CHAPTER 1 – POLICY AND STRATEGY
FEATURES OF BUSINESS POLICY
STRATEGY
- A distinctive plan created to deal with the
allocation and deployment of physical and
human resources so as to reach a market
position and accomplish the organizational
goals and objectives in the face of
environmental pressures.
1. SPECIIFIC
- should be explicit
POLICY
- A set of guide to thinking and action formulated
by the organization for balanced decision
making.
3. RELIABLE/UNIFORM
- must be standardized enough so that it can be
efficiently pursued by the subordinates
THE NATURE OF BUSINESS POLICY
 In order for an organization to accomplish its
annual objectives it needs to have policies.
 Guidelines, rules and procedures that support
efforts intended to accomplish declared
objectives are incorporated in policies.
 Policies make certain that each unit of the
organization function under the same standard
rules.
 Coordination and communication among
different units of the organization are made
possible through polices.
 Without consultation from top level
management when making decisions, lower
level management is permitted to deal with
problems and issues
BUSINESS POLICY
- Defines the scope or boundaries and serves as
an overall guide within which decisions can be
taken by the subordinates in an organization.
- Develops the general management standpoint
that will direct and administer the actions of the
organization.
- Handles the acquiring of resources which the
organization would make use of in the
attainment of its objectives
- Commonly have extended life
The policy statements are wide-ranging at the top
level.
Top management’s responsibility
- the formulating and approving of major
comprehensive organizational policies
Middle management
- less important policies concerning the
operations of the various sub-units of the
organization
Lower level management
- creates more specific policies
2. CLEAR
- must be definite
- must prevent the use of jargons and
connotations
- no misinterpretation in pursuing the policy
4. APPROPRIATE
- should be suitable to the current organizational
goal
5. SIMPLE
- must be straightforward and without doubt can
be understood by the entire organization
6. INCLUSIVE/COMPREHENSIVE
- in order to have an extensive scope, a policy
must be wide-ranging
7. FLEXIBLE
- should be bendable in procedure/application
- it must be extensive in scope as to make certain
that the line managers make use of them in
repetitive/routine situations
8. STABLE
- should be steady or else it will lead to
uncertainty and hesitation in minds of those
who regarded it as guide
IMPORTANCE OF BUSINESS POLICY
- shows the satisfactory performance restrictions
while at the same time attending to the needs
of the employees
a. BALANCE
- Promotes individual productivity
- Employers must be clear in dealing with
employee goals and inform the latter on the
manner of accomplishing these goals
- A business policy has to be properly
communicated,
realistically
implemented,
directed and updated.
b. JOB DESCRIPTIONS
- Each position in the organization needs to
be properly described and be included in
the business policy.
- A well-thought of and soundly written
business policy makes it easier for business
to operate even with no regular
involvement by management.
c. LIABILITY
- The employer may be held legally
responsible for misbehavior done by
employees on the job particularly if such
naughtiness affected stakeholders.
d. CONSEQUENCES FOR VIOLATIONS
- There should be a concrete rules that deal
with any disobedience of the business
policy.
DIFFERENCE BETWEEN POLICY AND STRATEGY
POLICY
Focused largely with
organizational
management
Can be delegated for
implementation
Outline of the
organizational activities
Task of top level
management
Governing an organization
Thoughts and actions
What should be done and
should not be done
STRATEGY
Takes care of
environmental limitations
and opportunities
Last minute executive
decision cannot be
delegated
Organizational decisions
which have not been dealt
with or encountered
Task of middle level
management
Strategic decisions
Actions
Methods applied
EXAMPLES OF COMPANY POLICIES
1. SUBSTANCE ABUSE
- An employee’s attendance and productivity
is affected when he is taking in abusive
substances like drugs and alcohol.
2. DRESS CODE
- Dressing in a particular manner is often
required by various organizations from their
employees.
3. COMPUTER USE
- In an attempt to restrict the use of Internet
surfing and to increase productivity, some
organizations may execute a policy about
the use of computers inside the place of
work.
4. ELECTRONIC COMMUNICATIONS
- Most companies execute an electronic
communications policy to administer the
use of Internet, e-mail, mobile phones,
telephones, fax machines and personal
media devices.
5. WORKING FOR OTHERS
- In order to protect the employer, a policy
restricting an employer’s ability to work for
others may possibly exist.
6. SEXUAL HARASSMENT
- It consists of making unwanted sexual
advances, making sexually open comments,
sung sexually overt language or requesting
sexual favor in exchange for a salary raise or
promotion.
7. SMOKING
STRATEGY DEFINITION
- It came from the ancient Greek word
“strategos” – “the general’s art”
HENRY MINTZBERG’S FIVE P’S:
1. STRATEGY AS PLAN
PLAN – is a kind of deliberately crafted course
of action that serves as a guide in handling a
situation to become successful
2 Fundamental Characteristics of Strategy Plan:
a. Strategy is prepared in advance of the actions
to which it applies
b. It is formulated intentionally and on purpose.
BUSINESS MODEL
- Vital element of an organization’s strategic
plan
- Explains the course of action that the
company would follow to earn profits
2. STRATEGY AS A PATTERN
- Centers on the extent to which an
organization’s stream of actions over time
are consistent.
PATTERN STRATEGY = looks at what has
worked in the past ---- & seek ways to continue,
even enhance this pattern
Market patterns are often unintentional --- Key
is to be able to identify such patterns --- &
where they’re beneficial incorporate them into
your strategy.
3. STRATEGY AS A POSITION
- Refers to an organization’s position in the
industry relative to its competitors.
4. STRATEGY AS A PLOY
- is an explicit move intended to outsmart or
deceive competitors
PLOYS – may consist of plotting disrupt,
dissuade, discourage, or otherwise influence
them as part of a strategy
5. STRATEGY AS A PERSPECTIVE
- refers to how managers construe the
competitive situation around them
- a strategy could be considered as
perspective when majority of the people
inside the organization have the same
viewpoint during the crafting of strategic
decision
- it must be shared by organizational
members through their actions and targets
- culture plays an important role in the
choices of organization about its strategy
Quality & execution of classic products +
Innovation & creativity for new products =
Perspective Strategy needs to match your
culture.
TYPES OF STRATEGY
1. INTENDED STRATEGY
- is nothing but a deliberate course of action
reflected to be most appropriate for
accomplishing preset corporate goals
- it is the approach that an organization looks
forward to implement
- conceived by top management
- is the outcome of a process of negotiation,
bargaining and comprising
- what the organization designed to do
Business plan
- when a strategic plan is formed for a new
enterprise
- is an intended strategy since it is the draft of
the strategy that the organization proposes so
that it will be on the right track
Positioning
- refers to the approach the company would
relate with the external environment and its
reaction in the change of government
2. DELIBERATE STRATEGY
- entails the management detailing the actions
that the company must be doing to realize
definite goals
- is analytical and structured with vision
statement, mission statement, strengths and
weaknesses (SWOT), objectives and so on
- the parts of the intended strategy that the
organization continues to practice over time
3. EMERGENT STRATEGY
- is an unplanned strategy that arises in response
to
the
various
unexpected
threats,
opportunities and challenges
-
-
-
takes place in the absence of a plan to execute
by management
describes the constant development of
corporate strategy of an organization to keep
pace with and to overtake the external
environment to accomplish pre-set targets
a learning process where the whole corporate
body understands the facts and figures coming
from external environment and assesses the
changes in external and internal environment
what the organization did in response to
unanticipated opportunities and challenges
4. REALIZED STRATEGY
- is the strategy that an organization actually
follows
- a product of an organization’s intended
strategy, the organization’s deliberate strategy
and its emergent strategy
THE NATURE OF STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
- is the management process and decisions that
decide the long-term structure and activities of
the company
- it is a process which determines whether an
organization excels, survives, or dies
- is equally an art and science that concerns on
formulating, implementing, and evaluating,
cross-functional decisions that make easy for an
organization to achieve its objectives
5 IMPORTANT THEMES OF STRATEGIC MANAGEMENT:
1. Management process
- relay to how strategies are created and changed
2. Management decisions
- the decisions must relate clearly to a solution
of perceived problems
3. Time scales
- the strategic time option is long however, for a
company in real trouble this can be very short
4. Structure of the organization
- an organization is managed by people in a
structure
5. Activities of the organization
- a potentially limitless area of study and
normally centers upon all activities which
involve the organization
STRATEGIC MANAGEMENT PROCESS
Strategic management offers the following:
1. a planned direction approved by the team and
stakeholders
2. an understandable business strategy and vision
for the upcoming years
3. a technique for accountability
4. a framework for governance at various levels
5. a reasonable structure to manage risk for
business stability
6. the potential to make the most of opportunities
and respond to external change through taking
current strategic decisions
PHASES OF STRATEGIC MANAGEMENT:
1. ENVIRONMENTAL SCANNING
- is the beginning of the strategic planning
process and includes doing situational study of
the organization in the environmental
perspective
- the organization needs to find out its market
position relative to competitors, its image as a
business, its strengths and weaknesses as well
as its opportunities and threats
2. STRATEGIC FORMULATION
- consists of crafting a vision and mission,
determining the external opportunities and
threats of an organization, identifying internal
strengths and weaknesses, setting up long-term
objectives, developing alternative strategies,
and selecting specific strategies to pursue
-
emotional and intellectual in pursuing the
future (theorists Hamel and Parahald)
the idea of strategic intent came from the
Japanese in Post-Worldwar II
STRATEGIC MANAGEMENT BENEFITS
 identification
 prioritization
 discovery of opportunities
FINANCIAL BENEFITS
1. RELEVANCE
- Strategic management facilitates the creation of
an
occupational
environment
where
department supervisors may obtain a new way
of operating their processes and to be
courageous in making the needed changes.
2. PROFITABILITY MANAGEMENT
- Honest and differing viewpoints of various
department heads aids a company discover a
lot concerning its customers and stimulate sales
later.
- In order to measure profitability, strategy
managers make use of the company income
statement known also as the statement of profit
and loss.
3. STRATEGIC IMPLEMENTATION
- to establish annual objectives, prepare policies,
motivate employees, and allocate resources so
that prepared strategies can be put into
practice
3. LIQUIDITY MONITORING
- Liquidity loss is a serious warning that there is
an upcoming short term problem from the
management viewpoint.
- Strategic management assists organizations
check cash balances and make certain that
accessible cash is aligned with long-term goals.
- Statement of cash flows
4. STRATEGIC EVALUATION AND CONTROL
- the final phase
- the core process for acquiring the information
such as what time appropriates strategies that
are not working as they should
4. SOLVENCY ADMINISTRATION
- The best asset-debt combination is managed by
the organization with use of strategic
management to help maintain solvency.
- Statement of financial position
STRATEGIC MANAGEMENT MODEL
- fundamental steps
of the strategic
management
- identifies concepts of strategy and the elements
necessary for development of a strategy
enabling the organization to satisfy its mission
NON-FINANCIAL BENEFITS
STRATEGIC INTENT
- is the high level statement of the way through
which an organization is able to accomplish its
vision
- is a management idea that refers to a grand and
persuasive dream that offers vitality both
1. IMPROVES STABILITY
- Strategies like setting up a new business, selling
into new market segments or adding a novel
product line facilitate stability improvement.
2. DECREASES RISKS
- The execution of corporate governance,
internal controls and policies and procedures
using strategic management helps minimizes
legal experiences.
3. STRONG LABOR SUPPLY
-
Proactive staffing practices that improve
workforce performances are included in
strategic management.
2. TARGET CONSUMERS
- A well-organized mission statement identifies
extensively the target market.
4. STRENGTHEN BRAND MANAGEMENT
- Generating a particular brand as a component
of strategic management makes easier the
identification of opportunities that will make
stronger the organization as a business.
3. TARGET REGION
- The organization should choose what region it
could serve best and convey that information
using the mission statement.
5. IDENTIFIES (SWOT)
- Strategic management consists of exploring the
strengths, weaknesses, opportunities and
threats confronting the overall company and
individual elements of it.
CHAPTER 2 – ORGANIZATIONAL MISSION, VISION,
OBJECTIVES AND VALUES
REMEMBER: Mission and Vision are standard and
critical elements of a company’s organizational strategy.
ORGANIZATIONAL MISSION AND ITS IMPORTANCE
MISSION STATEMENT
- The statement of the organization’s purpose
- It guides the company in its decision-making
- Provides insight into what organization’s
leaders’ view as the chief purpose for being in
business.
Generally speaking, the target of the mission are:
1. Shareholders
2. Leaders
3. Employees
Components of Strategic Planning:
1. Formulating company objectives
2. Strategies
3. Tactics – actionable steps
Some Examples of Objectives:
1. Market-share targets
2. Revenue or profit goals
3. Achievement of customers satisfaction
4. Enhanced awareness of the brand
To gain superior customer satisfaction:
a. Better training
b. Checking of feedbacks
CHARACTERISITICS OF A MISSION STATEMENT
1. FUNCTION
- The inclusion some description of the function
of the business is a requirement for a mission
statement.
4. VALUES
- Company values should express principles the
company explicitly tries to affirm in day-to-day
operations.
5. TECHNOLOGY
- For businesses that depend greatly on
technology, the mission statement should
contain a description of the important
technology the company does or plans to
employ.
6. EMPLOYEES
- A mission statement offers a chance to express
that policy in a concise way so employees
distinguish the rudiments of where they are
situated.
7. STRATEGIC POSITIONING
- Effective mission statements also incorporate a
concise description of the company’s strategic
position in the market.
8. FINANCIAL OBJECTIVES
- Profit-oriented businesses need understandable
financial objectives.
9. IMAGE
- Companies always aspire to create good public
image.
WRITING A MISSION STATEMENT
Mission statement:
a. Describe the goals, ethics, culture, and norms
for making decisions of an organization
b. Describe the goals of the company and focuses
on its customers, its employees, and its owners
and what the organization can do for them
c. A vital tool to know, create and communicate
basic business ethics which must be concisely
articulated in a paragraph or two
d. A great tool for understanding, developing and
communicating
fundamental
business
objectives
A mission statement must respond to issues concerning
one’s business, such as:
1. The nature of the company
2. What the company is doing, what it stands for
and the reason for doing it such business
3. The desire to make profit or is it enough to just
making a living
4. Markets being served and the benefits being
offered to them
5. Solve a problem for the customers
6. The type of internal work environment
employees desires
a. Start with a Market-defining Story
A truly good story defines the market and gives
details on the needs or wants or the so-called “why to
buy.” It also describes the customer being targeted or
“buyer persona.” Along with it identifies how the
business is distinct from most others, or even
exceptional. It makes simpler thoughts concerning what
a business is not, what it cannot do.
b. Define How the Customer’s Life is Better Because
the Business Exists
Begin the mission statement with what the
company can do well. Use the market-defining story to
discover the reason for the business being special for its
target market.
c. Consider What the Business Does for Employees
These modern days, responsible organizations
want to be excellent in the eyes of their employees. If
the company places importance in keeping its
employees, it tries to excel in turnover for its bottom
line.
Equality, diversity, value for ideas and
originality, empowerment, training, tools, and the like
are factors that essentially matter.
d. Add What the Business Does for its Owners
Business schools trained their students that the
mission of management is to increase the worth of
stock. Shares of stock are in reality the evidence of
ownership. Traditionally, a business exists to enhance
the financial position of its owners, and possibly it does.
e. Discuss, Digest, Cut, Polish, Review, Revise
A good mission statement provides numerous
purposes, name objectives, and survive for a long
period of time. Thus, it is worthy to edit or make
necessary corrections.
EVALUATING MISSION STATEMENT
Here are some things to consider when making
assessment of a mission statement:
1. Is the center of the mission statement concerns
customer satisfaction or the product itself?
2. Does the mission statement inform who the
company’s customers are?
3. Does the mission statement give details on
what specific customer needs the company is
trying to please?
4. Does the mission statement make clear how the
company will provide its customers?
5. Does the mission statement match the present
market environment?
6. Is the mission statement formulated in
reference to the company’s core competencies?
7. Is the mission statement motivating and does it
inspire employee commitment?
8. Is the mission statement practical?
9. Is the mission statement definite, brief, sharply
focused, and impressive?
10. Is the mission statement plain and effortlessly
understood?
11. Does the mission statement tell how the
company desires to be remembered?
ORGANIZATIONAL VISION: ITS IMPORTANCE AND
BENEFITS
VISION STATEMENT
a. Include a viewpoint of corporate values
b. May offer a direction for the company
c. Adds an ingredient of human values, motivate
employees and provide stakeholders with a
sense of reason
d. To differentiate an organization apart from
other players in the industry where it belongs
e. Also provides an organization its unique
identity, company emphasis, and pathway for
progress
f. Offers portrait of what the organization shall
look like say five to ten years from now
g. Similar to a mission statement, it helps the
company to describe its purpose
IMPORTANCE OF A VISION STATEMENT:
1. It is useful in connecting the present and the
future of a company.
2. It offers hope for the future of a company, thus
becoming a supply of inspiration.
3. It helps management of a company in the
formulation of the standards for decision
making.
4. In addition, it enlightens the importance of the
company and helps improve whatever market
place in which the company is a part of. Further,
it develops organization interest and
commitment.
5. A vision statement of an organization assists in
identifying the actions and goals that will help
in accomplishing the vision.
BENEFITS OF A VISION STATEMENT:
1. It gives direction and assists the organization to
get ready for the future.
2. It offers assistance for decision-making.
3. It forms the organization’s strategy.
4. It directs the types of people the company hires
and promotes.
5. It describes what the company will do and what
it will not do.
6. It aids in prioritization and in planning.
7. It makes parallel people and activities across
the business organization.’
8. It offers purpose and a basis of inspiration.
9. It mirrors an organization’s foundation values
and beliefs.
10. It gives power to people and helps center their
efforts.
11. It brings transformation and hope for the
upcoming years.
QUALITIES OF AN EFFECTIVE VISION STATEMENT
1. FUTURE FOCUSED
- A good vision statement provides clear
direction and offers a visible picture of what the
business likely to be in five to ten years times.
2. DIRECTIONAL
- An effective vision offers path and makes
obvious where the organization is heading.
3. CLEAR
- A vision that is clear allows individuals within
the organization to have a collective sense of
what is significant and what is not, to make sure
that they are open to perform in those
constraints.
4. RELEVANT
- A vision to be effective must have a link on
what has occurred during the past to the
preferred future which shows the credibility of
the vision.
5. PURPOSE-DRIVEN
- An effective vision offers a bigger sense of
purpose for the organization as well as its
people.
6. VALUES BASED
- Vision entails a set of values and beliefs that are
necessary to support who organizations have to
become to accomplish the vision.
-
Values are ideals or morals that the
organization shares on what is good or bad.
7. CHALLENGING
- A vision is a challenging goal that should set a
high standard for the entire organization.
8. UNIQUE
- A vision is said to be unique when it pronounces
the characteristics that makes the organization
stands out and why it is significant.
9. VIVID
- Well created visions illustrate the future in a
manner that is simple to visualize and to depict
in the mind’s eye.
10. INSPIRING
- An effective vision connects and encourages
people to make commitment to a cause.
- Vision is inspiring when it stops on in his tracks,
grabs one’s heart and causes him to pay good
attention.
WRITING A GOOD VISION STATEMENT
a. Define the Output
Begin with making clear what the organization
actually does. Make certain to stay focused on the
output not the input.
b. Define the Unique Twist to Bring Out the Above
Outcome
At some point in the organization’s lifespan,
there is this belief of management that the company
will surely become successful while others would fail
because of something impressive. This something must
be defined and become part of the vision statement.
c. Apply Some High-level Quantification
Ironically speaking, most of the times vision
statements are too visionary. Without possible realistic
end in sight, the initial encouragement anchored in
great vision statement can swiftly become
disappointment, or even worst cynicism amongst
employees and customers of the organization. Thus, the
vision statement must not be too specific.
d. Add relatable, human, “real world” aspects
As an ultimate trick to make the vision more
unforgettable, there must be an addition of a real-life
aspect so that consumer could have a concrete picture
to relate with the vision statement.
ORGANIZATIONAL OBJECTIVES
OBJECTIVES
-
-
-
-
Are definite outcome that an organization
obtains in order to achieve its fundamental
mission
Affirm direction, help in evaluation, produce
synergy, disclose priorities, center on
harmonization, and offer a starting point for
effective planning, organizing, leading and
controlling activities
Must have the characteristics of being
challenging, measurable, consistent, realistic,
and visible.
Give the source for strategic decision making
Supply the standards for both the
organizational and individual evaluation of
performance
FORMULATING STRATEGIC OBJECTIVES
CHARACTERISTICS THAT ARE RELATED WITH
SETTING OBJECTIVES:
1. SPECIFICITY
- The concern if specificity is decided by
conveying objectives at various levels and
prefixing terms.
2. MULTIPLICITY
- Refers to the quantity and kind of objectives to
be created.
- In order to cover all functional areas,
management needs to form sufficient and
fitting objectives.
3. PERIODICITY
- Objectives are formulated for different
timeframes.
Long term objectives – less definite
Short-term objectives – definite, specific, complete
4. VERIFIABILITY
- In strategic management, it is meaningful to
make use of just verifiable objectives.
- It is also related to objectives being measurable.
6. QUALITY
-
ORGANIZATIONAL VALUES
1. GUIDE
The principles and ethics can guide the behavior
of organization members. They assist organizations in
determining what is right and wrong.
2. COMMUNITY
Value statements serve as a reference point for
community members outside the organization.
3. ACTING OUTSIDE THE VALUES
When an organization writes down its values, it
lays out its expectations of behaviors for organization
members.
4. MISSION AND GOALS
The ultimate purpose of value statements is to
encourage behaviors from organization members that
promote the achievement of organizational goals and
its mission.
5. LIVING OUT VALUE STATEMENTS
Communication of values is vital both internally
and externally. Organizational values ought to be
updated regularly by members as well as outsiders. This
will promote the feeling of being part of the
organization.
NOTE:
o
o
5. REALITY
o
2 Set Objectives of Organizations:
a. Official Objectives
- are what the organization would aspire to
realize; qualitative
b. Operational Objectives
- are what the organization desires to attain to
become successful; quantitative
The measurement of quality objectives comes
from its capability to furnish precise direction
and concrete basis for appraising the
performance.
The strength of the organizational values
determines how the company functions
whether well or poorly.
Values serve as an operating system that shows
the way to meet the organizational needs and
prioritize these needs.
The purpose of every organization is inspired by
values.