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MANUAL ON STRATEGIC

MANAGEMENT
(STRAMAN)
DR. R.M. PASTRANA, Ph.D, DBE
ronaldmpastrana@yahoo.com
Graduate School of Business
San Beda College
Mendiola, Manila, Phil.
A Corporate Strategy for XYZ Company

R.M. PASTRANA, Ph.D, DBE


● Title Page (not more than 12 words)
● Approval Sheet
● List of Tables
● List of Figures
● Acknowledgment
● Executive Summary (not more than 500 words)
Table of Contents
PART I
INTRODUCTION
Chapter 1-Background of the Study

1.1 Introduction and General Context of the


Strategic Management Study
1.2- Statement of the Problem
1.2.1 Main Objective of the Study
1.2.2. Specific Research Questions and/or
1.2. 3 Specific Research Objectives
(Major Areas of Study)
1.3 Significance of the Study
1.4 Scope and Limitations of the Study
Chapter 2- Review of Related Literature

● 2.1 Secondary Data


2.1.2 Books (Classical and Contemporary Writings on Strategy, Strategic
Management & Corporate Planning )
2.1.3 Government Data and Statistics (NSO)
2.1 4 Industry Publications/Manuscripts/ Manuals
2.1.4 Published Strategic Management Papers /Thesis from Colleges and
Universities
2.1.5 Journals and Magazines
● 2.2 Tertiary Data
2.2.1 Web-based/Internet/.2.2 On-line Publications
Models/Tools/References:
● The Art of War (Tzu)
● Strategy: Central Management and Policy (Newman & Logan,1978)
● Business Policy (Christensen,1982)
● Strategic Management (David,2014)/Strategic Management (Wheelen,2012)
● Competitive Advantage (Porter,1985)/Business Policy in the Asian Context(Soriano,1990)
● Balanced Scorecard (Kaplan and Norton,2000)/Corporate Planning Manual (AIM,2005)
● Competing for the Future (Hamel & Prahalad,1990)/In Search of Excellence (Peters,1986)
● MBNQA ( Baldrige Business Excellence Framework 2013)/ISO 9001:2008 Quality Management
Systems
Chapter 3- Theoretical Framework

● 3.1 Assumptions
● 3.2 Conceptual Framework/Model: Comprehensive
Strategic Management Framework
● 3.3 Operational Framework &/or Research
Paradigm
● 3.4 Statement of the Central Hypothesis
● 3.4.1 Specific Hypotheses
◻ 1. Hypothesis on Part II- External Environmental
Analysis
◻ Hypothesis on Part III-Internal Environmental Analysis
◻ Hypothesis on Part IV- Strategy Formulation
◻ Hypothesis on Part V-Strategy Implementation
◻ Hypothesis on Part VI- Strategy Evaluation
● 3.5 Operational Definition

Model: Strategic Management Model (David)


Chapter 4- Research Methodology

4.1 Research Design


a. Descriptive Research- Case Analysis Approach
b. Action Research
4.2 Sampling Plan
4.3 Data Gathering Procedures
4.4 Data Analysis and Measurement
PART II
EXTERNAL ENVIRONMENT &
INDUSTRY ANALYSIS
Chapter 6-External Assessment and Analysis of
Potential
Changes in the Macro Economic Environment

6.1 Societal Environment


6.1.1 Global & International Issues
a. Global Trends
b. Regional Economic Outlook:Asia-Pacific / ASEAN /AEC
Model/Tool: The WEF Global Competitive Index

6.1.2 The Philippine Macro-Economic Environment


a. Political, Legal & Regulatory Forces
b. Economic Forces
c. Social, Cultural & Demographic Forces
d. Technological & Infra-structural Forces
e. Ecological- and Natural Environment Forces
Model/Tool: PSE Index
6.2 Analysis of Present Task Environment: Competitive Forces
6.2.1 Micro –economic & Industry Analysis
a. Definition of Industry
b. Industry Analysis
1. Intensity of Rivalry of Existing Competitors
2. Potential Entry of New Competitors
3 Potential Development of Substitute Products and/or Services
4. Bargaining Power of Suppliers
5. Bargaining Power of Buyers-Consumers
Model: Porter’s 5-Forces Model of Industry Analysis
c. Competitive Analysis
a. Strategic Mapping
b. Market Definition (Target Market Segments)
Model: Kotler’s Market Segmentation Strategy
c. Market Size
Model/Tool: The Competitive Profile Matrix (CPM) (David)
● 6.3 Broader Societal Expectations
● Model: Corporate Social Responsibility (CSR) Model
6.4 Summary of Part II- External Assessment

6.4.1 Opportunities (O) and Threats (T)

Model/Tool: The External Factor Evaluation (EFE) Matrix


PART III
INTERNAL ENVIRONMENT &
COMPANY ANALYSIS
Chapter 7- Overview of the Company

7.1 Company Background


7.1.1 . Corporate Structure: Management and Governance
7.1.2 . Corporate Culture & Personal Values of the Key
Implementers
7.1.3 Corporate Resources: Internal Factors
a. Over-all Company Historical & Current Performance ( 3-5 years)
Model/Tool: Audited Financial Statements/ Annual Performance Report
b. Operational/Functional Analysis
b.1 Marketing
b.2 Finance and Accounting
b.3 Production / Operations and Logistics (incl. R&D)
b.4 Human Resources /Knowledge Management (HR-KM)
b.5 Management Information Systems (MIS)
Model: Wheelen’s Strategic Audit
7.2 Resource-Based View (RBV) of the
Company / Internal Assessment
7.2.1 Financial Statement Analysis
Model/Tool: Du Pont Model of Financial Analysis
7.2.2 Core Competencies and Competitive
Advantage Sustainability Assessment
Model: Porter’s Value- Chain Analysis (VCA)
Model: Competitive Advantage (Porter/David)
Tools: Benchmarking/Best Practices Approach
● 7.3 Summary of Part III- Internal Environment

7.3.2 Internal Factor Evaluation:


Strengths and Weaknesses (SW)
7.3.3 Core Competencies, Distinctive
Competencies and Sustainable Competitive
Advantage

Model/Tool: Internal Factor Evaluation (IFE)


Matrix :
Chapter 8: Conclusion on Parts II and III- Environmental
Scanning

8.1 Summary of Environmental Scanning :SWOT Analysis


Model: The Internal-External (IE) Matrix/ (David)/
SWOT Matrix
8.2 Identification of Core Competencies and Sustainable
Competitive Advantage
Model: Competitive Advantage Models (Porter/David)
8.3 Key Success Factors (KSFs)
9.2 Window of Opportunity
9.3 Major Concerns/ Opportunities for Improvement (OFI)
Model: MBNQA (Baldrige Business Excellence Framework)
8.4 Hypothesis
8.5 Conclusion
PART IV:STRATEGY FORMULATION
Chapter 9: Current Situation Analysis
● 9.1 Current Company Performance
● 9.1.1 Return on Investment
9.1.2 Market Share
9.1.3 Profitability
Model/ Du pont Financial Ratio Analysis Model
● 9.2 Present Strategic Posture
● Vision-Mission
● SBUs/ Products and /or services
● Target Market/Geographical Area
● Competitive Advantage/s (Distinctiveness and Uniqueness)
● Corporate Goals and Objectives: Strategic, Financial and Social
● Corporate Objectives (Measures and Targets)
● Business Objectives (Measures and Targets)
● Functional Objectives (Measures and Targets)
● Strategies (Initiatives)
● Corporate Policies
● Model: Kaplan & Norton’s Balanced Scorecard (BSC) Model
● 9.3 Evaluation of Present Corporate Strategies
● The transparency, cohesiveness, and consistency of
Strategies and Policies to Vision-Mission , Goals and
Objectives (VMGO)
● Model:/Tools:
● Michael Porter’s Competitive Strategy
● Michael Porter’s Generic Competitive Strategies
● Gary Hamel& Prahalad’s Core Competence Model
● Tom Peter’s Excellence Model
● MBNQA Baldrige Business Excellence Framework 2013
Chapter 10: Strategic Analysis and Choice
● 10.1 Input : Strategic Issues
● 10.2 Matching: Strategy Generation and
Strategic Options
● Models/Tools:
● The Strategic Position and Action Evaluation (SPACE) Matrix
● The Boston Consulting Group (BCG) Model
● The Internal/External (IE) Matrix
● The Grand Strategy Matrix
Chapter 10: Strategic Analysis and Choice
● 10.3 Decision: Strategy Selection/Choice
● 10.3.1 Criteria for Strategy Selection
● Model: The Quantitative Strategic Planning Matrix (QSPM)
● 10.3.2 Proposed Strategies
a. Grand Strategy (Corporate Level)
● Models:
◻ Integration Strategies (Forward/Backward and Horizontal)
◻ Ansoff’s Product-Market Growth Grid
b. Business Strategy (Strategic Business Unit (SBU) Level)
◻ Model: Porter’s Generic Competitive Strategies
c. Functional Strategy (Operational Area Level)
c.1 Marketing Function
◻ Marketing Objectives (Based on Target Market Segments)
◻ Marketing Strategies ( 4ps)
◻ Model: 4Ps of Marketing (Kotler)
c.2 Production/Operations Function
◻ Operations Objectives
◻ Operations Strategies (10 Issues in OM)
◻ Model: Operations Management (Heizer)
c.3 Human Resource Strategies
◻ Human Resource Objectives
◻ Human Resource Strategies
◻ Model: Human Resources Strategies (Dessler)
c.4 Finance Strategies
◻ Finance Objectives
◻ Finance Strategies ( 4ps)
◻ Model: Finance Strategies (Gitman))
Chapter11 :Conclusions on Part IV: Strategy
Formulation
● Summary of Strategy Formulation
● Hypothesis
● Conclusion
PART V: STRATEGY EXECUTION
Chapter 12 : Analysis of the Company’s Capability
to Execute

● 12.1 Comparison of the actual (current situation) versus


intended results ( goals & objectives set and strategies
formulated )
● 12.2 Assessment of the capability (competencies) of the
people (current workforce) in the organization to carry
out the chosen (recommended) strategies.
● Criteria: Workforce Competencies
● 12.3 Evaluation of resource allocation (budget and time)
in support of the recommended strategies.
● Criteria: financial budget and management time allocation
● 12.4 Evaluation of the current systems,
processes and procedures instituted by the
organization to implement its recommended
strategies and attain its objectives
● Criteria: the management process coherence
with strategies formulated
● planning, organizing, staffing, directing, evaluating
functions
● budgeting, monitoring and rewarding systems
● processes and procedures of the organization
● 12.5 Assessment of the different operational
functions of the organization, its various programs
and projects and the support services supplied to
back up the strategies and the objectives desired.
Criteria: efficiency, effectiveness and timeliness/speed

12.6 Examination of individual managers and team of
people
● Criteria: management styles, attitudes, value systems,
relationships, ethics, cohesiveness, client orientation and
performance according to result-based criteria.

12.7 Study of the organization’s facilities, environment and


physical set-up.
● criteria: responsiveness to organizational needs and
conduciveness to good performance.
● 12.8 Scanning of the organization’s external connections,
communications, linkages, networks and allies /collaborators
as well as detractors/competitors and obstructors.
● Criteria: Role and impact on the organization’s effectivity.
● 12.9 Evaluation of the top managers and leaders
● Criteria: ability to elicit support and performance from the staff, their decision-
making skills, their policies and guidelines and their overall effect on the
organization.

● 12.10 Assessment of the overall consistency or fit among the


strategies adopted, the structures, systems and resources
applied and the people of the organization in relation to the
adopted vision, mission and objectives
● Criteria: over-all consistency or fit
● Model: McKinsey’s 7S Model
● Business Process Re-engineering (BPR)/res-structuring
Chapter 13: Managing Internal Organization for Strategic
Execution: Action Plan and Time Frame
a) Define specific, shorter term goals
b) Set policies, guiding principles
c) Allocate resources (people, money, facilities,
manager’s time)
d) Organize for tasks
e) Determine who will manage what
f) Service delivery mechanisms, methods, systems
procedures
g) Sequencing of activities; planning step by step
process; time-framing of whole strategy, programs and
projects
h) Support systems; alliance building
i) Communication and dissemination
Chapter 14: Managing Strategic Change
● Managing conflict
● Managing Resistance to Change
● Creating a Strategy-Supportive Culture

● Model: McKinsey’s 7S Model


Chapter 15: Financial Projections
● 15.1 Summary of Financial Projections
● Five-Year Projected Statement of Comprehensive Income
(Income Statement)
● Five-Year Projected Statement of Financial Position
(Balance Sheet)
● Five-Year Projected Statement Cash Flow
● Notes to Financial Statement
● 15.2 Financial Statement Analysis of Key Ratios
based on Financial Projections
● Liquidity, Activity, Leverage, Debt-Equity, Profitability and
Market Ratios (if listed)
Chapter 16: Conclusions on Part V- Strategy
Implementation
16.1 Summary of Part V-Strategy Implementation
16.2 Hypothesis
16.3 Conclusion
PART VI- STRATEGY EVALUATION:
PERFORMANCE MONITORING AND
CONTROL
Chapter 15. Performance Management: Monitoring of performance
according to key result areas (KRA) and performance indicators (Pis)
Model: Kaplan & Norton’s Balanced Scorecard (BSC) Method

Chapter 16. Evaluating variance from performance and establishing


causes, determining effects.
ModeI: Ishakiwara (FishBone- Approach /Cause and Effect) Diagram
Kepner-Tregoe (KT) Approach to Problem Analysis and Decision-
Making

Chapter 17.Corrective action/Preventive Actions


Model :ISO 9001:2008 QMS, Six Sigma DMAIC Model

Chapter 18. Contingency Planning : Instituting better control mechanisms,


Potential Problem Analysis and Continuous Improvement
Chapter 19- Strategic Information Systems: Enterprise Resource Planning
(ERP)
Model: MBNQA/ Baldrige Framework/ISO 9001:2015 QMS/KT Approach-
PPA
ERP Systems: SAP Business One-/ Oracle
Chapter 19: Conclusions on Part VI- Strategy
Evaluation
19.1 Summary of Strategy Evaluation, Monitoring & Control
19.2 Hypothesis
19.3 Conclusion

Tools: Program Evaluation & Review Technique /Critical Path


Method (PERT/CPM)
Gantt’s Chart
Computer-Based Project Management Models
Part VII-Summary : Conclusions and
Recommendations
Chapter 20. Summary, Conclusions & Recommendations

20.1. Summary of Parts 1-VI


20.2 Conclusions
Statement of the Central Hypothesis
20.3 Recommendations
20.1 As an Action Research Paper for the
Company/Business Entity recipient-user
20.2 Areas for Further Study (scholarly research)
Chapter 21. References
References (APA format and style)
Reflection
● Observations and/or reflections in the process of
doing the Strategic Management Paper
● Business Ethics
● Corporate Social Responsibility
● Environmental Sustainability
● Global/International Issues
● Economic /social impact of globalization
● Business culture/Cross cultures

● Benedictine Learnings
Appendices
● Company Waiver
● Research Instrument (if applicable)
● Certification of Reviewer
Notes about the Author/Researcher
● Curriculum Vitae
ILLUSTRATION/APPLICATION OF
STRATEGIC MANAGEMENT
FRAMEWORK:MODELS & TOOLS
MANUAL ON STRATEGIC
MANAGEMENT
(STRAMAN)
DR. R.M. PASTRANA, Ph.D, DBE
ronaldmpastrana@yahoo.com
Graduate School of Business
San Beda College
Mendiola, Manila, Phil.
A Corporate Strategy for XYZ Company

R.M. PASTRANA, Ph.D, DBE


● Title Page (not more than 12 words)
● Approval Sheet
● List of Tables
● List of Figures
● Acknowledgment
● Executive Summary (not more than 500 words)
Table of Contents
PART I
INTRODUCTION
Chapter 1-Background of the Study

1.1 Introduction and General Context of the


Strategic Management Study
1.2- Statement of the Problem
1.2.1 Main Objective of the Study
1.2.2. Specific Research Questions and/or
1.2. 3 Specific Research Objectives
(Major Areas of Study)
1.3 Significance of the Study
1.4 Scope and Limitations of the Study
Chapter 2- Review of Related Literature

● 2.1 Secondary Data


2.1.2 Books (Classical and Contemporary Writings on Strategy, Strategic
Management & Corporate Planning )
2.1.3 Government Data and Statistics (NSO)
2.1 4 Industry Publications/Manuscripts/ Manuals
2.1.4 Published Strategic Management Papers /Thesis from Colleges and
Universities
2.1.5 Journals and Magazines
● 2.2 Tertiary Data
2.2.1 Web-based/Internet/.2.2 On-line Publications
Models/Tools/References:
● The Art of War (Tzu)
● Strategy: Central Management and Policy (Newman & Logan,1978)
● Business Policy (Christensen,1982)
● Strategic Management (David,2014)/Strategic Management (Wheelen,2012)
● Competitive Advantage (Porter,1985)/Business Policy in the Asian Context(Soriano,1990)
● Balanced Scorecard (Kaplan and Norton,2000)/Corporate Planning Manual (AIM,2005)
● Competing for the Future (Hamel & Prahalad,1990)/In Search of Excellence (Peters,1986)
● MBNQA ( Baldrige Business Excellence Framework 2013)/ISO 9001:2008 Quality Management
Systems
Review of Related Literature
● Strategic Management
● Strategy
● Corporate Planning
● Strategists and Thinkers on Strategy
● Sun Tzu; The Art of War
● Peter Drucker: The Practice of Management
● Newman and Logan: Strategy, Policy and Central Management:
(Columbia Business School)
● Mckinsey & Co.-Management Consulting
● Harvard Business School
● Christensen: Business Policy
● Kaplan and Norton: Balance Scorecard (BSC)
● Michael Porter: Competitive Strategy
● Peter Lorange (Wharton School of Finance)
● G. Hamel, & Prahalad, Competing for the Future
● Wheelen and Hunger: Strategic Management Audit
● David, Strategic Management
PLANNING
Is to organize in a disciplined way the major tasks that
the firm has to address to maintain operational efficiency
in its existing business and to guide the organization into
a new and better future (Hax &Majlub)

there is no such things as “an effective unique way to plan”

two dimensions of planning

1.responding to changes in the external environment


(adaptability)
2.creatively deploy internal resources to improve the
competitive position of the firm (flexibility)
Strategic Management Process
Strategic Planning
● Is centered in the formulation of the business
and their supporting programs

● An end product of a thoughtful process that


comprise:

(a) an environmental scan


(b) an internal scrutiny
(c) the business mission
What is Strategic Planning?
■Strategic
planning is a must for purposeful organizations
seeking more effective ways of attaining chosen goals.

■It defines clearly what the organization wants, what it is all


about, who it wishes to serve, what it intends to get out of
its efforts and how specially it should move over time.

■It is not a knee-jerk response to immediate stimuli.

■ It is not concerned with day to day activities or short term


fluctuations in the environmental conditions the
organization is situated.
MBNQA Criteria for Performance Excellence Framework:
A Systems Perspective 2013

Organizational Profile:
Environment, Relationships and
Challenges
2 5
Strategic Workforce
Planning Focus

1 7
Leadership Results

3 6
Customer and Process
Market Focus Management

4 Measurement, Analysis, & Knowledge


Management
Understanding the PQA
● It is not an annual budgeting exercise, not a
justification of what the organization is doing,
not pipe-dreaming about unreachable visions
and not the mere matching of strategies with
competitive or similar institutions.

● It is not a statement of optimistic aspirations


and vague notions of achieving them nor a
resigned acceptance of how things are.

● It is not a bunch of ideas voiced by top


management nor an aggrrupation of separate
tasks assigned.
● Strategic planning takes a longer term
perspective established by an organization to
guide shorter term decisions.

● It is a set of guiding principles, which, put


together, would produce the best result-to-
effort, outcome-to-tasks and output-to-input
ratio.

● It is the determination of the most efficacious


means by which an organization can achieve
its ends, given the resources it can muster
and conditions it must operate in.
● It is concerned with the choice of preferred clients,
beneficiaries or markets.

● It is concerned with the major securement and deployment


of resources.

● It is concerned with the identification of specific key result


areas which proceed from the vision and objectives of the
organization.

● It puts together mutually reinforcing activities and tasks


emanating from the strategy that is consistent with the people
doing those tasks, the structures adopted by management
and the systems employed by the organization.

● It enables the organization to work closely together and rally


behind a common cause. The strategy’s rationale must be
understood and accepted by all decision-makers and field
doers. It must be workable and feasible.
A good strategic plan must therfeore contain the fourteen “Fs” to be effective.

FOURTEEN FS OF EFFECTIVE STRATEGIES


Good strategies must:

1. Be Fundamental Sound and Correct. This means it must be anchored on the


realities of the environment or situation the organization is in. It must
recognized major trends and directions in this environment. It must take
account of what the organization can do and cannot do, what it has and
does not have.

2. Have Foresight. It must be able to determine the most likely future scenario
in order to properly position the organization.

3. Take a Favored Course of Action. The implementors of the strategy must


empathize with what they are doing. Otherwise, their motivation level would
be low. They must actually identify with their strategy based on their vision,
values and preferences.

4. Focus Efforts on a Few but Critical Activities. Effective strategies are rifle
shots at a chosen target, not shotgun blasts that scatter the resources of the
organization. They choose the few things that would make a big difference.
5. Have Force behind the Chosen Few Things. Organizations
must out their full force and major resources behind the
strategies taken. They must “put their money where their mouth
is.”

6. Follow Through. A golfer or tennis player knows that hitting


the ball is not enough. There must be a complete swing that
directs the ball to its chosen destination. The whole
organization must move to support its major thrust all the way
to final acceptance by and satisfaction of its client system.

7. Have a Fit Among the Objective, Tasks, People and


Structure of the Organization. There must be consistency
between the type of people operating within certain
organizational structures and systems and the defined objectives,
the chosen strategies and tasks of the organization. Avoid
mismatches.
8. Have a Finite Time Frame. Unreachable stars have less
motivating power than realizable objectives within finite time
frames of five, 10 to 20 years.

9. Be Feasible. This means that strategies must be doable by the


organization. It must work out in the field and produce good
benefit-cost relationship.

10. Take a Full and Wholistic Approach. Compartmentalized


approaches lead to partial solutions that often lead to greater
problem. Organizations must look at the full implications of
relationships among variables in order to reinforce rather than
cancel each other out.

11. Get Feedback through Good Monitoring and Evaluation Systems.


Every action produces a reaction and this reaction must be
monitored closely and assessed as to whether it is moving
towards the desired objectives.
12. Be Felt with Sufficient Impact by the Intended
Targets. Development organizations tend to
forget the very purpose of their strategy which
is to positively affect the lives of the people
they are serving. Strategies must therefore
translate into felt impact.

13. Be Flexible Depending on Environmental


Changes. The assumptions governing
strategies chosen may change overtime. Hence,
there is a need to modify, alter or overhaul
strategies in the face of environmental
changes.

14. Be Final Results Oriented. At the end of day,


the development organization must be
responsible for its intended results and be
accountable to the beneficiaries for such
results. They should not concentrate on inputs or
tasks only but should make sure that these
inputs or tasks lead to the desired outputs and
outcomes.
The Strategic Planning Process
Good Strategic planning operates at two levels.
The first one is from the top where the strategist draws a clear
picture of where it wants to (a vision) and establishes the
purpose for being of the organization (the mission statement).
From the vision and mission, the strategist develops objectives
which are measurable end-results that determine whether the
organization is getting closer or farther from the vision or ultimate
goal.
The strategist must, at this point, define what are the key result
areas (KRAs) expected out of its effort and how these KRAs
translate into specific performance indicators (PIs) that can be
monitored and evaluated.
WHEELEN’s
Strategic Management Model
Environmental
Scanning Strategy Formulation Strategy Implementation Evaluation
and Control
External
Mission

Objectives
Societal
Environment
Strategies
Task
Environment Policies

Programs
Internal
Budgets

Structure Procedures
Culture
Resources Performance

Feedback
David’s Comprehensive Strategic Management Model
VM-O-KRA-PI - SPATRES
● Objectives (KPI) follow Vision-Mission (Goals)
● Strategy follows Objectives
● Structure and Program follow strategy

Structur
e/
Objective
Vision- Programs
s
Mission Strategy /
(KRA/KPI
(Goals) Tasks
/
Action
Targets)
Plan
Full Spectrum of Right to Left Planning

R V
E A M
C
S
T
I A I I
C
V T
O I S
I T S
T O Key
I N
R
A
S
U
E T
Performance S
Result
R
S P
E
G
Indicators or
R I I I
C
& O
G
E
S
PIs Areas
T R O
A A
E S M O
K N
S S

N
The second is from the bottom where the strategist grounds the
organization according to the realities of the environment it operates in.

There are two environments:


-the external environment which the area, industry or sector affecting or
being affected by the organization; and -the internal which is composed of
the resources, manpower, capabilities and constraints of the organization
itself.

The strategist must be able to determine the opportunities and threats in


the external environment in relation to its vision, mission and objectives.

The strategist must also outline the strengths and weaknesses of the
organization according to the same vision, mission and objectives.
What is Strategy?

● Is a coherent, unifying and integrative pattern of


decisions (Glueck, 1976)

● Determines and reveals the organizational purpose in


terms of long-term objectives, action programs and
resource allocation priorities (Chandler, 1962)

● Selects the businesses the organization is in or is to


be in (Learned, et al, 1962)
What is Strategy?
● Attempts to achieve a long term sustainable advantage
in each of its businesses. By responding properly to the
opportunities and threats in the firm’s environment, and
the strengths and weaknesses of the organization
(Porter, 1980)

● Engages all the hierarchical level of the firm (Corporate,


Business and functional) (Andreews, 1980, Ansolf, 1965,
Hax and Majlub, 1984): and

● Defines the nature of the economic and non-economic


contributions it intends to make its stakeholders (Hax
and Majlub, 1991)
The diagram below show the interrelationships of strategies, organization
and people and the management processes involved in order to achieve
the vision, mission and objectives.

STRATE ORGANI
GIES ZATION
•Programs Planning •Structures
Decision •Systems
•Activities Making
•Tasks Implementing •Resources

Vision
Mission
Leading
Motivating Objectives
Relating
Staffing and
Evaluating
Supporting

•Capabilities
•Attitudes

PEOPLE
Vision-Mission
1. Where do we want to go?
(MISSION/VISION)

2. Which environmental
Factor will aid or hamper
us in reaching our goal?
(Environmental Scan:
Opportunities
And Threats) I I I I I
I I I I I I
I I I I I I
I I I I I
3. Where are we?
(Internal Scrutiny:
I I I I I I
Strengths and II II IIII
Weaknesses)
I I I I I

4. How do we get there?


(Strategy Formulation)
Visioning
What is Vision?
● VISION is one-liner (or a 25-page) dream of the
leadership group that can only be realized
beyond 5 years
● …the most concise way you can describe your
dream
● In short, how do you see your company in the
longest term you can see
Components of the Vision
THE CORPORATE VISION
● For MORE ADEQUATE articulation, CORPORATE
VISION can still be expressed into
1. VISION
2. MISSION
3. GOALS
4. OBJECTIVES
5. VALUES
The first 4 correspond to the “Matter” of the Business, the
last item, to the “Spirit” of the Business
● Corporate Vision is the most strategic form and most
fundamental expression of corporate destination
Vision as a Starting Point

● Nothing starts without a Vision

● Vision is a Dream, an Aspiration, an Inspiration, a


Direction, a Challenge of a leader, of an owner, of
managers, of the leadership group

● It answers broadly and strategically the question:


Where do you want to be? What do you want to
accomplish?
Vision as the Source of Power

● Vision is the Leader’s source of power.

● Power is the ability to get things done, to mobilize


resources, to get and use whatever it is that a person
needs for the goals and he or she is attempting to meet
(Kanter, 1977)

● …is the basic energy to intiate and sustain action


translating intention into reality. (Bennis and Nanus,
1986) or the capacity to translate intention into reality and
sustain it.

● Power is the capacity to translate a vision and supporting


values into reality and sustain them (Quigley, 1992)
The Industrial Organization (I/O) View

• The Industrial Organization (I/O) approach


to competitive advantage advocates that
external (industry) factors are more
important than internal factors in a firm for
achieving competitive advantage
The Industrial Organization (I/O) View

• The Industrial Organization (I/O) theorists


believes that the industry in which the firm
competes has stronger influence on the
firm’s performance than internal functional
decisions managers make in marketing,
finance and the like.
The Industrial Organization (I/O) View

Industry
Properties

Economies of Scale

Barriers to market entry

Product differentiation

Level of competitiveness
The Industrial Organization (I/O) View

External Factors has Internal Factors less


Stronger Influence Influence

Economies of scale Internal resources

Barriers to market entry Capabilities


Product differentiation Structure
Level of competitiveness Operation
The External and Internal Factors

“It is not a matter of whether external and


internal factors are more important in gaining
and maintaining competitive advantage.
Effective integration and understanding of
both external and internal factors is the key to
COMPETITIVE ADVANTAGE”

Fred R.David
A. Vision, Mission, Objective, KRAs and Performance
Indicators

➢ A vision is an ideal state or condition which an


organization wants to attain. It should not be too
idealized, however, as to lose all meaning.

➢ A vision is an end scenario that could be


achieved after successive stages of
intermediate scenarios. It is better to describe
and picture the vision in vivid terms.
A sample vision may go like this:

“A community that is able to provide for its


own basic needs, access and deploy the
necessary resources for an ecologically-
balanced and equitable development and
live in peace, happiness and justice.”
● A mission statement is the general thrust of the
organization that is anchored on its vision.

● It is primal motivation of the organization, its very reason


for existence.

● It must be broad enough to inspire everybody in the


organization but narrow enough to focus its efforts.

● A sample mission statement from one non-government


organization is stated simply as: “To improve the quality
of life of the Filipino poor.”
A local government unit expresses its
mission in these terms:

“To promote the general well-being of


the people in the province and
transform them into self-reliant, self-
managing, just and peaceful
communities.”
Objectives are measurable end results that derive their impetus
from the mission statements.

Referring to the aforementioned local government unit, it


enumerated its objectives as:

1.) To increase the income of the people from way below


subsistence to a level where they can provide for
their basic needs.
2.) To foster good health for all.
3.) To enable communities organize, mobilize, source
their own resources and manage their own affairs.
4.) To provide justice to all and eradicate crime.
The objectives should be translated into key
result areas.
● For objective 1, the KRA might be the ability of the
community to earn enough n cash and in kind and to
access sufficient external resources in order to meet
their basic needs for food, shelter, education,
clothing, water, power and so on.

● Specific performance indicators should proceed


from the KRA. A qualified income level must be set
as the benchmark, which income should correspond
to the minimum basket of goods necessary to have a
decent human life.
● Objective 2 should have the KRA of
good health measured in terms of
specific health results (like life
expectancy, mortality rates, morbidity
rates, age-to-weight ratios, infant
survival and work attendance) which
could serve as the performance
indicators.
External Environment & Industry
Analysis
SWOT Analysis
B. Factors in Environmental Analysis
Environmental assessment or analysis should recognize four general
ecological factors.

● Social factors include the demography of the society under study like its
population, age, morbidity and gender parameters. They look at the
education and skill levels of the populace, their health and their state of
physical as well as psychological security.

● Social factors necessarily entail an appreciation of religious values as


well as cultural customs and mores. They take into account the structure
of society, the relationship and interaction of one social group to the
other and the general “pecking order” of societal authority.
● Political factors have to do with power structures and forces which
influence an environment’s internal governance and its external
linkages.

● These structures and forces include the existing government power


elite and their opposition, religious sects, anarchist, business
tycoons, activists, reactionaries, the military, revolutionaries,
landlords, peasants, management, labor unions, the voting masses,
etc.

● These factors weave a web of protagonist, a pattern of collaborations


and conflicts. They are founded on certain constitutional or legal
frameworks which almost follow but others seek destroy. They have
to do with the control and management of vital internal resources
including human, natural, physical and monetary.

● Political forces also seek to attract augmentative resources from the


outside environment while striving to prevent destructive elements
from entering its internal boundaries.
● Economic factors involve all productive forces generated
by capital, land and labor from both the formal and the
informal sectors of the economy.

● Investments in various forms of assets with their


corresponding financial sources are the foundations of
economic wealth generation and distribution.

● They are shaped by technology sourcing and usage,


management expertise, manpower skills, savings realized,
consumption patterns, investment level, financing raised
and production realized.

● Economic factors determine the general quality of the


people living in the environment under evaluation.
● Ecological factors situate how the different parts of the
ecosystem or ecological environment affect one another.

● They assess how these parts tend to build or destroy,


enhance or degrade other parts. They, therefore,
determine the environment’s ability to continually provide
sustenance and well-being to its living inhabitants, be
they men, animals or plants.

● Ecological factors define the quality of life produced by


the environment due to productivity or conservation
programs.

● Ecological factors dictate the condition of the


environment’s natural resources and degree of utilization
or exploitation of these resources. They establish the
pollution levels regurgitated by economic and social
activities.
● The social, political, economic and
ecological factors are the parameters by
which one evaluates the past, present
and future performance of the
environment.

● These factors can be viewed from


different perspectives depending on
one’s interests and concerns.
C. Critical Thinking
● Sifting through a pile of information to pick out what are critical for
evaluation and decision-making may be difficult without the use of data
sieves.

●Two mental exercises are necessary for the sifting process.

● One exercise is analysis which breaks down information into parts that
are screened according to their relevance, magnitude, importance and
urgency.

● The other exercise is synthesis which consolidates information into


larger and more “visible” or “obvious” units so that the whole picture
essence of the information could be brought to fore.

●The latter exercise is helped by tracing patterns, relationships and


trends of the data to determine how they are interlocked and what would
be the most likely scenario of the data in the future

●.Both analysis and synthesis contribute to the art of critical thinking.


Simply put, critical thinking removes much of the chaff from the grain.
This allows for clearer focusing and the development of insights.
● Beginning with the analytical framework, the data should first be properly
classified. The taxonomy suggested in the consideration of environmental
factors could be employed. Once data are classified, one could then apply
the data sieving criteria of relevance, magnitude, importance and urgency.

● Relevance refers to how the information relates to its mission, objectives,


purposes and rationale of an issue or situation taken from the point of view
of an institution or organization.

● For example, an entity concerned with the preservation of natural forest


would find out strong relevance data that pertain to the rate of destruction or
rehabilitation of forest areas, government policies affecting forest utilization,
what upland forest dwellers do with their habitat and the ecological system
supported by the forest.

● Relevance therefore screens data encoding to one’s reason for being or


basic purpose of life.
● Magnitude refers to the quantitative extent and scope of influence
which certain factors have over an issue or problem.

● Largeness or size are the operative screening devices.

● For example, in assessing the productive capacity of a certain


population, the number of people who can contribute to the labor
force (i.e., above 15 and below 65 years old) would represent the
pertinent magnitude or, in considering free education at he
primary school level, the number of children attending such a
school level would be the magnitudinal data sifter.
● Importance refers to the qualitative degree of influence which
certain factors exercise over a given situation.

● For example, religious beliefs may be important


considerations in the value system of a people.

● Level of disposable income would be the most important


factor in determining purchasing power.

● Climatic conditions might be very important to the


performance of certain agricultural crops.

● Importance therefore screens according to the causative


significance or depth of influence which one environmental
factor has over another.
● Finally urgency screens data according to time
considerations or the response that must be
made to a given problem or issue over time.

● For example, killer earthquakes may not come


very often (low level of occurrence), may not be
the main determining factor of a nation’s wealth
(low level significance if isolated) and woould not
be the main preoccupation of a government (low
relevance) ;

● but the earthquake must be attended to at once


by the entire government machinery because of
high urgency with respect to the saving of lives
and property.
● Synthesis pieces information together.

● One device is to study past historical data and use


trend analysis to project or “synthesize” future
prospects.

● From data analysis therefore, one proceeds to


synthesis by creating a total scenario of the past,
present and future.

● Synthesis also paints patterns of analyzed data


together with a mosaic of new insightful
significance. One begins to appreciate cause and
effect syndromes, correlations or the lack there of
sequential occurrence, chains of events and
informational juxtapositions.
● Synthesis may be arrived at through rational
thought processes or through more imaginative
and intuitive approaches.

● The former requires the mechanical application of


logic while the latter adopts the insightful leaps of
creative discovery.

● Psychic energies may be brought to bear on this


creative process.
● The tools of synthesis therefore include:

● forecasting techniques; cause and effect analysis;


data integration through pattern formation;
sequencing events through chronological
parameters or through their degree of significance
or influence; correlations ; and;

● creative process including the development of new


scenarios, innovative thinking and intuitive or
psychic leaps.
The Five-Forces Model of Competition
1. Rivalry Among Competing Firms
• Strategies of one firm can be successful only when they can
provide competitive advantage over the strategies of rival
firms.

• Rivalry among the competing firms will increase when:


i. the numbers of competitors increase
ii. competitor become equal in size and capability
iii. demand for the product declines
iv. customer can switch brand easily

• Rival firms become weakness, firm will benefits the


opportunity by increase marketing and production
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• New firms can easily enter a particular industry,


will increase the intensity of competitiveness
among the firms.
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• Barrier that facing by the new entry:


i. need to gain technology and specialized
know-how
ii. lack of experience
iii. strong customer loyalty or strong brand
preference
iv. large capital requirement
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• When new entry has a strong capability, existing


firm will block the new entry.
The Five-Forces Model of Competition
3. Potential Development of Substitute
Product
• Firm are compete with the producer of substitute
products in other industry.

• Appearance of substitute products puts a ceiling


on the price that can be charged
The Five-Forces Model of Competition
3. Potential Development of Substitute
Product
• Competitive pressure arising from substitute
product increase as the relative price of
substitute products declines and customers cost
of switching decrease

• For example, producers of eyeglasses and


contact lenses are face increasing competitive
pressures from laser eye surgery.
The Five-Forces Model of Competition
4. Bargaining Power of Suppliers

• Occurs when large number of supplier, only few


good substitute raw materials and cost of
switching raw materials is high

• firms may use a backward integration strategy to


gain control of supplier

• In others industry, seller are use forging strategic


partnership with supplier
The Five-Forces Model of Competition
5. Bargaining Power of Customers

• Occurs when customers are concentrated or


large in number or buy in volume
• Bargaining power of customer is higher when
products being purchased are standard
• others firm will offer extended warranties or
special services to gain customer loyalty.
• Customer can negotiate selling price, warranty
coverage, and accessory packages to a greater
extent
Internal Environment & Company
Analysis
D. Internal Assessment
● In assessing a development organization, the very first task to
determine its performance vis-à-vis its given or its adopted mandate
(vision, mission and objective).

● The mandate must, however, be translated into result-based (output)


performance indicators (not output) that define the impact of the
organization on its intended beneficiaries.

● For result-based performance, it does not matter how “good” the


organization is in delivering certain services.

● If these delivered services do not translate into tangible, measurable


results or benefits (i.e., more income, better health). Then they are
useless services.
The first task therefore
concentrates on the matching
of actual versus intended
results.
● The second task is to gauge the capabilities of the
people in the organization to carry out the chosen
strategies.

● An organization may have found the formula for


getting better results but the people may not be up
to it due to lack of competence.
● The third task is to see whether the proper amount of
resources are being put behind the strategies to
realize organizational objectives.

● Strategies may be good and the people may be


competent but the organization may not be actually
putting its money and time where its mouth is.
● A fourth task is to evaluate the systems, processes
and procedures instituted by the organization to
implement its strategies and attain its objectives.

● The planning, organizing, staffing, directing,


evaluating, budgeting, monitoring and rewarding
systems, processes and procedures of the
organization may actually be working at cross
purposes vis-a-vis its strategies and objectives.
● A fifth task is to assess the different operational
functions of the organization, its various programs
and projects and the support services supplied to
back up the strategies and the objectives desired.

● Are the functions, programs and services being


carried out efficiently, expeditiously and
efficaciously?
Sixth, there is a need to examine
individual managers and team of people as to
their management styles, attitudes, value
systems, relationships, ethics, cohesiveness,
client orientation and performance according to
result-based criteria.

Seventh, the organization’s facilities,


environment and physical set-up must be studied
to see whether they are responsive to
organizational needs and conducive to good
performance.
● Eight,
the organization’s external
connections, communications, linkages,
networks and allies/collaborators as well
as detractors/competitors and obstructors
must be scanned as to their role in the
organization’s effectivity.
● Ninth, the top managers and leaders must be
evaluated as to their ability to elicit support and
performance from the staff, their decision-making
skills, their policies and guidelines and their overall
effect on the organization.

● Finally, there must be an assessment of the overall


consistency or fit among the strategies adopted,
the structures, systems and resources applied and
the people of the organization in relation to the
adopted vision, mission and objectives.
Three management processes must
be highlighted:
a.) One, are the motivation and evaluation process
encouraging the people to perform the strategies or
tasks?

b.) Two are the organizational structure, system and


resources allowing planning, decision-making and
implementing processes to lead to the accomplishment of
the strategies and tasks?

c.) Three, are the organizational structure, systems and


resources providing the right leadership, selecting the
right people, fostering better relationship and
supporting the people.
The diagram below show the interrelationships of strategies, organization
and people and the management processes involved in order to achieve
the vision, mission and objectives.

STRATE ORGANI
GIES ZATION
•Programs Planning •Structures
Decision •Systems
•Activities Making
•Tasks Implementing •Resources

Vision
Mission
Leading
Motivating Objectives
Relating
Staffing and
Evaluating
Supporting

•Capabilities
•Attitudes

PEOPLE
E. SWOT Analysis
● After going through the two levels of visioning/objective setting
and environmental analysis,

● the organization proceeds to develop strategic options or


alternative routes to its final destination.

● A juxtaposition of strengths (S) and weaknesses (W) of the


organization with the opportunities (O) and threats (T) in the
environment can be made to generate these options.

● This is called SWOT Analysis where four combinations can be


made.
1. Strengths-Opportunities Strategies. Ask the question:
how can strengths be employed to take advantage of
development opportunities?
2. Strengths-Threats Strategies. Ask the question: how can
strengths be used to counteract threats that tend to
hinder achievement of objectives and pursuit of
opportunities?
3. Weaknesses-Opportunities Strategies. Ask the question:
how can weaknesses be overcome to take advantage of
or implement development opportunities?
4. Weaknesses- Threats Strategies. Ask the question: how
can weaknesses be overcome to counteract threats that
tend to hinder achievement of objectives and pursuit of
opportunities?
STRATEGIC PLANNING PROCESS
Internal Strengths Weaknesses
Environment 1. 1.
Assessment 2. 2.
External 3. 3.
Environment 4. 4.
Assessment
Opportunities 1. Expand/area/sector/ 1. Niche
1. Industry Coverage 2. Linkaging or networking
2. 2. Intensify existing 3. Subcontracting
3. operations 4. Anchor projects
4. 3. Integrate backward or
forward
4. Acquire or take over
Threats 1. Diversify into other 1. Retrench
1. services or products 2. Merge
2. 2. Consolidated 3. Withdraw/ close shop
3. 3. Contingency
4. mechanisms

STRATEGIC OPTIONS USING SWOT ANALYSIS


Strategy Formulation
F. Choice of Strategy and Implementation

● The strategic options are then evaluated according


to criteria established by the organization, which
criteria are derived from the :
● vision, mission,
● objectives KRAs and PIs.

● A judgment is then made.

● The decision made further subjected to criticism by


asking what can go wrong with it in order to develop
contingencies or to alter the decision altogether.
● After the strategic choice is made and contingency
planning is done, there is a need to translate the strategy
into organizational implementation terms by drawing up
the appropriate organizational structure, systems and
procedures to implement it.

● Activities are enumerated within specific time frames and


tasks are assigned to particular groups or individuals,
again with time-bound performance expectations.

● The strategy must be mentioned and evaluated


according to the performance indicators and KRAs
established for feedback purposes and subsequent
iterations into improved strategies.
G. Sample Sequence
A sample sequence is the strategic planning process may go like this:

1. Review of existing vision, mission and objectives and of existing strategies.

1. Take stock of external environment using critical thinking skills or sieving data
according to relevance, magnitude, importance and urgency.

● Study events unfolding and resources of the environment


● Evaluate trends, directions, movements in the environment
● Identify opportunities for development by the organization
● Identify obstacles or threats to development by the organization
3. Assess internal environment using ten tasks (processes)
outlined in this manual (refer to section on Internal
Assessment). Gauge strengths and weaknesses of the
organization.

3. Reexamine values, ideologies in light of changes in


external environment and internal capabilities. Refine
vision, mission and objectives accordingly.

3. Establish key result areas and specific result-oriented,


measurable performance indicators.

3. Juxtapose opportunities and threats found in internal


environment with internal strengths and weaknesses of
the organization. This serves as the basis for doing a
SWOT analysis.
7. Creatively list strategic options. Samples include
the following strategic options which are
categorized according to Strengths-Opportunities
(SO), Strengths-Threats (ST), Weaknesses-
Opportunities (WO) and Weaknesses-Threats
(WT).

8. Make a choice according to criteria supportive of


key result areas and performance indicators that
have been established.
CRAFTING STRATEGIES
PLAN Strategy Responsibility Timelin
e
Corporate Corporate ■Board of 5-10
Directors/Trustees
Plan Strategy ■Execom
/20
years
Business Business ■Top-Senior 1-5
Management
Plan Strategy ■President/VPs
years
Operating Operating/ Middle

1 year
Management
Plan Functional
Strategy
CRAFTING STRATEGIES
PLAN Strategy Tasks Timeline

Corporate Corporate ■Growth 5-10 /20


Strategies
Plan Strategy ■Diversification
years
Strategies
Business Business ■Competitive 1-5 years
Strategies
Plan Strategy
Operating Operating/ ■Action Plan 1 year
■Tactics
Plan Functional
Strategy
Corporate Growth Strategies: Forward
Integration

● Forward Integration-gaining ownership or


increased control over distributors or retailers:

● Establishing distributors
● Websites directly to customers
● Franchising
● Partnership/Placement/local-overseas
Corporate Growth Strategies:
Backward Integration
● Forward Integration-seeking ownership or increased
control of a firm’s suppliers (supply chain)

● SMC- Magnolia/Poultry
● Partnership/Recruitment/local-overseas
Corporate Growth Strategies:
Horizontal Integration

● Horizontal Integration-seeking ownership or


increased control of a firm’s competitors.

● Mergers & Acquisition (M&A):


● Jollibee-Chowking, Greenwich, Red Ribbon
● SMC- Coca Cola, Magnolia, Ginebra, Purefoods
Corporate Growth Strategies- Intensive
Strategies: MARKET PENETRATION

● Market Penetration (Brand Shifting)


● Seeks to increase market share for present products, or services in
present markets through greater marketing efforts.
● Heavy on Marketing expenses
● Increase salespersons
● Increase advertising expenditures
● Extensive promotion
● Example:
● Consumer products (TV /Print Ads, Promo)
● (Print Ads- Newspapers)
● Billboards/TV/ Endorsements by known TV/Movie
Personalities
● Advocacy
ADVERTISING SLOGANS

● DLSU- “ your future begins here…”


● Ateneo-” Primus paribus”( “ First among equals…”
● Informatics- “ One of Asia’s biggest IT Schools…”
● AMA-” largest IT university in Asia…”
● STI- “ hired upon graduation…”
● Asia-Pacific-” academe + industry partnership”
● SSC-R – “ because all you need is a second chance!”
● Adamson U-” Affordable Quality education”
● FEU- “ where industry meets academe”
● Fatima U (OLFU)- “ rise to the top”
● Letran-” UST and Letran-on the same Dominican
tradition”
● LCCM-” Reinventing education for the future”
Corporate Growth Strategies- Intensive
Strategies: MARKET DEVELOPMENT

● Market Development
● Involves introducing present products or services into new
geographic areas.
● Population shift (urban-rural/regions/country)

● Example:
● Mc Donalds/Jolibee/Starbucks/7-11/Ministop/SM- branching
out (areas/regions/overseas)
● Cebu Pacific-new routes, “No.1 in routes covered/destinations”
● STI/AMA/Informatics-Franchising
● Ateneo (loyola)-rockwell-makati,ADB,Laguna, Subic
● DLSU- taft-ortigas- makati(RCBC bldg)
● MIT/UST- middle East
Corporate Growth Strategies- Intensive
Strategies: PRODUCT DEVELOPMENT

● Product Development
● Seeks increased sales by improving or modifying present
products or services.
● Large research and development expenditures

● Example:
● Mc Donalds/Jollibee/Magnolia/Selecta- new products
● SMC- San Mig light
● Coca-cola Zero/Pepsi Light
● C2- from colas to tea (flavors)
● Del Monte (fit)- flavors
Corporate Growth Strategies- Intensive
Strategies: PRODUCT DEVELOPMENT

● Product Development
● Seeks increased sales by improving or modifying present
products or services.
● Large research and development expenditures

● Example:
● Ateneo
◻ MBA Standards. Executive MBA, MBA-Regis, Middle Management.
Hospital Mgt
● UP-Open U (Open and Distance Education)
● DLSU-CSB- Continuing Education/Equivalency
The Crucial Choice for a Competitive Advantage:
Quality, Cost Leadership or Focus?
Porter’s Generic Competitive Strategies and HEI’s

● Porter (Harvard University) introduced competitive strategies to the


corporate world in the 80’s.These generic strategies allow
organizations to gain competitive advantage from three different
bases: differentiation, cost leadership and focus.(Porter, 1985).

● Cost leadership emphasizes producing standardized products at a


very low cost-per unit for consumers who are price-sensitive.

● Differentiation is a strategy aimed at producing products and


services considered unique industrywide (generally superior quality
products or excellent service quality).

● Focus means producing products and services that fulfill the


specific needs of a small group of consumers (David, 2007).
Porter’s Generic
COMPETITIVE STRATEGY?
Lowest Cost Differentiation

Cost
Competitive

Broad Differentiation
Leadership
Target
Scope

Narrow Focu
Target s

Source: Michael Porter : Competitive Strategy


BUSINESS COMPETITIVE STRATEGIES:
PORTER’S GENERIC STRATEGIES

● COST LEADERSHIP
● Emphasizes producing standardized products at very low per-unit cost for
consumers who are price sensitive.
● SM,Toyota, Dell

● DIFFERENTIATION
● Aimed at producing products and services considered unique industrywide and
● directed at consumers who are relatively price insensitive
● BMW, Mercedes Benz, Volvo, Sony,Apple

● FOCUS (NICHE)
● Producing products and services that fulfill the needs of small group of consumers
● 7-11/Ministop
● Assumption College (Education, AB, BA)-exclusive for women , B+ -A market
● ACE (Asian Center for Entrepreneurship)
The Crucial Choice for a Competitive Advantage:
Quality, Cost Leadership or Focus?
Porter’s Generic Competitive Strategies and HEI’s
● The accreditation of HEIs to regulatory
requirements and certification to international
standards such as ISO tend to support the
differentiation strategy pursued by an HEI.

● It is also consistent with the cost leadership strategy


since ISO certified organizations achieve
product/service standardization which would
eventually lead to cost efficiency.

● HEIs with small student population (particularly


private catholic schools) may find focus strategy
appropriate for its size and operations.
FUNCTIONAL STRATEGIES/OPERATING
PLAN

● Operating Plan
(Business)

● Marketing Plan

● HR Plan
● Production/Operations
Plan
● Financial Plan
● Capital Investment Plan
Strategy Implementation
9. Gear for implementation
a) Define specific, shorter term goals
b) Set policies, guiding principles
c) Allocate resources

Money
People
Facilities
Managers
time
d) Organize for tasks
e) Determine who will manage what
f) Service delivery mechanisms, methods, systems
procedures
g) Sequencing of activities; planning step by step
process; time-framing of whole strategy,
programs and projects
h) Support systems; alliance building
i) Communication and dissemination
10. Contingency Planning
What can we do wrong?
Establish fallback positions
Strategy Evaluation
11. Evaluation Process
a) Monitoring of performance according to key result
areas and performance indicators
b) Evaluating variance from performance and
establishing causes, determining effects.
c) Corrective action
d) Instituting better control mechanisms
Kaplan’s Balanced Scorecard and Performance
Measurement-Based Management System
a. The McKinsey 7-S Framework
Peters and Waterman in their seminal book “In Search of Excellence” (Peters, 1982),
introduced the Mc Kinsey 7-S Framework, named after the consulting firm that
developed the model, as shown below:

Shared
Value
12. Reformulate Strategies

A summary Table of Strategic Planning Concept is


attached for reference.
Chapter 3- Theoretical Framework

● 3.1 Assumptions
● 3.2 Conceptual Framework/Model: Comprehensive
Strategic Management Framework
● 3.3 Operational Framework &/or Research
Paradigm
● 3.4 Statement of the Central Hypothesis
● 3.4.1 Specific Hypotheses
◻ 1. Hypothesis on Part II- External Environmental
Analysis
◻ Hypothesis on Part III-Internal Environmental Analysis
◻ Hypothesis on Part IV- Strategy Formulation
◻ Hypothesis on Part V-Strategy Implementation
◻ Hypothesis on Part VI- Strategy Evaluation
● 3.5 Operational Definition

Model: Strategic Management Model (David)


Strategic Management Model
WHEELEN’s
Strategic Management Model
Environmental
Scanning Strategy Formulation Strategy Implementation Evaluation
and Control
External
Mission

Objectives
Societal
Environment
Strategies
Task
Environment Policies

Programs
Internal
Budgets

Structure Procedures
Culture
Resources Performance

Feedback
Chapter 4- Research Methodology

4.1 Research Design


a. Descriptive Research- Case Analysis Approach
b. Action Research
4.2 Sampling Plan
4.3 Data Gathering Procedures
4.4 Data Analysis and Measurement
● Sample Research Methodology
● Research Design
◻ Descriptive & Action Research
● Sampling Plan
◻ Single Product
◻ Multiple-Product/Business Firm
● Data Gathering Methods and Procedures
◻ Primary Data-Focus Group
◻ Secondary Data Sources
◻ Company Records
◻ Industry Publications

● DataAnalysis and Measurement


◻ EFE Model/ IFE Model
David’s Comprehensive Strategic Management Model
Gathering Information for External
Environmental Analysis
Three approaches to information gathering:
● Scanning: general surveillance of environmental changes;
looking for early signals of changes

● Monitoring: close attention to specific developments that could


affect the organization

● Competitive Intelligence: following/understanding actions of


competitors
The Process of Performing an External Audit

● Must involves as many managers & employees


WHY ?
● Lead to understanding & commitment from
organizational members
● Appreciate having the opportunity to contribute ideas
● To gain a better understanding of their firm’s industry,
competitors, and markets
Steps to Perform External Audit
Gather competitive intelligence &
information about “P E S T E L”

Assimilated and evaluated all


information gathered
Steps to Perform External Audit
Identify opportunities and threats

Create list of ideas to drop into goals


Steps to Perform External Audit
Goals should SMART

Customers focus, industry driven

Competitive advantage
PART II
EXTERNAL ENVIRONMENT &
INDUSTRY ANALYSIS
Chapter 6-External Assessment and Analysis of
Potential
Changes in the Macro Economic Environment

6.1 Societal Environment


6.1.1 Global & International Issues
a. Global Trends
b. Regional Economic Outlook:Asia-Pacific / ASEAN /AEC
Model/Tool: The WEF Global Competitive Index

6.1.2 The Philippine Macro-Economic Environment


a. Political, Legal & Regulatory Forces
b. Economic Forces
c. Social, Cultural & Demographic Forces
d. Technological & Infra-structural Forces
e. Ecological- and Natural Environment Forces
Model/Tool: PSE Index
6.2 Analysis of Present Task Environment: Competitive Forces
6.2.1 Micro –economic & Industry Analysis
a. Definition of Industry
b. Industry Analysis
1. Intensity of Rivalry of Existing Competitors
2. Potential Entry of New Competitors
3 Potential Development of Substitute Products and/or Services
4. Bargaining Power of Suppliers
5. Bargaining Power of Buyers-Consumers
Model: Porter’s 5-Forces Model of Industry Analysis
c. Competitive Analysis
a. Strategic Mapping
b. Market Definition (Target Market Segments)
Model: Kotler’s Market Segmentation Strategy
c. Market Size
Model/Tool: The Competitive Profile Matrix (CPM) (David)
● 6.3 Broader Societal Expectations
● Model: Corporate Social Responsibility (CSR) Model
Industry Analysis:
Competitive Profile Matrix (CPM)
What Is CPM Matrix?
Identifies firm’s major competitors and their strengths &
weaknesses in relation to a sample firm’s strategic positions.
However, critical success factors in a CPM include both
internal and external issues; therefore, the ratings refer to
strengths and weaknesses, where 4 = major strength, 3 =
minor strength, 2= minor weakness, and 1 = major
weakness
CPM EXAMPLE
Company 1 Company 2 Company 3
Critical Success Weight Ratin Score Ratin Score Rating Score
Factors g g

Advertising 0.20 1 0.20 4 0.80 3 0.60


Product Quality 0.10 4 0.40 3 0.30 2 0.20
Price 0.10 3 0.30 2 0.20 4 0.40
Competitiveness
Management 0.10 4 0.40 3 0.20 3 0.30
Financial Position 0.15 4 0.60 2 0.30 3 0.45
Customer Loyalty 0.10 4 0.40 3 0.30 2 0.20
Global Expansion 0.20 4 0.80 1 0.20 2 0.40
Market Share 0.05 1 0.005 4 0.20 3 0.15
Total 1.00 3.15 2.50 2.70
External Environment Assessment (EEA)

● To perform EEA, we need to understand the SWOT


Analysis.
● STRENGTHS
● WEAKNESSES
● OPPORTUNITIES
● THREATS
SWOT Analysis
External Environment Assessment (EEA)

● To perform EEA, we need to understand the SWOT


Analysis.
● STRENGTHS
● WEAKNESSES
● OPPORTUNITIES
● THREATS
Gathering Information for External
Environmental Analysis
Three approaches to information gathering:
● Scanning: general surveillance of environmental changes;
looking for early signals of changes

● Monitoring: close attention to specific developments that could


affect the organization

● Competitive Intelligence: following/understanding actions of


competitors
The Process of Performing an External Audit

● Must involves as many managers & employees


WHY ?
● Lead to understanding & commitment from
organizational members
● Appreciate having the opportunity to contribute ideas
● To gain a better understanding of their firm’s industry,
competitors, and markets
Steps to Perform External Audit
Gather competitive intelligence &
information about “P E S T E L”

Assimilated and evaluated all


information gathered
Steps to Perform External Audit
Identify opportunities and threats

Create list of ideas to drop into goals


Steps to Perform External Audit
Goals should SMART

Customers focus, industry driven

Competitive advantage
External Environment Forces (PESTEL)

Political, Government & Legal Forces

Government Regulations

Key opportunities & threats


■ Antitrust legislation
■ Tax rates
■ Lobbying efforts
■ Patent laws
External Environment Forces (PESTEL)
Political, Government & Legal Forces Variables

Regulation/deregulation
Tax law changes
Special tariffs
Environmental protection laws
Political conditions
Government subsidies
External Environment Forces (PESTEL)
Economic Forces
•Availability of credit
•Level of disposable income
•Interest rates
•Inflation rates
External Environment Forces (PESTEL)

Economic Forces
•Money market rates
•Fed Gov’t deficits
•GDP trend
•Consumption patterns
External Environment Forces (PESTEL)
Economic Variables
Unemployment trends

Stock market trends


Foreign economic conditions
Import/Export factors
Value of the dollar in world markets and tax rates
External Environment Forces (PESTEL)
Social, Cultural, Demographic &
Environmental Forces
SCDE forces have major Impact –
•Products
•Services
•Markets
•Customers
External Environment Forces (PESTEL)
Social, Cultural, Demographic & Environmental
Forces Variables
Avg. educational level

Consumer behavior

Monitor Key Ethical concerns

Variables Attitudes toward saving

Racial equality

Social responsibility
Technological Forces

Major Impact –
•Internet
•Communications
•Semiconductors
Competitive Forces
Identifying Rival Firms
• Strengths
• Weaknesses
• Capabilities
• Opportunities
• Threats
• Objectives
• Strategies
Key Questions Concerning Competitors

Their strengths

Their weaknesses

Their objectives and strategies

Their responses to external variables

Their vulnerability to our alternative strategies


Key Questions Concerning Competitors

Our vulnerability to strategic counterattack

Our product/service positioning

Entry and exit of firms in the industry

Key factors for our current position in industry

Sales/profit rankings of competitors over time


Key Questions Concerning Competitors

Nature of supplier & distributor relationships

The threat of substitute products/services

Should we keep our strategies secret from


employees and stakeholders?
The Five-Forces Model of Competition
1. Rivalry Among Competing Firms
• Strategies of one firm can be successful only when they can
provide competitive advantage over the strategies of rival
firms.

• Rivalry among the competing firms will increase when:


i. the numbers of competitors increase
ii. competitor become equal in size and capability
iii. demand for the product declines
iv. customer can switch brand easily

• Rival firms become weakness, firm will benefits the


opportunity by increase marketing and production
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• New firms can easily enter a particular industry,


will increase the intensity of competitiveness
among the firms.
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• Barrier that facing by the new entry:


i. need to gain technology and specialized
know-how
ii. lack of experience
iii. strong customer loyalty or strong brand
preference
iv. large capital requirement
The Five-Forces Model of Competition
2. Potential Entry of New Competitor

• When new entry has a strong capability, existing


firm will block the new entry.
The Five-Forces Model of Competition
3. Potential Development of Substitute
Product
• Firm are compete with the producer of substitute
products in other industry.

• Appearance of substitute products puts a ceiling


on the price that can be charged
The Five-Forces Model of Competition
3. Potential Development of Substitute
Product
• Competitive pressure arising from substitute
product increase as the relative price of
substitute products declines and customers cost
of switching decrease

• For example, producers of eyeglasses and


contact lenses are face increasing competitive
pressures from laser eye surgery.
The Five-Forces Model of Competition
4. Bargaining Power of Suppliers

• Occurs when large number of supplier, only few


good substitute raw materials and cost of
switching raw materials is high

• firms may use a backward integration strategy to


gain control of supplier

• In others industry, seller are use forging strategic


partnership with supplier
The Five-Forces Model of Competition
5. Bargaining Power of Customers

• Occurs when customers are concentrated or


large in number or buy in volume
• Bargaining power of customer is higher when
products being purchased are standard
• others firm will offer extended warranties or
special services to gain customer loyalty.
• Customer can negotiate selling price, warranty
coverage, and accessory packages to a greater
extent
Industry Analysis: The External Factor
Evaluation (EFE) Matrix
What Is EFE Matrix?
EFE Matrix is an analytical technique related to the
SWOT analysis. EFE is an acronym of the External
Factor Evaluation. EFE Matrix evaluates the
external position of the organization or its strategic
intent.
What Is EFE Matrix?
An External Factor Evaluation (EFE) Matrix
allows strategists to summarize and evaluate
the following:

Economic Demographic Governmental

Social Environmental Technological

Cultural Political Competitive


Steps To Develop EFE Matrix
Step 1 : List Key External Factors as Identified
in The External Audit Process (such as 5
Opportunities and 5 Threats

Step 2 : Assign to each factor a weight in the


range from 0.00 to 1.00 according to the
importance of the opportunity and threat - the
sum of weights must be equal to 1.00
Steps To Develop EFE Matrix
Step 3 : Assign a Rating Between 1 and 4 To
Each Key External Factor
Ratings are based on effectiveness of the
firm’s strategies
4 = superior, 3 = above average, 2 =
average,1 = poor
Porter’s Generic
COMPETITIVE STRATEGY?
Lowest Cost Differentiation

Cost
Competitive

Broad Differentiation
Leadership
Target
Scope

Narrow Focu
Target s

Source: Michael Porter : Competitive Strategy


CPM EXAMPLE
Company 1 Company 2 Company 3
Critical Success Weight Ratin Score Ratin Score Rating Score
Factors g g

Advertising 0.20 1 0.20 4 0.80 3 0.60


Product Quality 0.10 4 0.40 3 0.30 2 0.20
Price 0.10 3 0.30 2 0.20 4 0.40
Competitiveness
Management 0.10 4 0.40 3 0.20 3 0.30
Financial Position 0.15 4 0.60 2 0.30 3 0.45
Customer Loyalty 0.10 4 0.40 3 0.30 2 0.20
Global Expansion 0.20 4 0.80 1 0.20 2 0.40
Market Share 0.05 1 0.005 4 0.20 3 0.15
Total 1.00 3.15 2.50 2.70
6.4 Summary of Part II- External Assessment

6.4.1 Opportunities (O) and Threats (T)

Model/Tool: The External Factor Evaluation (EFE) Matrix


Sample Interpretation of the result of EFE

Since the result is greater than 2.5, the position


of computer company is above average and
able to respond in outstanding threats and
weaknesses in computer industry and has
competitive advantage than other
computer companies.
PART III
INTERNAL ENVIRONMENT &
COMPANY ANALYSIS
Chapter 7- Overview of the Company

7.1 Company Background


7.1.1 . Corporate Structure: Management and Governance
7.1.2 . Corporate Culture & Personal Values of the Key
Implementers
7.1.3 Corporate Resources: Internal Factors
a. Over-all Company Historical & Current Performance ( 3-5 years)
Model/Tool: Audited Financial Statements/ Annual Performance Report
b. Operational/Functional Analysis
b.1 Marketing
b.2 Finance and Accounting
b.3 Production / Operations and Logistics (incl. R&D)
b.4 Human Resources /Knowledge Management (HR-KM)
b.5 Management Information Systems (MIS)
Model: Wheelen’s Strategic Audit
7.2 Resource-Based View (RBV) of the
Company / Internal Assessment
7.2.1 Financial Statement Analysis
Model/Tool: Du Pont Model of Financial Analysis
7.2.2 Core Competencies and Competitive
Advantage Sustainability Assessment
Model: Porter’s Value- Chain Analysis (VCA)
Model: Competitive Advantage (Porter/David)
Tools: Benchmarking/Best Practices Approach
● 7.3 Summary of Part III- Internal Environment

7.3.2 Internal Factor Evaluation:


Strengths and Weaknesses (SW)
7.3.3 Core Competencies, Distinctive
Competencies and Sustainable Competitive
Advantage

Model/Tool: Internal Factor Evaluation (IFE)


Matrix :
Chapter 8: Conclusion on Parts II and III- Environmental
Scanning

8.1 Summary of Environmental Scanning :SWOT Analysis


Model: The Internal-External (IE) Matrix/ (David)/
SWOT Matrix
8.2 Identification of Core Competencies and Sustainable
Competitive Advantage
Model: Competitive Advantage Models (Porter/David)
8.3 Key Success Factors (KSFs)
9.2 Window of Opportunity
9.3 Major Concerns/ Opportunities for Improvement (OFI)
Model: MBNQA (Baldrige Business Excellence Framework)
8.4 Hypothesis
8.5 Conclusion
SWOT MATRIX
Internal Environment Assessment MAJOR MAJOR
STRENGTHS WEAKNESSES
External 1. 1.
Environment 2. 2.
Assessment 3. 3.
4. 4.
5. 5.

Major Opportunities SO Strategies WO Strategies


1.
2.
3.
4.
5.

Major Threats ST Strategies WT Strategies


1.
2.
3.
4.
5.
PART IV:STRATEGY FORMULATION
Chapter 9: Current Situation Analysis
● 9.1 Current Company Performance
● 9.1.1 Return on Investment
9.1.2 Market Share
9.1.3 Profitability
Model/ Du pont Financial Ratio Analysis Model
● 9.2 Present Strategic Posture
● Vision-Mission
● SBUs/ Products and /or services
● Target Market/Geographical Area
● Competitive Advantage/s (Distinctiveness and Uniqueness)
● Corporate Goals and Objectives: Strategic, Financial and Social
● Corporate Objectives (Measures and Targets)
● Business Objectives (Measures and Targets)
● Functional Objectives (Measures and Targets)
● Strategies (Initiatives)
● Corporate Policies
● Model: Kaplan & Norton’s Balanced Scorecard (BSC) Model
Kaplan’s Balanced Scorecard and
Measurement-Based Management
Visioning
What is Vision?
● VISION is one-liner (or a 25-page) dream of the
leadership group that can only be realized
beyond 5 years
● …the most concise way you can describe your
dream
● In short, how do you see your company in the
longest term you can see
Components of the Vision
THE CORPORATE VISION
● For MORE ADEQUATE articulation, CORPORATE
VISION can still be expressed into
1. VISION
2. MISSION
3. GOALS
4. OBJECTIVES
5. VALUES
The first 4 correspond to the “Matter” of the Business, the
last item, to the “Spirit” of the Business
● Corporate Vision is the most strategic form and most
fundamental expression of corporate destination
Vision as a Starting Point

● Nothing starts without a Vision

● Vision is a Dream, an Aspiration, an Inspiration, a


Direction, a Challenge of a leader, of an owner, of
managers, of the leadership group

● It answers broadly and strategically the question:


Where do you want to be? What do you want to
accomplish?
Vision as the Source of Power

● Vision is the Leader’s source of power.

● Power is the ability to get things done, to mobilize


resources, to get and use whatever it is that a person
needs for the goals and he or she is attempting to meet
(Kanter, 1977)

● …is the basic energy to intiate and sustain action


translating intention into reality. (Bennis and Nanus,
1986) or the capacity to translate intention into reality and
sustain it.

● Power is the capacity to translate a vision and supporting


values into reality and sustain them (Quigley, 1992)
Corporate Values
From the “matter” let’s talk about the “spirit” of
the
CORPORATE
VISION:

Corporate
VALUES
Sample Vison-Mission Statements
The Mission Statement of General Motors Venezuela
Summary Statement
The mission of GMV is the assembly and wholesale marketing of automotive vehicles, and
wholesale marketing of the associated replacement parts.
CURRENT FUTURE
PRODUCT SCOPE: - Passenger cars Expand current product scope by
- Light-duty commercial introducing:
vehicles -Four-wheel drive vehicles
- Medium-duty trucks (4WD)
- Heavy–duty trucks
- Buses
MARKET SCOPE: - Vehicle users Same as current
- Replacement parts users
GEOGRAPHIC SCOPE: - Only Venezuela Sam as current
WAYS TO ACHIEVE - Lowest cost position - Extend market coverage to all
COMPETITIVE through greater volume segments
LEADERSHIP: and economies of scale - Modernization of manufacturing
- Maintain product differe- facilities
ntiation through quality, - Improvement of professional
technology innovation and clerical personnel
and marketing intelligence- Development of component
manufacturing vendors

Adapted from Otto K. Soulavy, “Imploration of a Formal Strategic Planning Process”,1983. Reprinted by
permission of Otto K. Soulavy.
Mission Statement of Citibank Taipei
CURRENT FUTURE
Provide corporate Expand product scope by
customers with financial delivering a broader range
PRODUCT SCOPE services including electronic of integrated financial
cash management, trade services
services, foreign exchange Continue to develop fee and
investment advisory commission-based products
service, and project finance Emphasize product
Build products and services differentiation through
generating fee-based expertise and innovation
revenue
Provide products and Limit to large customers
MARKET SCOPE services to government, and selected middle market
private corporations, and names only
financial institutions through Participate in capital market
integrated services and at home and abroad
global communications
network
Major parts of Taiwan Expand geographic
GEOGRAPHICAL SCOPE boundaries of banking
within Taiwan, including
additional branches outside
Taipei
Hire and keep talented Increase efficiency, market
WAYS TO ACHIEVE people share, and product service
COMPETITIVE expertise
LEADERSHIP Continue new product
development
Active participation in
legislative reform
Samples of mission

A Sample

Mission of a Freight Company


Present (2000) Future (2005)

Product/ Service Trucking (gen’l & bulk Trucking of consumer goods,


Scope hauling) Consumer brokerage (sea),
Container yrd opn, Custom
bonded & regular
warehousing, Heavy eqpt
rental &importn

Market Mining cos Same+Mfg., Shipng, Constn,


Scope Mport/ Xport, Transport cos

Geographical Northern Luzon Whloe of Luzon


Scope

Unique Expert mountain drives Same+ one stop shop


Competencies Competent mechanics logistics servicing
Multiple truck
configuration
● 9.3 Evaluation of Present Corporate Strategies
● The transparency, cohesiveness, and consistency of
Strategies and Policies to Vision-Mission , Goals and
Objectives (VMGO)
● Model:/Tools:
● Michael Porter’s Competitive Strategy
● Michael Porter’s Generic Competitive Strategies
● Gary Hamel& Prahalad’s Core Competence Model
● Tom Peter’s Excellence Model
● MBNQA Baldrige Business Excellence Framework 2013
MBNQA Criteria for Performance Excellence Framework:
A Systems Perspective 2013

Organizational Profile:
Environment, Relationships and
Challenges
2 5
Strategic Workforce
Planning Focus

1 7
Leadership Results

3 6
Customer and Process
Market Focus Management

4 Measurement, Analysis, & Knowledge


Management
Understanding the PQA
Chapter 10: Strategic Analysis and Choice
● 10.1 Input : Strategic Issues
● 10.2 Matching: Strategy Generation and
Strategic Options
● Models/Tools:
● The Strategic Position and Action Evaluation (SPACE) Matrix
● The Boston Consulting Group (BCG) Model
● The Internal/External (IE) Matrix
● The Grand Strategy Matrix
MATCHING SWOT FOR STRATEGIC OPTIONS

Internal Strengths Weaknesses


Environment 1. 1.
Assessment 2. 2.
External 3. 3.
Environment 4. 4.
Assessment

Opportunities 1. Expand/area/sector/ 1. Niche


1. Industry Coverage 2. Linkaging or networking
2. 2. Intensify existing 3. Subcontracting
3. operations 4. Anchor projects
4. 3. Integrate backward or
forward
4. Acquire or take over
Threats 1. Diversify into other services 1. Retrench
1. or products 2. Merge
2. 2. Consolidated 3. Withdraw/ close shop
3. 3. Contingency mechanisms
4.

STRATEGIC OPTIONS USING SWOT ANALYSIS


Chapter 10: Strategic Analysis and Choice
● 10.3 Decision: Strategy Selection/Choice
● 10.3.1 Criteria for Strategy Selection
● Model: The Quantitative Strategic Planning Matrix (QSPM)
● 10.3.2 Proposed Strategies
a. Grand Strategy (Corporate Level)
● Models:
◻ Integration Strategies (Forward/Backward and Horizontal)
◻ Ansoff’s Product-Market Growth Grid
b. Business Strategy (Strategic Business Unit (SBU) Level)
◻ Model: Porter’s Generic Competitive Strategies
c. Functional Strategy (Operational Area Level)
Porter’s Generic
COMPETITIVE STRATEGY?
Lowest Cost Differentiation

Cost
Competitive

Broad Differentiation
Leadership
Target
Scope

Narrow Focu
Target s

Source: Michael Porter : Competitive Strategy


c.1 Marketing Function
◻ Marketing Objectives (Based on Target Market Segments)
◻ Marketing Strategies ( 4ps)
◻ Model: 4Ps of Marketing (Kotler)
c.2 Production/Operations Function
◻ Operations Objectives
◻ Operations Strategies (10 Issues in OM)
◻ Model: Operations Management (Heizer)
c.3 Human Resource Strategies
◻ Human Resource Objectives
◻ Human Resource Strategies
◻ Model: Human Resources Strategies (Dessler)
c.4 Finance Strategies
◻ Finance Objectives
◻ Finance Strategies ( 4ps)
◻ Model: Finance Strategies (Gitman))
Chapter11 :Conclusions on Part IV: Strategy
Formulation
● Summary of Strategy Formulation
● Hypothesis
● Conclusion
PART V: STRATEGY EXECUTION
Chapter 12 : Analysis of the Company’s Capability
to Execute

● 12.1 Comparison of the actual (current situation) versus


intended results ( goals & objectives set and strategies
formulated )
● 12.2 Assessment of the capability (competencies) of the
people (current workforce) in the organization to carry
out the chosen (recommended) strategies.
● Criteria: Workforce Competencies
● 12.3 Evaluation of resource allocation (budget and time)
in support of the recommended strategies.
● Criteria: financial budget and management time allocation
● 12.4 Evaluation of the current systems,
processes and procedures instituted by the
organization to implement its recommended
strategies and attain its objectives
● Criteria: the management process coherence
with strategies formulated
● planning, organizing, staffing, directing, evaluating
functions
● budgeting, monitoring and rewarding systems
● processes and procedures of the organization
● 12.5 Assessment of the different operational
functions of the organization, its various programs
and projects and the support services supplied to
back up the strategies and the objectives desired.
Criteria: efficiency, effectiveness and timeliness/speed

12.6 Examination of individual managers and team of
people
● Criteria: management styles, attitudes, value systems,
relationships, ethics, cohesiveness, client orientation and
performance according to result-based criteria.

12.7 Study of the organization’s facilities, environment and


physical set-up.
● criteria: responsiveness to organizational needs and
conduciveness to good performance.
● 12.8 Scanning of the organization’s external connections,
communications, linkages, networks and allies /collaborators
as well as detractors/competitors and obstructors.
● Criteria: Role and impact on the organization’s effectivity.
● 12.9 Evaluation of the top managers and leaders
● Criteria: ability to elicit support and performance from the staff, their decision-
making skills, their policies and guidelines and their overall effect on the
organization.

● 12.10 Assessment of the overall consistency or fit among the


strategies adopted, the structures, systems and resources
applied and the people of the organization in relation to the
adopted vision, mission and objectives
● Criteria: over-all consistency or fit
● Model: McKinsey’s 7S Model
● Business Process Re-engineering (BPR)/res-structuring
a. The McKinsey 7-S Framework
Peters and Waterman in their seminal book “In Search of Excellence” (Peters, 1982),
introduced the Mc Kinsey 7-S Framework, named after the consulting firm that
developed the model, as shown below:

Shared
Value
Chapter 13: Managing Internal Organization for Strategic
Execution: Action Plan and Time Frame
a) Define specific, shorter term goals
b) Set policies, guiding principles
c) Allocate resources (people, money, facilities,
manager’s time)
d) Organize for tasks
e) Determine who will manage what
f) Service delivery mechanisms, methods, systems
procedures
g) Sequencing of activities; planning step by step
process; time-framing of whole strategy, programs and
projects
h) Support systems; alliance building
i) Communication and dissemination
The Balanced Scorecard (BSC) and
Measurement-Based Management
Sample Balanced Scorecard:
VMOKRAPI-SPATRES
VISION STATEMENT

MISSION STATEMENT

CORE VALUES/CREDO/CORPORATE PHILOSOPHY


MISSION STATEMENT
Scope Current (This year) Proposed (Next 5
Years)

Product/Service

Market Scope
(customers)
Geographical
(location/place

Unique
Competencies
(Competitive Advantage,
Distinctive Competencies)
OBJECTIVES KEY RESULT AREAS PERFORMANCE
INDICATORS

1.

2.

3.

4.

5.
Performance Strategies Programs Resources
Indicator Activities Needed

1.

2.

3.

4.

5.
Corporate Performance Objectives for General Motors Venezuela

Performance Indicator Past Years Current Year Objectives


(2009)
2006 2007 2008
1. SALES size M S 479 598 648
growth % 40 24 8 10
2. PROFITS size 12 21 5 -
growth -25 + 78 -79 -
3. ASSETS size 228 298 300
growth 5 31 1 10
RATIOS
4. PROFITABILITY (%)
Margin 2.5 3.5 0.7 4.0
R.O.A. 5.2 7.0 1.4 8.0
R.O.E. 21.9 35.0 7.2 30.0
5. TURNOVER
Assets 2.1 2.0 2.2 2.5
Inventory 3.3 2.8 3.1 3.5
Accounts
Receivable 4.6 3.8 4.1 5.0
6. CAPITAL
STRUCTURE 0.1 0.7 0.9 0.5
Long Term Debt- 2.9 3.7 2.5 2.0
Equity
Total Debt-Equity
Corporate Performance Objectives for CITICORP (%)

Current
Performance Indicator Past Years (percentages) Year Objectives
(2008)

2004 2005 2006 2007

■ Return on Equity 16.1 13.5 13.7 16.4 20


■ Return on Assets 0.58 0.47 0.48 0.61 0.80
■ EPS Growth 14 7 4 33 15 – 18
Methodology in mission formulation

Mission of the Business


Business………………………………………………………

NOW FUTURE
PRODUCT SCOPE

MARKET SCOPE

GEOGRAPHICAL
SCOPE

UNIQUE
COMPETENCIES
Workshop

Framework for Analyzing Changes of Corporate Philosophy

EXISTING DESIRED
RELATIONSHIPS WITH
STAKEHOLDERS
Employees
Customers
Shareholders
Suppliers
Communities
BROAD CORPORATE OBJECTIVES
Growth
Profitability
CORPORATE POLICIES
Management Style
Organizational Policies
Human Resource Management
Finance
Marketing
Manufacturing
Technology
CORPORATE VALUES
Ethics
Beliefs
Rules of Personal and Corporate Behavior
Business Performance Objectives by SBU
Business Performance Objectives
History Current Year Projections
Indicators of
19__ 19__ 19__ 19__ 19__ Actual Budget 19__ 19__ 19__ 19__ 19__
Performance
Sales
Assets
Size Profits
R&D
Expenses
Sales
Assets
Gro
wth Profits
R&D
Expenses
Profit
Profita
bility Margin
ROA
Assets
Turn Inventory
over Accts.
Receivable
Productivity
Techn Innovation
ologic
al Quality
Mtg. Costs
Huma Training
n Safety
Resou
rces
Business Performance Objectives by SBU
Business Performance Objectives

History Current Year Projections


Indicators of
Performance
19_ 19_ 19_ 19_ 19_ Actual Budget 19_ 19_ 19_ 19_ 19_

Sales
Assets
Size Profits
R&D Expenses

Sales
Assets
Growth Profits
R&D Expenses

Profit Margin
Profitabilit ROA
y

Assets
Inventory
Accts. Receivable
Turnover

Job satisfaction
Job performance
Turnover
Absenteeism
Human Motivation
Resources Job security
Career prospects
Psychological stress
Safety/Health conditions
Income

Rate of technological
innovation
R & D productivity
Rate of return in R&D
Procurem investment
ent Technology-based
diversification
Other appropriate
measures

Indicators for lost


performance
Technolog Indicators for service
ical performance
Indicators for vendor
relationships

Cost
Delivery
Quality
Manufact Flexibility to volume
uring changed
Flexibility for new
products introduction

Product strategy
Distribution Strategy
Marketing Price strategy
Promotion and
advertising strategy
BUSINESS COMPETITIVE STRATEGIES:
PORTER’S GENERIC STRATEGIES

● COST LEADERSHIP
● Emphasizes producing standardized products at very low per-unit cost for
consumers who are price sensitive.
● SM,Toyota, Dell

● DIFFERENTIATION
● Aimed at producing products and services considered unique industrywide and
● directed at consumers who are relatively price insensitive
● BMW, Mercedes Benz, Volvo, Sony,Apple

● FOCUS (NICHE)
● Producing products and services that fulfill the needs of small group of consumers
● 7-11/Ministop
● Assumption College (Education, AB, BA)-exclusive for women , B+ -A market
● ACE (Asian Center for Entrepreneurship)
The Crucial Choice for a Competitive Advantage:
Quality, Cost Leadership or Focus?
Porter’s Generic Competitive Strategies and HEI’s
● The accreditation of HEIs to regulatory
requirements and certification to international
standards such as ISO tend to support the
differentiation strategy pursued by an HEI.

● It is also consistent with the cost leadership strategy


since ISO certified organizations achieve
product/service standardization which would
eventually lead to cost efficiency.

● HEIs with small student population (particularly


private catholic schools) may find focus strategy
appropriate for its size and operations.
FUNCTIONAL STRATEGIES/OPERATING
PLAN

● Operating Plan
(Business)

● Marketing Plan

● HR Plan
● Production/Operations
Plan
● Financial Plan
● Capital Investment Plan
MATCHING SWOT FOR STRATEGIC OPTIONS

Internal Strengths Weaknesses


Environment 1. 1.
Assessment 2. 2.
External 3. 3.
Environment 4. 4.
Assessment

Opportunities 1. Expand/area/sector/ 1. Niche


1. Industry Coverage 2. Linkaging or networking
2. 2. Intensify existing 3. Subcontracting
3. operations 4. Anchor projects
4. 3. Integrate backward or
forward
4. Acquire or take over
Threats 1. Diversify into other services 1. Retrench
1. or products 2. Merge
2. 2. Consolidated 3. Withdraw/ close shop
3. 3. Contingency mechanisms
4.

STRATEGIC OPTIONS USING SWOT ANALYSIS


ILLUSTRATION ON HOW TO
TRANSLATE VISION-MISSION INTO
SPECIFIC GOALS AND OBJECTIVES
(KRA/KPI/Pis)
STRATEGIC MANAGEMENT:

FROM VISION-MISSION TO
PERFORMANCE- WALK THROUGH AN
ACTUAL PROCESS:
THE DOUBLE HAPPINESS CASE
Visioning
What is Vision?
● VISION is one-liner (or a 25-page) dream of the
leadership group that can only be realized
beyond 5 years
● …the most concise way you can describe your
dream
● In short, how do you see your company in the
longest term you can see
Components of the Vision
THE CORPORATE VISION
● For MORE ADEQUATE articulation, CORPORATE
VISION can still be expressed into
1. VISION
2. MISSION
3. GOALS
4. OBJECTIVES
5. VALUES
The first 4 correspond to the “Matter” of the Business, the
last item, to the “Spirit” of the Business
● Corporate Vision is the most strategic form and most
fundamental expression of corporate destination
Vision as a Starting Point

● Nothing starts without a Vision

● Vision is a Dream, an Aspiration, an Inspiration, a


Direction, a Challenge of a leader, of an owner, of
managers, of the leadership group

● It answers broadly and strategically the question:


Where do you want to be? What do you want to
accomplish?
Vision as the Source of Power

● Vision is the Leader’s source of power.

● Power is the ability to get things done, to mobilize


resources, to get and use whatever it is that a person
needs for the goals and he or she is attempting to meet
(Kanter, 1977)

● …is the basic energy to intiate and sustain action


translating intention into reality. (Bennis and Nanus,
1986) or the capacity to translate intention into reality and
sustain it.

● Power is the capacity to translate a vision and supporting


values into reality and sustain them (Quigley, 1992)
Visioning
What is Vision?
● VISION is one-liner (or a 25-page) dream of the
leadership group that can only be realized
beyond 5 years
● …the most concise way you can describe your
dream
● In short, how do you see your company in the
longest term you can see
Components of the Vision
THE CORPORATE VISION
● For MORE ADEQUATE articulation, CORPORATE
VISION can still be expressed into
1. VISION
2. MISSION
3. GOALS
4. OBJECTIVES
5. VALUES
The first 4 correspond to the “Matter” of the Business, the
last item, to the “Spirit” of the Business
● Corporate Vision is the most strategic form and most
fundamental expression of corporate destination
Vision as a Starting Point

● Nothing starts without a Vision

● Vision is a Dream, an Aspiration, an Inspiration, a


Direction, a Challenge of a leader, of an owner, of
managers, of the leadership group

● It answers broadly and strategically the question:


Where do you want to be? What do you want to
accomplish?
Vision as the Source of Power

● Vision is the Leader’s source of power.

● Power is the ability to get things done, to mobilize


resources, to get and use whatever it is that a person
needs for the goals and he or she is attempting to meet
(Kanter, 1977)

● …is the basic energy to intiate and sustain action


translating intention into reality. (Bennis and Nanus,
1986) or the capacity to translate intention into reality and
sustain it.

● Power is the capacity to translate a vision and supporting


values into reality and sustain them (Quigley, 1992)
RIGHT TO LEFT PLANNING: The Real
World Application of Strategic Planning
● As you read this presentation, you know that the proper
place to start is the left side of the page. Your eyes then
move to right. You also go from the top of the page to the
bottom because that’s the way we have been taught to
read.

● So when we talk about right to left planning, it only means


that we begin at the end or right side of the page, like the
Japanese, and end at the beginning or the left side.

● While this may sound like paradox that’s actually how


many of us plan our own personal lives.

● It should be the same for enterprise or business planning.


● When we were children, our parents dotingly planned for us. They
probably visualized that we would finish our college education,
maybe even obtain masters or doctorate degrees.

● They envisioned marriage, a family, a brood of lovely grandchildren,


fairly comfortable, even luxurious, lifestyles, and long healthy lives
for all.

● So they planned by looking at the end result and then worked


backwards by feeding us well, giving us vitamins, sending us to
school, buying us books, housing us in a good secure neighborhood
and exposing us to the right values, behavior and manners.

● They might have even screened our godparents, scrutinize our


friends, matched us with the right marriage partners and God knows
what else they might have done just to ensure their grand vision for
us.
● We ourselves, as we reached the age of reason,
begin to set our sights on personal goals,
ambitions, dreams and aspirations.

● They might have clashed with our parents’ own


plan for us.

● But just as well. In the end, everyone hopes that


everything would turn out for the best.
● It should be the same for enterprise planning. Always begin
with the end in mind.

● Even if one is starting small, there should always a higher


level that we should crave for.

● If for nothing else, this should inject us with the proper


amount of motivation or, at the very least, anxiety.

● Planning must visualize tomorrow, how it would look like,


feel like, smell like, touch like, taste like, hear like. The
clearer the picture we have of tomorrow, the more we know
what we have to do today, like our parents did for us.
● Drawing our tomorrow on paper is good way to plan.

● Put whatever details you want in the drawing in a very vivid


manner.

● How large will your enterprise exactly be? Who will your
precise customers be? Where will you be specifically
located? How well will you service your customers? In how
many ways will you be wooing and delighting them?

● For all of these questions, you must be ale to quantify the


qualities that you seek.
● For example, if you want to be leader in the industry
and have market dominance,

● what exact sales volume and market share must you


attain before you can really say you are the
dominant market leader?
● If you desire to provide world-class service, what
would this mean in terms of customer ratings of
your firm versus others considered world class?

● How much price premium would your customers


pay for your goods and services to indicate that
they prefer you over lesser, non-world-class
mortals?

● Would you have a lot more repeat customers,


percentage wise?

● Would you have lesser or no customer


● If you dream of bountiful profits and dividends,

● precisely what percentage return on investment,


return on equity and return on sales would that be?

● What obscene amount cash dividends would you be


delirious with?
● The more exact the measures of
tomorrow that you set, the more you can
actually manage your resources and your
concentration of time, effort and money.

● It is like making a cake. If you want, icing-


thick, ecstatically sweet, melts-in-your-
mouth, creamy chocolate cake that tastes
just like grandma used to make it, you
better have the right recipe for it.

● A wrong ingredient here, a wrong mixture


there and what will have is a cake fit for
feeding birds in the park.
● And so it is with management.

● Ifyou can not measure it, you


can not really manage it.
● Somehow, in your mind, you must internalize the
performance outcomes of your efforts.

● The performance outcomes or end results are what


we call performance indicators.

● The word performance is very important. There are


many things you do to achieve an outcome but they
are not yet, in the strict sense, final performance
indicators.

● For example, you can train people so they can gain


technical skills. Even if they all pass the training with
flying colors, that is not yet performance.
● You can then hire these people to increase your company’s
productivity. But that is not yet performance.

● They may prove to be very productive workers and produce the


goods. But that is not yet business performance unless you are able
to sell the products you produced.

● Sales become performance. The profits generated from those sales


become performance.

● Everything else was a means, a strategy, a way of getting to the end


results or outcome desired.

● You monitor the means. Your monitor whether your people are
carrying out the chosen strategies. But you evaluate the end results
or performance outcomes.
● In several training sessions for small and medium scale enterprises
in the province of Bulacan, participants were asked what they
wanted to achieve five years down the road.

● They were requested to have a “vision” of their tomorrow.

● Their vision statements were translated to a set of performance


indicators that could be measured.

● One participating entrepreneur owned three eateries located at bus


terminals. The eateries were organized under one enterprise called
Double Happiness.

● The entrepreneur’s vision was to have twenty eateries located in


Central Luzon (Region 3), covering the region’s major bus terminals.
Bulacan, a province of Central Luzon, as just going to be the base or
headquarters of the enterprise.
● The articulated vision of Double Happiness
was
“to establish a commanding presence and market
leadership as a food chain servicing major bus
terminals in Central Luzon within the next five
years.”

● This vision was a futuristic picture of the


enterprise, described in words or a vision
statement.

● It was time bound (five years), ambitious but


realistic (from three eateries to twenty), had a
geographical and target market focus that would
enable the entrepreneur to plan strategically.
● Next, the entrepreneur developed a mission statement, which
essentially proclaimed the basic purpose for being of the
organization.

● As a business organization, the basic propose cannot really stray


away very much from wanting to earn a decent return on one’s
investment and carving a sizeable slice of the market.

● For development organizations, they would have to stick close to


their mandates.

● A health organization cannot deviate very much from “providing good


health services.”

● An educational foundation cannot go very far from “providing quality


education to a specific sector of students or professional trainees.”
● For Double Happiness, their mission statement is:
“ to provide quality food and passenger convenience services that
would generate sufficient profits for stockholders and improve the
lives of its employees”.

● This mission statement specifies the product or service to be


rendered (food and passenger convenience), which in effect also
defines the market (food consumers who eat at bus terminals and
avail of convenience services there).

● As a business, the two main stakeholders are the owners


(stockholders) and the employees (management and staff), whose
desire for better lives must be satisfied.

● (In some planning books or manuals, mission statements are


called Goals.)
● Next, the enterprise translates the broad vision
and mission statements to specific objectives.

● Objectives are measurable end results and,


for business organizations, usually center
around four major ends:
● increasing profits;
● expanding markets;
● satisfying customers with quality products or
services;
● and providing reasonable compensation and
benefits to employees.
● Some larger enterprises see beyond the business and talk
about serving the community, the larger society and the
environment.

● At the very least, however, a business must capture and


satisfy a sizeable target market and generate profits for its
owners.

● For a health organization, the broader health mission could


be more narrowly defined in a statement of objectives that
goes as follows: to increase lifespans; to reduce mortality
and morbidity rates; to increase nutrition levels; and, even,
to increase productive years of workers because of better
health.
For Double Happiness, these were the stated
objectives:
1) To establish strong market presence in Central Luzon

1) To earn good financial returns for its owners

1) To delight customers with high quality food and


services

1) To make Double Happiness a happy and rewarding


place to work in
● The attainment of these objectives or
measurable end results could be described
and measured by Key Results Areas
(KRAs).

● KRAs are manifestations or proofs that


the objectives are being achieved.

● For each objective, there could be one or


several KRA’s.

● The four objectives of Double Happiness


were translated to the following KRA’s:
Key Results
Objectives
1a. Number of food
1. To establish strong
market presence in outlets in major bus
terminals in Central
Central Luzon
Luzon (This is a
measure of market
reach.)

1b. Sales volume


attained (This is the
amount, in pesos, sold,
which is a measure of
market success.)

1c. Market share in


Central Luzon (This is a
2a. Amount of net profits realized for the
2. To earn good financial returns next five years (This is the buttomline
for its owners success measure.)

2b. Return on equity (ROE) or net profits


divided by the stockholders’ equity (This is
to relate profits to the equity investment
made. Since, entrepreneurs invested their
own money, called stockholders equity,
they want to measure the financial yield
on their own investments through ROE
measure.)

2c. Return on assets (ROA) or return on


investment (ROI). These are net profits
divided by the total assets or investments
of the enterprise. (Since the loan and
equity are invested in assets, the ROA or
ROI measures how much profits are
generated by the total investments made
by the enterprise.)

2d. Return on Sales or net profits divided by


the sales. (This is a measure of the net
profit margins the enterprise is making.)
3. To delight customers with 3a.Growth in sales per outlet (This
indicates increasing patronage due to
high quality food and good food and service.)
services
3b.Percentage of repeat customers.
(This indicates how satisfied the
customers were the first or
subsequent times they came.)

3c.Number of customer commendations


or complaints as measured by the
frequency of voluntary praises or
complaints made.

3d.Awards and recognition given by the


community or the government for
excellent service. (This is a
comparative measure vis-à-vis other
food outlets or businesses.)

3e.Customer Survey Rating to ascertain


customers’ degree of delight.
4a.Compensation and benefits of
4. To make Double managers and workers are above
Happiness a happy and industry rates.
rewarding place to work
in 4b.Management and employee
turnover (This measure level of
contentment or discontentment
with the company.)

4c.Number of job applicants


compared to other similar
establishments (This measures
reputation because of favorable
word of mouth “advertising” by its
own management and employees
to other people.)
● The Key Result or KRA’s are qualitative
manifestations that the objectives are being attained.

● These KRA’s must be covered into numerical


Performance Indicators or PIs.

● PIs are nothing but exact quantifications of the


KRAs.

● For planning purposes, Double Happiness must establish


the PI baseline or performance outcome as of the current
year. Double Happiness should then come up with the
PIs for the next year and the next five years, according to
the planning horizon desired.
For example purposes, the conversion of
Double Happiness’ KRA’s into number-
specific PIs may look like Table 1 below:
Table 1. PERFORMANCE INDICATORS OF DOUBLE HAPPINESS

KRAs PIs

1999 2000 2004


(now) (One Year Later) (Five Years Later)

1a. Number of Food Outlets 3 5 20


in Central Luzon

1b. Sales Volume Attained P7 million P13 million P60 million

1c. Market Share 2% 3% 12%


2a. Net Profits P1 million P2 million P10 million

2b. ROE 30% 40% 60%

2c. ROA/ROI 15% 20% 30%

2d. ROS 14% 15% 16%


3a. Sales Growth/ Outlet / Year 20% 20% 20%

30% 40% 50%


3b. Repeat Customers

3c. Complaints Made by Customers 1 out of 10 1 out of 50 1 out of 100


Commendations Made 4 out of 20 6 out of 20 10 out of 20

3d. Awards and Recognition None One by Two by Central


Received Bulacan Chamber Luzon Provinces

3.5 4.0 4.5


3e. Customer Rating (in a scale of (in a scale of (in a scale of
1.0 to 5.0) 1.0 to 5.0) 1.0 to 5.0)
4a. Compensation and benefits above Same as 5% above 15% above
Industry Standards Industry Industry industry

4b. Employee Turnover 3 out of 10 2 out of 10 1 out of 10


Per year per year Per year

4c. Number of Job Applicants 10% more 20% more 30% more
Compared to others job job job
applicants applicants applicants
● From the of a vision to the establishment of concrete
performance indicators, the first half of the right to
left planning exercise has been completed.

● At the right end of the page is the vision of the


future, 5 or 10 years down the road, followed by the
mission statement, the objectives, the key result
areas and, finally, the performance indicators. This is
shown in Diagram 1.
Diagram 1. From Vision to Performance Indicators

M
V
I I
Key S
Performance Result
Areas
S
Indicators S
(PIs)
(KRAs) I I
O O
N
N
● The second half of the right to left planning exercise
starts at the performance indicators.

● The planning process calls for the generation of


major alternatives, also known as strategic options,
for attaining each and everyone of the performance
indicators.
● To illustrate this process, one of the participants
in the Bulacan training session for SMEs was a
Multi-Purpose Cooperative in a barangay of San
Jose del Monte.

● The vision of the cooperative was to “create a


prosperous community” while its mission was to
“uplift the quality of life of its cooperative
members.”

● In defining quality of life, the cooperative wanted


its members to earn sufficient income to meet
the minimum basic needs of food, shelter,
clothing, education, health and recreation.
● These became separate objectives with their
respective key result areas.

● However, they came up with a single performance


indicator which specified the level of income per
average family of five that would allow members to
have quality life, defined as meeting the minimum
basic needs.

● This came out to P13,000 income per month. The


average monthly income of the cooperative members
then was P5,000 per family.

● This was obviously a difficult performance indicator to


achieve. How would they then jump from P5,000 to
P13,000 in average monthly income over the next five
years, setting inflation aside?

● The question posed was “in how many ways could the
performance indicator be attained?”
Placing the performance indicator at the right most side of the page, the
participants of the training session generated several strategic options. This given below
in Diagram 2.
Diagram 2. Generating Strategic Options
Strategic Options
1) Helping members set up and operate
their own enterprises. For members
with existing enterprises, make them
grow bigger

2) Train members of the family in


technical skills that would make them
gainfully employed.
Performance
3) The cooperative should establish
business ventures that yield
Indicator:
substantial profits and dividends for P13,000
its members and provide employment Monthly
for members and their families. Income
4) Act as recruitment and placement
agency that would find overseas or
large business employment for
members and their families who
already have employable skills.

5) Cooperative should have a program


that would help members in the
education of their children in order
that they may find good jobs later on
or get married to rich spouses
because of their “good breeding.”
Each of the five strategic options listed in Diagram 2 was converted into action programs.
Taking the first strategic option of helping members set up or grow their own enterprises, the
following Action Program depicted in Diagram 3 was arrived at:

Diagram 3. Action Program

Action Program
1) Source funds from members, donors
and financial institutions for lending or
equity infusion to members

2) Technology sourcing and transfer

Strategic Option
2) Technical and management assistance
No. 1
Help members set
2) Market access up
or grow their own
enterprises
2) Organizational and entrepreneurial
development training program

6) Information access

6) Skills training of the workers


members’ enterprises
● The next stage of the process was to bring the
action program down to specific activities and
tasks.

● The first action program of sourcing funds from


members, donors and financial institutions for
lending and/or equity infusion to members was
taken as an example. This is shown in Diagram
4.
Diagram 4. Activities and Tasks
Tasks Activities
1a. Hire Consultant for 1) Design financial
design investment program
1b. Provide terms of
reference for financial
investment program
1c. Raise funds for
consultant
1d. Deliberate on
Consultant’s design
1e. Get the support of
members for pursuing
program.

2a. Hire Consultant for 2) Prepare feasibility


study study
2b. Provide terms of Action Program
reference for study No. 1
2c. Raise funds for Source funds for
Consultant lending and equity
2d. Deliberate on study infusion
2e. Decide to go on or not

3a. Solicit savings from 3) Raise funds from


members members, donors, and
3b. Prepare proposals for financial institutions
donors and financial
institution
3c. Enter into contracts
with donors and
financial institutions.

4a. Hire and train 4) Set up financing


managers and staff. program’s
Select Investment and organizational
Loan Committee structure, hire the staff
members and operationalize the
4b. Set up systems and service delivery
procedures system.
● Once all the activities and tasks are properly lined
up, the last stage of the process is to determine
what resources are required to carry out the
strategy, action program, activities and tasks.

● The resources required are made up of people,


pesos (money) and physical facilities or the
three P’s of resource budgeting.

● This completes the right to left planning exercise.


The full spectrum of exercise is given in Diagram 5.
Chapter 14: Managing Strategic Change
● Managing conflict
● Managing Resistance to Change
● Creating a Strategy-Supportive Culture

● Model: McKinsey’s 7S Model


Chapter 15: Financial Projections
● 15.1 Summary of Financial Projections
● Five-Year Projected Statement of Comprehensive Income
(Income Statement)
● Five-Year Projected Statement of Financial Position
(Balance Sheet)
● Five-Year Projected Statement Cash Flow
● Notes to Financial Statement
● 15.2 Financial Statement Analysis of Key Ratios
based on Financial Projections
● Liquidity, Activity, Leverage, Debt-Equity, Profitability and
Market Ratios (if listed)
Chapter 16: Conclusions on Part V- Strategy
Implementation
16.1 Summary of Part V-Strategy Implementation
16.2 Hypothesis
16.3 Conclusion
PART VI- STRATEGY EVALUATION:
PERFORMANCE MONITORING AND
CONTROL
Chapter 15. Performance Management: Monitoring of performance
according to key result areas (KRA) and performance indicators (Pis)
Model: Kaplan & Norton’s Balanced Scorecard (BSC) Method

Chapter 16. Evaluating variance from performance and establishing


causes, determining effects.
ModeI: Ishakiwara (FishBone- Approach /Cause and Effect) Diagram
Kepner-Tregoe (KT) Approach to Problem Analysis and Decision-
Making

Chapter 17.Corrective action/Preventive Actions


Model :ISO 9001:2008 QMS, Six Sigma DMAIC Model

Chapter 18. Contingency Planning : Instituting better control mechanisms,


Potential Problem Analysis and Continuous Improvement
Chapter 19- Strategic Information Systems: Enterprise Resource Planning
(ERP)
Model: MBNQA/ Baldrige Framework/ISO 9001:2015 QMS/KT Approach-
PPA
ERP Systems: SAP Business One-/ Oracle
The ISO 9001:2008 QMS Process-Based Model

Quality Management System


Continual Improvement

Management
Responsibility

Measurement
Resource
Analysis
Management
Improvement

Input Output
Production Realization
The Balanced Scorecard (BSC) and
Measurement-Based Management
Chapter 19: Conclusions on Part VI- Strategy
Evaluation
19.1 Summary of Strategy Evaluation, Monitoring & Control
19.2 Hypothesis
19.3 Conclusion

Tools: Program Evaluation & Review Technique /Critical Path


Method (PERT/CPM)
Gantt’s Chart
Computer-Based Project Management Models
Part VII-Summary : Conclusions and
Recommendations
Chapter 20. Summary, Conclusions & Recommendations

20.1. Summary of Parts 1-VI


20.2 Conclusions
Statement of the Central Hypothesis
20.3 Recommendations
20.1 As an Action Research Paper for the
Company/Business Entity recipient-
user
20.2 Areas for Further Study (scholarly
research)
ENVIRONMENTAL SCANNING

EXTERNAL & INTERNAL ENVIRONMENTS:


SWOT ANALYSIS
SUMMARY OF MAJOR
OPPORTUNITIES AND THREATS:
EXTERNAL ENVIRONMENT/COMPETITION

Major Opportunities Major Threats


(Demographics/Socio- Legal & Regulations
Economic/Political, technology) (Competitors, substitutes, new
entrants, customers/suppliers)
INTERNAL ASSESSMENT: PAASCU /PACU-COA MODEL

ASSESSMENT Strengths or Weaknesses


AREA

Faculty

Instruction & Research

Library/Lab/
Physical Plant
Student Services

Administration

Community Involvement

Purposes and Objectives


(Vision-Mission)
INTERNAL ASSESSMENT: ISO 9001:2000 MODEL

ASSESSMENT Strengths or Weaknesses


(5) ISO 9001:2000
Clauses
Quality Management
System
Management Responsibility

Resource Management

Product/Service Realization

Measurement, Analysis and


Improvement
LEVELS OF INTERNAL ASSESSMENT: IQuAME Model

ASSESSMENT Strengths or Weaknesses


KRA
Administration and
Governance

Management of
Resources

Quality of Teaching &


Research

Support for Students

Relations with the


Community
INTERNAL ASSESSMENT: 2008 BALDRIDGE EDUCATION MODEL

ASSESSMENT Strengths or Weaknesses


7 CATEGORIES
Leadership

Strategic Planning

Student, Stakeholder,
Market Focus
Measurement, analysis and
Knowledge Management

Workforce Focus

Process Management

Results
SUMMARY OF MAJOR
STRENGTHS AND WEAKNESSES

Major Strengths Major Weaknesses


SWOT MATRIX
Internal Environment Assessment MAJOR MAJOR
STRENGTHS WEAKNESSES
External 1. 1.
Environment 2. 2.
Assessment 3. 3.
4. 4.
5. 5.

Major Opportunities SO Strategies WO Strategies


1.
2.
3.
4.
5.

Major Threats ST Strategies WT Strategies


1.
2.
3.
4.
5.
STRATEGY FORMULATION
VISION STATEMENT

MISSION STATEMENT

CORE VALUES/CREDO/CORPORATE PHILOSOPHY


MISSION STATEMENT
Scope Current (This year) Proposed (Next 5
SY 2007/08 Years) SY2008/09-2012/13

Product/Service
(Programs/Courses)

Market Scope
(student-client)
Geographical
(location/place/Mode of
Delivery of Programs)

Unique
Competencies
(Competitive Advantage,
Distinctive Competencies)
OBJECTIVES KEY RESULT AREAS PERFORMANCE
INDICATORS

1.

2.

3.

4.

5.
STRATEGY IMPLEMENTATION
Performance Strategies Programs Resources
Indicator Activities Needed

1.

2.

3.

4.

5.
PERFORMANCE EVALUATION
& CONTROL
(RESULTS)
SUMMARY TABLE OF STRATEGIC PLANNING
COMPONENTS: FROM VISION TO PERFORMANCE
1 2 3 4 5 6
Vision Mission Targeted Results Strategies to Programs Activities Internal Staff Internal
Impact-Based Ensure Outcomes/ & Tasks Required Capabilities and
Performance Skills Required
Results/Impact
Indicators
1. Objective 1 1. Strategy 1
Key Result
Area(s) a) a) Program A a) a)
b) - Activities
-Tasks

2. Objective 2 1. Strategy 2
Key Result c) b) Program B b) b)
Area(s) d) - Activities
- Tasks

3. Objective 3 1. Strategy 3 c) Program C c) c)


Key Result e) - Activities
Area(s) f) - Tasks

d) d)
4. Objective 4 1. Strategy 4 d) Program D
Key Result g) - Activities
Area(s) h) - Tasks
7 8 9 10 11

Internal Resources External Assistance External External Resources Actual Performance


Required Needed Organizations to be Required Indicators
Accessed

a) a) a) a) a)
b)

b) b) b) b) c)
d)

c) c) c) c) e)
f)

d) d) d) d) g)
h)
Chapter 21. References
References (APA format and style/Alphabetical by
Author)
1. Kaplan, R. S and Norton, D.P; “The Balanced Scorecard, Harvard Business School (HBS) Press,
1996
2. Kaplan, R. S and Norton, D.P; “Alignment: Using the Balanced Scorecard to Create Corporate
Synergies”, Harvard Business School (HBS) Press, 2006
3. Kaplan, R. S and Norton, D.P; “ The Strategy-Focused Organization: How Balanced Scorecard
companies Thrive in the new Business Environment”, Harvard Business School (HBS) Press,
2001
4. Pera Neville-Clarke, “ The Balanced Scorecard”, 2009
5. Pera Neville-Clarke, “ Aligning Six Sigma with Management System Objectives”, 2008
6. “ISO 9001:2000 Quality Management System Standards”: ISO, 2008
7. Peters, T.J and Waterman, R. H, “ In Search of Excellence”, Harper & Row, 1982
8. AIM, “Strategic Planning System for Educational Institutions”, 2005
9. Miclat, E.F, “ Strategic Planning in Education”, Rex Publishing,2005
10. Wheelen and Hunger, “ Business Policy and Strategic Management”,2007
11. David, F, “Strategic management”, Pearson, 12/Edition, 2009
12. Franco, E, “Educational Planning”, NBS,1994
13. Education Criteria, Malcolm Baldridge National Quality Award, 2008
14. Heizer H., and Reinder,B. “Operations Management:9th Ed, Prentice-Hall, 2009
Sample References
● Sun Tzu; The Art of War
● Peter Drucker: The Practice of Management
● Newman and Logan: Strategy, Policy and Central
Management: (Columbia Business School)
● Mckinsey & Co.-Management Consulting
● Harvard Business School
● Christensen: Business Policy
● Kaplan and Norton: Balance Scorecard (BSC)
● Michael Porter: Competitive Strategy
● Peter Lorange (Wharton School of Finance)
● G. Hamel, & Prahalad, Competing for the Future
● Wheelen and Hunger: Strategic Management Audit
● David, Strategic Management
Reflection
● Observations and/or reflections in the process of
doing the Strategic Management Paper
● Business Ethics
● Corporate Social Responsibility
● Environmental Sustainability
● Global/International Issues
● Economic /social impact of globalization
● Business culture/Cross cultures

● Benedictine Learnings
Appendices
● Company Waiver
● Research Instrument (if applicable)
● Certification of Reviewer
● Audited Financial Statement (Past /Current Year,3-5
Years)
● Projected Financial Statement (5 years)
● Strategic Audit of a Corporation (Format) and
Sample
Notes about the Author/Researcher
● Curriculum Vitae of Dr. Ronald M. Pastrana
(Management Consultant, Diplomate and Entrepreneur)
● Education:
● Post Doctoral Studies; DBA/De La Salle University (w/Honors)
● Ph.D Commerce, UST (Magna Cum Laude)
● MBA: Ateneo de Manila University, Phil (w/Honors)
● BSMIE, MIT
● Strategic Management Program (Asian Institute of Management (AIM), Phils., Asian
Institute of Technology (AIT), Thailand, Business Consulting, Arthur Andersen (USA)
● Work Experience:
● Professorial Lecturer, Graduate School of Business, San Beda College, Manila, Phil,
Letran College, PLM, UE, LCCM
● Member, Technical Panel on Business and Management (TPBM), CHED
● Don Jose Z, Fernandez Professorial Chair, De La Salle University, Manila
● Co-Practice Leader in Corporate Finance and Technical Advisor /Manager In-
Charge of Business Consulting Group, Arthur Andersen & Co.-A Member Firm of
Andersen Worldwide, Chicago,USA
● Examiner, MBNQA (Baldrige), ISO International Registry of Certified Auditors
(IRCA),UK
Thank You