Chapter 2 discusses the necessity of strategic management for businesses in a dynamic market characterized by competition and constant change. It outlines various internal and external triggering events that lead firms to adopt new strategies and highlights the influence of technology and globalization on business operations. Additionally, the chapter covers concepts such as the product life cycle, experience curve, economies of scale, and the impact of e-commerce on competitive strategies.

1. CHAPTER 2
MOTIVATORS AND DRIVERS OF STRATEGIC
MANAGEMENT

2. 2.1 WHY THE NEED FOR STRATEGIC MANAGEMENT
Strategic management or strategizing per se may not be that
critical
Many of the business organizations operated as independent
business entities
Single business concerns have grown so big or have multiplied
in number that it is now getting to be difficult to manage.
It acknowledges that the profit motive and the nature of
competition have been dominant factors motivating and driving
business organizations.

3. 2.2 The Dynamic Nature of the Market and the Business
The business and the market are not static but dynamic in nature
“One thing constant in this world is change itself”
Business managers need to live and accept that to be competitive, one
has to live with a constantly changing environment and get the best out
of it.

4. FUNDAMENTALS OF STRATEGIC MANAGEMENT
• CIRCUMSTANCES AND REALITIES:
• A. The ever-changing market conditions
supply and demand situations
• B. The changing taste of the market
the taste and preferences of the buyers/consumers change over time
• Sociopolitical Changes
political changes
• D. The impact of global developments vis-à-vis the local markets
increasing role of technology, particularly the Internet
• E. The changes in the conduct of businesses
change the conduct of business when it comes to operating hours

5. • 2.3 THE TRIGGERING EVENTS
• Triggering Events-
refer to situations or scenarios that may have caused or resulted in
to the actions or initiatives of the top management of the firm
to consider certain strategic options to make the firm competitive
or to achieve certain strategic objectives. Two Forms of Triggering
Events:
• 1.Internal Triggering Events-
are those situations and scenarios intervening or disturbing the
business organization and one that the company can exercise a
certain level of control.
• 2.External Triggering
Events are those factors external to the firm or matters where the
business organization itself may not want to happen.

6. Internal Triggering Events
• a)New CEO/President.
New leadership in any business organization generally results in some changes.
• b)Performance gap.
A performance gap exists when performance does not meet expectations.
• c)Change in ownership.
A change in ownership either by way of acquisition, sellout, merger, or changes in the majority of
ownership of stockholdings among publicly listed firms.
• d)Management team shake-up.
An incumbent President or CEO may opt to form a new management team.
• e)Corporate reorganization/restructuring.
Requires new schemes or strategies to achieve a new vision-mission statement.
• f)New products or services.
Result in another kind or at least an enhanced strategy for the new kind of product or service
offered.
ew vision-mission statement.
trategygiven the new kind of prod

7. External Triggering Events
a)The overall economic environment;
b) Government leadership policies and regulatory functions;
c)Sociopolitical environment;
d)The legal environment;
e)The technological environment;
f)The global/regional environment;
g)Market factors (demand and supply situation);
h)The religious environment
i)Occurrence of calamities and other phenomena

8. • 2.4 THEORY OF THE FIRM
• The so-called theory of the firm also referred to as the types
of market structures described are as follows:
• a)Monopoly. It is a market structure characterized by the
existence of a single seller of a product that dominates the
market.
• b)Oligopoly. This type of market has more than one producer
or seller of a product, which may be either homogeneous or
differentiated.
• c)Monopolistic competition. It exists when many sellers
offer similar products that are not perfect substitutes for one
another.
• d)Perfect competition. It is a market structure characterized
by many producers or sellers and a homogeneous product.

9. 2.5 Technology Developments and Innovations
- Technology. Is an agent of change spurring the traditional definition of time and space.
- Emerging technologies rapidly becoming commonplace, and the need to keep pace is a constant challenge
and opportunity for managers and strategists.
- -Rapid developments innovations and technologies have had so much impact– on the level
of business competition anywhere in the world.
- Other than playing a key role in producing product substitutes or better quality and cheaper
products of the same kind, the promise of efficiency in production systems, higher
productivity as well as consistency in quality or produce that new technologies offer in the
market is a major consideration among establishments to be technology conscious.
- Nowadays, technology has become a major component of what it takes to be competitive
both in product quality and market price.
- Brick-and-Mortar Era
The era where there is an 8-hour conduct of business.
- Click and Mortar Era
This an era whose mode of doing business transcends beyond traditional business hours with
business transactions happening round-the-world and round-the-clock or on a borderless
scenario and a real-time basis.

10. • 2.6 The Product Life Cycle
• The Product or Service Life Cycle also known as the Market
or Industry Lifecycle
- There is no such product, service, industry, or market that
continues to grow for life or over the infinite period, and will
never come to its maturity, peak, and decline stage.
• S-curve is a living proof that just like humans, there is a
beginning and end for everything the same is true for every
product or service in this world.

11. • 2.7 EXPERIENCE CURVE
• The theory of experience curve suggests that as the
business organizations stay much longer in the business or
the industry, the business organization accumulates a body
of knowledge and experience that enables the firms to do
their business better.
• It is also referred to as the learning curve.

13. 2.8 ECONOMIES OF SCALE
The theory of economies or Diseconomies of scale appears similar to
the experience curve.
It postulates that there is a decline in the per unit cost of production (or
activity) as the volume of production (or services rendered) is
increased.

14. • 2.9 Best Operating Level
• There is an OPTIMUM LEVEL of operating machines or using resources
that can result in the lowest possible cost of production of a product or
service.
• The motivation and drive to produce the good or service to lowest
possible level.
2.10 Building Competitive Strategies
THEORY BEHIND THE PRODUCT LINE CYCLE
that unless nothing is being done about the product or service and given
ever-changing market conditions, the competitiveness of the product will
be eventually eroded -and hence it must be continually built up.

16. 2.11 Other Relevant Theories Influencing Strategic Management
• While developing business policies and strategies is biased
towards knowing the current and future factors that will influence
industry operations, it is also known that strategists do consider
proven theories including those that are empirical in nature.
• Empirical studies on the other are built on qualitative and
quantitative underpinnings and logical assumptions.
2.12 Geopolitical Development and the Globalize Market
A globalized trade scenario is that having removed or at least reduced a lot of
trade barriers and import restrictions, there is now a free or open flow of
goods and services across nations.

17. • 2.13 Challenges and Opportunities of e-Commerce/e-Business
• The biggest threat and impact of e-Commerce/e-Business in the
competition aspect of the business is its capability to conduct
business operations any time of the day.
• The feature to do shopping by simply doing mouse work has
revolutionized import and export business transactions. The
electronic ordering system as well as on online payment scheme
that comes with e-Commerce/e-Business makes buying and
selling convenient for both the seller and the buyer.