2. BOOK INFO
- 15 Chapters
- 2 Appendixes
- 74 Figures and Illustrations
- 11 Tables
- 321 Pages
- Paperback
- Published and Distributed by Rex Bookstore, 2007
- First Edition
3. THE AUTHOR
Dr. Norberto A. Orcullo Jr.
- Academician, researcher and entrepreneur.
- Sr. Faculty Member of Buss. Mgmt Dept (CBA – DLSU-D)
- Proj. Engr and Research Specialist (Section Chief - Dept. of Energy)
- Consultant – Regional Energy Devt Proj (UN-Economic and Social Comm for APac)
- Had trainings in Singapore, US, Thailand.
- Resource person in several for a conducted in Egypt, US Indonesia, Malaysia, Brunei,
Singapore and Hong Kong.
4. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Business Policy
Set of rules that guide the conduct of the business in pursuit of profit and other
objectives. Fundamental framework for plans and the basis for decision making.
Clear policies make the workplace harmonious.
Concept of Strategy
Strategy is the top management’s plan to attain outcomes consistent with the
organization’s mission and goals.
5. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Concept of Strategy
Wright, Knoll and Parnell (1996)
1. Strategy formulation
2. Strategy implementation
3. Strategic control (modify either the strat or execution)
Intended strategy (Original)
Realized Strategy (Actual or eventual) – modified
6. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Characteristics of Strategy
A plan in preparation for what a competitor or enemy might or might not do
Relevant to the existing competition
Assumes the existence of a negative scenario or setback
A program of action to attain objectives
A process used to help organizations decide on objectives, its resources and use of
those resources.
Basis for long term goals
Used to work around an obstruction to an objective
Strategic Management
Is business policy (looking inward towards organizational operation) using strategy in
considering external realities that affects its operations.
7. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Nature of Strategic Management
Stahl and Grigsby (1992):
The entire process of strategic decision-making that:
1. Relates to its environment
2. Guides internal activities
3. Determines the long-term performance of the organization
8. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Nature of Strategic Management
Wheelen and Hunger (2004):
A set of managerial decisions and actions that determine the long-run performance of
a corporation. Includes:
1. Environmental scanning (external and internal)
2. Strategy formulation (strategic and long-range planning)
3. Strategy implementation
4. Evaluation
5. Control
Monitoring and evaluation of OT (external) against SW (internal)
9. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Nature of Strategic Management
Williamson, Jenkins, et al (2004)
A framework in the idea of shaping the destiny of the org. by:
1. Putting the org into competitive position
2. Sustaining and improving that position by
3. Getting appropriate resources
4. Monitoring environmental changes
5. Responding to those changes
10. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Nature of Strategic Management
Williamson, Jenkins, et al (2004)
Their Key questions:
Where is the organization going?
What are its options?
What is the best way forward for the org
How can it be done?
Their Steps:
Analyze OT or constraints in the external
Analyze SW in its internal
Establish mission and develop goals
Formulate strategies at –
• Top (corporate level)
• Mid (business)
• Rank (functional)
Implement the strats
Control the activities to ensure goals are
attained
11. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Nature of Strategic Management
Wright, Knoll and Parnell (1996)
A continuous and dynamic process considering the organization is driven by ever
changing external conditions.
Benefits of Strategic Mgmt (Wheelen and Hunger(2004))
1. Clearer sense of strategic vision of the organization.
2. Sharper focus on what is strategically important.
3. Improved understanding of a rapidly changing environment.
12. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Strategic Decision-Making Process
1. Evaluate current performance
2. ROI, profitability – productivity
3. Current mission, objectives strats and polices
4. Review corporate governance (Top level performance)
5. Scan and assess external environment to determine OT
6. Scan and assess internal environment to determine SW
7. Analyze SWOT
A. Pinpoint problem areas
B. Review and revise mission and objectives as necessary
13. CHAPTER 1
EVOLUTION OF BUSINESS POLICY
Strategic Decision-Making Process
8. Generate, evaluate and select the best alternative strat in light of SWOT analysis.
9. Implement selected strat (programs, budgets and procedures)
10. Evaluate selected strat to ensure minimum deviation from plans through
A. Feedback systems
B. Control of activities
14. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC MANAGEMENT
The Dynamic Nature of the Market and the Business
1. The ever changing market conditions – emergence of new players resulting to stiffer
competition
2. The changing taste of the market – changing preferences of buyers compels
businesses to adapt, as well as other players, thus enhancing the competition.
3. Sociopolitical changes – affects the conduct of the business
4. Impact of global developments –
5. Changes in the conduct of business because of technology.
15. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC MANAGEMENT
The Triggering Events
1. New CEO/President – new leadership
2. Performance gap – when performance does not meet expectations.
3. Change in ownership – new owners of the business
4. Management team shake up – new management team created by the CEO
5. Corporate reorganization/restructuring – by internal decision or by external factors
6. New products or services
16. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC MANAGEMENT
The Product/ Service Life Cycle
This cycle shows that there is no such service that continues to grow for life.
INTRODUC
TION
GROWTH
MATURITY
DECLINE
PROFIT/EFFICIENCY
TIME
17. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC MANAGEMENT
The Experience/ Learning Curve
The theory suggests that overtime, the organization accumulates a body of knowledge
that enables it to do its work and tasks better and efficiently with consideration of the
budget allotted.
COST
TIME
18. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC MANAGEMENT
The Best Operating Level
The concept of BOL indicates an optimum level where an organization operates with the
least use of its resources in doing the same task.
COST
TIME
19. CHAPTER 3
BUSINESS COMPETITION
Porter’s Competition Model
1. Rivalry among Competing Sellers / Existing Firms
2. Suppliers – raw materials used
3. Substitutes – same product or service found in other firms
4. Buyers
5. Potential and New Entrants
6. Stakeholders
20. CHAPTER 4
CORPORATE LEVEL STRATEGIES
When an organization is engaged in multiple businesses and these businesses are ran by
the parent company, the parent company must employ the Corporate Level Strategy.
4 E’s of Corporate Strategy (Thompson and Cats-Baril (2003))
Extend – add new business
Expand – add new products/services
Exit – drop existing unprofitable products/services
Enhance – improve existing products/services
21. CHAPTER 5
BUSINESS AND FUNCTIONAL LEVEL STRATEGIES
Business-Level Options
1. Product Development – create additional/innovate product or service to augment
existing ones.
2. Market Development – bring existing product/service to other areas by branching
out geographically.
3. Market Penetration – push existing product/service to saturated market. Same
product, same area, more marketing efforts.
22. CHAPTER 5
BUSINESS AND FUNCTIONAL LEVEL STRATEGIES
Functional Strategy
The approach taken by a functional area or unit to achieve its objectives and duties by
way of maximizing the use of its resources. It addresses how the particular duty of the
concerned department will be done and carried out. It is concerned with the developing
and nurturing competencies at the department level.
If there are smaller units than the departments, another form of strategy, which is a
more detailed, will have to be employed which is referred to as Operating Strategy.
23. CHAPTER 6
VALUE CHAIN
Value Chain System
The series of activities and processes, including supply of materials or inputs, involved
in producing a product or rendering a service.
26. STRATEGIC MANAGEMENT
WHEELEN AND HUNGER MODEL, 2004
Environmenta
l Scanning
Strategy
Formulation
Strategy
Implemen-
tation
Evaluation
and
Control
CHAPTER 7
STRATEGIC MANAGEMENT MODELS
27. STRATEGIC MANAGEMENT
WHEELEN AND HUNGER MODEL 2000
Environmental Scanning Strategy Formulation Strategy Implementation Evaluation and Control
EXTERNAL
Societal
Environmental
General Forces
Task
Industry Analysis
INTERNAL
Structure
Chain of Command
Culture
Beliefs
Expectations
Values
Resources
Assets
Skills
Competencies
Knowledge
PERFORMANCE
- Process to monitor
performance and take
corrective action
- Actual results
MISSION-Reasonforexistence
OBJECTIVES-Reasonforexistence
STRATEGIES–WHATandWHENtoaccomplish
POLICIES–Boardguidelinesfordecisionmaking
PROGRAMS–activitiestoaccomplishplan
BUDGET–CostofProgram
PROCEDURES–Sequenceofsteps
neededtodothe
job
28. THE 6 TASKS OF STRATEGIC MANAGEMENT
ORCULLO MODEL, 2006
Develop
Strategic
Vision and
Mission
Set
Strategic
Objectives
Craft
Strategy
Execute
Strategy
Evaluate,
Monitor,
Revise
Monitoring / Review – Operating Officers Level
Monitoring / Review – Corporate Level (BOD)
Environment
al Scanning
CHAPTER 7
STRATEGIC MANAGEMENT MODELS
29. Mission
Vision
Set Strategic
Objectives
Strategies to Achieve
Objectives
Functional Strategies
Admin Finance Mktg Optns
R&D
Tactical/Operational Activities
OPERATIONALIZING THE STRATEGIC PLAN
ORCULLO, 2006
CHAPTER 7
STRATEGIC MANAGEMENT MODELS
30. THE 6 TASKS OF STRATEGIC MANAGEMENT
ORCULLO MODEL, 2006
CHAPTER 7
STRATEGIC MANAGEMENT MODELS
Vision-Mission Statement – A declaration of what
the org is all about and what it wants to become.
Strategic Objectives – Specific target and objectives
the org wants to achieve in measurable terms
Strategies – Functional and operating plans detailing
tasks on what needs to be done and how to achieve
strategic objectives
Strategy Implementation/Execution Plan – Details
of operating level tasks identified specific departments
including routine and daily activities
Monitoring, Evaluation and Taking corrective
actions – Monitoring compliance, evaluating
performance and doing corrective actions as needed.
STRATEGIC
PLAN
32. CHAPTER 8
TASK 1: ENVIRONMENTAL SCANNING
Strength
Is something an organization does well or
a characteristic that enhances its service.
(APPLY, SUSTAIN)
Weakness
Is something an organization lacks, does
poorly, or a disadvantageous condition.
(OVERCOME)
Opportunities
Refer to situations where there are
potentials from developing into products or
services. Options for growth and
expansion.
(DISCOVER)
Threats
Internal or external factors that put the
organization in uncompromising situation
(AVERT)
33. CHAPTER 9
TASK 2: THE VISION AND MISSION STATEMENT
VISION Statement
“Where we are going”
“Where to go”
“What we would like to become”
Roadmap (Thompson-Strickland 1999)
Used as a starting point
Spells out a course to pursue
Communicated in a clear and exciting
manner
Indicates capabilities to be develop
MISSION Statement
“what are we here for” (Thompson-
Strickland 1999)
Defines current product/service
offerings and activities
Customer needs being served
Capabilities
Conveys “who we are, what we do, and
where we are now”
34. CHAPTER 9
TASK 2: THE VISION AND MISSION STATEMENT
VISION - MISSION Statement
To challenge and motivate members of the organization
Invite members to commit and pursue the vision
Arouse strong sense of organizational purpose
Induce member to buy-in
Galvanize the members to live with the organization
35. CHAPTER 10
TASK 3: SETTING STRATEGIC OBJECTIVES
Goals – desired general end towards efforts are directed
Objectives – specified and quantified versions of goals.
Strategic Intent – direction and desire an organization would like to pursue
Strategic Thrust – (Strategic bias) a decision-making process by senior management. A
focused management attention in areas it wants to excel, to concentrate resources to
develop superior competencies and capabilities – to sustain competitive advantage.
36. CHAPTER 10
TASK 3: SETTING STRATEGIC OBJECTIVES
Strategic Objectives
Converts vision and mission into specific performance targets
Tracks performance
Pushes the organization to be inventive and result-driven
Prevents complacency
Pulls members towards a common direction
Objectives at Functional and Operating Levels
specific and highly detailed objectives of the smallest unit.
37. CHAPTER 10
TASK 3: SETTING STRATEGIC OBJECTIVES
S Specific Concrete and specific to last
detail and is quantifiable.
M Measurable Related to the mission
statement and should be measurable.
A Achievable Not a dream or desire but
should be something attainable.
R
Realistic / Resource-Oriented Must be
realistically based on the organization’s
financial and human resources.
T
Time-bound There must be a time frame
or limit as to how soon the objectives can
be achieved.
38. CHAPTER 11
TASK 4: CRAFTING STRATEGIES
Why Strategies Evolve
Shifting market conditions
Fresh moves by competitiors
New technologies and innovations
Evolving customer preferences
Political and regulatory changes
New opportunities
Crisis situation
39. CHAPTER 11
TASK 4: CRAFTING STRATEGIES
Characteristics of Strategy Making
Action-oriented – must put action to the objectives
Evolves over time – must be responsive to environmental changes
An ongoing process – continuing task to address internal and external triggers.
Time and Output-oriented – results are expected within specified time frame.
Requires participation of everyone – it is the role of all parties in the organization.
Answers the “How”
40. CHAPTER 11
TASK 4: CRAFTING STRATEGIES
Planned Strategy – refers to the strategy that was purposively developed as desired.
Proactive Strategy – strategy developed to address assumed future threats.
Reactive Strategy – strategy developed as a result or response to changes.
Rule Breaking Strategy – unusual, extraordinary, beyond the books strategy, in either
conception or execution
41. CHAPTER 12
TASK 5: IMPLEMENTING AND EXECUTING STRATEGIES
Goals of Strategy Execution
Unite total organization behind strategy
See that activities are done in a manner tightly matching first-rate strategy execution
Generate commitment to carry out the strategy
Determinants to Successful Strategy Execution
Good Leadership
Motivation
Working with Others
A match between the organization’s culture and image to the strategy execution.
42. CHAPTER 13
TASK 6: MONITORING, EVALUATING AND
TAKING CORRECTIVE ACTIONS
Ways to Lead the Execution Process
Take active, visible role
Make decisions authoritatively
Delegate much
Be personally involved in details
Proceed swiftly to achieve results
Take low-key, behind-the-scenes role
Decide based on consensus
Delegate little
Coach others to carry tasks
Deliberately move gradually
Tools to Monitor Progress of Execution
Charts and Milestone indicators – ie Gantt charts
Strategy Audit – questionnaire checklist to determine issues occurring in the
processes and help generate solutions.
43. CHAPTER 13
TASK 6: MONITORING, EVALUATING AND
TAKING CORRECTIVE ACTIONS
Considerations in Reporting
Accurate
Timely
Promptness - feedback on implementation activities before task is completed
Track performance indicators
Has good form and content
Simple and clear
Relevant – presented only to persons
who need them
Consistent
Controlled – addressed to appropriate
persons
Cost consideration
Comparability with previous reports
Frequency
*not in the book
44. CHAPTER 14
INDUSTRY SITUATION ANALYSIS
Context of Industry Situation Analysis
Involves in seeing and analyzing the situation of the industry as a whole and situating
the firm in the industry, assessing the industry and the external factors around it.
Competitor Analysis
This addresses the question of how each of the player or organization operates in the
industry.
45. CHAPTER 14
INDUSTRY SITUATION ANALYSIS
Reacting to
Change
Anticipating
Change
Leading Change
• Introduce better products in response to
new offerings of rivals
• Respond to unexpected changes in
buyer needs and preferences
• Adjust to new govt policies
• Analyze prospects for market
globalization
• Research buyer needs, preferences and
expectations
• Monitor new technological developments
to predict future
• Pioneer new and better technologies
• Introduce innovative products that open
new markets and spur creation of whole
new industries
• Seek to set industry standards
• React and respond as
needed
• Defend and protect
company’s position
• Plan ahead for future
changes
• Add/adapt competitive
capabilities
• Improve product line
• Strengthen distribution
• Seize the offensive
• Be the agent of industry
change
• Influence rules of the game
• Force rivals to follow
OffensiveDefensive
Strategic Posture Actions Strategy
46. CHAPTER 15
COMPETITIVE STRATEGIES
Concept of Competitive Strategy
Consists of specific efforts of the organization meant to outcompete direct or indirect
competitors in certain areas or directions. It focuses on particular areas that the
company believes it has the advantage.
Differentiation Strategy
Either in products or services context, it creates a competitive advantage by designing
a variety of products or services to satisfy the wants and needs of the customers.
47. CHAPTER 15
COMPETITIVE STRATEGIES
Appeal of Differentiation Strategy
Uniqueness of the product or service
Perceived as valuable and a quality product
Reliable
Rivals cannot match or immitate
Commands a premium price
Builds brand loyalty
