School of Accountancy, Business and Hospitality
Business Administration Department
Curriculum 2019-2020
ONLINE LEARNING MODULE
MGMT 1063-Strategic Management
AY 2021-2022
Lesson 1: Introduction
Topic:
The Strategic Management Process
Learning Outcomes:
At the end of this module, you are expected to:
1.
2.
3.
4.
Discuss the concept on business policy and strategy
Describe the strategic-management process.
Identify the benefits of strategic management.
Explain the bases of Policies and Strategies
LEARNING CONTENT
Introduction:
This introductory lesson focuses on activating your knowledge on strategic management. This may no
longer be new to you as you are already on your third year in tertiary education. Often times, strategic
management is used interchangeably with decision making, however, these two are in a way similar when it
comes to implementation. So brace yourself and bring out all that strategy you know to learn with full
understanding what strategic management is.
So, what comes then into your mind whenever you hear the words “strategic management”? Maybe it’s
the instructor who comes into your mind but whatever or whoever it is, strategic management will bring out all
the best that you learned in your business administration journey.
We’ve been into this pandemic for a long time now and it won’t be new anymore for you to know that
majority of the businesses from all around the world have been suffering because of the COVID-19.
Nevertheless, it is interesting to note that this time of difficulty faced by enterprises nowadays has something
to do with strategic management. If it is employed, do you think they all need to suffer from recession? All
these and more we are to unfold as we go about this course.
Lesson Proper:
MGMT 1063-Strategic Management| 1
The success of an organization is strongly linked to how the management perceives the goals to be
achieved and the ways devised to achieve those goals. These are two different but interrelated concepts of
policy and strategy.
Organizational success or failure is largely dependent on how the various functional areas in the
organization are combined to produce and deliver value to different stakeholders. This integration of functions
is taking place in a continuously changing and complex environment. The formulation and implementation of
policies and strategies is an important issue as the organization strives to remain successful and grow in an
increasingly complex, competitive and globalized world. It is therefore interdisciplinary by nature and requires
an understanding of all functional areas.
Business Policies – rules that guides the decisions and actions of the members of the organization. It guides
the conduct of the business in pursuit of profit and other objectives of the business.
Business policies are used to guide personnel in doing things right to be able to operate the business
in a more competitive manner. They serve as guideposts or perimeter within which decisions have to be
based upon. Business policies are set forth by the top management and hence must be adhered to. Policies
are marching orders for middle management to implement and rank and file has to do the actions. The more
policies are clearly understood, the more harmonious a workplace become.
Policies come from:
a. Operational manual- documentation by which an organization provides guidance for members and
employees to perform their functions correctly and reasonably efficiently
b. Personnel handbook - sometimes also known as an employee manual, staff handbook, or company
policy manual, is a book given to employees by an employer that used to bring together employment
and job-related information which employees need to know.
c. Memoranda - also called memo or memos — are specially formatted written communications within
the business
Business Strategy – refers to the top management’s plan to attain the outcomes consistent with the
organization’s mission and goals. It is a competitive moves and business approaches that management is
employing to run the company. It refers to the entire process of strategic decision making that relates to its
environment, guides internal activities, and determines the long term performance of the organization.
a.
b.
c.
d.
Business strategy is the Management’s “game plan” for the company to:
Attract and please customers
Stake out a market positions
Conduct operations
Compete successfully
MGMT 1063-Strategic Management| 2
The Bases of Policies and Strategies
❖ Legal mandate – must be based on the provisions of the articles of incorporation and by-laws of the
organization
❖ Vision and mission statement – sense of direction for which the organization was conceived or
established.
❖ Specific objectives – these are purposely developed for the organization and for its members to
pursue.
❖ Programs and policies – these are set forth in pursuit of short and long-term goals given certain
considerations at hand.
Let’s twit the Twitter Case!
Why was twitter struggling in 2015? In contrast, why are facebook and Google so successful? For that
matter, why is any company successful? What enables some firms to gain and then sustain their competitive
advantage over time? why do once-great firms fail? How can managers influence firm performance? These are
the big questions that define strategic management. Answering these questions requires integrating the
knowledge you’ve obtained in your studies of various business disciplines to understand what leads to superior
performance, and how can you help the organization achieve it.
Strategic management - used synonymously with the term strategic planning. It takes into consideration
various external as well as internal factors and the environment in general as well as competitiveness and
sustainability over the long term period in the industry or sector it belongs.
Strategic plan- company’s game plan. It results from tough managerial choices among numerous good
alternatives, and it signals commitment to specific markets, policies, procedures, and operations.
The Strategic Management Process
Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation
& Control
Strategic management is the art and science of formulating, implementing, and evaluating crossfunctional decisions that enable an organization to achieve its objectives. Its basic elements are:
MGMT 1063-Strategic Management| 3
I. ENVIRONMENTAL SCANNING. This includes identifying an organization’s external opportunities and
threats, determining internal strengths and weaknesses.
A. External Environment. This consists of
variables (Opportunities & Threats) that are
outside the organization and not typically
within the short run control of top
management.
• Task environment - elements or groups
that directly affect and are affected by
organization’s major operations. Examples
are stockholders; government; suppliers.
• Societal environment - includes general
forces that do not directly touch the short
run activities of the organization but can
influence its long run decision. Examples
are economic and technological factors
B. Internal Environment. This consists of
variables (strengths & Weaknesses) that are
within the organization itself and are not
usually within the short run control of top
management. Examples are corporation’s
structure, culture, resources.
• Corporation structure (chain of command)
= the way a corporation is organized in
terms of communication and workflow;
described as organizational chart
• Corporation’s culture (rule of conduct) =
pattern of beliefs, expectations and values
shared by the corporation’s members.
Example: Participative cultures (strong
employee involvement); acceptable
behavior from top to bottom; reflects the
mission of an organization. Example: This
is who we are: this is what we do; This is
what we stand for
• Corporation’s resources =assets that are
from the raw materials for the production
of organization’s products & services; from
managerial talent to financial resources
II. STRATEGY FORMULATION. This is the development of long range plans for the effective management of
environmental opportunities & threats in light of corporation’s strengths and weaknesses
Plans:
1. Mission- refers to the purpose or reason for the organization’s existence
- declaration of an organization’s “reason of being”
Example: To reinvent how people share knowledge, tell stories, and inspire their
audiences to act (Prezi)
2 Types:
a) narrow mission- it limits the scope of the organization’s activities in terms of:
product/ service, technology used, market served
b) broad mission – widens scope of activities
Example:
Narrow Mission
Broad Mission
Railroads
transportation
Insurance
financial services
2. Objective-end results of planned activity
-state what is to be accomplished by when & should be quantifiable
Example: To sell more prezi licenses.
NOTE: Achievement of objective results in the fulfilment of corporation’s mission
MGMT 1063-Strategic Management| 4
3. Strategies – a statement of “how” an organization achieves its mission & objectives
-it maximizes competitive advantage(what the organization has that other do not have)
Example: Cornering a young market.
3-level Hierarchy of Strategy
A) Corporate strategy-explores the ways in which a firm can develop a favorable portfolio
strategy. It is a decision on: type of business, flow of financial resources, ROI
B) Business Strategy-emphasizes improvement of the competitive position of a corporation’s
product or services in the specific industry or market segment served by the division. Its
SBE (Strategic Business Unit) may be: overall cost leadership, differentiation, focus
C. Functional Strategies-it is maximizing of resource productivity
4. Policies- broad guidelines which serves to link formulation of strategy and its implementation
Example: Equal opportunity and non-discrimination of customers.
III. STRATEGY IMPLEMENTATION. This is the process by which strategies and policies are put into action
through the development of programs, budgets and procedures.
This element requires a firm to establish annual objectives, devise policies, motivate employees, and
allocate resources so that formulated strategies can be executed. It is often called the action stage whereby
process by which strategies and policies are put into action through the development of programs, budgets and
procedures.
A. Programs–statement of the activities or steps needed to accomplish a single use plan; it makes the
strategy action oriented
B. Budgets-statement of program in financial terms
C. Procedures-are system of sequential steps or techniques that describe in detail how a particular
task or job is to be done
IV. EVALUATION & CONTROL. This is the process in which corporate activities and performance results are
monitored so that actual performance can be compared with desired performance.
This involves reviewing external and internal factors that are the bases for current strategies,
measuring performance, and taking corrective actions.Conducted through:
INFORMATION
RESULT
corrective
action; problem
resolution
Strategy formulation, implementation, and evaluation activities occur at three hierarchical levels in a
large organization: corporate, divisional or strategic business unit, and functional. Through this, strategic
management helps a firm function as a competitive team.
MGMT 1063-Strategic Management| 5
The Benefits of Strategic Management
Clearer sense of strategic vision for the firm.
Sharper focus on what is strategically important
Improved understanding of a rapidly changing environment
Historically, the principal benefit of strategic management has been to help
organizations formulate better strategies through the use of a more
systematic, logical, and rational approach to strategic choice
Historically, the principal benefit of strategic management has been to help
organizations formulate better strategies through the use of a more
systematic, logical, and rational approach to strategic choice
KEY TAKEAWAYS
➢ Strategy is the set of goal-directed actions a firm takes to gain and sustain superior performance
relative to competitors.
➢ A good strategy enables a firm to achieve superior performance.
➢ A successful strategy requires four integrative management tasks: environmental scanning, strategy
“Strategic Management is not a box of tricks or bundle of techniques. It is analytical thinking and committment
of resource to action. But quantification alone is not planning. Some of the most important issues in strategic
management cannot be quantified at all”.
~Peter Drucker
*** END of LESSON 1***
REFERENCES
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
MGMT 1063-Strategic Management| 6
NEOLMS LEARNING MODULE
MGMT 1063- Strategic Management and Total Quality Management
AY 2020-2021
Lesson 2: Strategic Decision Makers
Topic:
Strategic Managers, Responsibilities of the BOD, Responsibilities of Top
Management, and Major Policies of an Enterprise
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss the different skills of strategic managers.
2. Identify the responsibilities of the BOD and top management.
3. Explain the major policies of an enterprise
4. Determine when to employ strategic management
LEARNING CONTENT
Lesson Proper:
Strategic Managers
What do strategic managers do that makes some strategic mangers more effective than others? In a
study of more than 350 CEOs, strategy scholars found that they spend, on average, 67% of their time in
meetings, 13% working alone, 7% on e-mail, 6% on phone calls, 5% on business meals, and 2% on public events
such as ribbon-cutting for a new fatory. Surprisingly given the advances in information technology, CEOs today
spend most of their time in face-to-face meetings. They consider it most effective in getting their message across
and obtaining the information they need. Not only do meetings present data through presentations and verbal
communications, but they also enable CEOs to pick up on rich nonverbal cues such as facial expressions, body
language, and mood, that are not apparent to them if they use e-mail or Skype, for example.
MGMT 1063- Strategic Management | 1
BASIC SKILLS OF STRATEGIC DECISION MAKERS / MANAGERS
1. TECHNICAL
SKILLS
2. HUMAN
SKILLS
3. CONCEPTUAL
SKILLS
•pertains to WHAT is done and to working with THINGS
•They comprise one’s ability to use technology to
perform organizational task (ex.software proficiency)
•pertains to HOW something is done and to working
with PEOPLE
•They comprise one’s ability to work with people to
achieve goals (communication; empathy)
•pertains to WHY something is done and to one’s view
of the organization as a WHOLE.
•They comprise one’s ability to understand the
complexities of a corporation as it affects and is
affected by its environment (ex. Critical thinking)
THE CORPORATE BOARD OF DIRECTORS/ Responsibilities of the BOD
Responsibility: The BOARD is required to direct the affairs of the corporation but not to manage them.
❖ To monitor – to keep abreast with the developments inside and outside the organization
❖ Evaluate and influence – to examine management’s proposals, decisions, and actions; agree or
disagree with them; give advice and offer suggestions; and outline alternatives
❖ Initiate and determine – to delineate a corporation’s mission and specify strategic options to its
management
TOP MANAGEMENT RESPONSIBILITIES:
1. Fulfill key roles
As a manager, you probably fulfill many different roles every day. For instance, as well as
leading your team, you might find yourself resolving a conflict, negotiating new contracts, representing
your department at a board meeting, or approving a request for a new computer system. Put simply,
you're constantly switching roles as tasks, situations, and expectations change.
❖ Figurehead – acts as legal and symbolic head. Performs obligatory social, ceremonial and legal duties.
❖ Leader - motivates, develops and guides subordinates. Oversees staffing, training associated activities
❖ Liaison – maintains network of contacts and information sources outside top management in order to
obtain information assistance
❖ Monitor – seeks and obtain information needed for understanding the corporation and its
environments. Acts as nerve center for the corporation.
❖ Disseminator – transmits information to the rest of top management team and other key people in the
organization.
❖ Spokesman – transmits information to key groups in the task environment
❖ Entrepreneur – searches the organization and its environment for projects to improve products,
processes, procedures and structures. Supervises the design and implementation of project.
❖ Disturbance handler – takes corrective actions in times of disturbance or crises.
❖ Resource allocator – allocates organization resources by making and/or improving decisions
MGMT 1063- Strategic Management | 2
❖ Negotiator – represents the organization in negotiating important agreement. Speaks directly or
through negotiator with key people.
2. Provide corporate leadership
This describes top manager’s successful use of power and influence to direct the activities of
others when pursuing organization’s goals. Their visions and actions enable their organizations to
achieve competitive advantage and demonstrate strategic leadership; sense of mission, enthusiasm
and positive attitude.
Characteristics:
a. CEO presents a Role (for others to identify and follow); sets example in terms of behavior and
proper decorum; displays clear-cut values and attitudes about the organization
b. CEO articulates a Transcendent goal (John Teets); “Management’s job is to see the company not
as it is… but as it can become”
c. CEO communicates High performance standard and shows confidence in the followers’ abilities to
meet standard.
3. Manage strategic planning process
Strategic planners provide detailed analyses of internal and external data and apply it to all
quantifibale areas (e.g. prices, costs, margins, market demands). They also revisit plans regularly,
predict future sales based on anticipated growth.
Major Policies of an Enterprise
For this part of the lesson, let’s examine the Starbuck’s secret succes:
Diana, a Starbucks store manager in southern California, received several requests a day for an
iced beverage offered by a local competitor. After she received more than 30 requests one day, she
tried the beverage herself. Thinking it might be a good idea for Starbucks to offer a similar iced
beverage, she requested that headquarters consider adding it to the product lineup. Diana had an
internal champion in Howard Behar, then one of Starbucks’s top executives. Mr. Behar presented this
MGMT 1063- Strategic Management | 3
strategic initiative to the Starbucks executive committee on which he sat, but it was voted down in a 7:1
vote. Starbucks’s CEO Howard Schultz commented, “We do coffee, we don’t do iced drinks.”
Diana, however, was undeterred. She started experimenting with a blender to re-create this
specific drink. Satisfied with her results, she began to offer the drink in her store. When Howard Behar
visited Diana’s store, he was shocked to see this new drink on the menu—all Starbucks stores were
supposed to offer only company-approved drinks. But Diana told him the new drink was selling well.
Howard Behar flew Diana’s team (and her blender) to Starbucks headquarters in Seattle, to
serve this new drink to the executive committee. They liked the drink, but still said no. Then Behar
pulled out the sales numbers that Diana had carefully kept. The drink was selling like crazy: 40 drinks
a day the first week, 50 drinks a day the next week, and then 70 drinks in the third week after
introduction. They had never seen such growth numbers. These results persuaded the executive team
to give reluctant approval to introduce the drink in all Starbucks stores. You’ve probably by now guessed
the drink—Starbucks’s Frappuccino. Frappuccino is now a billion-dollar business for Starbucks, and at
one point brought in more than 20 percent of Starbucks’s total revenues (which were $11 billion in
2010).
❖ Friedman’s Traditional View of Business Responsibility. “To use its resources and engage
in activities designed to increase its profits so long as it stays within the rules of the game which
is to engage in open and free competition without deception or fraud.
In the case of starbucks, this was effectively and efficiently manifested by Diana. Though
the main product of Starbucks is coffee, it did not specify whether it be a hot or cold coffee. And
so, as long as there’s the trademark taste of the coffee, it doesn’t matter whether it is offered in
ice or hot water. The end goal is is still the same: that is to increase profit. And this was the
convincing point among the executives especially the CEO: that it may be “It’s not what we do”
but the benefit (profit) is promising and worth the change.
❖ Archie Caroll’s View
a. Economic – produce goods/ services with value to society so firm can repay its creditors and
stockholders. (must do)
For the sake of Starbucks, it’s economic responsibility is to offer the finest coffee in the
world. This is embodied in their purpose/ mission statement.
b. Legal – responsibilities are defined by government laws (have to do)
Starbucks’ legal responsibilities include complying with regulatory requirements as to tax,
wage/labor, sanitary and the like.
c. Ethical – held beliefs (should do); responsibilities that are purely obligatory in nature (might do).
For starbucks, their ethical standards contained adequate clauses on discrimination, freedom of
association and forced labor
Strategic managers such as Diana, the Starbucks store manager are much closer to the final
products, services, and customers than the more removed corporate- or business-level managers. As
a result, managers may start strategic initiatives based on autonomous actions that can influence the
direction of the company. To be successful however, top-level executives need to support emergent
strategies that they believe fit with the firm’s vision and mission. Diana’s autonomous actions might not
have succeeded or might got her in trouble if she did not garner the support of a senior Starbucks
executive. This executive championed her initiative and helped pesuade other top executives.
Why Some Firms Do No Strategic Planning:
MGMT 1063- Strategic Management | 4
Lack of
knowledge in
strategic
planning
Poor reward
structures
Firefighting
Content with
success
Fear of failure
Overconfidence
Prior bad
experience
Self-interest
Waste of time
Too expensive
Laziness
Fear of the
unknown
Honest
difference of
opinion
Suspicion
Pitfalls in Strategic Planning:
× Using strategic planning to gain control over decisions and resources
× Doing strategic planning only to satisfy accreditation or regulatory requirements
× Too hastily moving from mission development to strategy formulation
× Failing to communicate the plan to employees, who continue working in the dark
× Top managers making many intuitive decisions that conflict with the formal plan
× Top managers not actively supporting the strategic-planning process
× Failing to use plans as a standard for measuring performance
× Delegating planning to a “planner” rather than involving all managers
× Failing to involve key employees in all phases of planning
× Failing to create a collaborative climate supportive of change
“Effective managers proactively control their tasks and the expectations of their major stockholders,
which allows them to meet stategic goals rather than fight fires”.
~ Sumantra Goshal
*** END of LESSON 2***
MGMT 1063- Strategic Management | 5
COURSE LEARNING MODULE
MGMT 1063-Strategic Management and Total Quality Management
AY 2021-2022
Lesson 3: SWOT Analysis
Topic:
Definition of SWOT Analysis, Matching and converting, Internal and External
Factors, Use of SWOT Analysis
Learning Outcomes:
At the end of this module, you are expected to:
1.
2.
3.
4.
Define and discuss SWOT analysis.
Match the SWOT components and convert them.
Identify internal and external factors affecting an organization
Determine the uses of SWOT Analysis
LEARNING CONTENT
Introduction:
We discussed in the previous module that strategic managers must manage and align the firm’s
different functional areas for competitive advantage. Also, as functional managers, they are responsible for
implementing business strategy within a single functional area. For this week, we’re going to deal more on one
of the primary roles of strategic leaders, the SWOT analysis.
Lesson Proper:
Definition of SWOT Analysis
A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may
be incorporated into the strategic planning model. An example of a strategic planning technique that
incorporates an objective-driven SWOT analysis is Strategic Creative Analysis (SCAN). Strategic Planning,
including SWOT and SCAN analysis, has been the subject of much research. We synthesize insights from an
internal analysis of the company’s strenghts and weaknesses with those from an analysis of external
opportunities and threats.
MGMT 1063- Strategic Management| 1
SWOT
Analysis
a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture
It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable
to achieving that objective.
Provides information that is helpful in matching the firm’s resources and
capabilities to the competitive environment in which it operates
A SWOT Analysis allows the strategist to evaluate a firm’s current situation and future prospects by
simultaneously considering internal and external factors. The SWOT Analysis encourages managers to scan
the internal and external environments, looking for any relevant factors that might affect the firm’s current or
future competitive adavantage. The focus is on internal and external factors that can affect – in a positive or
negative way – the firm’s ability to gain and sustain competitive advantage. So what are the components of the
analysis?
Strengths: attributes of the
person or company that is
helpful to achieving the
objective. A firm’s strengths
are its resources and
capabilities than can be
used as a basis for
developing a competitive
advantage. What do you do
well? What are your
advantages?
Weaknesses: attributes of
the person or company that
is harmful to achieving the
objective. What is done
badly? What could be
improved? What should be
avoided? Are your
competitors doing better?
Opportunities: external
conditions that is helpful to
achieving the objective.
What are the interesting
trends? Where are the
opportunities available to
you?
Threats: external conditions
which could do damage to
the objective. What
obstacles to you face? How
are your competitors fairing?
Could changes in technology
threaten your position? Do
you have bad debt or cashflow problem?
MGMT 1063- Strategic Management| 2
Internal strengths and weaknesses concern resources, capabilities, and competencies. A resource is a
weakness if it is not valuable. In this case, the resource does not allow the firm to exploit an external
opportunity or offset an external threat. A resource, however is a strength and a core competency if it is
valuable, rare, costly to imitate, and the firm is organized to capture at least part of the economic value
created.
On the other hand, external opportunities and threats are in the firm’s general environment. An
attractive industry for example, presents an external opportunity for firms not yet active in the industry. On the
while, stricter regulation for financial institutions, for example, might represent an external threat to banks.
To further understand the components SWOT, let’s take a look on the SWOT Analysis of Starbucks
Company:
As noted above, both strenghts are weknesses are qualities internal to the company while opportunities
and threats are external, things that may be beyond the control of the company.
MGMT 1063- Strategic Management| 3
Let’s hear from you!
What is your self-SWOT?
Identify your strengths, weaknesses, opportunities and threats and be ready to share them in class.
•
•
For the LMS, sharing via google meet/zoom shall be posted through our messenger group.
For the modular, accomplish the worksheet attached.
Identification of SWOTs is essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs. To develop strategies that take into
account a SWOT matrix can be constructed. In this matrix, the horizontal axis is divided into factors that are
internal to the firm and vertical axis into factors that are external to the firm as shown below:
SWOT MATRIX
Strengths
Weaknesses
Opportunities
S-O
Strategies
(pursue W-O Strategies ( Overcome
opportunities that are good fit weaknesses to pursue
to the company’s strengths)
opportunities)
Threats
S-T Strategies ( identify ways
that the firm can use its
strengths
to
reduce
its
vulnerability to external threats)
W-T Strategies (Establish a
defensive plan to prevent the
firm’s weaknesses from making
it highly susceptible to external
threat)
To use the SWOT matrix for strategy-making it is important to know how to match and convert the
components which is to be discussed next.
Matching and converting
In order to match and convert the components SWOT, managers gather information for a SWOT
analysis in order to link internal factors (strengths and weaknesses) to external factors (opportunities and
MGMT 1063- Strategic Management| 4
threats. Then managers use the SWOT matrix to develop strategic alternatives. But what are matching and
converting?
Matching
•used to find competitive advantages by matching the strengths to opportunities
Converting
•to apply conversion strategies to convert threats or weaknesses into strengths or opportunities
Note: If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.
One example of conversion strategy is to find new markets. But let’s take a look on Google as an
example. The location of its headquarters is in Silicon Valley, near several universities as a key source of the
firm. Most people would consider this a strength for the firm. However, California has a high cost of living and
is routinely ranked among the worst of the US states in terms of ease of doing business. In addition, this area
of California is along major earthquake fault lines and is more prone to natural disasters than many other parts
of the country. So is the location a strength or a weakness? The answer is “it depends”. In a similar fashion, is
global warming an opportunity or threat for car manufacturers? If government enacts higher gasoline taxes and
make driving more expensive, it can be a threat. If, however, carmakers respond to government regulations by
increased innovation through developing more fuel-efficient cars as well as low- or zero-emission engines such
as hybrid or electric vehicles, it may create more demand for new cars and lead to higher sales.
Internal and external factors
The
aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the
objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of
information into two main categories:
Internal factors – The strengths and
weaknesses internal to the organization. The
factors may include all of the 4P's; as well as
personnel, finance, manufacturing capabilities,
and so on.
External factors – The opportunities and threats
presented by the external environment to the
organization.The external factors may include
macroeconomic matters, technological change,
legislation, and socio-cultural changes, as well as
changes in the marketplace or competitive position.
MGMT 1063- Strategic Management| 5
To identify these internal and external factors, the following types of analyses will be helpful:
PEST (Political, Economic,
Social, and Technological)
Analysis
•describes a framework of
macro-environmental
factors used in the
environmental scanning
component of strategic
management.
STEEPLED (Social,
Technological, Economic,
Environmental, Political,
Legal and Ethics and
Demographic) Analysis
PESTLE (Political,
Economic, Social, and
Technological, Legal and
Environmental) Analysis
•allows scanning,
monitoring, and evaluating
changes and trends in the
firm's macroenvironment
•It is a part of the external
analysis when conducting
a strategic analysis or
doing market research, and
gives an overview of the
different macro
environmental factors that
the company has to take
into consideration.
•. It is a useful strategic tool
for understanding market
growth or decline, business
position, potential and
direction for operations.
Use of SWOT Analysis
In summary, the following therefore are the uses of SWOT Analysis:
SWOT analysis is used in any decision-making situation when a
desired end-state (objective) has been defined
SWOT analysis is used in pre-crisis planning and preventive crisis
management.
SWOT analysis is used in creating a recommendation during a
viability study.
LESSON KEY TAKEAWAY
Formulating a strategy that increases the chances of gaining and sustaining a competitive advantage is
based on synthesizing insights obtained from an internal analysis of the company’s strengths and weaknesses
with those from an analysis of external opportunities and threats.
*** END of LESSON 3***
PARTICIPATION(for recitation purposes)
For Modular, a separate worksheet is attached, to be submitted/ given back to the teacher.
What is your self-SWOT?
Identify your strengths, weaknesses, opportunities and threats and be ready to share them in class.
MGMT 1063- Strategic Management| 6
COURSE LEARNING MODULE
MGMT 1063-Strategic Management and Total Quality Management
AY 2021-2022
Lesson 4: Business SWOT Analysis
Topic:
Business SWOT Analysis, How to Use the Tool, Examples of SWOT
Learning Outcomes:
At the end of this module, you are expected to:
1. Apply SWOT analysis in business.
2. Determine how to use the SWOT analysis tool.
3. Conduct SWOT analysis of a business basing from samples.
LEARNING CONTENT
Introduction:
We have discussed in the previous module a general SWOT Analysis procedure including its uses. You
have now acquired the toolkit with which to conduct a complete strategic analysis of a firm’s internal and
external environments. For the next discussion, we consider SWOT Analysis more in business.
Lesson Proper:
Business SWOT Analysis
SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for
identifying both the Opportunities open to you and the Threats you face. So what makesSWOT particularly
powerful in business?
SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and
weaknesses, and the opportunities and threats that you face. It helps you focus on your strengths, minimize
threats, and take the greatest possible advantage of opportunities available to you. It can be used to "kick off"
strategy formulation, or in a more sophisticated way as a serious strategy tool. You can also use it to get an
understanding of your competitors, which can give you the insights you need to craft a coherent and successful
competitive position.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 1
How to Use the Tool
When carrying out your analysis, be realistic and rigorous. Apply it at the right level, and supplement it
with other option-generation tools where appropriate. But how exactly are you going to apply SWOT analysis in
business?
In looking at your strengths, think about them in relation to your competitors - for example, if all your
competitors provide high quality products, then a high quality production process is not strength in the market,
it is a necessity.
Strengths: Figure out
your strengths. Think
about the questions
from your point of view
and from others.
•What advantages does your company have?
•What do you do better than anyone else?
•What unique or lowest-cost resources do you have
access to?
•What do people in your market see as your strengths?
•What factors mean that you "get the sale"?
Examples:
➢ We can respond very quickly as we have no red tape, no need for higher management approval.
➢ We can give really good customer care, as the current small amount of work means we have plenty of
time to devote to customers.
➢ Our lead consultant has strong reputation within the market.
➢ We can change direction quickly if our approach isn't working.
➢ We have little overhead, so can offer good value to customers.
➢ Patents, strong brand names, good reputation among customers, cost advantages from proprietary
know-how, exclusive access to high grade natural resources, and favorable access to distribution
networks
For weaknesses, again, consider this from an internal and external basis: Do other people seem to
perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be
realistic now, and face any unpleasant truths as soon as possible.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 2
Weaknesses: Determine your
weaknesses. Deal with any negative
answers as soon as you can. You
should think about these questions
from your point of view and from
others.
•What could you improve?
•What should you avoid?
•What are people in your market likely to see as
weaknesses?
•What factors lose you sales?
Examples:
➢ Our company has no market presence or reputation.
➢ We have a small staff with a shallow skills base in many areas.
➢ We are vulnerable to vital staff being sick, leaving.
➢ Our cash flow will be unreliable in the early stages.
➢ Lack of patent protection, a weak brand name, poor reputation among customers, high cost structure,
lack of access to the best natural resources, lack of access to key distribution channels.
For opportunities, a useful approach is to look at your strengths and ask yourself whether these open
up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could create
opportunities by eliminating them.
Opportunities: Recognize your
opportunities. Helpful opportunities
can come from things like lifestyle
events and variations in societal
patterns. A good method for looking
at opportunities is to evaluate your
strengths and weaknesses.
•What are the interesting trends you are aware of?
•What good openings do you have?
Examples:
➢ Our business sector is expanding, with many future opportunities for success.
➢ Our local council wants to encourage local businesses with work where possible.
➢ Our competitors may be slow to adopt new technologies.
➢ An unfulfilled customer needs, arrival of new technologies, loosening of regulations, removal of
international trade barriers
Hence, useful opportunities can come from such things as:
Changes in
technology and
markets on both
a broad and
narrow scale
Changes in
government
policy related to
your field
Changes in
social patterns,
population
profiles, lifestyle
changes
Local events
Lastly, threats are concerned with the following questions:
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 3
Threats: Discover your threats. Ask:
Doing this will let you know what
should be done to put things in
perspective.
•What obstacles do you face?
•What is your competition doing that you should be
worried about?
•Are the required specifications for your job, products
or services changing?
•Is changing technology threatening your position?
•Do you have bad debt or cash-flow problems?
•Could any of your weaknesses seriously threaten
your business?
Examples:
➢
➢
➢
Will developments in technology change this market beyond our ability to adapt?
A small change in focus of a large competitor might wipe out any market position we achieve.
Shifts in consumer tastes away from the firm’s products, emergence of substitute products, new
regulations, and increased trade barriers
Examples of SWOT Analysis
Example #1
This SWOT analysis example is based on an imaginary situation. The scenario is based on a businessto-business manufacturing company, who historically rely on distributors to take their products to the end user
market. The opportunity, and therefore the subject for the SWOT analysis, is for the manufacturer to create a
new company of its own to distribute its products direct to certain end-user sectors, which are not being
covered or developed by its normal distributors.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 4
Subject of SWOT analysis example: the creation of own distributor company to access new end-user
sectors not currently being developed.
Strengths
Weaknesses
•
End-user sales control and direction.
•
Customer lists not tested.
•
Right products, quality and reliability.
•
Some gaps in range for certain sectors.
•
Superior product performance vs competitors.
•
We would be a small player.
•
Better product life and durability.
•
No direct marketing experience.
•
Spare manufacturing capacity.
•
We cannot supply end-users abroad.
•
Some staff have experience of end-user sector.
•
Need more sales people.
•
Have customer lists.
•
Limited budget.
•
Direct delivery capability.
•
No pilot or trial done yet.
•
Product innovations ongoing.
•
Don't have a detailed plan yet.
•
Can serve from existing sites.
•
Delivery-staff need training.
•
Products have required accreditations.
•
Customer service staff need training.
•
Processes and IT should cope.
•
Processes and systems, etc
•
Management is committed and confident.
•
Management cover insufficient.
Opportunities
Threats
•
Could develop new products.
•
Legislation could impact.
•
Local competitors have poor products.
•
•
Profit margins will be good.
Environmental effects would favor larger
competitors.
•
End-users respond to new ideas.
•
Existing core business distribution risk.
•
Could extend to overseas.
•
Market demand very seasonal.
•
New specialist applications.
•
Retention of key staff critical.
•
Can surprise competitors.
•
Could distract from core business.
•
Support core business economies.
•
Possible negative publicity.
•
Could seek better supplier deals.
•
Vulnerable to reactive attack by major
Example #2
Using SWOT to analyze the market position of a small management consultancy with specialism in
HRM.
Strengths
Weaknesses
Opportunities
Threats
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 5
Reputation in marketplace Shortage of consultants at Well established position Large consultancies
operating level rather than with a well-defined market operating at a minor level
partner level
niche.
Expertise at partner level
in HRM consultancy
Unable to deal with multidisciplinary assignments
because of size or lack of
ability
Identified market for
Other small consultancies
consultancy in areas other looking to invade the
than HRM
marketplace
Track record – successful
assignments
LESSON KEY TAKEAWAY
SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and
Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your strengths, minimize
threats, and take the greatest possible advantage of opportunities available to you.
*** END of LESSON 4***
REFERENCES
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
will be penalized. Please be guided accordingly.
MGMT 1063-Strategic Management Page 6
COURSE LEARNING MODULE
MGMT 1063-Strategic Management and Total Quality Management
AY 2018-2019
Lesson 5: The Segments of the General Environment
Topic:
The Segments of the General Environment (Societal Environment): Economic
Forces; Socio-cultural; Demographic
Learning Outcomes:
At the end of this module, you are expected to:
1. Determine the segments of the general environment.
2. Enumerate factors affecting the economic force.
3. Identify the elements of socio cultural and economic forces.
LEARNING CONTENT
Introduction:
We have discussed in the previous module SWOT Analysis being applied in business. For this week,
we will be going deeper into a company’s/firm’s external environment by looking into three (3) factors that
affect it.
Lesson Proper:
The Segments of the General Environment (Societal Environment)
A firm’s external environment consists of all the factors that can affect its potential to gain and sustain a
competitive advantage. By analyzing the factors in the external environment, managers can mitigate threats
and leverage opportunities. One common approach to understanding how external factors impinge upon a firm
MGMT 1063- Strategic Management| 1
is to consider the source or proximity of these factors.
General environment managers have little
direct influence over
such as macroeconomic
factors (interest/currency
exchange rates)
Task environment managers do have some
influence over such as the
composition of their strategic
groups (a set of close rivals)
or the structure of the industry
Economic Forces
Economic factors in a firm’s external environment are largely macroeconomic, affecting economy-wide
phenomena. Managers need to consider the following five macroeconomic factors can affect firm strategy:
MGMT 1063- Strategic Management| 2
Growth Rates
•This is a measure of the change in the amount of goods and
services produced by a nation's economy.
•Real growth rate - indicates the current business cycle of the
economy, whether business activity is expanding or contracting.
Levels of
employment
•These are directly affected by growth rates.
•In boom times, unemployment tends to e low and skilled human
capital becomes scarce and more exoensive resources
•In economic downturns, unemployment rises.
Interest rates
•It is the amount that creditors are paid for use of their money and
the amount that debtors pay for the use, adjusted for inflation.
•Low interest rates have a direct bearing on consumer demand.
Price stability
•Refers to the lack of change in price levels of goods and services
•Inflation - too much money chasing too few goods and services
•Deflation - describes a decrease in the overall price level.
Currency exchange
rates
•It determines how many dollars one must pay for a unit of foreign
currency
•It is a critical variable for any company that buys or sells products
and services across national borders.
In summary, economic factors affecting businesses are ever-present and rarely static. Managers need
to fully appreciate the power of these factors, in both domestic and global markets to assess their effects on
firm performance.
Sociocultural Forces
MGMT 1063- Strategic Management| 3
Sociocultural factors – capture a society’s cultures,
norms, and values. Because they not only are constantly
in flux but also differ across groups, managers need to
closely monitor such trends and consider the implications
for firm strategy.
In recent years for example, a growing number of U.S. consumers have become more health-conscious
about what they eat. This trend led to a boom for businesses such as Chipotle, Subway, and Whole Foods. At
the same time, traditional fast-food companies McDonald’s and Burger King, along with grocery chains such as
Albertsons and Kroger, have all had to scramble to provide healthier choices in their product offerings.
Demographic Forces
Demographic factors – trends that capture
population characteristics related to age,
gender, family size, ethnicity, sexual
orientations, religion, and socio-economic
class. They can present opportunities but
can also pose threats.
A recent census revealed that 51 million Americans (16.4 percent of the total population in US) are
Hispanic. It is now the second largest ethnic group in US and growing fast. On average, Hispanics are also
younger and their incomes are climbing quickly. This trend is not lost on companies trying to benefit from this
opportunity.
Minicase to Ponder on
MGMT 1063- Strategic Management| 4
What went wrong?
•
Read the case below to serve as an example of how the external environment affects a
company/organization.
Blackberry’s Bust
A pioneer in smartphones, BlackBerry was the undisputed industry leader in the early 2000s, which
were preferred by IT managers. Its devices allowed users to receive e-mail and other data in real time globally,
with enhanced security features. For executives, a BlackBerry was not just a tool to increase productivity – and
to free them from their laptops – but also an important status symbol. As a consequence, by 2008 BlackBerry’s
market cap had peaked at $75 billion. Yet by 2015, this valuation had fallen more than 90 percent, to less than
$7 billion. What happened?
The introduction of the iPhone by Apple in 2007 changed the game in the mobile device industry.
Equipped with a camera, the iPhone’s slick design offered a user interface with a touchscreen including a
virtual keyboard. The iPhone connected seamlessly to other cellular networks and Wi-Fi. Combined with
thousands of apps via the Apple iTunes store, the iPhone provided a powerful user experience, or as the late
Steve Jobs said, “The Internet in your pocket.”
However, BlackBerry engineers and executives initially dismissed the iPhone as a mere toy with poor
security features. Everyday users thought differently. They has less concern for encrypted software security
than they had desire for having fun with a device that allowed them to text, surf the web, take pictures, play
games, and do e-mail. Although BlackBerry devices were great in productivity applications, such as receiving
and responding to e-mail via typing on its iconic physical keyboard, they provided a poor mobile web browsing
experience.
Initially, mobile devices were issued top-down by corporate IT departments. The only available device
for executives was a company-issued BlackBerry. This made life easy for IT departments, ensuring network
security. Consumers, however, began to bring their personal iPhones to work and used them for corporate
communication and productivity applications. This bottom-up groundswell of the BYOT (“bring your own
technology”) movement forced corporate IT departments to open up their services beyond the BlackBerry.
LESSON KEY TAKEAWAY
The framework to analyze the firm’s external environment is the industry in which the firm operates, and
the competitive forces that surround the firm from the outside.
*** END of LESSON 5***
REFERENCES
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
MGMT 1063- Strategic Management| 5
NEOLMS LEARNING MODULE
MGMT 1063- Strategic Management and Total Quality Management
AY 2020-2021
Lesson 6: Other Segments of the Environment
Topic:
Environmental Forces; Political, Governmental and Legal Forces; Technological
Forces
Learning Outcomes:
At the end of this module, you are expected to:
1. Determine environmental forces affecting the firm/company.
2. Recognize the interrelatedness of political, governmental and legal forces
3. Enumerate technological factors affecting the organization
LEARNING CONTENT
Introduction:
We have learned last week that economic factors to be considered are growth rates, interest rates,
levels of employment, price stability and currency exchange rates while sociocultural factors capture a
society’s cultures, norms, and values.
Lesson Proper:
Environmental Forces
Organizations and the natural environment coexist in an interdependent relationship. Managing these
relationships in a responsible and sustainable way directly influences the continued existence of human
societies and the organizations we create. Managers can no longer separate the natural and the business
worlds; they are enextricably linked.
Environmental factors –
involve broad issues such as
the natural environment, global
warming, and sustainable
economic growth.
MGMT 1063- Strategic Management| 1
Negative examples come readliy to mind, as many business organizations have contributed to the
pollution of air, water, and land, as well as depletion of the world’s natural resources.
Political, Governmental and Legal Forces
Political, government and legal factors are closely related, as political pressure often results in changes
in legislation and regulation.
Political
• This results from the processes and actions
of government bodies that can influence
the decisions and behavior of firms.
• Nonmarket strategies - lobbying, public
relations, contributions, litigation, and so
on, in ways that are favorable to the firm.
Governmental
• can directly affect firm performance by
exerting both political and legal sanctions,
including court rulings and industry
regulations
• can often wield positive legal and political
mechanisms to achieve desired changes in
consumer behavior.
Legal
• include the official outcomes of political
processes as manifested in laws, mandates,
regulations, and court decisions - all of
which can have a direct bearing on a firm's
profit potential.
MGMT 1063- Strategic Management| 2
Technological Forces
Technological factors – capture the application of knowledge to create new
processes and products.
Nanotechnology revolution – promises significant upheaval for a vast array of industries
ranging from tiny medical devices to new-age materials for earthquake-resistant buildings.
Not surprisingly, changes in the technological environment bring both opportuites and threats for
companies. Firm’s innovation strategy is important to competitive advantage.
LESSON KEY TAKEAWAY
A firm’s macroenvironment consists of a wide range of environmental, political, governmental, legal,
and technological factors that can affect industry and firm performance. What matters is that managers must
know how to deal/address their domestic and global aspects.
*** END of LESSON 6***
REFERENCES
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
MGMT 1063- Strategic Management| 3
LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: THE INTERNAL ENVIRONMENT (week 7)
Topic:
The Firm’s Internal Environment
Learning Outcomes:
At the end of this module, you are expected to:
1.
2.
3.
4.
5.
6.
7.
8.
Explain the need for firms to study and understand their internal environment.
Define value and discuss its importance.
Describe the differences between tangible and intangible resources.
Define capabilities and discuss how they are developed.
Describe four criteria used to determine whether resources and capabilities are core competencies.
Explain how value chain analysis is used to identify and evaluate resources and capabilities.
Define outsourcing and discuss the reasons for its use.
Discuss the importance of preventing core competencies from becoming core rigidities.
LEARNING CONTENT
Introduction:
THE INTERNAL ENVIRONMENT: Resources, Capabilities, and Core Competencies.
An organization's internal environment is composed of the elements within the organization, including current
employees, management, and especially corporate culture, which defines employee behavior. Although some
elements affect the organization as a whole, others affect only the manager. A manager's philosophical or
leadership style directly impacts employees. Traditional managers give explicit instructions to employees, while
progressive managers empower employees to make many of their own decisions. Changes in philosophy
and/or leadership style are under the control of the manager. This chapter describe some of the elements that
make up the internal environment.
Mgmt 1063 – Strategic Management | 1
Lesson Proper:
THE IMPORTANCE OF INTERNAL ANALYSIS
An internal analysis examines your organization’s internal environment in order to assess its resources,
competencies, and competitive advantages. Performing an internal analysis allows you to identify the strengths
and weaknesses of your organization. This knowledge then aids the strategic decision making of management
while they carry out the strategy formulation and execution process.
Traditional Factors:
1. Labor cost
2. Access to
financial
resources
3. Raw materials
4. Protected or
regulated markets
Key challenge in developing the ability to change rapidly:
1. Fostering an organizational setting in which experimentation and learning are expected and promoted.
2. A different managerial mind-set is required for firms to be in the global economy.
Resources,
Capabilities and Core
Competencies
•these are the characteristics that make up the foundation of competitive
advantage.
RESOURCES
- source of a firm’s capabilities.
- cover the spectrum of individual, social and organizational phenomena.
Competitive advantage - created through the unique bundling of several resources.
2 Types of Resources:
1. Tangible
- assets that can be seen and quantified
- The value of many tangible resources can be established through financial statements, but these statements do not account for the value of all of firm’s assets.
- The value of tangible resources is also constrained because they are difficult to leverage- it is hard to
derive additional business or value from tangible resources.
Examples:
✓ production equipment
✓ manufacturing plants
✓ formal reporting structures
4
Types of tangible Resources:
a. Financial resources - the firms borrowing capacity. The firm’s ability to generate internal funds.
b. Organizational resources - the firm’s formal reporting structure and its formal planning,
controlling and coordinating systems.
c. Physical resources - sophistication and location of a firm’s plant and equipment. Access to raw
materials.
d. Technological resources - stock of technology, such as patents, trademarks, copyrights and
trade secrets.
2. Intangible
- includes assets that typically are rooted deeply in the firm’s history and have accumulated overtime.
Mgmt 1063 – Strategic Management | 2
-
Relatively difficult for competitors to analyze and imitate.
Is a superior and more potent source of core competencies.
Examples:
✓ knowledge
✓ trust between managers and employees
✓ ideas
✓ the capacity for innovation
✓ managerial capabilities
✓ organizational routines
✓ specific capabilities
✓ firm’s reputation for its goods or services and how it interacts with people.
3 Types of Intangible:
a. Human resources –knowledge; trust; managerial capabilities; organizational routines
b. Innovation resources –ideas; scientific capabilities; capacity to innovate
c. Reputational resources –reputation with customers; brand name; perceptions of product
quality, durability and reliability; -reputation and suppliers (for efficient, effective, supportive and
mutually beneficial interactions and relationships)
- A well-known Economists studying the main drives of
economic growth, found a general increase in the
contribution of intangible assets to U.S. economic growth
since the early 1900’s. In fact, the more unobservable a
resource is, the more sustainable will be the competitive
advantage. The larger the network of users, the greater
the benefit to each party.
CAPABILITIES
- these are the firm’s capacity to deploy resources that have been purposely integrated to achieve a
desired end state
- the foundation of many capabilities lies in the skills and knowledge of a firm’s employees and often,
their functional expertise. Hence, the value of human capital in developing and using capabilities and,
ultimately, core competencies cannot be overstated.
Firms committed to continuously developing their people’s capabilities seem to accept the adage that:
“the person who knows how will always have a job. The person who knows why will
always be his boss.”
-
Global business leaders support the view that the knowledge possessed by human capital is among the
most significant of an organization’s capabilities and ultimately be at the root of all competitive
advantages
CORE COMPETENCIES
Mgmt 1063 – Strategic Management | 3
CORE
COMPETENCIES
•are sources and capabilities that serve as a source of a firm’s
competitive advantage over rivals.
•distinguish a company competitively and reflect its personality.
•emerge overtime through an organizational process of accumulating
and learning how to deploy different resources and capabilities.
•it is the “crown jewels of a company”.
Strategic Assets
•assets that have competitive value and potential that serves as a
source of competitive advantage.
*Some resources and capabilities may result in incompetence.
Creating Value
•
•
•
Value – is measured by a products performance characteristic and by its attributes which customers
are willing to pay.
Creating Customer Value –is the source of a firm’s potential to earn above-average returns.
*Firms intend regarding value creation affect its choice of business-level strategy and its
organizational structure.
Differentiation strategy –is an integrated set of actions designed by a firm to produce or deliver goods
or services (at an acceptable cost) that customers perceived as being different in ways that are
important to them.
The challenge of Internal Analysis
Resources,
•have a significant influence on the firms ability to earn above-average
Capabilities, Core
returns.
Competencies
Making these decisions
- identifying, developing, deploying and protecting resources, capabilities and are competencies.
- This task is challenging and difficult as any other with which managers are involved.
To facilitate the development and use of core competencies, managers must have:
*courage
*self-confidence
*integrity
*the capacity to deal with uncertainty
*complexity
*willingness to hold people accountable for their work and to be held
accountable to themselves.
Conditions Affecting Managerial Decisions about Resources, Capabilities and Core Competencies:
1. Uncertainty – regarding characteristics of the general and the industry environments, competitor’s
action and customer’s preferences.
2. Complexity – regarding the interrelated causes shaping a firm’s environments and perceptions of the
environments.
Mgmt 1063 – Strategic Management | 4
3. Intra organizational conflicts – among people making managerial decisions and those affected by
them.
Judgment – is the capability of making successful decisions when no obviously correct model or rule is
available or when relevant data are unreliable or incomplete.
Denial – is unconscious coping mechanism used to block out and not initiate painful changes.
BUILDING CORE COMPETENCIES
2 Tools help the firm identify and build its core competencies:
1. Four specific criteria of sustainable advantage
a. Valuable – allow the firm to exploit opportunities or neutralize threats in its external
environment.
b. Rare capabilities – not possess by many other firms.
c. Costly to imitate – capabilities that other firms cannot easily develop.
d. Non-substitutable – capabilities that do not have strategic equivalents.
2. Value Chain Analysis –allows the firms to understand the parts of its operations that create value and
those that do not. Refers to the process whereby a firm determines the costs associated with
organizational activities from purchasing raw materials to manufacturing product/s to marketing those
products.
Activities:
✓ Obtaining raw materials, designing products, building manufacturing facilities, developing
cooperative agreements, and providing customer service.
VALUE CHAIN SEGMENTS
1. Primary Activities – are involved with a product’s physical creation, its sale and distribution to buyers
and its service after the sale.
a. Inbound logistics – activities such as materials handling, warehousing and inventory control,
used to received, stores and disseminate inputs to a product.
b. Operations – activities necessary to convert the inputs provided by inbound logistics into final
product form. Machining, packaging, assembly and equipment maintenance are examples of
operations activities.
c. Outbound logistics – activities involved with collecting, storing and physically distributing the
final product to customer. Ex: finished goods warehousing, materials handling and order
processing.
d. Marketing and Sales – activities completed to provide means through which customers can
purchase products and to induce them to do so.
Mgmt 1063 – Strategic Management | 5
▪
to effectively market and sell products, firms develop advertising and promotional
campaigns, select appropriate distribution channels, and select, develop and support
their sales force.
e. Service – activities designed to enhance or maintain a products value. Firms engage in a range
of service-related activities, including installation, repair, training and adjustments.
2. Support Activities – provide the support necessary for the primary activities to take place.
a. Procurement –activities completed to purchase the inputs needed to produce a firm’s product.
Ex: raw materials and surplus, as well as fixed assets- machinery, laboratory equipment, office
equipment, buildings.
b. Technological Development – activities completed to improve a firm’s product and the
processes used to manufactures it. Ex: process equipment, basic research and product design
and servicing procedure.
c. Human Resource Mgmt. – activities involved with recruiting, hiring, and training, developing
and compensating all personnel.
d. Firm Infrastructure – includes activities such as general management, planning, finance,
accounting, legal support, and government relations that are required to support the work of the
entire value chain.
OUTSOURCING
•is the purchase of a value-creating activity from an external supplier.
Outsourcing is contracting with another company or person to do a
particular function.
To verify that the appropriate primary and support activities are outsourced, four skills are essential for
managers involved in outsourcing programs:
✓ Strategy thinking
✓ Deal making
✓ Partnership governance
✓ Managing change
Outsourcing can significantly change how an organization operates; managers administering these programs
must also be able to manage that change, including resolving employees’ resistance that accompanies any
significant change effort.
Reasons for outsourcing
1. LACK OF EXPERTISE:
a. You have to outsource if you don't have the rightly skilled professionals.
b. Leverage the provider's extensive investments in technology, methodologies and people
2. CAPITAL:
a. Conservation: Reduce overheads, free up resources, the money can be applied to develop the Core
business rather on overheads such as computers, desks etc.
b. Cost Effective: No HR recruiting, training, solution providing.
c. Reduced operating costs.
d. Reduction of financial risk: as investment shared.
3. MANAGEMENT
a. Sharper focus on core business
b. Improved efficiency
c. Better concentration on strategic thinking, process developing
d. Increasing customer satisfaction
e. Reduce the risk of technological obsolescence and increase efficiency by consolidating and
centralizing functions
f. Reduce the overall head ache and develop market presence tension free.
Mgmt 1063 – Strategic Management | 6
g. Obtain needed project management and implementation consulting expertise, along with access to
best practices and proven methodologies
4. GOOD BUSINESS SENSE
a. Availability of world best services at half the cost.
b. Save the ever-critical time
c. Get access to specialized professionals and skills
d. Great flexibility: it is much easier to cancel a contract than fire personal employees.
e. Avoid the cost of starting from scratch and gain from the experience of custom built outsourcing
solutions available.
5. EDGE OVER COMPETITION
a. Provide value added service
b. Provide better, specialized, customized and dedicated customer service
c. Increase customer satisfaction
d. Keep pace with the rapidly changing business modules
e. Be reliable and innovative
f. Shedding of HR or IT burden helps you do better in core business.
6. TOWARDS GLOBALIZATION
a. Reduce your marketing and software delivery costs
b. Gain access to global buyer base needing software development
c. Manage your projects online with buyer participation
d. Neutral marketplace with global choices
Disadvantages of Outsourcing
a. Less managerial control - It may be harder to manage the outsourcing service provider as compared to
managing your own employees.
b. May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to
outsourcing.
c. Security and confidentiality issues - If your company is outsourcing business processes such as payroll,
confidential information such as salary will be known to the outsourcing service provider.
d. Quality Risk - Outsourcing can expose an organization to potential risks and legal exposure. As an
example, if a car is recalled for faulty parts and that part was outsourced, the car manufacturer carries
the burden of correcting the potentially damaged reputation of the car maker. While the vendor would
need to make good on the faulty product by contract, the manufacturer still has the “black eye” from the
incident and carries the burden of correcting the negative public perception.
e. Quality Service - Unless a contract specifically identifies a measurable process for quality service
reporting, there could be a poor service quality experience. Some contracts are written to intentionally
leave service levels out to save on costs.
f.
Language Barriers - If a customer call center is outsourced to a country that speaks a different
language, there may be levels of dissatisfaction for customers dealing with the language barriers of
someone with a strong accent.
g. Employee/ Public Opinion - There can be negative perceptions with outsourcing and the sympathy of
lost jobs. This needs to be managed with sensitivity and grace.
h. Organizational Knowledge - An outsourced employee may not have the same understanding and
passion for an organization as a regular employee. There is the potential that an outsourced employee
will come in contact with customers and not be as knowledgeable of the organization, resulting in a
negative customer experience.
Mgmt 1063 – Strategic Management | 7
i.
Labor Issues - Organized labor in the United States has very strong feelings about outsourcing to other
countries that have a less standard of living and worse working conditions. This viewpoint can affect
how the workforce responds to outsourcing and can affect their daily productivity.
j.
Legal Compliance and Security - It is important that issues regarding legal compliance and security be
addressed in formal documentation. Processes that are outsourced need to be managed to ensure
there is diligence with legal compliance and system security. An example of this is outsourcing the IT
function and having an outsourced employee use their access to confidential customer data for their
own gain.
k. Employee Layoffs - Outsourcing commonly results in the need to reduce staffing levels. Unless it can
be planned through attrition, layoffs are inevitable. This is difficult at best and if not managed
appropriately, can have a negative impact on remaining employees.
l.
Finally, when researching vendors for outsourcing be sure to think through your specific needs and get
at least three Requests for Proposals (RFP) to ensure you are getting the best value for your dollar.
Core Competencies: Cautions and Reminders
Tools such as outsourcing can help the firm focus on its core competencies. However, evidence shows that the
value-creating ability of core competencies should never be taken for granted.
The ability of a core competence to be a permanent competitive advantage can’t be assumed. The reason for
these cautions is that all core competencies have the potential to become core rigidities.
Competence:
Strength – because it is the source of competitive
advantage.
- strategic competitiveness
Weakness – because if emphasized when it is no longer
competitively relevant, it can be a seed of organizational
inertia (apathy, sluggishness).
*** END of LESSON ***
Mgmt 1063 – Strategic Management | 8
LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: ESTABLISH LONG-TERM OBJECTIVES (Week )
Topic:
Placing Strategies into Action
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss the value of establishing long-term objectives.
2. Identify 16 types of business strategies.
3. Identify numerous examples of organizations pursuing different types of
strategies.
4. Discuss guidelines when particular strategies are most appropriate to pursue.
5. Discuss Porter’s five generic strategies.
6. Describe strategic management in nonprofit, governmental, and small
organizations.
7. Discuss joint ventures as a way to enter the market.
8. Discuss the Balanced Scorecard.
9. Compare and contrast financial with strategic objectives.
10.
Discuss the levels of strategies in large versus small firms.
11.
Explain the First Mover Advantages concept.
12.
Discuss recent trends in outsourcing.
13.
Discuss strategies for competing in turbulent, high-velocity markets.
14.
LEARNING CONTENT
Introduction:
Mgmt 1063 – Strategic Management | 9
STRATEGY IN ACTION
Strategy is a long-range planning in order to develop a tactical plan. While Tactics deals with the use of
competencies in actual performance. Strategy in Action combines both to adapt behavior and provide
structure in order to achieve continuous improvements.
In this lesson, we will discuss about the importance of believing that lasting organizational change and action,
takes place only through and with people.
Lesson Proper:
Long-term
Objectives
•Represents the results expected from pursuing certain strategies.
Strategies
•Represent the actions to be taken to accomplish long-term
objectives.
Nature of Long-term Objectives
✓ Quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and
congruent to organizational units.
✓ Stated in terms of assets, growth in sales, profitability, market share, degree and nature of
diversification, degree and nature of vertical integration, earnings per share, and social responsibility.
✓ Provide direction, allow synergy, aid in evaluation, establish priorities, reduce uncertainty, minimize
conflicts, stimulate exertion, and aid in the allocation of resources and design of jobs.
✓ Needed at the corporate, divisional, and functional level of the organization.
✓ Important measure of managerial performance
✓ Help stakeholders understand their role in an organization’s future
✓ Provide a basis for consistent decision making of managers whose values and attitudes differ.
✓ Set forth organizational priorities and stimulate exertion and accomplishment.
✓ Set standards by which individuals, groups, departments, divisions, and entire organization can be
evaluated.
✓ Provide the basis for designing jobs and organizing activities to be performed in an organization.
Levels of Strategies
Corporate Level – primarily responsible for
having effective strategies at the various
levels, the CEO.
Divisional Level – divisional president or
executive vice president
Functional Level – finance, marketing, F&D,
manufacturing, information system, and human
resource manager.
Operational Level – plant managers, sales
managers, production and department
managers.
Mgmt 1063 – Strategic Management | 10
Types of Strategies
A. Integration Strategies
1. Forward Integration – involves gaining ownership or increased control over distributors or
retailers. An effective means of implementing forward integration is franchising.
Guidelines for effective strategy
a. When present distributors are expensive or unreliable or incapable of meeting the firm’
distribution needs.
b. When the availability of quality distributors is so limited as to offer a competitive advantage to
those firms that integrate forward.
c. When an organization competes in an industry that is growing and is expected to continue to
grow.
d. When an organization has both the capital and human resources needed to manage the new
business of distributing its own products.
e. When the advantages of stable production are particularly high.
f. When present distributors or retailers have high profit margins.
2. Backward Integration – seeking ownership or increased control of a firm’s suppliers.
Guidelines for effective strategy
a. When an organization’s present suppliers are expensive, or unreliable, or incapable of meeting
the firm’s needs for parts, components, assemblies, or raw materials.
b. When the number of suppliers is small and the number of competitors is large.
c. When an organization competes in an industry that is growing rapidly.
d. When an organization has both capital and human resources to manage the new business of
supplying its own raw materials.
e. When the advantages of stable prices are particularly important.
f. When present supplies have high profit margins, which suggests that the business of supplying
products
g. When an organization needs to quickly acquire a needed resource.
3. Horizontal Integration – seeking ownership of or increased control over a firm’s competitors.
Mergers, acquisitions, and takeovers among competitors allow for increased economies of scale
and enhanced transfer or resources and competencies.
a. Merger – it is a transaction involving two or more corporations in which stock is exchanged, but
from which only one corporation survives
-usually between firms of somewhat similar size and are usually “friendly”
-name derived from composite firms
b. Acquisitions -the purchase of a corporation that is completely absorbed as an operating
subsidiary or division of the acquiring corporation
c. Joint venture -a strategy of forming temporary partnership or consortium for the purpose of
gaining synergy
-provides a way to temporarily fit the different strengths of partners together so that an
outcome of value of both is achieved
Guidelines for effective strategy
a. When an organization can gain monopolistic characteristics in a particular area or region
without being challenged by the government for “tending substantially” to reduce competition,
b. When an organization competes in a growing industry
c. When increased economies of scale provide major competitive advantages
Mgmt 1063 – Strategic Management | 11
d. When an organization has both the capital and human talent needed to successfully manage
an expanded organization.
e. When competitors are faltering due to a lack of managerial expertise or a need for particular
resources that an organization possesses.
B. Intensive Strategies – requires intensive efforts if a firm’s competitive position with existing products is to
be improved.
1. Market Penetration – seeks to increase market share for present products or services in present
markets through greater marketing efforts. This includes increasing the number of salespersons,
increasing advertising expenditures, offering extensive sales promotion items, or increasing publicity
efforts.
Guidelines for effective strategy:
a. When current markets are not saturated with a particular product or service.
b. When the usage rate of present customers could be increased significantly.
c. When the market shares of major competitors have been declining while total industry sales
have been increasing.
d. When the correlation between sales and marketing expenditures historically has been high.
e. When increased economies of scale provide major competitive advantages.
2. Market Development – involves introducing present products or services into new geographic
areas.
Guidelines for effective strategy:
a. When new channels of distribution are available that are reliable, inexpensive, and of good
quality.
b. When an organization is very successful at what it does.
c. When new untapped or unsaturated markets exists.
d. When an organization has the needed capital and human resources to manage expanded
operations.
e. When an organization has excess production capacity.
f. When an organization’s basic industry is becoming rapidly global in scope.
3. Product Development – seeks to increase sales by improving or modifying present products or
services.
Guideline for effective strategy:
a. When the organization has successful products that are in the maturity stage of the product life
cycle.
b. When an organization competes in an industry that is characterized by rapid technological
developments.
c. When major competitors offer better-quality products at comparable prices.
d. When an organization competes in a high-growth industry.
e. When an organization has especially strong research and development capabilities.
C. Diversification Strategies- strategy which different products or divisions are added to the corporation
1. Related / concentric Diversification – their value chains possess competitively valuable crossbusiness strategic fits. Most companies favor related diversification strategies in order to capitalize on
synergies as follows;
a. Transferring competitively valuable expertise, technological know-how, or other capabilities from
one business to another.
b. Combining the related activities of separate businesses into single operations to achieve lower
costs.
c. Exploring common use of a well-known brand name.
Mgmt 1063 – Strategic Management | 12
d. Cross-business collaboration to create competitively valuable resource strengths and
capabilities.
Guidelines for effective strategy:
a. When an organization competes in a no – growth or a slow – growth industry.
b. When adding new, but related, products would significantly enhance the sales of current
products.
c. When new, but related, products could be offered at highly competitive prices
d. When new, but related products have seasonal sales levels that counterbalance an
organization’s existing peaks and valleys.
e. When an organization’s products are currently in the declining stage of the product’s life cycle.
f. When an organization has a strong management team.
2. Unrelated / conglomerate Diversification – their value chains are so dissimilar that no
competitively valuable cross-business relationship exists.
Guidelines for effective strategy:
a. When revenues derived from an organization’s current products or services would increase
significantly by adding the new, unrelated products.
b. When an organization competes in a highly competitive and/or a no-growth industry, as
indicated by low industry profit margins and returns.
c. When an organization’s present channels of distribution can be used to market the new
products to current customers.
d. When the new products have countercyclical sales patterns compared to an organization’s
present products.
e. When an organization’s basic industry is experiencing declining annual sales and profits.
f. When an organization has the capital and managerial talent needed to compete successfully in
a new industry.
g. When an organization has the opportunity to purchase an unrelated business that is an
attractive investment opportunity.
h. When there exists financial synergy between the acquired and acquiring firm.
i. When existing markets for an organization’s present products are saturated.
j. When antitrust action could be charged against an organization that historically has
concentrated on a single industry.
Horizontal Growth
Strategy
•- the acquisition by one corporation of another corporation or
business unit in the same industry
Vertical Growth
Strategy
•-is the strategy of a corporation that enters one or more businesses
that provide goods or services necessary to the manufacture and
distribution of its own products but that were previously purchased
from other companies.
D. Defensive Strategies
1. Retrenchment – occurs when an organization regroups through cost and asset reduction to reverse
declining sales and profits. Designed to fortify an organization’s basic distinctive competence.
PHASES
a. Contraction- the initial effort to reduce size and costs; cutback in non-critical expenditures
b. Consolidation- the development of a program to stabilize the now-leaner corporation
c. Rebuilding- an attempt to once again expand the organization
Guidelines for effective strategy:
a. When an organization has a clearly distinctive competence but has failed consistently to meet
its objectives and goals over time.
b. When an organization is one of the weaker competitors in a given industry.
Mgmt 1063 – Strategic Management | 13
c. When an organization is plagued by inefficiency, low profitability, poor employee morale, and
pressure from stockholders to improve performance.
d. When an organization has failed to capitalize on external opportunities, minimize external
threats, take advantage of internal strengths, and overcome internal weaknesses over time.
e. When an organization has grown so large so quickly that major internal reorganization is
needed.
2. Divestiture – Selling a division or part of an organization. It is used to raise capital for further
strategic acquisitions or investments. It can be part of retrenchment strategy to rid an organization of
business that are unprofitable, that require too much capital, or that do not fit well with the firm’s other
activities.
Guidelines for effective strategy;
a. When an organization has pursued a retrenchment strategy and failed to accomplish needed
improvements.
b. When a division needs more resources to be competitive than the company can provide.
c. When a division is responsible for an organization’s overall poor performance.
d. When a division is a misfit with the rest of an organization; this can result from radically different
markets, customers, managers, employees, values or needs.
e. When a large amount of cash is needed quickly and cannot be obtained reasonably from other
sources.
f. When government antitrust action threatens an organization.
3. Liquidation – selling all of a company’s assets, in parts, for their tangible worth. It is recognition of
defeat and consequently can be an emotionally difficult strategy.
Guidelines for effective strategy:
a. When an organization has pursued both a retrenchment strategy and a divestiture strategy, and
neither has been successful.
b. When an organization’s only alternative is bankruptcy. It represents an orderly and planned
means of obtaining the greatest possible cash for an organization’s assets. A company can
legally declare bankruptcy first and then liquidate various divisions to raise needed capital.
c. When the stockholders of a firm can minimize their losses by selling the organization’s assets.
E. Stability strategy -appropriate for a successful corporation operating in an industry of medium
attractiveness.
-epitomized by steady-as-she-goes philosophy
1. No-change strategy -a corporation continues on its course
-success depends on a lack of change in the corporation’s external and internal environment
2. Profit strategy -it involves the sacrifice of future growth for present profits
-short-term success coupled to long-term stagnation
3. Pause strategy -it involves reducing the levels of a corporation’s objectives so that it can consolidate
its resources.
4. Proceed with caution strategy - strategy results from a specific decision to proceed slowly because
of important factors developing in the external environment
*** END of LESSON ***
Mgmt 1063 – Strategic Management | 14
LEARNING MODULE
MKTG 1163 – Strategic Marketing Management
AY 2021-2022
Lesson: ESTABLISH LONG-TERM OBJECTIVES (Continuation Week 8)
Topic:
Placing Strategies into Action
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss the value of establishing long-term objectives.
2. Identify 16 types of business strategies.
3. Identify numerous examples of organizations pursuing different types of
strategies.
4. Discuss guidelines when particular strategies are most appropriate to pursue.
5. Discuss Porter’s five generic strategies.
6. Describe strategic management in nonprofit, governmental, and small
organizations.
7. Discuss joint ventures as a way to enter the market.
8. Discuss the Balanced Scorecard.
9. Compare and contrast financial with strategic objectives.
10.
Discuss the levels of strategies in large versus small firms.
11.
Explain the First Mover Advantages concept.
12.
Discuss recent trends in outsourcing.
13.
Discuss strategies for competing in turbulent, high-velocity markets.
Continuation……..
Michael Porter’s Five Generic Strategies
MKTG 1163 – Strategic Marketing Management | 1
1. Overall cost leadership strategies - this strategy requires “aggressive construction of efficientscale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control,
avoidance of marginal customer accounts, and cost minimization in areas like R & D, service, sales
force, advertising and so on.”
Guidelines for effective strategy;
a. When price competition among rival sellers is especially vigorous.
b. When the products of rival sellers are essentially identical and suppliers are readily available
from any of several eager sellers.
c. When there are few ways to achieve product differentiation that have value to buyers.
d. When most buyers use the product in the same ways.
e. When buyers incur low costs in switching their purchases from one seller to another.
f. When buyers are large and have significant power to bargain down prices.
g. When industry newcomers use introductory low prices to attract buyers and build a customer
base.
2. Differentiation - this strategy involves the creation of a product or service that is perceived
throughout its industry as being unique.
- Uniqueness can be accomplished through design or brand image, technology, features, dealer
network, or customer service.
- Viable for earning above-average returns in a specific business because the resulting brand
loyalty lowers customer’s sensitivity to price.
Guidelines for effective strategy:
a. When there are many ways to differentiate the product or service and many buyers perceive
these differences as having value.
b. When buyer needs and uses are diverse.
c. When few rival firms are following a similar differentiation approach.
d. When technological change is fast paced and competition revolves around rapidly evolving
product features.
3. Focus - this strategy focuses on a particular buyer group, product line segment or geographic
segment.
- it is valued because of the belief that that an SBU that focuses its efforts is better able to serve
its narrow strategic target more effectively or efficiently than can its competitors.
- it does however necessitate a trade-off between profitability and overall market share
Guidelines for effective strategy;
a. When the target market niche is large, profitable, and growing
b. When industry leaders do not consider the niche to be crucial to their own success.
c. When industry leaders consider it too costly or difficult to meet the specialized needs of the
target market niche while taking care of their mainstream customers.
d. When the industry has many different niches and segments, thereby allowing a focuser to pick
a competitively attractive niche suited to its own resources.
e. When few, if any, other rivals are attempting to specialize in the same target segment.
Focus: maximize corporate and divisional resources
Manufacturing: strategy to reduce costs and to improve the quality of its output
Marketing: strategy to increase sales
Strategies to be avoided
1. Follow the leaders- ignores a firm’s particular strengths and weaknesses
2. Hit another home run- pioneering a successful product; 2nd chance to succeed is very
slight
MKTG 1163 – Strategic Marketing Management | 2
3. Arms race- spirited battle; example is price wars
4. Do everything- taking all opportunities at one time
5. Losing hand- continue throwing money to unsuccessful business
Means for Achieving Strategies
1. Joint Venture / Partnering – occurs when two or more companies form a temporary partnership
or consortium for the purpose of capitalizing on some opportunity.
- Allow companies to improve communications and networking, to globalize operations, and to
minimize risk.
- To pursue an opportunity that is to complex, uneconomical, or risky for a single firm to pursue
alone.
- Effective way to enhance corporate growth than mergers and acquisitions.
Reasons of failure:
a. Managers who must collaborate daily in operating the venture are not involved in forming or
shaping the venture.
b. The venture may benefit the partnering companies but may not benefit customers.
c. The venture may not be supported equally by both partners.
d. The venture may begin to compete more with one of the partners than the other.
Guidelines for effective strategy:
a. When a privately-owned organization is forming a joint venture with a publicly-owned
organization.
b. When a domestic organization is forming a joint venture with a foreign company.
c. When the distinct competencies of two or more firms complement each other especially well.
d. When some project is potentially very profitable but requires overwhelming resources and risks.
e. When two or more smaller firms have trouble competing with a large firm.
f. When there exists a need to quickly introduce a new technology.
2. Merger / Acquisition – occurs when two organization of about equal size unite to form one enterprise.
Reasons for merging:
a. Deregulation, technological change, excess capacity, inability to boost profits through price
increase, a depressed stock market, the need to gain economies of scale.
b. Increase market power, reduced entry barriers, reduced cost of new product development,
increased speed of products to market, lowered risk compared to developing new products,
increased diversification, avoidance of excessive competition, and opportunity to learn and
develop new capabilities.
Reasons why mergers fail:
a. Integration difficulties
b. Inadequate evaluation of target
c. Large or extraordinary debt
d. Inability to achieve synergy
e. Too much diversification
f. Managers overly focused on acquisitions
g. Too large an acquisition
h. Difficult to integrate different organizational cultures
i. Reduced employee morale due to layoffs and relocations
3. First Mover Advantages – refer to the benefits a firm may achieve by entering a new market or
developing a new product or service prior to rival firms.
Advantages:
MKTG 1163 – Strategic Marketing Management | 3
a. Securing access to rare resources, gaining new knowledge of key factors and issues, and
carving out market share and a position that is easy to defend and costly for rival firms to
overtake.
b. Build a firm’s image and reputation with buyers
c. Produce cost advantages over rivals in terms of new technologies, new components, new
distribution channels, etc.
d. Create strongly loyal customers
e. Make imitation or duplication by a rival hard or unlikely.
4. Outsourcing – is a rapidly growing new business that involves companies taking over the functional
operations such as human resources, information systems, customer service and even marketing to
other firms.
*** END of LESSON ***
REFERENCES
Textbooks
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
MKTG 1163 – Strategic Marketing Management | 4
School of Accountancy, Business and Hospitality
Business Administration Department
Curriculum 2018-2019
Learning Module
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: Cultural Aspects of Strategy Choice
Topic:
Cultural Aspects of Strategy Choice
Learning Outcomes:
At the end of this module, you are expected to:
1. Identify the role of organizational culture in strategic analysis and choice.
LEARNING CONTENT
Introduction:
Strategic choice and analysis mainly involve making subjective decisions. These decisions are made
based on objective information. There are even cultural aspects to strategy choices that you must
know.
MGMT 1063 – Strategic Management | 1
Lesson Proper:
Nature of strategy analysis and choice
Generation of alternative strategies
Establishment of long-term objectives
Choosing the strategies for pursuing
The alternative that helps achieve mission and objectives is the best alternative.
What is culture?
Culture is basically the sum total of all
shared, often subconscious assumptions
learned by a group through history. The
evolution of culture can be traced back to
the original reason for existence of the
organization. It forms over cumulatively over
time in a very pragmatic manner
It is important to know what culture is before you get into the cultural aspects of strategy choice. With our
cultural aspects of strategy choice assignment help, every important detail is properly discussed. Our experts
will make sure you understand every aspect of the topic. That way, you not only get your homework help, but
also the academic assistance.
Importance of cultural factors in strategy analysis and choice
Cultural factors play an important role in day to day life of any organization. The unique culture of any
organization represents the very essence of its work. Therefore, it plays an important role when it comes to
choosing among the different strategy alternatives for the organization. While doing so, the different levels of
support that a concerned strategy would receive from present cultural products should be given
due consideration.
The cultural aspects
It includes a set of shared beliefs, values, attitudes, norms, customs, heroes, heroines and personalities that
describe the firm.
MGMT 1063 – Strategic Management | 2
•
•
•
Viewing strategic management from the point of view of culture is always beneficial. This is because
success is frequently dependent on the kind of support that a firm’s culture provides to a strategy.
Strategies are more attractive if they require few cultural changes. This is because considerable effort
and time might be required for incorporating extensive changes
If the strategies of a firm are support by cultural products like values, beliefs and rituals, then the
changes can be implemented by managers easily and smoothly.
The Culture and Politics of Strategy Choice:
• It is beneficial to view strategic management from a cultural perspective because success often rests
on the degree of support that strategies receive from a firm’s culture.
• If a firm’s strategies are supported by cultural products such as values, beliefs, rites, rituals,
ceremonies, stories, symbols, language, heroes, and heroines, then managers often can implement
changes swiftly and easily.
• Strategies that require fewer cultural changes may be more attractive because extensive changes can
take considerable time and effort.
• In the absence of objective analyses, strategy decisions too often are based on the politics of the
moment. With development of improved strategy formulation tools, political factors become less
important in making strategic decisions.
Political maneuvering consumes valuable time, subverts organizational objectives, diverts human energy, and
results in the loss of some valuable employees
Political biases and personal preferences get unduly embedded in strategy choice decisions
Politics of Strategy Choice:
Politics in Organizations
• Management hierarchy
• Career aspirations
• Allocation of scarce resources
Political Tactics for Strategists
All organizations are political. Unless managed, political maneuvering consumes valuable time, subverts
organizational objectives, diverts human energy, and results in the loss of some valuable employees.
Sometimes political biases and personal preferences get unduly embedded in strategy choice decisions.
Internal politics affect the choice of strategies in all organizations. The hierarchy of command in an
organization, combined with the career aspirations of different people and the need to allocate scarce
resources, guarantees the formation of coalitions of individuals who strive to take care of themselves first and
the organization second, third, or fourth. Coalitions of individuals often form around key strategy issues that
face an enterprise. A major responsibility of strategists is to guide the development of coalitions, to nurture an
overall team concept, and to gain the support of key individuals and groups of individuals.
a. Equifinality: give flexibility to use different techniques.
It is often possible to achieve similar results using different means or paths. Strategists should
recognize that achieving a successful outcome is more important than imposing the method of
achieving it. It may be possible to generate new alternatives that give equal results but with far greater
potential for gaining commitment.
b. Satisfying: achieving satisfactory results with acceptable strategies.
Achieving satisfactory results with an acceptable strategy is far better than failing to achieve optimal
results with an unpopular strategy.
c. Generalization: shifting focus from specific to general ones.
MGMT 1063 – Strategic Management | 3
Shifting focus from specific issues to more general ones may increase strategists’ options for gaining
organizational commitment.
d. Higher-order issues: postponed short-term in favor of long term. E.g., focus on survival and give
concession to union on wage increase.
By raising an issue to a higher level, many short-term interests can be postponed in favor of long-term
interests. For instance, by focusing on issues of survival, the airline and automotive industries were
able to persuade unions to make concessions on wage increases.
e. Political access on important issues
Strategy and policy decisions with significant negative consequences for middle managers will motivate
intervention behavior from them. If middle managers do not have an opportunity to take a position on
such decisions in appropriate political forums, they are capable of successfully resisting the decisions
after they are made. Providing such political access provides strategists within formation that otherwise
might not be available and that could be useful in managing intervention behavior.
Tactics to Aid Strategies:
1. Choose methods that afford employee commitment
2. Achieve satisfactory results with a popular strategy
3. Shift from specific to general issues
4. Focus on long-term issues and concerns
5. Involve middle level managers in decisions
REFERENCES
Textbooks
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
Online Resources
https://myhomeworkhelp.com/cultural-aspects-strategy-choice-homework-help/
https://smallbusiness.chron.com/top-5-biggest-decisions-business-owners-make-10131.html
https://www.coursehero.com/file/p7fk5ei/The-Politics-of-Strategy-Choice-All-organizations-are-political-Unlessmanaged/
Images
https://images.app.goo.gl/fAxhZJMTr4DsyvA98
https://images.app.goo.gl/sPGK1JnzpxWXx92B9
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MGMT 1063 – Strategic Management | 4
School of Accountancy, Business and Hospitality
Business Administration Department
Curriculum 2018-2019
Learning Module
MKTG 1163 – Strategic Management
AY 2021-2022
Lesson: Cultural Aspects of Strategy Choice (continuation)
Topic:
Cultural Aspects of Strategy Choice
Learning Outcomes:
At the end of this module, you are expected to:
1. Understand the governance issues in the choice of strategies
Lesson Proper:
Governance Issues:
Board of Directors
•– a group of individuals who are elected by the ownership of a
corporation to have oversight and guidance over management and who
look out for shareholders’ interests
Board of Directors Duties and Responsibilities:
1. Control and oversight over management
2. Adherence to legal prescriptions
3. Consideration of stakeholders/interests
4. Advancement of stockholders’ rights
Principles of Good Governance:
1. No more than two directors are current or former company executives
2. The audit, compensation, and nominating committees are made up solely of outside directors
3. Each director owns a large equity stake in the company, excluding stock options
4. Each director attends at least 75% of all meetings
5. The board meets regularly without management present and evaluates its own performance annually
6. The CEO is not also the chairperson of the board
7. There are no interlocking directorships (where a director or CEO sits on another director’s board)
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MGMT 1063 – Strategic Management | 1
Why Is Culture Important in Understanding Strategic Management?
What is your business’s culture? Similar to the culture of a country, every business has its own unique
set of values, norms and behaviors. A business’s culture can evolve over time. Its evolution is often
kicked into high gear by strategic management.
Strategic management is the never-ending process of managing your business for success. It includes
ongoing assessment of your customer base, competition and financial management. Its big picture
analyzing and planning to set up your business to grow and succeed long term.
Strategic planning typically starts with three questions:
Where is my business
now?
Where do I want it to
be?
How am I going to get it
there?
Many factors have to be considered when working on strategic plans and management of those plans.
You’re not alone, if your focus has so far been on external factors like your customers, suppliers,
politics and even the weather if your business happens to be about outdoor activities. But if you want to
realize the goals you’ve laid out, you also have to look inward. That means assessing your company’s
culture.
Culture Supports Strategic Management
A business’s culture can make or break strategic management. Because after you’ve defined “how
you’re going to get there” you’re going to need your employees to buy-in, support and implement your
strategy. If you have a negative corporate culture, you’re going to have to fix it first.
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MGMT 1063 – Strategic Management | 2
If you and your employees aren’t working as a team toward a common goal, you need to figure out why.
The usual culprits include poor communication, inconsistent or micromanagement, and focusing only
on profits.
Don’t forget to assess your leadership skills. Poor leadership can lead to bad employee attitudes and
behavior. Ask yourself, or even better, ask your employees, how you can improve.
Strategy Culture Compatibility
The relationship between organizational culture and strategy implementation has to be a healthy one.
Strategic plans don’t succeed when there is only partial commitment. One way to lay the groundwork
for buy-in, is to include boots on the ground employees in Step 3; How are we going to get there?
Don’t choose the employees who you think will automatically support all of your ideas – be brave and
choose the ones who likely won’t. They’ll be able to point out flaws or weaknesses in your plan. Ask
them for their input on fixing the plan and suggestions on how to implement it. If you can get them on
board the rest will be easy.
There Will Be Growing Pains
The role of culture in strategic decision making is very important so don’t ignore it. That said, don’t be
surprised if you have a few hiccups when you try to implement your strategy. Don’t panic. It’s just part of
the process.
You may find that no matter what you do, some employees just don’t like change. Don’t be surprised if
you lose them. You may even lose some you consider your best. Growth of any kind can be painful but
it’s growth you want if your business is to succeed.
Strategic Management Yoga
After you’ve defined what your strategy is going to be and you’ve set up your business’s culture to
support your strategy, be sure to allow for change, as a strategic plan and strategic management must
– above all else – be flexible.
You might find that your customers aren’t ready for a new product or process. Maybe the way you’ve
always rolled out new procedures needs some tweaking. You may even discover that your goals
weren’t realistic to begin with and they need to be reconsidered.
Remember that strategic management is a never-ending process. It needs to be able to flex and
stretch, just like you do in yoga class. Think downward facing dog, upward facing dog, downward facing
dog, and so on and so forth.
*** END of LESSON ***
REFERENCES
Textbooks
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MGMT 1063 – Strategic Management | 3
COURSE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: Strategy Analysis and Choice
Topic:
Strategy Analysis and Choice
Learning Outcomes:
At the end of this module, you are expected to:
1. Identify important behavioral, political, ethical, and social responsibility considerations in strategy
analysis and choice with the use of fact storming web.
LEARNING CONTENT
Introduction:
In this lesson we will discuss about the
strategic analysis and choice as studied
in strategic management!
Further this lesson will help you to learn
about:
Strategy Analysis and Choice
Strategic Analysis and Choice- BCG
Matrix
Strategic Analysis and Choice- Tools and
Techniques
Strategy analysis and choice focuses on generating and evaluating alternative strategies, as well as on
selecting strategies to pursue. Strategy analysis and choice seeks to determine alternative courses of
action that could best enable the firm to achieve its mission and objectives.
The firm’s present strategies, objectives, and mission together with the external and internal audit
information, provide a basis for generating and evaluating feasible alternative strategies. The alternative
strategies represent incremental steps that move the firm from its current position to a desired future
state.
Alternative strategies are derived from the firm’s vision, mission, objectives, external audit, and internal
audit and are consistent with past strategies that have worked well. The strategic analysis discusses the
analytical techniques in two stages i.e. techniques applicable at corporate level and then techniques
used for business-level strategies.
MGMT 1063 – Strategic Management | 1
Lesson Proper:
The Process of Generating and Selecting Strategies:
• A manageable set of the most attractive alternative
strategies must be developed
• The advantages, disadvantages, trade-offs, costs, and
benefits of these strategies should be determined
• Identifying and evaluating alternative strategies should
involve many of the managers and employees who earlier
assembled of the organizational vision and mission statements,
performed the external audit, and conducted the internal audit
• Alternative strategies proposed by participants should be
considered and discussed in a series of meeting
• Proposed strategies should be listed in writing
• When all feasible strategies identified by participants are
given and understood, the strategies should be ranked in order
of attractiveness
A Comprehensive Strategy-Formulation Framework:
Stage 1 – Input Stage
•Summarizes the basic input info needed to formulate strategies
•Consists of the EFE Matrix, the IFE Matrix, and the Competitive Profile Matrix (CPM)
Stage 2 – Matching Stage
•Focuses on generating feasible alternative strategies by aligning key external and
internal factors
•Techniques include the SWOT Matrix, the Strategic Position and Action Evaluation
(SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE)
Matrix, and the Grand Strategy Matrix
Stage 3 – Decision Stage
•Involves the Quantitative Strategic Planning Matrix (QSPM)
•Reveals the relative attractiveness of alternative strategies and thus provides objective
basis for selecting specific strategies
Example
Matching Key External and Internal Factors to Formulate Alternative Strategies:
Key Internal Factor
Excess working capital (an internal
strength)
Insufficient
weakness)
capacity
(an
internal
Strong research and development
expertise (an internal strength)
Key External Factor
+ Annual growth of 20% in the cell
phone
industry
(an
external
opportunity)
+ Exit of two major foreign competitors
from the industry (an external
opportunity)
+ Decreasing numbers of younger
adults (an external threat)
Resultant Strategy
= Acquire Cellfone, Inc.
= Pursue horizontal integration by
buying competitors’ facilities
= Develop new products for older
adults
MGMT 1063 – Strategic Management | 2
Poor employee morale (an internal
weakness)
+ Rising health-care costs (an external
threat)
= Develop a new wellness program
The Matching Stage:
A. The SWOT Matrix helps managers develop four types of strategies:
1. SO (strengths-opportunities) Strategies
- Uses a firm’s internal strengths to take advantage of external opportunities
2. WO (weaknesses-opportunities) Strategies
- Aim at improving internal weaknesses by taking advantage of external opportunities.
3. ST (strengths-threats) Strategies
- Use a firm’s strengths to avoid or reduce the impact of external threats
4. WT (weaknesses-threats) Strategies
- Defensive tactics directed at reducing internal weaknesses and avoiding external threats
SWOT Matrix:
1. List the firm’s key external opportunities
2. List the firm’s key external threats
3. List the firm’s key internal strengths
4. List the firm’s key internal weaknesses
5. Match internal strengths with external opportunities, and record the resultant SO strategies
6. Match internal weaknesses with external opportunities, and record the resultant WO strategies
7. Match internal strengths with external threats, and record the resultant ST strategies
8. Match internal weaknesses with external threats, and record the resultant WT strategies
This technique is also known as Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix:
So again, the TOWS matrix is an important tool that helps managers develop four types of strategies:
(a) SO Strategies
(b) WO Strategies
(c) ST Strategies
(d) WT Strategies
Matching key external and internal factors is the most tedious part of developing a TOWS Matrix. It
requires good judgment. However, there is no one best set of matches.
(a) SO Strategies:
SO strategies use a firm’s internal strengths to take advantage of external opportunities. All managers
would like their organization to be in a position in which internal strengths can be used to take advantage
of external trends and events. Organizations generally will pursue WO, ST, or WT strategies in order to
get into a situation in which they can apply SO Strategies.
When a firm has major weaknesses, it will strive to overcome them and convert them into strengths.
When an organization confronts major threats, it will attempt to avoid them in order to focus on
opportunities.
(b) WO Strategies:
WO strategies focus at improving internal weaknesses by taking advantage of external opportunities.
Sometimes a firm may have key external opportunities but it may have internal weaknesses that can
prevent it from exploiting them.
MGMT 1063 – Strategic Management | 3
For example, there may be a huge demand for electronic devices to control the amount and timing of fuel
injection in automobile engines (opportunity), but a certain auto parts manufacturer may not possess the
technology required for producing these devices (weakness).
The firm may consider one possible WO strategy to acquire this technology by forming a joint venture
with a firm having competency in this area. Another WO strategy may be to hire and train internal people
with the required technical capabilities.
(c) ST Strategies:
ST strategies make use of firm’s strengths to minimize the impact of external threats.
(d) WT Strategies:
WT strategies are defensive tactics directed at reducing internal weakness and avoiding external threats.
An organization faced with numerous external threats and internal weaknesses may indeed be in a
precarious position. In fact, such a firm may have to battle for its survival, merge, retrench, declare
bankruptcy, or choose liquidation.
The TOWS matrix involves eight steps:
1. List the firm’s key external opportunities.
2. List the firm’s key external threats.
3. List the firm’s key internal strengths.
4. List the firm’s key internal weaknesses.
5. Match internal strengths with external opportunities, and record the resultant SO Strategies in the
appropriate cell.
6. Match internal weaknesses with external opportunities, and record the resultant WO Strategies.
7. Match internal strengths with external threats, and record the resultant ST Strategies.
8. Match internal weaknesses with external threats, and record the resultant WT Strategies.
B. The SPACE Matrix:
The Strategic Position and Action Evaluation
(SPACE) matrix is another important matching
tool. Its four-quadrant framework indicates
whether aggressive, conservative, defensive, or
competitive strategies are most appropriate for a
given organization.
The axes of the matrix represent two internal
dimensions (financial strength (FS)) and
competitive advantage (CA) and two external
dimensions (environmental stability (ES)) and
industry strength (IS). These four factors are the
most important determinants of an organization’s
overall strategic position.
Depending upon the type of organization, several variables could make up each of the dimensions
represented on the axes of the SPACE matrix.
a. Four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive
strategies are most appropriate for a given organization
MGMT 1063 – Strategic Management | 4
b. Two internal dimensions (financial position [FP] and competitive position [CP])
c. Two external dimensions (stability position [SP] and industry position [IP])
d. Most important determinants of an organization’s overall strategic position
SPACE Matrix Axes:
1. Internal Strategic Position:
o Financial Position [FP] – return on investment, leverage, liquidity, working capital, cashflow,
inventory turnover, earnings per share, price earnings ratio
o Competitive Position [CP] – market share, product quality, product life cycle, customer loyalty,
capacity utilization, technological know-how, control over suppliers and distributors
2. External Strategic Position:
o Stability Position [SP] – tech changes, rate of inflation, demand variability, price range of
competing products, barriers to entry into market, competitive pressure, ease of exit from market,
price elasticity of demand, risk involved in business
o Industry Position [IP] – growth potential, profit potential, financial stability, extent leveraged,
resource utilization, ease of entry into market, productivity, capacity utilization
Steps to Develop a SPACE Matrix:
1. Select a set of variables to define FP, CP, ST, and IP
2. Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up
the FP and IP dimensions
3. Assign a numerical value ranging from -1 (best) to -7 (worst) to each of the variables that make up the
SP and CP dimensions
4. Compute an average score for FP, CP, IP, and SP
5. Plot the average scores for FP, IP, SP, and CP on the appropriate axis
6. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on the y-axis
and plot the resultant point on Y. Plot the intersection of the new xy point
7. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point
The directional vector associated with each profile
suggests the type of strategies to pursue:
aggressive,
conservative,
defensive,
or
competitive. When a firm’s directional vector is
located in the aggressive quadrant of the SPACE
matrix, an organization is in an excellent position to
use its internal strengths- (1) to take advantage of
external opportunities, (2) overcome internal
weaknesses, and (3) avoid external threats.
Therefore,
market
penetration,
market
development, product development, backward
integration,
forward
integration,
horizontal
integration,
conglomerate
diversification,
concentric diversification, horizontal diversification,
or a combination strategy all can be feasible,
depending on the specific circumstances that face
the firm.
The directional vector in the conservative quadrant implies staying close to the firm’s basic competencies
and not taking excessive risks. Conservative strategies most often include market penetration, market
development, product development, and concentric diversification.
MGMT 1063 – Strategic Management | 5
The directional vector in the defensive quadrant suggests that the firm should focus on rectifying internal
weaknesses and avoiding external threats. Defensive strategies include retrenchment, divestiture,
liquidation, and concentric diversification.
Finally, the directional vector in the competitive quadrant of the SPACE matrix suggests backward,
forward, and horizontal integration, market penetration, market development, product development and
joint ventures.
C. The Boston Consulting Group (BCG) Matrix:
• Graphically portrays differences among
divisions in terms of relative market share
position and industry growth rate
• Allows a multidivisional organization to
manage its portfolio of businesses by
examining the relative market share position
and the industry growth rate of each division
relative to all other divisions in the
organization
The BCG matrix is a tool that can be used to
determine what priorities should be given in
the product portfolio of a business unit. It has
2 dimensions; market share and market
growth. The basic idea behind it is that the
bigger the market share a product has or the
faster the product’s market grows the better it
is for the company. Placing products in the
BCG matrix results in 4 categories in a
portfolio of a company.
a. Question Marks – Quadrant I
• Organization must decide whether to strengthen them by pursuing an intensive strategy (market
penetration, market development, or product development) or to sell them
• Question marks are high-growth, low-market-share products or divisions. Their conditions are the
worst, for their cash needs are high, but cash generation is low. Such businesses are seen to
indicate opportunity. They need to gain share by generating additional market share and hence
lower cost via experience gains, while the growth rate in the industry is high.
b. Stars – Quadrant II
• Represent the organization’s best long-run opportunities for growth and profitability
• Stars are businesses that have high market share in a high growth environment. They are growing
rapidly and are the best long-run opportunities in terms of growth and profitability in the firm’s
portfolio. They are leaders in their business and generate large amount of cash. They require
substantial investment to maintain and expand their dominant position in a growing market.
c. Cash Cows – Quadrant III
• Generate cash in excess of their needs
• Should be managed to maintain their strong position for as long as possible
MGMT 1063 – Strategic Management | 6
•
Cash cows are low-growth, high market-share products or divisions. Because of their high market
share, they have low costs and generate cash. Since growth is slow, reinvestment costs are low.
Cash cows provide funds for overhead, dividends, and investment for the rest of the firm and are
in excess of their needs.
d. Dogs – Quadrant IV
• Compete in a slow- or no-market-growth industry
• Such businesses are defined as those in which the growth rate is slow and the relative market
share is low compared to the leading competitors. Because of their low market share these
businesses are often expected to have a higher cost structure than industry leaders.
The major benefit of the BCG Matrix is that it draws attention to the cash flow, investment
characteristics, and needs of an organization’s various divisions
D. The Grand Strategy Matrix:
• Thompson and Strickland’s improvements on BCG growth share portfolio matrix provide another
method of selecting a grand strategy option. It presents a model of grand strategy clusters. The
growth rate of the general market and the company’s competitive position in that market define
the situation of a business.
• Based on two evaluative dimensions: Competitive position and Market (industry) growth
When these factors are considered simultaneously, a business can be broadly categorized in one of the
four quadrants:
1. Strong competitive position in a rapidly growing market.
2. Weak position in a rapidly growing market.
3. Weak position in a slow growth market.
4. Strong position in a slow growth market
Each of these quadrants offers a set of promising possibilities for choice of a grand strategy.
a. Quadrant 1:
• Continued concentration on current markets (market penetration and market development) and
products (product development) is an appropriate strategy
b. Quadrant II:
MGMT 1063 – Strategic Management | 7
•
•
Unable to compete effectively
Need to determine why the firm’s current approach is ineffective and how the company can best
change to improve its competitiveness
c. Quadrant III:
• Must make some drastic changes quickly to avoid further decline and possible liquidation
• Extensive cost and asset reduction (retrenchment) should be pursued first
d. Quadrant IV:
• Have characteristically high cash-flow levels and limited internal growth needs and often can
pursue related or unrelated diversification successfully
E. The Quantitative Strategic Planning Matrix (QSPM):
• Objectively indicates which alternative strategies are best
• Uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide
objectively among alternative strategies
Steps in a QSPM:
1. Make a list of the firm’s key external opportunities and threats and internal strengths and weaknesses
in the left column
2. Assign weights to each key external and internal factor
3. Examine the Stage 2 (matching) matrices, and identify alternative strategies that the organization
should consider implementing
4. Determine the Attractiveness Scores (AS)
5. Compute the Total Attractiveness Score
6. Compute the Sum Total Attractiveness Score
Positive Features of the QSPM:
• Sets of strategies can be examined sequentially or simultaneously
MGMT 1063 – Strategic Management | 8
•
•
Requires strategists to integrate pertinent external and internal factors into the decision process
Can be adapted for use by small and large for-profit and nonprofit organizations
Limitations of the QSPM:
• Always require informed judgements
• It is only as good as the prerequisite info and matching analyses on which it is based
*** END of LESSON ***
MGMT 1063 – Strategic Management | 9
COURSE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: Implementing Strategies: Management and Operations Issues
Topic:
The Nature of Strategy Implementation; Annual Objectives; Policies; Resource
Allocation; Managing Conflict; Matching Structure with Strategy; Restructuring,
Re-engineering and E-engineering
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss the importance of annual objectives and policies in achieving organizational commitment for
strategies to be implemented.
2. Explain why organizational structure is so important in strategy implementation.
3. Compare and contrast restructuring and reengineering.
LEARNING CONTENT
Introduction:
The strategic management process does not end when the firm decides what strategy or strategies to
pursue. There must be a translation of strategic thought into strategic actions. This translation is much easier if
managers and employees of the firm understand the business, feel part of the company, and through
involvement in strategy-formulation activities have become committed to helping the organization succeed.
Without understanding and commitment, strategy implementation efforts face major problems.
Lesson Proper:
The Nature of Strategy Implementation
Successful strategy formulation does not guarantee successful strategy implementation. It is always
more difficult to do something (strategy implementation) than to say you are going to do it (strategy
formulation)!
Strategy formulation and implementation can be contrasted in the following ways:
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MGMT 1063 – Strategic Management | 1
Strategy-formulation concepts and tools do not differ greatly for small, large, for-profit, or nonprofit
organizations. Strategy implementation varies substantially among different types and sizes of organizations.
Implementing strategies requires such actions as altering sales territories, adding new departments, closing
facilities, hiring new employees, changing an organization’s pricing strategy, developing financial budgets,
developing new employee benefits, establishing cost-control procedures, changing advertising strategies,
building new facilities, training new employees, transferring managers among divisions, and building a better
management information system.
Management Perspectives
Implementation problems can arise because of this shift in responsibility, especially if strategyformulation decisions come as a surprise to middle- and lower-level managers. It is essential that divisional
and functional managers be involved as much as possible in strategy-formulation activities. Strategists should
be involved as much as possible in strategy-implementation activities. Management issues central to strategy
implementation include:
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MGMT 1063 – Strategic Management | 2
Managers and employees throughout an organization should participate early and directly in strategyimplementation decisions. Their role in strategy implementation should build upon prior involvement in
strategy-formulation activities. Strategists’ genuine personal commitment to implementation is a necessary and
powerful motivational force for managers and employees. Too often, strategists are too busy to actively
support strategy-implementation efforts, and their lack of interest can be detrimental to organizational success.
The rationale for objectives and strategies should be understood and clearly communicated throughout
an organization. Major competitors’ accomplishments, products, plans, actions, and performance should be
apparent to all organizational members. Major external opportunities and threats should be clear, and
managers’ and employees’ questions should be answered. Top-down flow of communication is essential for
developing bottom-up support. Firms need to develop a competitor focus at all hierarchical levels by gathering
and widely distributing competitive intelligence; every employee should be able to benchmark her or his efforts
against best-in-class competitors so that the challenge becomes personal. Firms should provide training for
both managers and employees to ensure that they have and maintain the skills necessary to be world-class
performers.
Annual Objectives
Establishing annual objectives is a decentralized activity that directly involves all managers in an
organization. Active participation in establishing annual objectives can lead to acceptance and commitment.
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MGMT 1063 – Strategic Management | 3
Annual objectives serve as guidelines for action, directing and channeling efforts and activities of
organization members. They provide a source of legitimacy in an enterprise by justifying activities to
stakeholders. They serve as standards of performance. They serve as an important source of employee
motivation and identification. They give incentives for managers and employees to perform. They provide a
basis for organizational design.
Considerable time and effort should be devoted to ensuring that annual objectives are well conceived,
consistent with long-term objectives, and supportive of strategies to be implemented. Approving, revising, or
rejecting annual objectives is much more than a rubber-stamp activity. The purpose of annual objectives can
be summarized as follows:
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MGMT 1063 – Strategic Management | 4
Policies
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without permission from the University. Unauthorized use of the materials, other than personal learning use,
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MGMT 1063 – Strategic Management | 5
Policies are needed to make a strategy work. Policies facilitate solving recurring problems and guide
the implementation of strategy.
Policies provide a basis for management control, allow coordination across organizational units, and
reduce the amount of time managers spend making decisions. Policies also clarify what work is to be done
and by whom. They promote delegation of decision making to appropriate managerial levels where various
problems usually arise. Many organizations have a policy manual that serves to guide and direct behavior.
Some example issues that may require a management policy are as follows:
To offer extensive or limited management development workshops and seminars
To centralize or decentralize employee-training activities
To recruit through employment agencies, college campuses, and/or newspapers
To promote from within or to hire from the outside
To promote on the basis of merit or on the basis of seniority
To tie executive compensation to long-term and/or annual objectives
To offer numerous or few employee benefits
To negotiate directly or indirectly with labor unions
To delegate authority for large expenditures or to centrally retain this authority
To allow much, some, or no overtime work
To establish a high- or low-safety stock of inventory
To use one or more suppliers
To buy, lease, or rent new production equipment
To greatly or somewhat stress quality control
To establish many or only a few production standards
To operate one, two, or three shifts
To discourage using insider information for personal gain
To discourage sexual harassment
To discourage smoking at work
To discourage insider trading
To discourage moonlighting
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MGMT 1063 – Strategic Management | 6
Resource Allocation
Resource allocation is a central management activity that allows for strategy execution. In
organizations that do not use a strategic-management approach to decision making, resource allocation is
often based on political or personal factors. Strategic management enables resources to be allocated
according to priorities established by annual objectives.
All organizations have at least four types of resources that can be used to achieve desired objectives:
Allocating resources to particular divisions and departments does not mean that strategies will be
successfully implemented. A number of factors commonly prohibit effective resource allocation, including an
overprotection of resources, too great an emphasis on short-run financial criteria, organizational politics, vague
strategy targets, a reluctance to take risks, and a lack of sufficient knowledge.
The real value of any resource allocation program lies in the resulting accomplishment of an
organization’s objectives. Effective resource allocation does not guarantee successful strategy implementation
because programs, personnel, controls, and commitment must breathe life into the resources provided.
Strategic management itself is sometimes referred to as a “resource allocation process.”
Managing Conflict
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MGMT 1063 – Strategic Management | 7
Interdependency of objectives and competition for limited resources often leads to conflict.
Establishing annual objectives can lead to conflict because individuals have different expectations and
perceptions, schedules create pressure, personalities are incompatible, and misunderstandings between line
managers (such as production supervisors) and staff managers (such as human resource specialists) occur.
Conflict is unavoidable in organizations, so it is important that conflict be managed and resolved before
dysfunctional consequences affect organizational performance. Conflict is not always bad. An absence of
conflict can signal indifference and apathy. Conflict can serve to energize opposing groups into action and
may help managers identify problems.
Various approaches for managing and resolving conflict can be classified into three categories:
Matching Structure with Strategy
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MGMT 1063 – Strategic Management | 8
Changes in strategy often require changes in the way an organization is structured for two major
reasons. Structure largely dictates how objectives and policies will be established. For example, objectives
and policies established under a geographic organizational structure are couched in geographic terms.
Objectives and policies are stated largely in terms of products in an organization whose structure is based on
product groups. The structural format for developing objectives and policies can significantly impact all other
strategy-implementation activities.
The second major reason why changes in strategy often require changes in structure is that structure
dictates how resources will be allocated. If an organization’s structure is based on customer groups, then
resources will be allocated in that manner. Similarly, if an organization’s structure is set up along functional
business lines, then resources are allocated by functional areas. Unless new or revised strategies place
emphasis in the same areas as old strategies, structural reorientation commonly becomes a part of strategy
implementation. Changes in strategy lead to changes in organizational structure. Structure should be
designed to facilitate the strategic pursuit of a firm and, therefore, follow strategy. Without a strategy or
reasons for being (mission), companies find it difficult to design an effective structure.
Small firms tend to be functionally structured (centralized). Medium-sized firms tend to be divisionally
structured (decentralized). Large firms tend to use a strategic business unit (SBU) or matrix structure. As
organizations grow, their structures generally change from simple to complex as a result of concatenation, or
the linking together of several basic strategies. Symptoms of an ineffective organizational structure include too
many levels of management, too many meetings attended by too many people, too much attention being
directed toward solving interdepartmental conflicts, too large a span of control, and too many unachieved
objectives.
The seven basic types of organizational structure are:
A functional structure groups tasks and activities by business function, such as production/operation,
marketing, finance/accounting, research and development, and management information systems. A
university may structure its activities by major functions that include academic affairs, student services, alumni
relations, athletics, maintenance, and accounting. Besides being simple and inexpensive, a functional
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MGMT 1063 – Strategic Management | 9
structure also promotes specialization of labor, encourages efficient use of managerial and technical talent,
minimizes the need for an elaborate control system, and allows rapid decision making.
Disadvantages;
• It forces accountability to the top, minimizes career development opportunities, and is sometimes
characterized by low employee morale, line/staff conflicts, poor delegation of authority, and inadequate
planning for products and markets.
• Often leads to short-term and narrow thinking that may undermine what is best for the firm as a whole. For
example, the research and development department may strive to overdesign products and components to
achieve technical elegance, while manufacturing may argue for low-frills products that can be mass produced
more easily. Thus, communication is often not as good in a functional structure.
Some form of divisional structure generally becomes necessary to motivate employees, control
operations, and compete successfully in diverse locations.
Advantages
 Accountability is clear. That is, divisional
managers can be held responsible for sales and
profit levels. Because a divisional structure is
based on extensive delegation of authority,
managers and employees can easily see the
results of their good or bad performances. As a
result, employee morale is generally higher in a
divisional structure than it is in a centralized
structure.
 It creates career development opportunities for
managers, allows local control of situations, leads
to a competitive climate within an organization, and
allows new businesses and products to be added
easily.
Limitation
Costly - each division requires functional specialists
who must be paid. Second, there exists some
duplication of staff services, facilities, and personnel;
for instance, functional specialists are also needed
centrally (at headquarters) to coordinate divisional
activities. Third, managers must be well qualified
because the divisional design forces delegation of
authority; better-qualified individuals require higher
salaries. A divisional structure can also be costly
because it requires an elaborate, headquartersdriven control system. Fourth, competition between
divisions may become so intense that it is
dysfunctional and leads to limited sharing of ideas
and resource for the common good of the firm.
The divisional structure can be organized in one of four ways: by geographic area, by product or
service, by customer, or by process. With a divisional structure, functional activities are performed both
centrally and in each separate division.
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MGMT 1063 – Strategic Management | 10
This type of structure can be most appropriate for organizations that have similar branch facilities
located in widely dispersed areas. A divisional structure by geographic area allows local participation in
decision making and improved coordination within a region.
The divisional structure allows strict control over and attention to product lines, but it may also require a
more skilled management force and reduced top management control. This structure allows an organization to
cater effectively to the requirements of clearly defined customer groups. For example, book publishing
companies often organize their activities around customer groups, such as colleges, secondary schools, and
private commercial schools. Some airline companies have two major customer divisions: passengers and
freight or cargo services.
However, a key difference between these two designs is that functional departments are not
accountable for profits or revenues, whereas divisional process departments are evaluated on these criteria.
Each process (division) would be responsible for generating revenues and profits. The divisional structure by
process can be particularly effective in achieving objectives when distinct production processes represent the
thrust of competitiveness in an industry.
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MGMT 1063 – Strategic Management | 11
As the number, size, and diversity of divisions in an organization increase, controlling and evaluating
divisional operations become increasingly difficult for strategists. Increases in sales often are not accompanied
by similar increases in profitability. The span of control becomes too large at top levels of the firm. For
example, in a large conglomerate organization composed of 90 divisions, such as ConAgra, the chief executive
officer could have difficulty even remembering the first names of divisional presidents. In multidivisional
organizations, an SBU structure can greatly facilitate strategy-implementation efforts. ConAgra has put its
many divisions into three primary SBUs: (1) food service (restaurants), (2) retail (grocery stores), and (3)
agricultural products.
This change in structure can facilitate strategy implementation by improving coordination between
similar divisions and channeling accountability to distinct business units. In a 100-division conglomerate, the
divisions could perhaps be regrouped into 10 SBUs according to certain common characteristics, such as
competing in the same industry, being located in the same area, or having the same customers.
Disadvantages
Advantage
• It makes the tasks of planning and control by the
 It requires an additional layer of management,
corporate office more manageable.
which increases salary expenses.
 The role of the group vice president is often
ambiguous. However, these limitations often do not
outweigh the advantages of improved coordination
and accountability.
A matrix structure can result in higher overhead because it creates more management positions. Other
disadvantages that can contribute to overall complexity include dual lines of budget authority (a violation of the
unity-of-command principle), dual sources of reward and punishment, shared authority, dual reporting channels,
and a need for an extensive and effective communication system.
Some Do’s and Don’ts in Developing Organizational Charts
 Reserve the title CEO for the top executive of the firm. Don’t use the title “president” for the top person;
use it for the division top managers if there are divisions within the firm.
 Do not use the title “president” for functional business executives. They should have the title “chief,” or
“vice president,” or “manager,” or “officer,” such as “Chief Information Officer,” or “VP of Human
Resources.” Further, do not recommend a dual title (such as “CEO and President”) for just one executive.
The Chairman of the Board and CEO of Bristol-Myers Squibb, Peter Dolan, gave up his title as chairman in
2005. Actually, “chairperson” is much better than “chairman” for this title.
 Directly below the CEO, it is best to have a COO (chief operating officer) with any division presidents
reporting directly to the COO. On the same level as the COO and also reporting to the CEO, draw in your
functional business executives, such as a CFO (chief financial officer), VP of Human Resources, a CSO
(Chief Strategy Officer), a CIO (Chief Information Officer), a CMO (Chief Marketing Officer), a VP of R&D,
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MGMT 1063 – Strategic Management | 12
a VP of Legal Affairs, an Investment Relations Officer, Maintenance Superintendent, and so on. Note in
Figure 7-6 that these positions are labeled and placed appropriately. Note that a controller and/or
treasurer would normally report to the CFO.
 Avoid having a particular person reporting to more than one person above them in the chain of command.
This would violate the unity-of-command principle of management that “every employee should have just
one boss.”
 Do not have the CFO, CIO, CSO, Human Resource officer, or other functional positions report to the COO.
All these positions report directly to the CEO.
A key consideration in devising an organizational structure concerns the divisions. Note whether the
divisions (if any) of a firm presently are established based upon geography, customer, product, or process. If
the firm is large with numerous divisions, decide whether an SBU type of structure would be more appropriate
to reduce the span of control reporting to the COO.
Restructuring, Re-engineering and E-engineering
Restructuring and re-engineering are becoming common place on the corporate landscape. Many
others too have recently appointed an e-commerce top executive.
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MGMT 1063 – Strategic Management | 13
LESSON KEY TAKEAWAY
Establishing annual objectives, devising policies, and allocating resources are central strategyimplementation activities common to all organizations. Depending on the size and type of the organization,
other management issues could be equally important to successful strategy implementation.
*** END of LESSON***
REFERENCE
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
Others:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others
without permission from the University. Unauthorized use of the materials, other than personal learning use,
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MGMT 1063 – Strategic Management | 14
COURSE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: More on Implementing Strategies: Management and Operations Issues
Topic:
Linking performance and pay to Strategies; Managing Resistance to Change;
Managing the Natural Environment; Creating a Strategy Supportive Culture;
Production/Operations Concerns when implementing Strategies; Human
Resource Concerns when implementing Strategies
Learning Outcomes:
At the end of this module, you are expected to:
1. Describe relationships between production/operations and strategy implementation.
2. Explain how a firm can effectively link performance and pay strategies.
3. Describe how to modify an organizational culture to support new strategies.
LEARNING CONTENT
Introduction:
Staff control of pay system often prevents line managers from using financial compensation as a
strategic tool. Flexibility regarding managerial and employee compensation is needed to allow short-term shifts
in compensation that can stimulate efforts to achieve long-term objectives.
Lesson Proper:
Linking Performance and Pay to Strategies
How can an organization’s reward system be more closely linked to strategic performance? How can
decisions on salary increases, promotions, merit pay, and bonuses be more closely aligned to support the
long-term strategic objectives of the organization? There are no widely accepted answers to these questions,
but a dual bonus system based on both annual objectives and long-term objectives is becoming
common.Profit sharing is another widely used form of incentive compensation.
Gain sharing requires employees or departments to establish performance targets; if actual results
exceed objectives, all members get bonuses.Criteria such as sales, profit, production efficiency, quality, and
safety could also serve as bases for an effective bonus system. If an organization meets certain understood,
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MGMT 1063 – Strategic Management| 1
agreed-upon profit objectives, every member of the enterprise should share in the harvest. A bonus system
can be an effective tool for motivating individuals to support strategy-implementation efforts.
Five tests are often used to determine whether a performance-pay plan will benefit an organization:
In addition to a dual bonus system, a combination of reward strategy incentives, such as salary raises,
stock options, fringe benefits, promotions, praise, recognition, criticism, fear, increased job autonomy, and
awards, can be used to encourage managers and employees to push hard for successful strategic
implementation. The range of options for getting people, departments, and divisions to activity support
strategy-implementation activities in a particular organization is almost limitless.
Managing Resistance to Change
No organization or individual can escape change. But the thought of change raises anxieties because
people fear economic loss, inconvenience, uncertainty, and a break in normal social patterns. Almost any
change in structure, technology, people, or strategies has the potential to disrupt comfortable interaction
patterns. For this reason, people resist change. The strategic-management process itself can impose major
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MGMT 1063 – Strategic Management| 2
changes on individuals and processes. Reorienting an organization to get people to think and act strategically
is not an easy task.
Resistance regularly occurs in organizations in the form of sabotaging production machines,
absenteeism, filing unfolded grievances, and an unwillingness to cooperate.People often resist strategy
implementation because they do not understand what is happening or why changes are taking place. Change
must be viewed as an opportunity rather than as a threat by managers and employees.Resistance to change
can emerge at any stage or level of the strategy-implementation process. Although there are various
approaches for implementing changes.
Three commonly used strategies are:
The rational change strategy is the most desirable. Managers can improve the likelihood of
successfully implementing change by carefully designing change efforts. Jack Duncan described a rational or
self-interest change strategy as consisting of four steps.
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Organizational change should be viewed today as a continuous process rather than as a project or
event. The most successful organizations today continuously adapt to changes in the competitive environment,
which themselves continue to change at an accelerating rate. It is not sufficient today to simply react to
change. Managers need to anticipate change and ideally be the creator of change. Viewing change as a
continuous process is in stark contrast to an old management doctrine regarding change, which was to
unfreeze behavior, change the behavior, and then refreeze the new behavior.
Managing the Natural Environment
All business functions are affected by natural environment considerations or by striving to make a
profit.People today are especially appreciative of firms that conduct operations in a way that mend rather than
harm the environment. But a rapidly increasing number of companies are implementing tougher environmental
regulation because it makes economic sense.
The ecological challenge facing all organizations requires managers to formulate strategies that
preserve and conserve natural resources and control pollution. Special natural environment issues include
ozone depletion, global warming, depletion of rain forests, destruction of animal habitats, protecting
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MGMT 1063 – Strategic Management| 4
endangered species, developing biodegradable products and packages, waste management, clean air, clean
water, erosion, destruction of natural resources, and pollution control. Firms increasingly are developing green
product lines that are biodegradable and/or are made from recycled products. Green products sell well.
Societies have been plagued by environmental disasters to such an extent recently that firms failing to
recognize the importance of environmental issues and challenges could suffer severe consequences.
Managing environmental affairs can no longer be an incidental or secondary function of company operations.
Product design, manufacturing, and ultimate disposal should not merely reflect environmental considerations,
but also be driven by them. Firms that manage environmental affairs will enhance relations with consumers,
regulators, vendors, and other industry players---substantially improving their prospects of success.
Firms should formulate and implement strategies from an environmental perspective. Environmental
strategies could include developing or acquiring green businesses, divesting or altering environment-damaging
businesses, striving to become a low-cost producer through waste minimization and energy conservation, and
pursuing a differentiation strategy through green-product features.
Creating a Strategy-Supportive Culture
Strategists should strive to preserve, emphasize, and build upon aspects of an existing culture that
support proposed new strategies. Substantial research indicates that new strategies are often market-driven
and dictated by competitive forces. For this reason, changing a firm’s culture to fit a new strategy is usually
more effective than changing a strategy to fit an existing culture. Numerous techniques are available to alter
an organization’s culture, including recruitment, training, transfer, promotion, restructure of an organization’s
design, role modeling, and positive reinforcement.
Schein indicated that the following elements are most useful in linking culture to strategy:
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Production/Operations Concerns when implementing Strategies
Production/operations capabilities, limitations, and policies can significantly enhance or inhibit the
attainment of objectives. A major part of the strategy-implementation process takes place at the production site.
Just-in-time (JIT)production approaches have withstood the test of time. JIT significantly reduces the costs of
implementing strategies. With JIT, parts and materials are delivered to a production site just as they are
needed, rather than being stockpiled as a hedge against later deliveries.
Factors that should be studied before locating production facilities include the availability of major
resources, the prevailing wage rates in the area, transportation costs related to shipping and receiving, the
location of major markets, political risks in the area or country, and the availability of trainable employees.
Human Resource Concerns When Implementing Strategies
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The job of human resource manager is changing rapidly as companies continue to downsize and
reorganize. Strategic responsibilities of the human resource manager include assessing the staffing needs
and costs for alternative strategies proposed during strategy formulation and developing a staffing plan for
effectively implementing strategies. This plan must consider how best to manage spiraling healthcare
insurance costs. Employers’ health coverage expenses consume an average 26 percent of firms’ net profits,
even though most companies now require employees to pay part of their health insurance premiums. The plan
must also include how to motivate employees and managers during a time when layoffs are common and
workloads are high.
The human resource department must develop performance incentives that clearly link performance
and pay to strategies. The process of empowering managers and employees through their involvement in
strategic-management activities yields the greatest benefits when all organizational members understand
clearly how they will benefit personally if the firm does well. Linking company and personal benefits is a major
new strategic responsibility of human resource managers. Other new responsibilities for human resource
managers may include establishing and administering an employee stock ownership plan (ESOP), instituting
an effective child-care policy, and providing leadership for managers and employees in a way that allows them
to balance work and family.
A well-designed strategic-management system can fail if insufficient attention is given to the human
resource dimension. Human resource problems that arise when businesses implement strategies can usually
be traced to one of three causes: (1) disruption of social and political structures, (2) failure to match
individuals’ aptitudes with implementation tasks, and (3) inadequate top management support for
implementation activities.A concern in matching managers with strategy is that jobs have specific and relatively
static responsibilities, although people are dynamic in their personal development. Commonly used methods
that match managers with strategies to be implemented include transferring managers, developing leadership
workshops, offering career development activities, promotions, job enlargement, and job enrichment.
A number of other guidelines can help ensure that human relationships facilitate rather than disrupt
strategy-implementation efforts. Specifically, managers should do a lot of chatting and informal questioning to
stay abreast of how things are progressing and to know when to intervene. Managers can build support for
strategy-implementation efforts by giving few orders, announcing few decisions, depending heavily on informal
questioning, and seeking to probe and clarify until a consensus emerges. Key thrusts that succeed should be
rewarded generously and visibly.
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MGMT 1063 – Strategic Management| 7
It is surprising that so often during strategy formulation; individual values, skills, and abilities needed for
successful strategy implementation are not considered. It is rare that a firm selecting new strategies or
significantly altering existing strategies possesses the right line and staff personnel in the right positions for
successful strategy implementation. The need to match individual aptitudes with strategy-implementation
tasks should be considered in strategy choice.
Inadequate support from strategists for implementation activities often undermines organizational
success. Chief executive officers, small business owners, and government agency heads must be personally
committed to strategy implementation and express this commitment in highly visible ways. Strategists’ formal
statements about the importance of strategic management must be consistent with actual support and rewards
given for activities completed and objectives reached. Otherwise, stress created by inconsistency can cause
uncertainty among managers and employees at all levels.Perhaps the best method for preventing and
overcoming human resource problems in strategic management is to actively involve as many managers and
employees as possible in the process. Although time-consuming, this approach builds understanding, trust,
commitment, and ownership and reduces resentment and hostility. The true potential of strategy formulation
and implementation resides in people.
Balancing Work Life and Home Life
Work/family strategies have become so popular among companies today that the strategies now
represent a competitive advantage for those firms that offer such benefits as elder care assistance, flexible
scheduling, job sharing, adoption benefits, an on-site summer camp, employee help lines, pet care, and even
lawn service referrals. New corporate titles such as Work/Life Coordinator and Director of Diversity are
becoming common.Human resource managers need to foster a more effective balancing of professional and
private lives because nearly 60 million people in the United States are now part of two-career families. A
corporate objective to become more lean and mean must today include consideration for the fact that a good
home life contributes immensely to a good work life.
The work/family issue is no longer just a women’s issue. Some specific measures that firms are taking
to address this issue are providing spouse relocation assistance as an employee benefit; providing company
resources for family recreational and educational use; establishing employee country clubs, such as those at
IBM and Bethlehem Steel; and creating family/work interaction opportunities. A study by Joseph Pleck of
Wheaton College found that in companies that do not offer paternity leave for fathers as a benefit, most men
take short, informal paternity leaves anyway by combining vacation time and sick days.
Some organizations have developed family days, when family members are invited into the workplace,
taken on plant or office tours, dined by management, and given a chance to see exactly what other family
members do each day. Family days are inexpensive and increase the employee’s pride in working for the
organization. Flexible working hours during the week are another human resource response to the need for
individuals to balance work life and home life. The work/family topic is being made part of the agenda at
meetings and thus is being discussed in many organizations.Strategies have no chance of being implemented
successfully in organizations that do not market goods and services well, in firms that cannot raise needed
working capital, in firms that produce technologically inferior products, or in firms that have a weak information
system.
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MGMT 1063 – Strategic Management| 8
LESSON KEY TAKEAWAY
In a single word, strategy implementation means change. It is widely agreed that “the real work begins
after strategies are formulated”. Successful strategy implementation requires the support of, as well as
discipline and hard work from motivated employees.
*** END of LESSON***
REFERENCE
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
Please be guided accordingly.
MGMT 1063 – Strategic Management| 9
COURESE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: Implementing Strategies: Marketing
Topic:
The Nature of Strategy Implementation; Marketing Issues
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss how market segmentation is conducted.
2. Identify the significance of product positioning as a tool in strategy implementation.
LEARNING CONTENT
Introduction:
Strategies have no chance of being implemented successfully when organizations do not market goods
and services well, when firms cannot raise needed working capital, when firms produce technologically inferior
products, or when firms have a weak information system. This chapter therefore, examines marketing,
finance/accounting, R&D, and MIS issues that are central to effective strategy implementation. Special topics
include market segmentation, market positioning, evaluating the worth of a business, determining to what
extent debt and/or stock should be used as a source of capital, developing pro forma financial statements,
contracting R&D outside the firm, and creating an information support system. Manager and employee
involvement and participation are essential for success in marketing, finance/accounting, R&D, and
management information systems activities.
Lesson Proper:
The Nature of Strategy Implementation
In some situations, individulas may not haveparticipated in the strategy-formulation process at all and
may not appreciate, understand or even accept the work and thought that went into strategy formulation. There
may even be foor dragging or resistance on their part. Managers and employees who do not understand the
business and are not committed to the business may attempt to sabotage strategy implementation efforts in
hopes that the organization will return to its old ways. Hence, implementation is a challenge because:
1. Less than 10 percent of strategies formulated are successfully implemented. There are many
reasons for this low success rate, including failing to segment markets appropriately, paying too
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MGMT 1063 – Strategic Management| 1
much for a new acquisition, falling behind competitors in R&D, and not recognizing the benefit of
computers in managing information.
2. Strategy implementation directly affects the lives of plant managers, division managers,
department managers, sales managers, project managers, personnel managers, staff managers,
supervisors, and all employees.
Marketing Issues
Countless marketing variable affect the success or failure of strategy implementation and the scope of
this text does not allow us to address all those issues. Some examples of marketing decisions that may require
policies are as follows:
To use exclusive dealerships or multiple channels of distribution.
To use heavy, light, or no TV advertising.
To limit (or not) the share of business done with a single customer.
To be a price leader or follower.
To offer a complete or limited warranty.
To reward salespeople based on straight salary, straight commission,
or a combination salary/commission.
To advertise online or not.
To protect consumer privacy/designate web policies.
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MGMT 1063 – Strategic Management| 2
A marketing issue of increasing concern to consumers today is the extent to which companies can track
individuals’ movements on the Internet and are even be able to identify the individual by name and e-mail
address. Individuals’' wanderings on the internet are no longer anonymous, as many persons still believe.
Market Segmentation
Market
segmentation
• widely used in implementing strategies, especially
for small and specialized firms
• subdividing of a market into distinct subsets of
customers according to needs and buying habits
Market-segmentation is an important variable in strategy implementation for at least three major
reasons:
First, strategies such as market development, product
development, market penetration, and diversification require
increased sales through new markets and products.
Second, market segmentation allows a firm to operate with
limited resources because mass production, mass distribution,
and mass advertising are not required.
Finally, market-segmentation decisions directly affect marketing
mix variables: product, place, promotion, and price,.
Perhaps the most dramatic new market segmentation strategy is the targeting of regional tastes. Firms
from McDonald’s to Samsung are increasingly modifying their products to meet different regional preferences.
Geographic and demographic bases for segmenting markets are the most commonly employed.
Product Positioning
After segmenting markets so that the firm can target particular customer groups, the next step is to find
out what customers want and expect. This takes analysis and research.Identifying target customers on whom
to focus marketing efforts sets the stage for deciding how to meet the needs and wants of particular consumer
groups. Product positioning is widely used for this purpose.
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MGMT 1063 – Strategic Management| 3
Product
Positioning
• entails developing schematic representations that
reflect how your products or services compare to
competitors on dimensions most important to success
in the industry
The following steps are required in product positioning:
Diagram a twodimensional productpositioning map with
specified criteria on each
axis.
Select key criteria that
effectively differentiates
products or services in
the industry.
Develop a marketing plan
to position the company’s
products appropriately.
Plot major competitors’
products in the resultant
four-quadrant matrix.
Identify areas in the positioning map
where the company’s products or
services could be most competitive in
the given target market. Look for vacant
areas (niches).
Because just two criteria can be examined on a single product-positioning map, multiple maps are often
developed to assess various approaches to strategy implementation. Multidimensional scaling could be used
to examine three or more criteria simultaneously but this technique requires computer assistance. Some rules
for using product positioning as a strategy-implementation tool are the following:
Look for the hole or
vacant niche.
Don’t squat
between segments.
Don’t serve two
segments with the
same strategy.
Don’t position
yourself in the
middle of the map.
An effective product positioning strategy meets two criteria: (1) it uniquely distinguishes a company
from the competition, and (2) it leads customers to expect slightly less service than a company can deliver.
Firms should not create expectations that exceed the service the firm can or will deliver. Firms need to inform
customers about what to expect and then exceed the promise. Underpromise and then overdeliver is the key!
LESSON KEY TAKEAWAY
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MGMT 1063 – Strategic Management| 4
Successful strategy implementation depends on cooperation among all functional and divisional
managers in an organization. Marketing departments are commonly charged with implementing strategies that
require significant increases in sales revenues in new areas and with new improved products.
*** END of LESSON ***
REFERENCE
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3 rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
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MGMT 1063 – Strategic Management| 5
COURSE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: Implementing Strategies: Finance/Accounting, R & D and MIS Issues
Topic:
Finance/Accounting Issues; Research and Development Issues; Management
and Information System Issues
Learning Outcomes:
At the end of this module, you are expected to:
1. Discuss procedures for determining the worth of a business.
2. Discuss the nature and role of research and development in strategy implementation.
3. Explain how management information systems can determine the success of strategy-implementation
efforts.
LEARNING CONTENT
Introduction:
As we continue with implementing strategies, we examine several finance/accounting concepts
considered to be central to strategy implementation: acquiring needed capital, developing projected financial
statements, preparing financial budgets, and evaluating the worth of abusiness.
Lesson Proper:
Finance/Accounting Issues
Some examples of decisions that may require finance/accounting policies are te following:
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MGMT 1063 – Strategic Management | 1
Acquiring Capital to Implement Strategies
Successful strategy implementation often requires additional capital. Besides net profit from operations
and the sale of assets, two basic sources of capital for an organization are debt and equity. Determining an
appropriate mix of debt and equity in a firm’s capital structure can be vital to successful strategy
implementation.
Theoretically, an enterprise should have enough debt in its capital structure to boost its ROI by applying
debt to products and project earnings more than the cost of the debt. In low earning periods, too much debt in
the capital structure of an organization can endanger stockholders’ returns and jeopardize company survival.
Fixed debt obligations generally must be met, regardless of circumstances.
EPS/EBIT analysis is a valuable tool for making capital financing decisions needed to implement
strategies, but several considerations should be made whenever using this technique:
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MGMT 1063 – Strategic Management | 2
Pro Forma Financial Statements
This type of analysis can be used to forecast the impact of various implementation decisions (for
example, to increase promotion expenditures by 50% to support a market-development strategy, to increase
salaries by 20% to support market-penetration strategy, to increase research and development expenditures
by 50% to support product development).
There are six steps in performing projected financial analysis:
1. Prepare the pro forma income statement before the balance sheet. Start by forecasting sales as
accurately as possible.
2. Use the percentage of sales method to project the cost of goods sold (CGS) and the expense items in the
income statement. For example, if CGS is 70 percent of sales in the prior year then use that same
percentage to calculate CGS in the future year. Items such as interest, dividends, and taxes must be
treated independently and cannot be forecasted using the percentage-of-sales method.
3. Calculate the projected net income.
4. Subtract from the net income any dividends to be paid and add the remaining net income to Retained
Earnings. Reflect the Retained Earnings total on both the income statement and balance sheet because
this item is the key link between the two projected statements.
5. Project the balance sheet items, beginning with retained earnings and then forecasting stockholder’s
equity, long-term liabilities, current liabilities, total liabilities, total assets, fixed assets, and current assets (in
that order). Use the cash account as the plug figure; that is use the cash account to make the assets total
the liabilities and net worth. Then, make appropriate adjustments.
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MGMT 1063 – Strategic Management | 3
6. List comments on the projected statements. Any time a significant change is made in an item from a prior
year to the projected year, a remark should be provided.
Financial Budgets
There are almost as many different types of financial budgets as there are types of organizations.
Some common types of budgets include cash budgets, operating budgets, sales budgets, and fixed budgets.
Perhaps the most common type of financial budget is the cash budget.
Evaluating the Worth of a Business
All the various methods for determining a business’s worth can be grouped into three main approaches:
what a firm owns, what a firm earns, or what a firm will bring in the market. But it is important to realize that
valuation is not an exact science. The valuation of a firm’s worth is based on financial facts, but common sense
and intuitive judgment must enter into the process.
The following are approaches to evaluating the worth of a business:
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MGMT 1063 – Strategic Management | 4
Deciding Whether to Go Public
Going public means selling off a percentage of your company to others in order to raise capital;
consequently, it dilutes the owners’ control of the firm. Before going public, a firm must have quality
management with a proven track record for achieving quality earnings and a positive cash flow.
Research and Development (R&D) Issues
R&D personnel can play an integral part in strategy implementation. These individuals are generally
charged with developing new products and improving old products in a way that will allow effective strategy
implementation. Surveys suggest that the most successful organizations use an R&D strategy that ties external
opportunities to internal strengths and is linked with objectives.
Well formulated R&D policies match market opportunities with internal capabilities. R&D policies can
enhance strategy-implementation efforts to:
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MGMT 1063 – Strategic Management | 5
There must be effective interactions between R&D departments and other functional departments in
implementing different types of generic business strategies. Conflicts between marketing, finance/accounting,
R&D, and information systems departments can be minimized with clear policies and objectives. There are at
least three major R&D approaches for implementing strategies:
Management Information Systems (MIS) Issues
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MGMT 1063 – Strategic Management | 6
Although no firm would use the same marketing or management approach for 20 years, many
companies have 20-year-old computer information systems that threaten their very existence. Firms that
gather, assimilate, and evaluate external and internal information most effectively are gaining competitive
advantages over other firms. Information collection, retrieval, and storage can be used to create competitive
advantages in ways such as cross-selling to customers, monitoring suppliers, keeping managers and
employees informed, coordinating activities among divisions, and managing funds.
LESSON KEY TAKEAWAY
Finance and accounting managers must devise effective strategy implementation approaches at low
cost and minimum risk to the firm. R&D managers have to transfer complex technologies or develop new
technologies to successfully implement strategies. Information systems managers are being called upon more
and more to provide leadership and training for all individuals in the firm.
*** END of LESSON ***
REFERENCE
Textbook:
Rothaermel, Frank. (2017). Strategic Management 3rd Edition.
References:
1. Montoya, Sheriff. (2017). Strategic Production and Operations Management. Unlimited Books Library
Services & Publishing Inc. Manila.
2. Stephens, Elisha, et.al. (2019). Business Policy and Strategic Management. ED-Tech Press, United
Kingdom.
3. Pereda, Pedrito. (2015). Strategic Management. Unlimited Books Library Services & Publishing Inc.
Manila.
4. Thompson, Arthur, et.al. ( 2015). Essentials of Strategic Management: The A Quest for Competitive
Advantage. McGraww-Hill Education, New York.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
Please be guided accordingly.
MGMT 1063 – Strategic Management | 7
COURSE LEARNING MODULE
MGMT 1063 – Strategic Management
AY 2021-2022
Lesson: STRATEGY REVIEW, EVALUATION, AND CONTROL
Topic:
STRATEGY REVIEW, EVALUATION, AND CONTROL
Learning Outcomes:
At the end of this module, you are expected to:
1. Describe a practical framework for evaluating strategies.
2. Explain why strategy evaluation is complex, sensitive, and yet essential for organizational
success.
3. Discuss the importance of contingency planning in strategy evaluation.
4. Discuss the role of auditing in strategy evaluation.
5. Explain how computers can aid in evaluating strategies.
LEARNING CONTENT
Introduction:
The best formulated and implemented strategies become obsolete as a firm’s external and internal environments
change. It is essential, therefore, that strategists systematically review, evaluate, and control the execution of
strategies. This Paper presents a framework that can guide managers’ efforts to evaluate strategic-management
activities, to make sure they are working, and to make timely changes. Computer information systems being used to
evaluate strategies are discussed. Guidelines are presented for formulating, implementing, and evaluating strategies.
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MGMT 1063 – Strategic Management| 1
Lesson Proper:
EXTENDED PAPER OUTLINE WITH TIPS
VTN (Visit the Net): www.mindtools.com/plevplan.html gives excellent information about evaluating strategies
including analytical tools.
I.THE NATURE OF STRATEGY EVALUATION
A. Importance of Strategy Evaluation
1. The strategic-management process results in decisions that can have significant, long-lasting
consequences. Erroneous strategic decisions can inflict severe penalties and can be exceedingly
difficult, if not impossible, to reverse.
2. Most strategists agree, therefore, that strategy evaluation is vital to an organization’s well-being;
timely evaluations can alert management to problems or potential problems before a situation
becomes critical.
3. Strategy evaluation includes three basic activities:
a. Examining the underlying bases of a firm’s strategy.
b. Comparing expected results with actual results.
c. Taking corrective actions to ensure that performance conforms to plans.
4. The strategy-evaluation stage of the strategic-management process.
5. Strategy evaluation can be a complex and sensitive undertaking. Too much emphasis on evaluating
strategies may be expensive and counterproductive. Yet, too little or no evaluation can create even
worse problems. Strategy evaluation is essential to ensure that stated objectives are being achieved.
6. It is impossible to demonstrate conclusively that a particular strategy is optimal, but it can be
evaluated for critical flaws. Here are four criteria to use in evaluating a strategy:
a. consistency
b. consonance
c. feasibility
d. advantage
7. These trends make strategy evaluation difficult:
a. dramatic increase in environmental complexity
b. difficult in predicting future
c. increasing number of variables
d. rapid rate of obsolescence
e. increase in the number of world events affecting organization
f. decreasing time spans for planning
VTN (Visit the Net): www.csuchico.edu/mgmt/strategy/module1/sld046.htm describes the how and why of strategy
evaluation.
VTN (Visit the Net): www.csuchico.edu/mgmt/strategy/module1/sld047.htm elaborates on “taking corrective actions.”
B. The Process of Evaluating Strategies
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MGMT 1063 – Strategic Management| 2
1. Strategy evaluation is necessary for all sizes and kinds of organizations.
a. Strategy evaluation should initiate managerial questioning of expectations and assumptions,
trigger a review of objectives and values, and stimulate creativity in generating alternatives and
formulating criteria of evaluation.
2. Evaluating strategies on a continuous rather than a periodic basis allows benchmarks of progress to
be established and more effectively monitored.
3. Managers and employees of the firm should continually be aware of progress being made toward
achieving the firm’s objectives. As critical success factors change, organizational members should
be involved in determining appropriate corrective actions.
VTN (Visit the Net): www.agnr.umd.edu/users/NERA/newplan.html#strategies provides the strategic plan of
Northeastern Regional Association of State Agricultural Experiment Station Directors for the years 1996 to 2000
including its measures of success.
II.
A STRATEGY-EVALUATION FRAMEWORK
The strategy-evaluation activities in terms of key questions that should be addressed, alternative answers to
those questions, and appropriate actions for an organization to take.
A. Reviewing Bases of Strategy
1. By developing a revised EFE Matrix and IFE Matrix, the underlying bases of an organization’s
strategy can be approached and reviewed.
a. A revised IFE Matrix should focus on changes in the organization’s management, marketing,
finance/accounting, production/operations, R&D, and MIS strengths and weaknesses.
b. A revised EFE Matrix should indicate how effectively a firm’s strategies have been in response to
key opportunities and threats.
VTN (Visit the Net): www.sba.gov/starting/businessplan.html provides a business plan outline.
B. Measuring Organizational Performance
1. Another important strategy-evaluation activity is measuring organizational performance. This activity
includes comparing expected results to actual results, investigating deviations from plans, evaluating
individual performance, and examining progress being made toward meeting stated objectives. Both
long-term and annual objectives are commonly used in this process.
2. Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a
need for corrective action.
3. Quantitative criteria commonly used to evaluate strategies are financial ratios, which strategists use
to make three critical comparisons:
a. comparing the firm’s performance over different time periods,
b. comparing the firm’s performance to competitors, and
c. comparing the firm’s performance to industry averages.
4. Key financial ratios for measuring organizational performance:
a. return on investment
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MGMT 1063 – Strategic Management| 3
b.
c.
d.
e.
f.
g.
h.
return on equity
profit margin
market share
debt to equity
earnings per share
sales growth
asset growth
C. Taking Corrective Action
1. The final strategy-evaluation activity, taking corrective action, requires making changes to reposition
a firm competitively for the future.
2. Examples of changes that may be needed are altering an organization’s structure, replacing one or
more key individuals, selling a division, or revising a business mission.
3. Taking corrective action raises employees’ and managers’ anxieties. Research suggests that
participation in strategy-evaluation activities is one of the best ways to overcome individuals’
resistance to change.
VTN (Visit the Net): www.opm.state.ct.us/mgmt/busguide/50states/guides.htm provides strategic management
handbooks with detailed instructions for planning in certain states.
VTN (Visit the Net): www.customs.treas.gov/about/strat/index.htm provides the strategic plan for the US Customs
Office.
III.
PUBLISHED SOURCES OF STRATEGY-EVALUATION INFORMATION
A. Examples of Helpful Publications
1. A number of publications are helpful in evaluating a firm’s strategies. For example, Fortune annually
identifies and evaluates the Fortune 1,000 (the largest manufacturers) and the Fortune 50 (the
largest retailers, transportation companies, utilities, banks, insurance companies, and diversified
financial corporations in the United States).
2. Another excellent evaluation of corporations in America, “The Annual Report on American Industry,”
is published annually in the January issue of Forbes. Business Week, Industry Week, and Dun’s
Business Month also periodically publish detailed evaluations of American businesses and industries.
Tip: The following are the website addresses of publications that frequently report on the strategies of American
firms.
Business 2.0 {http://www.business2.com/}
Business Week {http://www.businessweek.com/}
Fast Company {http://www.fastcompany.com/homepage/}
Fortune {http://www.fortune.com/fortune/}
Forbes {http://www.forbes.com/}
Industry Week {http://www.industryweek.com/}
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MGMT 1063 – Strategic Management| 4
Red Herring {http://www.herring.com/}
IV.
CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM
A. Strategy evaluation must meet several basic requirements to be effective.
1. Strategy-evaluation activities must be economical; too much information can be just as bad as
too little information.
2. Strategy-evaluation activities should also be meaningful; they should specifically relate to a
firm’s objectives.
3. Strategy-evaluation activities should provide timely information; on occasion and in some areas,
managers may need information daily.
4. Strategy evaluation should be designed to provide a true picture of what is happening.
B. There is more than one ideal strategy-evaluation system. The unique characteristics of an
organization, including its size, management style, purpose, problems, and strengths can determine a
strategy-evaluation and control system’s final design.
V.
CONTINGENCY PLANNING
A. Essence of Contingency Planning
1. A basic premise of good strategic management is that firms plan ways to deal with unfavorable and
favorable events before they occur.
2. Contingency plans can be defined as alternative plans that can be put into effect if certain key events
do not occur as expected.
B. Effective Contingency Planning Involves These Steps:
1. Identify both beneficial and unfavorable events that could possibly derail the strategy or strategies.
2. Specify trigger points. Estimate when contingent events are likely to occur.
3. Assess the impact of each contingent event. Estimate the potential benefit or harm of each
contingent event.
4. Develop contingency plans. Be sure that the contingency plans are compatible with current strategy
and financially feasible.
5. Assess the counter impact of each contingency plan. That is, estimate how much each contingency
plan will capitalize on or cancel out its associated contingent event.
6. Determine early warning signals for key contingent events. Monitor the early warning signals.
7. Develop advanced action plans to take advantage of the available lead time.
VI.
AUDITING
A. Auditing is defined by the American Accounting Association (AAA) as “a systematic process of
objectively obtaining and evaluating evidence regarding assertions about economic actions and
events to ascertain the degree of correspondence between those assertions and established
criteria, and communicating the results to interested users.”
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MGMT 1063 – Strategic Management| 5
1. People who perform audits can be divided into three groups: independent auditors, government
auditors, and internal auditors.
2. Two government agencies, the General Accounting Office (GAO) and the Internal Revenue
Service (IRS), employ government auditors responsible for making sure that organizations
comply with federal laws, statutes, and policies.
B. The Environmental Audit
1. For an increasing number of firms, overseeing environmental affairs is no longer a technical function
performed by specialists; rather, it has become an important strategic-management concern. It
should be as rigorous as a financial audit.
2. It should include training workshops in which staff help design and implement the policy. It should be
budgeted and have funds allocated to ensure its viability.
3. A Statement of Environmental Policy should be published periodically.
VII. USING COMPUTERS TO EVALUATE STRATEGIES
When properly designed, installed, and operated, a computer network can efficiently acquire information
promptly and accurately. Networks can allow diverse strategy-evaluation reports to be generated for, and
responded by different levels and types of managers.
*** END of LESSON ***
REFERENCE
References:
VTN (Visit the Net): www.mindtools.com/plevplan.html gives excellent information about evaluating strategies
including analytical tools.
VTN (Visit the Net): www.csuchico.edu/mgmt/strategy/module1/sld046.htm describes the how and why of strategy
evaluation.
VTN (Visit the Net): www.csuchico.edu/mgmt/strategy/module1/sld047.htm elaborates on “taking corrective actions
VTN (Visit the Net): www.agnr.umd.edu/users/NERA/newplan.html#strategies provides the strategic plan of
Northeastern Regional Association of State Agricultural Experiment Station Directors for the years 1996 to 2000
including its measures of success.
VTN (Visit the Net): www.sba.gov/starting/businessplan.html provides a business plan outline.
VTN (Visit the Net): www.opm.state.ct.us/mgmt/busguide/50states/guides.htm provides strategic management
handbooks with detailed instructions for planning in certain states.
VTN (Visit the Net): www.customs.treas.gov/about/strat/index.htm provides the strategic plan for the US Customs
Office.
WARNING: No part of this E-module/LMS content can be reproduced or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
Please be guided accordingly.
MGMT 1063 – Strategic Management| 6
Global/
International
Issues
Chapter Eleven
Chapter Objectives
1.
2.
3.
4.
Explain the advantages and disadvantages of
entering global markets.
Discuss protectionism as it impacts the world
economy.
Explain when and why a firm (or industry) may
need to become more or less global in nature
to compete.
Discuss the global challenge facing American
firms.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-2
Chapter Objectives (cont.)
5.
6.
7.
8.
Compare and contrast business culture in the
United States with many other countries.
Describe how management style varies
globally.
Discuss communication differences across
countries.
Discuss Africa as the newest hotspot for
business entry.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-3
A Comprehensive StrategicManagement Mode
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-4
Global/International Issues
❖ The underpinnings of strategic management
hinge on managers gaining an understanding
of competitors, markets, prices, suppliers,
distributors, governments, creditors,
shareholders, and customers worldwide.
❖ The price and quality of a firm’s products and
services must be competitive on a worldwide
basis, not just on a local basis.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-5
The Five Largest (by revenue)
Companies in Nine Countries (2011)
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-6
Fortune’s Most and Least Admired Companies
in the World for “Global Competitiveness”
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-7
Multinational Organizations
❖ Multinational corporations
 Organizations that conduct business
operations across national borders
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-8
Risks of Multinational
Organizations
Expropriation of assets
Currency losses through exchange rate fluctuations
Social/political disturbances
Import/export restrictions
Tariffs
Trade barriers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-9
Advantages of International
Operations
1.
2.
3.
Firms can gain new customers for their
products.
Foreign operations can absorb excess capacity,
reduce unit costs, and spread economic risks
over a wider number of markets.
Foreign operations can allow firms to establish
low-cost production facilities in locations close
to raw materials and/or cheap labor.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-10
Advantages of International
Operations
4. Competitors in foreign markets may not exist, or
5.
6.
competition may be less intense than in domestic
markets.
Foreign operations may result in reduced tariffs,
lower taxes, and favorable political treatment.
Joint ventures can enable firms to learn the
technology, culture, and business practices of
other people and to make contacts with potential
customers, suppliers, creditors, and distributors
in foreign countries.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-11
Advantages of International
Operations
7. Economies of scale can be achieved from
8.
operation in global rather than solely
domestic markets.
A firm’s power and prestige in domestic
markets may be significantly enhanced if the
firm competes globally.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-12
Disadvantages of
International Operations
1.
2.
3.
Foreign operations could be seized by
nationalistic factions.
Firms confront different social, cultural,
demographic, environmental, political,
governmental, legal, technological, economic,
and competitive forces when doing business
internationally.
Weaknesses of competitors in foreign lands are
often overestimated, and strengths are often
underestimated.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-13
Disadvantages of
International Operations
4.
5.
6.
Language, culture, and value systems differ
among countries, which can create barriers to
communication and problems managing
people.
Gaining an understanding of regional
organizations is often required in doing
business internationally.
Dealing with two or more monetary systems
can complicate international business
operations.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
11-14
The Global Challenge
❖ America’s economy is becoming much
less American.
❖ A world economy and monetary system
are emerging.
❖ Markets are shifting rapidly and in many
cases converging in tastes, trends, and
prices.
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11-15
Globalization
❖ Globalization
 process of doing business worldwide, so
strategic decisions are made based on global
profitability of the firm rather than just
domestic considerations
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11-16
Globalization
❖ Global strategy
 includes designing, producing, and marketing
products with global needs in mind, instead
of considering individual countries alone
 integrates actions against competitors into a
worldwide plan
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11-17
Corporate Tax Rates Across
Countries in 2011
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11-18
Cultural Pitfalls That May Help
You Be a Better Manager
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11-19
Cultural Differences between U.S.
and Foreign Managers
❖ Americans place an exceptionally high priority
❖
on time, viewing time as an asset. Many
foreigners place more worth on relationships.
Personal touching and distance norms differ
around the world. Americans generally stand
about three feet from each other when carrying
on business conversations, but Arabs and
Africans stand about one foot apart.
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11-20
Cultural Differences between
U.S. and Foreign Managers
❖ Family roles and relationships vary in different
❖
❖
countries.
Business and daily life in some societies are
governed by religious factors.
Time spent with the family and the quality of
relationships are more important in some
cultures than the personal achievement and
accomplishments espoused by the traditional
U.S. manager.
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11-21
Cultural Differences between
U.S. and Foreign Managers
❖ Many cultures around the world value modesty,
❖
team spirit, collectivity, and patience much
more than competitiveness and individualism,
which are so important in the United States.
Punctuality is a valued personal trait when
conducting business in the United States, but it
is not revered in many of the world’s societies.
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11-22
Cultural Differences between U.S.
and Foreign Managers
❖ To prevent social blunders when meeting
with managers from other lands, one must
learn and respect the rules of etiquette of
others.
❖ Americans often do business with
individuals they do not know, unlike
businesspersons in many other cultures.
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11-23
Communication Differences
Across Countries
❖ Italians, Germans, and French generally do
not soften up executives with praise before
they criticize. Americans do soften up folks,
and this practice seems manipulative to
Europeans.
❖ Israelis are accustomed to fast-paced
meetings and have little patience for
American informality and small talk.
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11-24
Communication Differences
Across Countries
❖ British executives often complain that American
❖
❖
executives chatter too much. Informality,
egalitarianism, and spontaneity from Americans
in business settings jolt many foreigners.
Europeans feel they are being treated like
children when asked to wear name tags by
Americans.
Executives in India are used to interrupting one
another.
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11-25
Communication Differences
Across Countries
❖ When negotiating orally with Malaysian or
❖
Japanese executives, it is appropriate to allow
periodically for a time of silence.
Refrain from asking foreign managers
questions such as “How was your weekend?”
That is intrusive to foreigners, who tend to
regard their business and private lives as totally
separate.
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11-26
Mexico-Business Culture
❖ Employers seek workers who are
agreeable, respectful, and obedient,
rather than innovative, creative, and
independent.
❖ Mexican employers are paternalistic,
providing workers with more than a
paycheck, but in return they expect
allegiance.
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11-27
Mexico-Business Culture
❖ Mexicans do not feel compelled to follow
rules that are not associated with a
particular person in authority they work
for or know well.
❖ Mexicans are very status conscious so
business titles and rank are important.
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11-28
Japan-Business Culture
❖ The Japanese place great importance on
group loyalty and consensus, a concept
called Wa.
❖ When confronted with disturbing
questions or opinions, Japanese
managers tend to remain silent.
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11-29
Japan-Business Culture
❖ Most Japanese managers are reserved, quiet,
❖
distant, and introspective, whereas most U.S.
managers are talkative, insensitive, impulsive,
direct, and individual oriented.
Unlike Americans, Japanese prefer to do
business on the basis of personal relationships
rather than impersonally speaking over the
phone or by written correspondence.
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11-30
Brazil-Business Culture
❖ Avoid embarrassing a Brazilian by
criticizing an individual publically. That
causes that person to lose face with all
others at a business meeting.
❖ Appointments are commonly cancelled or
changed at the last minute in Brazil, so do
not be surprised or get upset.
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11-31
Germany-Business Culture
❖ Germans are like Americans in that they do
not need a personal relationship to do
business. They are more interested in a
businessperson’s academic credentials and
their company’s credentials.
❖ German meetings adhere to strict agendas,
including starting and ending times.
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11-32
Egypt-Business Culture
❖ Egyptians prefer to do business with those
they know and respect, so expect to spend
time cultivating a personal relationship
before business is conducted.
❖ In Egypt, business moves at a slow pace
and society is extremely bureaucratic.
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11-33
China-Business Culture
❖ The Chinese rarely do business with
companies or people they do not know. Your
position on an organizational chart is
extremely important in business relationships.
❖ Arriving late to a meeting is an insult and
could negatively affect your relationship.
❖ Meetings require patience because mobile
phones ring frequently and conversations
tend to be boisterous.
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11-34
India-Business Culture
❖ People in India do not like to say “no,”
verbally or nonverbally.
❖ Rather than disappoint you, they often will
say something is not available, or will
offer you the response that they think you
want to hear, or will be vague with you.
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11-35
India-Business Culture
❖ Indians prefer to do business with those
whom they have established a relationship
built upon mutual trust and respect.
❖ Punctuality is important.
❖ Indians generally do not trust the legal
system and someone’s word is often
sufficient to reach an agreement.
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11-36
Sampling of African Countries—Easeof-Doing-Business Rankings
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11-37
Sampling of Asian Countries—Ease-ofDoing-Business Rankings
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11-38
Sampling of European Countries—
Ease-of-Doing-Business Rankings
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11-39
Sampling of North and South American
Countries—Ease-of-Doing-Business Rankings
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11-40
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11-41