterprise's future direction. However, a clear separation is needed between the
managerial process by which an organization formulates, evaluates, implements, and controls the
relationships between its objectives, its strategies, and its environment.
Researchers usually distinguish three stages in the process of strategic management: strategy
formulation, strategy implementation, and evaluation and control.
Strategy Formulation
Strategy formulation is the process of establishing the organization's mission, objectives, and
choosing among alternative strategies. Sometimes strategy formulation is called "strategic
planning."
Strategy Implementation
Strategy implementation is the action stage of strategic management. It refers to decisions that
are made to install new strategy or reinforce existing strategy. The basic strategy -
implementation activities are establishing annual objectives, devising policies, and allocated
resources. Strategy implementation also includes the making of decisions with regard to
matching strategy and organizational structure; developing budgets, and motivational systems.

Strategy Evaluation and Control

The final stage in strategic management is strategy evaluation and control. All strategies are
subject to future modification because internal and external factors are constantly changing. In
the strategy evaluation and control process managers determine whether the chosen strategy is
achieving the organization's objectives. The fundamental strategy evaluation and control
activities are: reviewing internal and external factors that are the bases for current strategies,
measuring performance, and taking corrective actions.
Strategic Management Models
Strategic management is a broader term that includes not only the stages already identified but
also the earlier steps of determining the mission and objectives of an organization within the
context of its external environment. The basic steps of the strategic management can be
examined through the use of strategic management model.
The strategic management model identifies concepts of strategy and the elements necessary for
development of a strategy enabling the organization to satisfy its mission. Historically, a number
of frameworks and models have been advanced which propose different normative approaches to
strategy determination. However, a review of the major strategic management models indicates
that they all include the following elements:
Performing an environmental analysis.
Establishing organizational direction.
Formulating organizational strategy.
Implementing organizational strategy.
Evaluating and controlling strategy.
Strategic management is a continuous and dynamic process. Therefore, it should be understood
that each element interacts with the other elements and that this interaction often happens
simultaneously.
The major models differ primarily in the degree of explicitness, detail, and complexity. These
differences derive from the differences in backgrounds and experiences of the authors. Some of
these models are briefly presented below.
Strategic Management Models
Strategic management is a broader term that includes not only the stages already identified but
also the earlier steps of determining the mission and objectives of an organization within the
context of its external environment. The basic steps of the strategic management can be
examined through the use of strategic management model.
The strategic management model identifies concepts of strategy and the elements necessary for
development of a strategy enabling the organization to satisfy its mission. Historically, a number
of frameworks and models have been advanced which propose different normative approaches to
strategy determination. However, a review of the major strategic management models indicates
that they all include the following elements:
Performing an environmental analysis.
Establishing organizational direction.
Formulating organizational strategy.
Implementing organizational strategy.
Evaluating and controlling strategy.
Strategic management is a continuous and dynamic process. Therefore, it should be understood
that each element interacts with the other elements and that this interaction often happens
simultaneously.
The major models differ primarily in the degree of explicitness, detail, and complexity. These
differences derive from the differences in backgrounds and experiences of the authors. Some of
these models are briefly presented below.
Andrews' Models
In 1965, Kenneth Andrews developed a simple model. This model includes the choice of a
strategy, but ignores implementation and control. In 1971, Andrews formulated a more complete
model that included implementation, but it still ignores a strategic control and evaluation.
Glueck's Model
William F. Glueck developed several models of strategic management based on the general
decision-making process.
The phases of this model are as follows:
* Strategic managements elements: "...to determine mission, goals, and values of the firm and the
key decision makers."
* Analysis and diagnosis: "…to search the environment and diagnose the impact of the threats
and opportunities."
* Choice: ...to consider various alternatives and assure that the appropriate strategy is chosen."
* Implementation: "...to match plans, policies, resources, structure, and administrative style with
the strategy."
* Evaluation: "...to ensure strategy and implementation will meet objectives."
As major contribution to the strategic management process, Glueck considered two elements:
"enterprise objectives" (the mission and objectives of the enterprise," and "enterprise strategists"
(who are involved in the process).
Moreover, Glueck broke down the planning process into analysis and diagnosis, choice,
implementation, and evaluation functions. This model also treats leadership, policy, and
organizational factors.
However, Glueck omitted the important medium- and short-range planning activities of strategy
implementation.
The Schendel And Hofer Model
Dan Schendel and Charles Hofer developed a strategic management model, incorporating both
planning and control functions.
Their model consists of several basic steps:
(1) goal formulation,
(2) environmental analysis,
(3) strategy formulation,
(4) strategy evaluation,
(5) strategy implementation, and
(6) strategic control.
According to Schendel and Hofer, the formulation portion of strategic management consists of at
least three subprocesses:
- environmental analysis, - resources analysis, - and value analysis.
Resource and value analyses are not specifically shown, but are considered to be included under
other items (strategy formulation).
The Thompson and Strickland Model
Thompson and Strickland developed several models of strategic management.
According to Thompson and Strickland strategic management is an ongoing process: "nothing is
final and all prior actions and decisions are subject to future modification."
This process consists of five major five ever-present tasks:
1. Developing a concept of the business and forming a vision of where the organization needs to
be headed.
2. Converting the mission into specific performance objectives.
3. Crafting a strategy to achieve the targeted performance.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance, reviewing the situation, and initiating corrective adjustments in
mission, objectives, strategy, or implementation in light of actual experience, changing
conditions, new ideas, and new opportunities.
Thompson and Strickland suggest that the firm's mission and objectives combine to define "What
is our business and what will it be?" and "what to do now" to achieve organization's goals. How
the objectives will be achieved refers to the strategy of firm.
In general, this model highlights the relationships between the organization's mission, its long-
and short-range objectives, and its strategy.
Korey's Model
Modern theorist and writer, Jerzy Korey-Krzeczowski, founder and President Canadian School
of Management, have proposed an integrated model of strategic management.
Korey's model consists of three discrete major phases:
(1) preliminary analysis phase,
(2) strategic planning phase,
(3) strategic management phase.
Further, Korey states that the systematic planning consists of at least four continuous
subprocesses:
(1) planning studies,
(2) review and control,
(3) feasibility studies, and
(4) feasibility studies.
The planning is ongoing process, thus all these subprocesses are integrated and they are
interacted each other; creating the fully dynamic model.
Korey's model incorporates both planning and control functions. Moreover, it describes not only
long-range strategic planning process, but also includes elements of medium and short range
planning.
Korey's model is based on existing models; but it differs in content, emphasis, and process.
This model adds several facets to the planning process that the reader has not seen in other
models. Some of these are: development of educational philosophy, analysis of the value
systems, review of community orientation and social responsibilities, definition of planning
parameters, planning studies, and feasibility studies. Using Kory's model for strategic planning
provides both new direction and new energy to the organization.
Schematic Model
As an aid in envisioning the strategic management process in this paper.
This model was developed by Peter Wright, Charles Pringle and Mark Kroll (1994). It consists of
five stages:
1. Analyze the environmental opportunities and threats.
2. Analyze the organization's internal strengths and weaknesses.
3. Establish the organizational direction: mission and goals.
4. Strategy formulation.
5. Strategy Implementation.
6. Strategic Control.
The model begins with an analysis of environmental opportunities and threats. The organization
is affected by environmental forces; but the organization can also have an impact upon its
environment.
The organization's mission and goals are linked to the environment by a dual arrow. This means
that the mission and goals are set in the context of environmental opportunities and threats.
The next arrow depicts the idea that strategy formulation sets strategy implementation in motion.
Specifically, strategy is implemented through the organization's structure, its leadership, and its
culture.
Then, the final downward arrow indicates that the actual strategic performance of the
organization is evaluated.
The control stage is demonstrated by the feedback line that connects strategic control to the other
parts of the model.
Developing The Strategic Management Process
Frederick W. Glueck, Stephan P. Kaufman, and A. Steven Walleck, studied the evolution of
strategic management in 120 companies.
They suggested that strategic planning in most organizations must evolve through four sequential
phases.
Phase 1 Basic financial planning. Organizations in phase 1 emphasize preparing and meeting
annual budgets. Financial targets are established and revenues and costs are carefully monitored.
The emphasis is short-term, and the primary focus is on the functional aspects of the
organization. Most organizations in this phase exhibit few other characteristics relating to the
future
Phase 2 Forecast-based planning. Organizations in phase 2 usually extend of the time frames
covered by the budgeting process. Managers tend to seek more sophisticated forecasts and to
become aware of their external environment and its effect on their organizations. Therefore,
organization in phase 2 has more effective resource allocation and more timely decisions relating
to organization's long-range competitive position.
Phase 3 Externally oriented planning. Phase 3 is characterized by the attempt to understand basic
marketplace phenomena. Organization begin to search for new ways to define and satisfy
customer needs. Moreover, phase 3 differs from the earlier phases that the corporate planners are
expected to generate a number of alterative courses of action for top management. Top
management begins to evaluate strategic alternatives in a formalized manner to planning and
actions.
Phase 4 Strategic Management. Phase 4 is characterized by the merging of strategic planning and
management into a single process. This integrated approach is accomplished through the
presence of three elements: pervasive strategic thinking (managers all levels have learned to
think strategically), comprehensive planning process, and supportive value system.

Evolution Of Strategic Management

Several researchers in the field of strategic management have developed models describing the
evolution of strategic management. In this section I present Ansoff's model.

H. Igor Ansoff analyzed the changing environmental challenges facing organizations during this
century and the managerial responses, competitive strategies, and entrepreneurial strategies
employed to cope with them.
According to Ansoff, during the twentieth century, two different types of system have evolved:
* positioning systems (long range planning, strategic planning, strategic position management)
which direct the firm's thrust in the environment;
* real-time systems (strong signal issue management, weak signal issue management, surprise
management) which respond one at a time to rapid and unpredicted environmental
developments.
The systems can be grouped into four distinctive stages of evolution,that were responsive to the
progressively decreasing familiarity of events and decreasing visibility of the future:
1. Management by (after the fact) control of performance, which was adequate when change was
slow.
2. Management by extrapolation, when change accelerated, but the future could be predicted by
extrapolation of the past.
3. Management by anticipation, when discontinuities began to appear but change, while rapid,
was still slow enough to permit timely anticipation and response.
4. Management through flexible/rapid response, which is currently emerging, under conditions in
which many significant challenges develop too rapidly to permit timely anticipation.

SUMMARY
Strategic management is a continuous process. There are three stages in this process: strategy
formulation, strategy implementation, and evaluation and control.
Strategy management is also viewed as series of steps. Therefore, the strategic- management
process can be best be studied and applied using the model. A review of the major strategic
management models indicates that they all include the following steps: performing an
environmental analysis, establishing organizational direction, formulating organizational
strategy, implementing organizational strategy, evaluating and controlling strategy.
The strategic management process mostly involves top management, board of directors, and
planning staff. In its final form, a strategic decisions is moulded from the streams of inputs,
decisions, and actions.
All organizations engage in the strategic management process. The success of an organization is
generally dependent upon the strategic management and organizational abilities of the managers.
Moreover, the concept of strategic management is still involving and will continue to undergo
change. Therefore, understanding and following and complete process of strategic management
can be helpful to practicing managers to gain organizations' objectives.

CHAPTER 3
ANALYSIS AND DISCUSSION

Strategic Management in Banking

Good strategy-making and good strategy-execution are the key ingredients of company success
and the most reliable signs of good management. This course is designed to help managers gain
an understanding of the theory and practice in the field of strategic management and leadership.
The goal is to give you a thorough understanding of the analytical techniques and tools necessary
to identify and formulate strategies successfully, and what skills you need as a leader to
implement them. Specifically, the course will focus on two main areas: (i) Strategy Management,
including: industry and competitive analysis; strategy formulation; and strategy implementation;
(ii) leadership, including: types and styles of leadership; delegation, communication; team
building; and conflict resolution.
Reassess the future of banking and strategy
How should banks reassess their strategies after the global banking crisis? What are the strategic
implications of the new Basel 3 regulations on capital and liquidity? How will big data and
digital banking change the future of banking? The Strategic Management in Banking program
provides senior bankers and board members with the opportunity to reassess and explore the
future of banking, developing new approaches for strong strategic management in a rapidly
changing environment.
How you benefit
• Build a command of strategic positioning. Gain expertise in strategic positioning,
including competition with new entrants and growth.
• Reassess asset management and private banking. Explore and anticipate the future of
asset management and private banking.
• Master big data and digital banking strategies. Learn to use big data and digital banking
to develop new ideas for cultivating customer-centricity.
• Enhance skills in asset and liability management. With the help of a simulation, enhance
your skills in asset and liability management.
Participant Profile
The program is designed specifically for senior bankers, including board members, responsible
for retail, corporate, capital markets and international banking.
Importance of strategic management accounting for bank management
As part of significant dynamic changes in the banking sector, the aim of this paper is to identify
the information portfolio for strategic management in Serbian banks. Foreign banks entering the
domestic market of banking products have caused the competition in the banking sector to
increase, which fostered the information to become a resource of primary importance for the
formulation of the bank’s strategy in various business segments.
In the past decade many events have affected the financial services industry, especially for the
banking segment. “Events such as deregulation of deposit rates, the fall of geographic barriers,
an economic downturn, and increasing non‐bank competition, have all caused the banking
industry's policies and leadership practices to be re‐evaluated by such authorities as shareholders,
directors, regulators, and management itself” (Want, 1990). Also, due to industry pressures,
many banks are having to stretch themselves into market sectors and services that would
otherwise have been unheard of just a few years ago. Tough times have arrived, and throughout
the industry banks are seeing slower growth in loans, deposits, and fee income. Overall, these
changes have required some type of reaction from the banking industry in order to survive.
“Conventional reactions to these types of industry changes could entail any of the following: cost
cutting, revamping of the organizational structure, acquisitions of other financial institutions, sale
of marginal businesses, elimination and reduction of support staff functions, new technologies
and training efforts to improve operational efficiencies, and new marketing strategies” (Want,
1990). While any one of these strategies may be successful for some organizations, they can
result in a detriment to others. “A key success factor in using these strategies is not to use any
one of them in isolation. In fact it is suggested that a combination of strategies be used to
incorporate one corporate strategic plan” (Want, 1990).
 Wegagen at a Glance

Who We Are
Wegagen Bank S.C was established on June 11, 1997. It came into being thanks to 16 visionary
founding members who recognized the critical role that financial institutions would play to
create a sustainable economic development and raised an initial capital of Birr 30 million. As at
June 30, 2015, the paid up capital of the Bank reached Birr 1.5 billion. The number of
Shareholders is now 2,280.

Overview of Wegagen Bank S.C.

Company Overview
Wegagen Bank S.C. provides commercial and international banking services in Ethiopia. It offers
various deposit products, including overdraft accounts, checking deposits, negotiable order of
withdrawal accounts, zero balance accounts, escrow accounts, savings deposits, and fixed time
deposits. Its loan portfolio comprises term loans, merchandise loans, trade and service loans,
agriculture production loans, manufacturing loans, building construction loans, bridge loans,
consumer loans, and automobile loans. The bank also offers international banking services, forex
bureau services, and local and international money transfer services. Wegagen Bank was founded
in 1997 and is headquartered in Adis
Company Description: Wegagen Bank is a pioneer Bank to introduce a core banking system in
July 2000, thereby managed to network the Head Office organs, City Branches and some of the
Outlying Branches. At present, migration of the existing Core Banking System into a more
versatile and ISO-standard solution is completed. The Bank has also implemented a full-fledged
Card Payment System, enabling its customers to get 24/7 banking services, on our ATM network,
and on POS Terminals, as well.
Products and Services: payment card banking services, dependable international money transfer
service
Detailed Description
Who are we? : Wegagen Bank is a private bank established as a share company and started
operation on June 11, 1997.
Vision: “Becoming the most preferred Bank in Ethiopia”.
Mission: “To provide a wide range of quality banking services through a dynamic workforce and
up-to-date IT solutions to satisfy the desires of all stakeholders”.
Head Office: The Bank operates through the Head Office located in Addis Ababa inside Dembel
City Center on Africa Avenue (Bole Road). A suitable design has been selected for its future
headquarters in the city’s heart, (Stadium area), and tender for construction shall float soon.
Branches: Currently the Bank has a network of 47 branches, out of which 21 are in Addis Ababa
and the remaining 26 are spread across major towns in the country. The Bank has also a forex
office inside Bole International Airport terminal (Annex III).
Deposits: Total deposits of the Bank reached 3.7 billion as at March 31, 2009.
Loans: Currently, the amounts of loans channeled into the Advances economy kept on growing
and reached Birr 2.4 billion.
Capital: As at March 31, 2009 the Bank’s paid-up capital reached Birr 509 million (Birr 646.9
million, including legal reserve).
Shareholders: The total number of shareholders kept on growing and reached 1,200.
Asset: Total Asset of the Bank stood at Birr 5.3 billion as at March 31, 2009.
Profit: A net profit before tax of Birr 190 million was registered in FY 2007/08 (according to
audited financial report).
Management: The Bank is supervised by the Board of Directors, which consists of a Chairman,
a Vice Chairman and seven other members. The Management is entrusted to the President/CEO.
The President/CEO oversees two Vice Presidents, the Controller, Legal Department, Risk
Management Department and IS Department. There are Seven Department Managers who also
report to the two Vice Presidents.
Staff: The Bank’s staff strength reached 1,672 as at March 31, 2009.
Customers: The number of customers that maintain their account with the Bank grew to over
168,000.
Technology: An integrated computerized banking system, the first of its kind in Ethiopia, has
been implemented and Head Office, city and some outlying branches are networked. The rest of
outlying branches are being connected phase by phase. Implementation of card payment system
is underway.
Product Range: The Bank offers full-fledged domestic banking services: mobilizing deposits,
providing varieties of credit facilities, local transfer services; and international banking services:
import-export services, conducting foreign exchange facilities and international money transfer
services.
Correspondent: The Bank works with numerous correspondents banks with valid Swift BKE
(Annex I), which are 96 in number and 19 banks for Standard Settlement Instruction (Annex II.)
1. General Information
1.1 Establishment
Wegagen Bank, S.C. is a privately owned company that was established as a result of the
country’s New Economic Policy and Institutional Reform Program that began in the middle of
1991. In recognition of the role that financial institutions would play in a sustained economic
development, the Founding Members seized the opportunity to create Wegagen Bank, S.C.
Established under the Licensing and Supervision of the Banking Proclamation No. 84/1994, the
Bank was registered with the National Bank of Ethiopia on April 30, 1997. The Memorandum
and Articles of Association of the Bank were signed on April 15th, 1997 and registered with the
Addis Ababa Bureau of Trade, Industry and Tourism on April 15, 1997, Registration Number
1/34/4/89.
Wegagen Bank started operation on June 11, 1997 with a subscribed capital of Birr 60 million,
out of which Birr 30 million was fully paid.
1.2 Vision and Mission
In order to achieve service excellence and become the preferred destination of customers and
other stakeholders, we have coined our vision as:
"Becoming the most preferred Bank in Ethiopia".
When we say this, we are heading forward to become the point of preference or a one-stop shop
for banking services for all our customers. We are building our capacity both in terms of skilled
manpower and technology to effectively respond to the prevalent local and global situations in
lieu of providing customer centric and efficient services. That is why we have set a relevant
mission to realize our vision as "to provide a wide range of quality banking services through a
dynamic workforce and up-to-date IT solutions to satisfy the desires of all stakeholders".
2. Objectives
The objective of the Bank could be stated as:
1. To increase the level of capital in order to raise the lending limit of the Bank and obtain a high
income.
2. To increase market share.
3. To maximize profitability and increase efficiency.
4. To contribute to the general economic development efforts of the nation.
5. Principles and Values

Wegagen Bank is committed to core business principles, through which dynamic and motivated
staff members make lasting customer relationships. The principles and values of the Bank, in
explicit form, are:
• Outstanding customer services,
 • Business integrity,
• Effective, efficient and expanding operations,
• Prudent lending,
• Reasonable cost control disciplines,
• Fair employment practices,
• Play a reasonable role in aligning objectives of the Bank with those of the local
communities, and
• Commitment to comply with the spirit and letter of the Law.

3. Core Competencies
While we have been in operation for a decade, we have built and continue to build our specific
and unique competencies, which could be mentioned as:
i. Improved use of ICT and networked branches through the state-of-the-art technology.
ii. Collective, participatory and transparent managerial decision makings,
iii. Energetic, committed and experienced work force, and
iv. Network with international money transfer agents.

4. Major Activities
The Bank has always taken an extra step to attain its goal of becoming one of the top performing
banks in the country in terms of quality of services, market share and long-term profitability. The
strategy is to achieve this goal through customer service commitment, cost control, quality of
credits, capital strength and core business concentration.
Wegagen Bank is already a pioneer in availing uninterrupted nine-hour service, six days a week
to its customers. Its customer base is healthy, extending loans and advances to a number of
business communities in various areas: agriculture, manufacturing, import and export,
construction, wholesale and distribution, etc. The major activities of the Bank are:
• To accept all types of deposits (savings, time and demand) and pay attractive interest rates on
interest bearing accounts (including provident fund and child trust deposits);
• To render fast and reliable local & international funds transfer services;
• To provide short and medium-term loans & advances and related lines of credit to commercial,
industrial and agricultural business enterprises;
• To provide consumer (personal) credit facilities for the purchase of automobiles, household
goods, etc.
• To provide full-fledged international banking services using SWIFT network, which is an
international inter-bank computer link-up.
5. Organization & Management
5.1 Organizational Chart
The Organizational Chart of Wegagen Bank, S.C. is attached as Annex IV.
5.2 Management
The Bank is supervised by the Board of Directors, which consists of a Chairman, a Vice
Chairman and seven other members. The Management is entrusted to the President/CEO, who in
turn supervises two Vice-Presidents, the Controller, Risk Management Department, Legal
Department and IS Department. Seven Department Managers report to the two Vice Presidents.
Mid management staff members are selected from a pool of experienced banking professionals
who can cater to the needs of customers with efficiency and expediency.

Vision
“To be one of the ten most reputable and competent banks in Africa by the year 2025.”
Mission Statement
• Our Mission is to:-
• Provide wide range of innovative and customer focused financial products and services.
• Employ state-of-the-art Information Technology with a view to boost operational
excellence.
• Be the employer of choice by creating conducive working environment wherein
employees achieve their career aspirations.
• Promote Corporate Social Responsibility, Good Governance and Compliance with
applicable laws, rules & regulations.
Core Values
• Honesty, Integrity and Loyalty: We are fair, transparent, and honest. By being sincere
and consistent in our behavior, we are accountable and transparent in our actions, thereby
delivering our promises.
• Service Excellence: We strive for excellence and quality in everything we do. We are
committed to satisfy our customers by providing timely, responsive and proactive
services.
• Professionalism: Our customers will be served by competent and highly trained
employees providing professional, courteous and friendly service. We are hardworking,
committed, efficient and responsible.
• Learning and Innovation: We encourage learning, initiatives and new ideas, recognize
people for their creativity, and challenge existing practices, as well as seek and identify
improvements. We enhance team sprit; share our expertise, ideas, information and
knowledge to achieve our common goals.
 • Employee Satisfaction: We consider our employees as valuable organizational resources
• Respect and Dignity: We respect and value those we work with, and the contribution
that they make. We act fairly, ethically and openly in all we do.
• Social Responsiveness: We do everything we can to contribute to the community we
work in. As a good corporate citizen, we actively participate in deserving social activities.
• Good Corporate Governance: We comply with laws, rules, regulations of the country
and international laws.
• Equal Employment Opportunity: We provide equal employment opportunity for all
irrespective of their origin, ethnicity, religion, disability, gender, etc.
Main Objectives
• Maximizing profitability through increased efficiency
• Enhance growing market share
• Expanding the bank’s capital base
• Ensuring excellence in customer services
• Provide differentiated, varied and value added banking services
Major Services
• Accept different types of deposits,
• Grant varieties of loan facilities,
• Offer full-fledged international banking services,
• Render local and international money transfer services and
• Payment Card services through ATM and POS network.
Branch Network
Wegagen Bank has a network of 146 branches of which 60 are in Addis Ababa and the remaining
86 are located in other cities and towns of the country. To expand its service coverage, the Bank
keeps on opening additional branches both in Addis Ababa and regional towns.
Corporate Governance
Wegagen Bank is governed by the Board of Directors consisting of a Chairperson, a Vice
Chairperson and seven Directors. The overall management is entrusted to the management team
which comprises the President/Chief Executive Officer, who is appointed by the Board of
Directors, four Vice-Presidents and sixteen Directors as well as Manager of Engineering Service.
As at March 31, 2015, the number of employees of the Bank stood at 2,951, of which 987 are
diploma holders, 1,067 are holding first and second degrees, while the remaining 897attended
high school and different levels of education.
SWOT analysis
DVB's business model is based on a detailed analysis of its key strengths, weaknesses,
opportunities and threats – a so-called SWOT analysis. Our competitive strengths and business
opportunities clearly distinguish the Bank from other market participants. It is this competitive
edge that allows us to successfully deal with the challenges of cyclical markets, and to act in the
best interests of our discerning clients.
Strengths
• Clearly focused business model with a unique specialization, cycle-neutral business
approach and global presence in all key transport markets
• Conservative and sustainable business policy
• Transparent structures, high degree of flexibility and fast decisions
• Highly qualified and experienced staff
• Customized products and services, high level of client service and close contacts to
manufacturers and leasing companies
• Extensive market and asset expertise
• Credit portfolio diversified by multiple criteria and categories
• Advanced risk management and pricing systems
• Granular and matched-maturity funding
• Strong capital base due to own funds
Weaknesses
• Higher liquidity costs, compared to most competitors
• Direct relationship between the Bank's business development and GDP growth
• Relatively high sector exposure
• Global presence requires high staff resources
• High staff costs due to high levels of employee qualification in terms of academic
expertise and experience
• No material client deposits
• Exposure to the Euro/US dollar exchange rate, with an impact on growth and results
Opportunities
• Realization of margins in line with risks taken
• Expansion of anti-cyclical Investment Management activities
• Building new client relationships
• Numerous initiatives taken to broaden the product portfolio and enhance cross-selling
 • Funding available through access to the extensive liquidity offered by the German
Cooperative Financial Services Network
• Expanding the advisory and other services offered to clients, investors, and banks
• Boosting DVB's reputation as a reliable partner to the international transport industry

Threats
• Distortions on the money and capital markets, in the broadest sense
• Significant decline in transport asset values, in various market segments
• Rising threat of recession, on a global scale
• High level of early repayments, which have a negative impact on the net interest margin
• Fallout of the global financial markets crisis, as well as development of the Chinese
economy
• Indebtedness of certain industrial nations and emerging economies
• Rise of the US dollar against the euro
• Further increasing regulatory requirements
• Volatility of commodity prices, especially oil prices

YIRGALEM CONSTRUCTION PLC

Vision
To see the firm participating and accomplishing various level of construction services in the
national level by strengthening technical professional and efficient approach in the coming ten
year.
Values
Well qualified and experienced working man ship with a number of professional engineers and
related professional that are collaborated with good management team and efficient equipment
and material. The company has owned a number of large machineries and vehicles that can an
input for the construction works of different project in parallel manner.

Objective
It has got approved quality management system by which all department plane their objectives
and measure their performance by implement effective record management system that are
related to construction process.
Goal
Involves the translation of design into reality formal design team may be assembled to plan the
physical proceedings and to integrate those proceeding with the other part.
Abstract
Our thesis is based on wegagen bank Hawassa Branch for non-construction companies and
yirgalem construction PLC for construction how they implement strategic management through
organizational structure. We get important information from customer service supervisor branch
level. both company has strategies management system.
Wegagen bank has concept about it. Their strategy management is more focus man power
administration and employed education capacity building. The first advantages of strategy
management the bank procedure apply smoothly and the second progress of the bank any
direction. Their is no any difficulty to apply strategy management.
Wegagen Company employed good costumer. Handling by different circumstance. Like:-
internet banking with internet banking you can view your balance and recent Transaction
Go”paperless” and move money between your account. You financier are at your fingertips
The business environment can be defines as the sum of variable impacting on the
competitiveness and ultimate the survival and growth of a firm. Despite the experience of
construction and non-construction organization it is possible to turn strategic management in to
individual action. Necessary to produce a great business performance but it is not easy many
companies reputedly fail to truly to implement strategic management but most companies and
organization knows there business and the strategy require for success specially large once
struggle to translate the theory in to action plane that will enable the strategy to be success fully
implemented and sustained there are some leading edge methods for effective strategic corporate
implementation.

CHAPTER 4
CONCLUSION
This is a general overview on how our questionaries had answerd . It is inorder to give a compresive
explanation based on the answer we have gotten . Besides this the origional questionary paper is will
be submitted with in project paper.
The questionaries that we have sent to Yergalem construction P.L.C had answered by contract
adminiesterator in the campany ! Our questions mainly intendend to ask aiot about the strategic
mana gement system and thier SWOT ( strength,weakness,opportunity and threat) analysis .
As if they are GC-1 contractor ;they a lot adapt to strategic management system and try to
explane how tey are undderstand it . They said strategic management is "It is about formulation
and implementation of obgectives and goals of each departement of the campany . Yiargalem
constraction has got eight and each of them develop their own objectives and the top maneger
measures thir performance based on thir achivements according to the standard "
We had also asked what advantages they will get in applying the static management sysem .
They told a lot advantage relating to this from those the major are to utilize the human resourse
properly , to use ther time as requird besedes they intend to emphasize as it minimize risk and
business failure, increase prodctivity and help to achiveement of higer goals !
The fundemental question is as they are familiar with SWOT analysis. as expected they
positively answerd YES and try to express how they are using it . There are more advantages
using SWOT analysis in case of a construction bid . As tey are contractor most of the time have a
great connection with bid and contract agreement . In construction bid based on SWOT analysis
they view their internal factors (strength and weakness)and the two external factors (opportunity
and threat) and analysis these factors tey will decide to participate on the bid or not based on the
result of analysis .
In addition to this as a great strength Yirgaem constraction p.l.c has got approval quaity
maneagement system by which all the departement plan thier objectives and measure their
performance .
As an end question we had try to ask if they can give us any existing document relating to
strategic management system in their campany . Being as good as a gold they support as with
giveing a docment that tells about the objective of construction department .T conclude this all
are a general expression how yirgalem consruction plc is performing thier task accourding to
thier stratagic mangement system .

REFERENCES
Ambrosini, V., & Bowman, C. (2009). What are dynamic capabilities and are they a useful construct in
strategic management?. International Journal of Management Reviews, 11(1), 29-49.
Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management
Journal, 14(1), 33-46.
Bang, H. L. (2002). Strategic Organization of Construction Contracting Firms: Ownership, Form, Growth,
and Boundaries. Copenhagen: Copenhagen Business School.
Betts, M., Clark, A., & Ofori, G. (1999b). Strategic management - definitions and techniques. In M. Betts
(Ed.) Strategic Management of I.T. in Construction (pp. 15-39). Oxford: Blackwell Science.
Competition Committee. (2007). Public procurement: The role of competition authorities in promoting
competition. Paris, France: Organisation for Economic Co-operation and Development.
Green, S., Larsen, G. D., & Kao, C. C. (2008). Competitive strategy revisited: Contested concepts and
dynamic capabilities. Construction Management and Economics, 26(1): 63-78.
Koesmargono, A. (2004). Pengaruh manajemen stratejik pada efektifitas organisasi : Studi kasus pada 21
perusahaan kontraktor di Indonesia. Jurnal Teknik Sipil, 5(1), 1-12.
Love, P. D., Holt, G. D., & Li, H. (2002). Triangulation in construction management research. Engineering,
Construction and Architectural Management, 9(4), 294303.
Mahoney, J., & Pandian, R. (1992). The resource-based view within the conversation of strategic
management. Strategic Management Journal, 13(5), 363-380.
Mintzberg, H. (1983). The new managerial work. New York: Prentice Hall.
Porter, M. E. (1985). Competitive Advantage: Creating and sustaining superior performance. New York:
Free Press.
Porter, M. E. (1990). The competitive advantage of nations. New York: Free Press.