Chapter 1

Basic Concept in Business Policy and Strategy

Strategic Management
Business Policy
Strategic Management Process
1. Situation Analysis
formulate

all decision and actions set by the managers

SM in context; integrate functional activities
step by step flow of activities to achieve goals
includes environmental scanning; provide information to

vision/mission statement
2. Strategy Formulation
involves development of company strategy
3 Levels of Strategy Formulation
a. Operational Strategy short term and are associated with various operational
departments
b. Competitive Strategy techniques in competing in a certain industry
Competitive Advantage
looks at quality
c. Corporate Strategy
long term and improve both operational and competitive
strategies
3. Strategy Implementation
development of procedures, programs and activities
4. Strategy Evaluation
appraising the companys performance
Planning
1.
2.
3.
4.

Phases
Planning Financial Aspects
Forecasting
External Planning
Strategic Management

Globalization
Global Brands
Electronic Age
Electronic Transactions
Population Ecology
adapt to changes
Organizational Adaptation
Institution Theory
Strategic Choice Perspective
Organizational Learning Theory
2 Views
1. Technical View
processes
2. Social View
Chapter 2

financial data of budget is planned

five year plans are made
task of top management
needs commitment of employees
internalization of markets and corporations
worlds top brands
period of vast electronic transactions
uses of the internet in business transactions
able to take hold of formidable position in the industry and
ability to be updated
adapts to changes by benchmarking
organizations not only adapt to a changing environment but
also tries to reshape its environment
knowledge in an important component to respond to changes
processing and preparation and interpretation of
experiences of people at work

Environmental Scanning

Environmental Scanning
2 Parts of Environment
Task Environment
Social Environment
Political Environment
Market Structure
1. Market Concentration
a. Atomistic
b. Oligopolistic
c. Monopolistic
2. Entry Barriers
a. Ease of Entry

conducting research through surveys, observation, etc

aspects of the organization that affects itself
political, legal, economic, etc
government rules and regulations
degree to dominate a particular market
many small sellers
few large sellers
one seller
difficulties and challenges to new entrants
no difficulties

b. Moderately Difficult Entry not too difficult to enter

c. Blockaded Entry
too high barriers
3. Product Differentiation
degree to be distinguished from other products
a. Homogeneous Products
highly identical
b. Differentiated Products
differentiated
Five Forces Model
Power of Buyers
Rivalry of Competitors
Power of Suppliers
Threat of Substitutes
Threat of New Entrants

ability of buyer
ability of each company to counter each other
ability of supplier
similar features at low cost
new companies with same products

Competitive Intelligence
3 Approaches
a. Strategic Intelligence
b. Tactical Intelligence
c. Counter Intelligence

act of gathering, analyzing and distributing information

SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats

basic straight forward model in environmental scanning

capabilities

Chapter 3

understand competitors future prospects

small scale, operational and short term
how to defend secrets

Strategy Formulation

Mission
Vision

purpose of companys existence

what the company wants to become

5 Power Ps
1. Position
2. Power
3. Pace
4. Potential
5. Performance

advantage in the hands of consumers

competitive edge
timing and intensity
probability of success
implementation of strategy

3 Basic
1.
2.
3.

keeping costs low

makes products unique
specializing or concentrating on particular market

Competitive Approaches
Cost Approach
Differentiation Approach
Focus Approach

2 Power Strategies
1. Horizontal Integration
2. Vertical Integration
a. Forward Integration
b. Backward Integration
3 Adaptive Methods
1. Prospector Approach
2. Defender Approach
3. Analyzer Approach
Essentials of Potential Strategies
1. Transferability
2. Competitive Dominance

expand the business into different products

control distribution of product
purchase the supplier to reduce dependency
innovation and exploration
making vast improvement in present products
attempts to copy successful products
can be transformed
better than others

3. Uniqueness
4. Substitutability
5. Durability
Growth
1.
2.
3.
4.

Strategies
Diversification
Market Development
Product Development
Market Penetration

cannot be easily copied

cannot be replaced
does not deteriorate quickly
development of new products for new markets
new market for existing product
new product for existing market
desire to achieve greater percentage of the market share

Balanced Scorecard

measures organizations progress

4 Implementing Strategies
1. Develop a clear cut strategy
2. Communicating the strategic objectives
3. Planning strategies
4. Monitoring strategic implementation
4 Basic
1.
2.
3.
4.

Processes
Financial Perspective
Customer Perspective
Business Process Perspective
Learning and Growth Perspective

financial measures
measures on customer satisfaction
procurement of materials, etc
measures of employees satisfaction

Chapter 4 - Strategy Implementation

Strategy
Greek: strategos meaning art of the general
Strategic goal
A battle plan, a technique or a tactic in the art of war

Strategy vs. Tactics

general, ongoing & long-term / specific, action & short-term

Corporate Levels of Strategy

Corporate Strategy decision of what industry it will be and not be in, how to allocate resources
o Considerations:
1. Scope
identifying overall goals of the corporation and type of
business
2. Access to Competition
identifying and defining where the company should be
accessible
3. Management of Relationships should be shared and coordinated to all employees
4. Management Practices
how employees are to be governed to achieve objectives
o John Welch
formulated a strategy for GE
Business Strategy
set of decisions of how the organization competes in the industry it is
in
basically positioning strategies
Functional Strategy decisions in the different functions of the organization
Called operational strategies
Operational Strategy translate the strategies in the corporate and business levels to departmental
or functional units
4 Ps of Marketing
1. Product
2. Pricing
3. Placement
4. Promotion
Marketing
products and services

process of creating and satisfying customer needs and wants through

Functional Strategies in Marketing

1. Customer Analysis
analyzing customers personalities, economic status, gender and
other demographical
aspects
2. Selling of Products and Services tasks that will help in selling products or services
a. Internet
effective tool in making the message across all sectors of the target
market
b. Personal Selling
tool for products like industrial goods
3. Product or Service Planning
a. Test Marketing
predicts future sales of new products and services
4. Pricing
Considerations
o Capacity of the consumers to buy
o Price of raw materials
5. Distribution
includes location, channels, etc.
a. Marketing Research
systematic gathering and analyzing of data that relates to
marketing goods and services
b. Opportunity Analysis
equivalent to cost benefit analysis
Functions in Finance
1. Investment Decision
capital budgeting
Involves allocation of resources including capital
2. Financing Decision examines and finds the best capital structure to the organization
how to raise capital
3. Dividend Decision right period or time frame of issuing a percentage of income to stockholders
Functions in Production

all activities related to transforming inputs to outputs

1. Process
various activities like use of facilities, production flow analysis and
physical distribution system
2. Capacity
determination of optimal output levels without going over or under
production
3. Inventory
manage the level of raw materials, work in process and finished goods
inventories
4. Quality
production of quality goods and services
Example of Strategies
E-Commerce/Use of Internet
Product Bunch
Introduction of Niche Products
Customer-centered
Expansion into related product lines
Available Strategies
Price Lining
consumer needs
Smart Pricing
market condition

practice of offering the same products at price points depending on

practice of various prices from one market to another depending on

Chapter 5 Strategic Human Resource Management

Vision
where the company is going
Mission
companys reason for existence
Stakeholders
people who comprise the whole organization
Environmental Scanning done to look in to the companys SWOT
What

the company should know about its HR?

Their needs
Individual and group behavior
Overall company culture
Their skills, knowledge and abilities individually and collectively

Major Categories of HR Practices

Work Design
o HR Planning
o Job Analysis & Work Design
o Recruitment
o Selection & Placement
o Training & Development
Pay Structure & Benefits
o Performance Management
o Compensation & Benefits Administration
o Employee Movements
Employee Relationships & Negotiations
o Labor-management Relations
o Employee Discipline
o Employee Safety & Health
New Role of HR
Work Design

complete transformation from its former status

formulated to suit the organizational strategies as a whole

Jobs
designed on the basis of strategy formulation and formulation
Physical/Mental Inputs
should be known in every detail
o Materials
o Information
o Equipment
responsible to get the job done
o Machines/Facilities responsible to get the job done
Human Inputs
o Knowledge
o Skills
o Abilities

Job Analysis
process of obtaining information about jobs
Uses of Job Analysis
Selection
identify the most qualifies candidates for employment
Performance Appraisal
getting all necessary information about how well each
employee performs
Training and Development
determine kind of training the employees need
Job Evaluation
help in setting up just pay structures
Career Planning
list down skills of a particular job and career opportunities that
go with it
Work Redesign
to make it more attuned to the times
HR Planning
know the appropriate number of employees
Reasons for Recruitment
Replacements for high turnover
Additional manpower for future expansion
Upgrading the caliber for future expansion
Hiring to hurt the competitors ability to hire top caliber talents
Increase of capability of the firm through people with new set of skills
Questions regarding recruitment
What are the objectives for recruiting and hiring?
How can the company prioritize jobs to fill up?
What kind of candidates does the company look for?
When will recruitment start?
Where will applicants be coming from?
Internal Hiring
External Hiring

members are given chance to apply for the vacancy

getting fresh graduates or persons from the industry

Ways to Assess Candidates

Psychological Tests
o Mental Ability or IQ Test
o Aptitude Test
o Personality Test
Interviews
Skills Tests
Background Check References
candidates
Transcript of Records

measures general intelligence

measures inclination towards certain field
measures traits and values
can be done on one on one basis or panel interview
provide rundown of the skills of the candidate
provide company with a brief background of the
identifies academic background of the candidates

Ways of attracting applicants

Competitive Compensation and Benefits Package

Career Opportunities
Excellent Culture
Highly Reputable Image

Job Descriptions
Innovation

written statements of the duties, responsibilities, reporting relationships, and

minimum qualifications of a job
primary element of entrepreneurship