A survey of strategy formulation practices in large financial services businesses in South Africa
Thesis (MPhil)--Stellenbosch University, 2010.
The research undertaken in this paper explores the strategy formulation practices of large financial services organisations in South Africa. Following a review of academic sources, it was concluded that strategy formulation comprises three distinct but interdependent activities. The first is that of foresight development, followed by strategy development and finally strategic or business planning. In addition, a variety of approaches to stakeholder engagement are possible. A review of similar research identified primary research into foresight practices in Europe and the professional experiences of two South African chartered accountants of strategic or business planning. No research on strategy development was identified. Thus, the researcher chose to conduct primary research in the form of a survey to interrogate each of the strategic activities. This focused on the level of resourcing applied to each activity, the tools used, the time horizon adopted and the breadth of stakeholder engagement. A review of the South African financial services industry suggested that banking, short-term insurance and long-term insurance needed to be included in the sample. An analysis of the respective organisations‟ market share for most key products was completed. This produced a sample of twelve organisations which had a market share in excess of 10per cent as at 31 December 2009 with the exception of those selected based on total life insurance premiums, which were based on December 2008 data due to information availability. Of the twelve organisations identified 66per cent (or eight) responded to the survey which was conducted using an online survey tool. Three respondents chose to respond telephonically when contacted by the researcher. The respondents for the respective organisations were either senior managers, in several cases members of the executive team, or people involved with strategy formulation at a corporate or group level. In order to increase the response rate, the survey was conducted anonymously, thus limiting comparison been organisations and industry sectors. The result of the analysis highlighted two key dimensions on which organisations differed. The first is the time frame used. Only two organisations regularly look more than three years ahead. The second is that of stakeholder engagement. Half of the respondents are interactive and include employees in the strategy formulation process, while the other half is autocratic limiting strategy formulation activity to management and often senior management only. This lead the researcher to conclude that while a wide array of strategy formulation tools are applied, many South African financial services organisations have opportunity to improve their strategy formulation practice by being more inclusive and adopting a longer and more holistic approach to scanning and foresight as part of the foresight development activity.