Statement of Objectives

The statement of objectives enumerates the specific goals to be achieved. It helps to determine
which alternative courses of action can be taken to solve the case. Set objectives should essentially
possess the following features specific, measurable, attainable, realistic and time bound (SMART).

Areas of Consideration

Having identified the central issue and having set the specific objectives, the next step is to look into
the areas of consideration. The areas of consideration are the facts of the case. They are dominant
variables in the organizational, local and even global environments that may have contributed to the
problem or may have been the root cause of the central issue itself. These areas of consideration are
related in one way or another to any of the different functional areas of the organization like
finance, production, operations, marketing, or human resource. To make the analysis more
comprehensive and complete, a SWOT analysis is recommended. The term SWOT stands for
strengths, weaknesses opportunities and threats. Both strengths and weaknesses are internal to the
organization while opportunities and threats are external.

Alternative Courses of Action

Once the areas of consideration have been analyzed, the individual comes up with alternative
courses of action. An alternative is an option to take or a choice to make. Alternative courses of
action possess the following characteristics:

a. They are mutually exclusive with no redundancies or overlaps; they are independent of each
other.

b. They specify the period.

c. They are realistic, relevant, and appropriate.

Doing Strategic Analysis

Understanding the basic concepts of strategic management is one thing but the ability to apply all
these principles and approaches is another thing. Strategic analysis, when appropriately and smartly
applied, is a powerful tool of competitiveness. It may even be "the difference" in becoming
successful or otherwise. Thus, undertaking strategic analysis has to be done purposively and
carefully coupled with an open mind to possible changes and step-ups. Emphasis in the conduct of
strategic analysis should be identifying industry growth and profit potentials. The approach in doing
strategic analysis is holistic. Although interlocking, each of the phases involved is inclusive with
broad implications.

Step 1:

The first step in strategic analysis is to carry out an industry analysis which is a cognitive approach to
evaluating the business environment where the company is part of. The best way to conduct an
industry analysis is to use Porter's Five Forces of Competition. The parameters include the bargaining
power of customers, bargaining power of suppliers, ease of entry of new firms, availability of
substitute products, and rivalry among existing firms. Refer to Chapter 3. Some issues that can help
you make a useful industry analysis are the following:

a.Who are your customers? Have they changed in terms of their buying capabilities?

b. Are your suppliers very powerful? Have they increased their prices or depreciated in quality, thus
making your products and services less attractive to the consumers?

c.Who are your major competitors and what are their current market shares? Are you a market
leader, a challenger, or a follower?

d. Can anyone easily engage in the same business as yours? Does the industry have trade
associations that can help, if not protect, the smaller ones?

e.Are your products and services still relevant or have they outgrown their usefulness?

f. Is the industry regulated to prevent unethical competition?

g.As a whole, is the industry growing? How fast is it growing? Can the industry supply the demand
for such products and services?

h. If the industry is declining, what steps can be undertaken to address this dismal situation?

Figure 12.1 Strategic Analysis Model

Industry Analysis

 Bargaining power of customers

 Bargaining power of suppliers

 Ease of entry of new firms

 Availability of substitute products

 Rivalry among existing firms

Strategy Evaluation

 Critical issues

 ldentication of Competitive advantage

Recommendations

 Objectives

 Improved/reinforced strategies

Key Success Factor

 Customer requirements

 Competitive factors to be met

 Business regulations/industry standards requirements

 Resource requirements

 Other technical requirements

Business Strategies Analysis

 Strategic goals

 Capabilities and skills

 Business Strategies

 Performance metrics

Step 2:

The next step to industry analysis while taking care of key success factors is business strategies
analysis. Business strategies analysis is the process of reviewing the strategic goals set by the
company, the capabilities and skills of its people resources, the business strategies formulated, and
the performance metrics established.

a. Regularly, companies revisit strategic goals. They are reviewed in terms of their importance and
weight to the current business positioning of the company. They are also analyzed in terms of
whether they have been completely or partly achieved. These goals include mainly functional,
operational, and more importantly, financial goals.

b. Once these goals have been reset, the capacities and proficiencies of the employees in delivering
results and supporting strategies are looked into. For example, the supply chain processes should be
efficient enough to make the needed inventory SKUs at minimum ordering and carrying costs,
manufactured to an extent where wastes and inefficiencies are optimally minimized, stored, and
handled systematically for orderly dispatching, and widely marketed for delivery to end users. Here,
value chain analysis is conducted.
c. The value chain analysis is effectively complemented by the conduct of marketing analysis. This
involves an assessment of a distribution function that is cost-effective, a delivery function that is
timesaving, a collection function that is highly positive, and a customer service that is largely
favorable. Having analyzed these processes, the formulated strategies are assessed in terms of their
being realistic and attainable. Refer to Chapter 4 for a review of these different types of strategies.
With these strategies are performance metrics that have been extensively discussed earlier.

Case 3: Vifel Cooperative Bank

Vifel Cooperative Bank is a financial entity wherein its members are also the owners and customers
of the bank. Initially, a group of 35 incorporators bound themselves to meet their common goals,
objectives, and aspirations. Inspired by the need to propagate the values of trust, self-help self-
responsibility, respect, community spirit, equity, integrity, self-regulation, and harmony, Vife!
Cooperative Bank was founded. Vifel Cooperative Bank espouses the seven cooperative principles of
voluntary and open membership, democratic member control, member economic participation,
autonomy and independence, education, training and information, co-operation among co-
operatives, and concern for community. Today, the bank provides a wide range of banking and
financial services to its customers. This includes savings and credit facilities like deposits, salary,
teacher, housing, and auto loans, banking accounts, and other related financial services.
Membership is so far pegged at 898 and the number continues to increase.

Vifel Cooperative Bank is competently managed by an aggressive and dynamic bank manager.
Supported by a pool of financial people who are qualified and knowledgeable in banking, trusted and
responsible in handling monetary, and imbued with involvement and commitment the Bank has
been successful in serving its customers who happen to be its stakeholders. Through the Bank more
members are able to build their own homes. The opportunity to own one has been appreciably
welcomed by the members.

This has given them a sense of security and safety and more than that, a sense of self-pride and self-
respect. Auto loans likewise allow the members to purchase cars. For parents sending their children
to school, credit facilities have helped members pay their children's tuition fees. In addition, Vifel
Cooperative Bank has supported its members in their entrepreneurial ventures. From their
borrowings, some members were able to put up their own businesses: baking and selling different
types of breads, cakes, cookies, and other pastries; selling vegetables, meat products, and fishes and
seafoods; opening franchises in mineral water, milk teas, and ice creams; and sewing t-shirts, shorts
and dusters.

Given the successes of Vifel Cooperative Bank, debt collection has been dificult. A number of its
members have defaulted in the payment of their loans. Reasons like lack of income and the reality of
lack of knowledge in handling one's finances have been common responses from these delinquent
payers.

Case 4: Gretchen Hotel

Gretchen Hotel is a five-star upscale hotel situated in Manila. Being one of the most popular as
shown in the delicate architecture of the past while complemented by pieces of furniture that
harmonize the entire mood. Strategically well placed, there is an intense but gentle ambiance of
artistry and national pride. This hotel was named after the lady owner, Gretchen, who passionately
worked hard to bring the best in the domicile service.

Today, Gretchen Hotel houses 375 cleanly maintained rooms of different sizes and three restaurants:
one for fine dining, another one serves exclusively Japanese food, and the other for casual dining.
Two swimming pools invite guests (children and adults) to relax and feel the cool water. It is
supplemented by a gym for physical and health aficionados.

On the ground floor are boutiques that sell antique items, shirts, bags, imported cookies, medicine,
and other items for casual needs. At night, one can hear a string of soft music that soothes the
otherwise tired travelers and professionals. The bar is suitable for quiet conversations while one sips
the relaxing mellow taste of the wines served. There are rooms for meetings and other business
discussions, equipped with technology gadgets and other communication requirements. In every
respect, Gretchen Hotel is proud of its complete and state-of-the-art facilities.

Gretchen Hotel has a total of 188 employees who are stationed in various service offices, starting
with administration, front desk to concierge, bellboys, restaurants, housekeeping, maintenance, and
other service offices. They render quality services to their customers and evidently, they are
delighted with how the staff, supervisors, and managers perform their jobs. Similarly, the daily room
rates of Gretchen Hotel are affordable, including food and other facility prices. Note that the Hotel
does not impose extra or hidden charges. They are transparent and this makes their customers
happy. While the old and current customers of Gretchen Hotel generally come back and patronize
the Hotel, it is confronted with a great challenge. Its average monthly occupancy rate is only 48.9%.

As the Manager of Gretchen Hotel, devise strategies to help increase the Hotel's occupancy rate.
Prepare an action plan.

Case 5: Violet Dreams

Violet Dreams is a company engaged in the manufacture of dolls, pillows, and stuffed toys: teddy
bears, dogs, rabbits, elephants, whales, and others. Founded 40 years ago, the company started
simply as a hobby of the owner who was then fond of sewing and making small handcrafted
giveaways. From then on, Violet Dreams expanded to what it is today. The company has so far
grown, having withstood the economic ups and downs that the country experienced in the past.

The vision of Violet Dreams is to see that its stuffed toys are cuddled in the arms of young children
while feeling comfort and security. Thus, the company continues to manufacture stuffed toys that
are smooth, soft, and safe to touch. As a result, Violet Dreams' products are intricately sewn in
mellow and calming colors like soft blue, pink, white, beige, light green, and others. So far, the
company has successfully created this market niche.

A sole proprietorship, Violet Dreams has no less than 95 sewers, including designers, cutters,
handcrafters, cleaners, packers, salespeople, and delivery personnel. Except for the sewers and
handcrafters who are paid by piece, the others are paid weekly or monthly. In addition, Violet
Dreams sells its stuffed toys through its own specialty stores. So far, the company manages 12
outlets each located in one of the leading malls in the country. Good sales are particularly generated
during special occasions like Christmas and Valentine's Day. Although Violet Dreams' stuffed toys are
considered popular birthday gifts, maintaining 12 stores have become very challenging for the
company, considering the seasonality of its products. During the company's lean months, monetary
obligations in terms of rental payments, utilities, and salary wages have become a burden to the
company.

Hired as a Consultant, how can you help the owners of Violet Dreams given the challenges
confronting them? Using case analysis, what strategies can you propose to help keep them
financially afloat and in time profitable? Prepare an action plan.