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Identifying the Best Practices in Strategic Management
Gertrude Steinbeck
ORG500 – Foundations of Effective Management
Colorado State University – Global Campus
Dr. Stephanie Allong
August 6, 2015
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IDENTIFYING THE BEST PRACTICES IN STRATEGIC 2
Identifying the Best Practices in Strategic Management
Strategic management and corporate sustainability are two
important dynamics of
modern-day organizations. It is important for organizational
leaders to have an understanding of
the theoretical applications of strategic management as a means
of addressing corporate
sustainability. The purpose of this paper is to provide
definitions and an understanding of
strategic management and corporate sustainability. An overview
of the Walgreen Company, the
organization of study, is also provided in order to understand
how the company has utilized
strategic management to implement sustainability initiatives for
long-term financial performance.
Strategic Management
The function of management is to plan, organize, lead, and
control the operations of an
organization (Robbins & Coulter, 2007) and includes strategic
management. Strategic

management is an approach in which organizations create a
competitive advantage, enhance
productivity, and establish long-term financial performance.
Chandler (as cited in Whittington,
2008) defines strategy as “the determination of the basic long-
term goals and objectives of an
enterprise, and the adoption of courses of action and the
allocation of resources necessary for
carrying out these goals” (p. 268). Similarly, Wheelen and
Hunger (2008) define strategic
management as the managerial decisions and actions of an
organization that achieve long-run
performance of the business, with benefits such as:
of vision for the organization
The Strategic Management Model (SMM) provides the
framework for integrating strategic
planning into an organization so that the aforementioned
benefits are realized.
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Strategic Management Model
Research indicates as the concept of strategic management
evolved, many
theoretical models were proposed. Ginter, Ruck, and Duncan
(1985) identify eight
elements of the normative strategic model: vision and mission;
objective setting; external
environmental scanning; internal environmental scanning;
strategic alternatives; strategy
selection; implementation; and control. Long (as cited in Ginter
et al., 1985) stated that
normative strategic management models are an “explicit,
intentional, planned and rational
approach” (p. 581) to management. Similar to Ginter et al.,
Wheelen and Hunger (2008)
established the SMM (see Figure 1) which includes four main
elements: environmental
scanning, strategy formulation, strategy implementation, and
evaluation and control.

Environmental scanning is the monitoring, evaluating, and
extracting of information from
the external and internal environments in order for management
to establish plans and
make decisions. Strategy formulation includes creating long-
term plans for the
organization, including the mission, objectives, strategies and
policies. Strategy
implementation is the process of executing policies and
strategies in order to achieve the
mission and objectives. Evaluation and control require
monitoring the performance of the
organization and adjusting the process as necessary in order to
achieve desired results
(Wheelen & Hunger, 2008).
The SMM assumes the organizational learning theory, which
states that an
organization adapts to the changing environment and uses
gathered knowledge to
improve the fit between itself and the environment. The SMM
also assumes the
organization be a learning organization in which the gathered
knowledge can be used to
change behavior and reflect new knowledge (Wheelen &

Hunger, 2008).
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Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation
and
Control
External:
Opportunities

Threats
Mission
Objectives
Strategies
Policies
Programs
Budgets
Procedures
Performance
Societal
Environmental

Task Environmental
Internal:
Strengths
Weaknesses
Structure
Culture
Resources
Figure 1. The strategic management model was adapted from
Strategic management and business policy
(11th ed.) by T. L. Wheelen, & J. D. Hunger, 2008, Upper
Saddle River, NJ: Pearson Prentice Hall.
Corporate Sustainability
In addition to enhancing financial performance through strategic
management,
organizational leaders have the responsibility of increasing
shareholder value through
corporate sustainability (Epstein, 2008). Corporate
sustainability is defined in a variety of
ways. Hollingworth (2009) described a sustainable organization
as “one that strives for
and achieves 360-organizational sustainability” (p. 1). The

author claimed an
organization is sustainable when it can endure, or maintain,
over a long-term without
permanently damaging or depleting resources including: the
organization itself; its human
resources (internal and external); the community/society/ethno-
sphere; and the planet’s
environment. He then claimed that if one of the four resources
is not sustainable, issues
with the remaining resources will eventually develop
(Hollingworth, 2009). Brundtland
(as cited in Epstein, 2008) described sustainability as the
economic development that
addresses the needs of the present generation without depleting
resources needed by
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2
3
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future generations Epstein (2008) adds to the definition from a
business perspective by
including corporate social responsibility. Epstein also states
that organizations have a
responsibility to stakeholders to improve management practices

in order to add value by
addressing corporate social, environmental and economic
impacts (Epstein, 2008).
Organizational leaders are the strategic decision makers of a
company and have a
responsibility to stakeholders (Wheelen & Hunger 2008).
Therefore, it is important to
have an understanding of why corporate sustainability is
important, and how the nine
principles of sustainability performance guide strategic
management.
Importance of Corporate Sustainability
In addition to making a profit, organizations have a
responsibility to society,
which includes addressing its economic, social, and
environmental impacts, otherwise
known as social responsibility. Friedman and Carroll had two
opposing views of
corporate social responsibility. Friedman argued that the sole
responsibility of business
was to use resources and activities that enhanced profits
(Wheelen & Hunger, 2008).
Carroll (1979) argued that social responsibility included much
more that making a profit;

he proposed businesses must include the economic, legal,
ethical and discretionary
categories of business performance.
services to meet the
needs/wants of society in order to make a profit;
company is expected to
abide by;
statements, but also
include the norms and beliefs held by society;
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of the parentheses.
on by the
organization including voluntary activities and philanthropic
contributions
(Carroll, 1979).
The importance of corporate sustainability, therefore, is that an
organization is
responsible for financial performance, but it also has additional
responsibilities to
stakeholders and society in general.
The Nine Principles of Sustainability Performance
The nine principles, as presented by Epstein and Roy (2003)

(see Table 1), further
define sustainability, are measureable, and can easily be
incorporated into strategic
management (Epstein, 2008). These principles include ethics,
governance, transparency,
business relationships, financial return, community
involvement, value of products and
services, employment practices and protection of the
environment.
A table or figure should fit all on one
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Table 1
The Nine Principles of Sustainability Performance

1. Ethics The company establishes, promotes, monitors and
maintains ethical
standards and practices in dealing with all of the company
stakeholders.
2. Governance The company manages all of its resources
conscientiously and effectively,
recognizing the fiduciary duty of corporate boards and managers
to focus
on the interests of all company stakeholders.
3. Transparency The company provides timely disclosure of
information about its
products, services and activities, thus permitting stakeholders to
make
informed decisions.
4. Business
relationships
The company engages in fair-trading practices with suppliers,
distributors
and partners.
5. Financial return The company compensates providers of
capital with a competitive return
on investment and the protection of company assets.
6. Community
involvement/
economic

development
The company fosters a mutually beneficial relationship between
the
corporation and community in which it is sensitive to the
culture, context
and needs of the community.
7. Value of
product and
services
The company respects the needs, desires and rights of its
customers and
strives to provide the highest levels of product and service
values.
8. Employment
practices
The company engages in human-resource management practices
that
promote personal and professional employee development,
diversity and
empowerment.
9. Protection of the
environment

The company strives to protect and restore the environment and
promote
sustainable development with products, processes, services and
other
activities.
Note. There should be a general note about the table here.
Adapted from “Improving
sustainability performance: Specifying, implementing and
measuring key principles” by M.
Epstein, & M. Roy, 2003, Journal of General Management,
29(1), pp.15-31.
Walgreens Company
Walgreens Company is a retail drugstore that is in the primary
business of prescription
and non-prescription drugs, and general merchandise including
beauty care, personal care,
household items, photofinishing, greeting cards, and seasonal
items (Reuters, 2010). More
recently, the organization diversified its offerings through
worksite healthcare facilities, home
care facilities, specialty pharmacies, and mail service
pharmacies (Walgreens Company, 2010).
When using a Table in your paper, make

sure you use the word “Table” with the
Table number. Then insert the title of the
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citation format.
Walgreen Company established a strong organizational culture
focusing on consumer and
employee satisfaction. The mission of Walgreens is:
We will provide the most convenient access to consumer goods
and services . . .
and pharmacy, health and wellness services . . . in America. We
will earn the trust

of our customers and build shareholder value. We will treat
each other with
respect and dignity and do the same for all we serve. We will
offer employees of
all backgrounds a place to build a career. (Walgreens, 2010a,
para. 1)
Walgreens was established in 1901 by pharmacist Charles R.
Walgreen Sr. (Walgreens, 2010b).
Prior to establishing the company, Mr. Walgreen struggled with
the direction the pharmacy
industry was headed; the lack of quality customer service and
care for people concerned him.
Today, Walgreens is the largest drugstore chain in the United
States employing over 238,000
people. Sales in 2009 exceeded $63 billion, in which 65% of
sales were from prescriptions
drugs. The organization has expanded into all 50 states, as well
as the District of Colombia and
Puerto Rico, for a total of 7,496 stores and 350 Take Care
clinics (Walgreens Company, 2010,
para. 3).
Conclusion
Strategic management and corporate sustainability are two
important practices in today’s

competitive global environment. In order to effectively
implement strategic management in light
of corporate sustainability, leaders must have an understanding
of such concepts. This paper has
provided a background and understanding of strategic
management and corporate sustainability.
An overview and history of Walgreen Company was also
presented in order to identify best
practices in strategic management that enhance corporate
sustainability.
If you are using information from
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References
Carroll, A. B. (1979). A three-dimensional conceptual model of
corporate performance. The
Academy of Management Review, 4(4), 497.
Collins, J. (2001). Good to great. New York, NY: HarperCollins
Publishers Inc.
Epstein, M. J. (2008). Making sustainability work. San
Francisco, CA: Greenleaf
Publishing Limited.
Epstein, M., & Roy, M. (2003). Improving sustainability
performance: Specifying, implementing
and measuring key principles. Journal of General Management,
29(1), 15-31.
French, S. (2009). Critiquing the language of strategic
management. The Journal of Management
Development, 28(1), 6-17. doi: 10.1108/02621710910923836
Ginter, P., Ruck, A., & Duncan, W. (1985). Planners’

perceptions of the strategic management
process. Journal of Management Studies, 22(6), 581-596.
Hollingworth, M. (2009, November/December). Building 360
organizational sustainability. Ivey
Business Journal, 73(6), 2.
Walgreens. (2010a). Mission statement. Retrieved from
http://news.walgreens.com/article_display.cfm?article_id=1042
Walgreens. (2010b). Our past. Retrieved from
http://www.walgreens.com/marketing/about/history/default.html
Reuters. (2010). Walgreen Co. Retrieved from
http://www.reuters.com/finance/stocks/companyProfile?symbol
=WAG.N
Robbins, S. P., & Coulter, M. (2007). Management (9th ed.).
Upper Saddle River, NJ: Pearson
Prentice Hall.
Walgreens Company. (2010). 2009 Annual report. Retrieved
from
List sources in
alphabetical order.

The word, References
should be capitalized,
centered, but not bold.
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runs over to the
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indent 5 spaces to
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website). If they are live,
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on “Remove Hyperlink.”
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from multiple web pages

from one website, you need
to be able to distinguish
what information came from
each web page. To do this,
you need to add the letters,
“a,” “b,” etc. to the year of
each citation.
http://investor.walgreens.com/annual.cfm
Wheelen, T. L., & Hunger, J. D. (2008). Strategic management
and business policy (11th ed.).
Upper Saddle River, NJ: Pearson Prentice Hall.
Whittington, R. (2008). Alfred Chandler, founder of strategy:
Lost tradition and renewed
inspiration. Business History Review, 82(2), 267-277.
Note: Level Headers 3, 4, and 5 are also used but much less
frequently. Click here for
more information on their format and use.

For more information on CSU-
Global APA requirements for
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References
Carroll, A. B. (1979). A three-dimensional conceptual model of
corporate performance. The
Academy of Management Review, 4(4), 497. [This is a journal
article citation. Articles
from the Library databases are based on print journals so the
citation will end with page
numbers.]
Collins, J. (2001). Good to great. New York, NY: HarperCollins
Publishers Inc. [This is a book

citation.]
Epstein, M. J. (2008). Making sustainability work. San
Francisco, CA: Greenleaf
Publishing Limited.
Epstein, M., & Roy, M. (2003). Improving sustainability
performance: Specifying, implementing
and measuring key principles. Journal of General Management,
29(1), 15-31.
French, S. (2009). Critiquing the language of strategic
management. The Journal of Management
Development, 28(1), 6-17. doi: 10.1108/02621710910923836
[This is a journal article
citation from a Library database. Include a doi number if
available.]
Ginter, P., Ruck, A., & Duncan, W. (1985). Planners’
perceptions of the strategic management
process. Journal of Management Studies, 22(6), 581-596.
Hollingworth, M. (2009, November/December). Building 360
organizational sustainability. Ivey
Business Journal Online. Retrieved from
http://www.iveybusinessjournal.com/article.asp?intArticle_ID=
868 [This is a journal that
is published online, so you would include the URL.]

Reuters. (2010). Walgreens Co. (WAG.N). Retrieved from
http://www.reuters.com/finance/stocks/companyProfile?symbol
=WAG.N
Walgreens. (2010a). Mission statement. Retrieved from
http://news.walgreens.com/article_display.cfm?article_id=1042
[This is a website citation
with a corporate author. If you retrieve information from
various pages of this particular
website, you need to cite each web page. However, because the
author and the year will
be exactly the same, the lowercase letters, “a,” “b,” etc. need to
be added to the year. The
in-text citation would be: (Walgreens, 2010a).]
Walgreens. (2010b). Our past. Retrieved from
http://www.walgreens.com/marketing/about/history/default.html

978-1-5386-6589-3/18/$31.00 ©2018 IEEE
COSO Framework for Warehouse Management
Internal Control Evaluation: Enabling Smart
Warehouse Systems
Ratna Sari
Information Systems Department,
School of Information Systems,
Bina Nusantara University,
Jakarta 11480, Indonesia
Computer Science Department, BINUS
Graduate Program – Doctor of
Computer Science, Bina Nusantara
University, Jakarta, Indonesia 11480
[email protected]
Raymond Kosala
Computer Science Department, BINUS
Graduate Program – Doctor of

Computer Science, Bina Nusantara
University, Jakarta, Indonesia 11480
[email protected]
Benny Ranti
Faculty of Computer Science,
Universitas Indonesia,
Depok 16424, Indonesia
[email protected]
Suhono Harso Supangkat
Sekolah Teknik Elektro dan
Informatika,
Institut Teknologi Bandung,
Bandung, Indonesia
[email protected]
Abstract— There are many ways for the company to
improve its performance, one of them is optimizing the
internal control of the company's activities. Internal
control is intended to evaluate company activities and
operations. This study took a case study at PT. XYZ
related to the evaluation of internal controls in

warehouse management using the COSO framework
approach. From 5 elements and 17 Principle, study
found, there are 2 principles that have not been applied
in PT. XYZ; enforced accountability and control over
technology. The recommendation given is system
improvement as intended the inventory system to be
more accurate and reliable to enable smart warehouse
systems inside organizations.
Keywords: internal control, COSO framework, warehouse
management, evaluation
I. INTRODUCTION
There are many ways for the company to improve its
performance, one of them is optimizing the internal control
of the company's activities and also implementation of the
new system to increase efficiency and effectiveness in all
business process activities [4]. Internal control is a process
undertaken by company management to assist the

achievement of operations, reporting and in accordance with
the compliance [9]. The internal optimization is needed
because it describes the overall rules and procedures used by
management to improve management effectiveness in the
business and identify lack of internal control in the business
processes that it can make the organization vulnerable and
possible risks occurs, eventually all these risks can have an
impact on a company's financial performance [2].
In warehouse management, internal controls devoted to
optimizing the functions, including the process of finished
goods inventory, and it useful to organize the distribution
process to the market. According to Rita Makumbi (2013)
[6] the function of the warehouse management is one of a
service that can help the company's operational functions
run smoothly as a store of raw material, unfinished goods,
until stock the finished goods or inventory. One of the
problem in warehouse management is high production of
manufacture, company must pay attention to the process

from the beginning of production, to the process of goods
delivery, and inventory calculations.
One of famous approach for warehouse management
control is using COSO framework. COSO framework is one
of tools to maintain the effectiveness and efficiency of
inventory process in organizations [12]. COSO framework
also known as integrated framework that can help company
to:(1) warehouse operation process more effective and
efficient; (2) accountable and reliable of inventory stock
calculation; (3) compliances with government law and
regulations [8].
This research took case study from PT. XYZ as one of
company who implemented the warehouse management.
Based on observing in PT. XYZ, we found that company
still difficulty to balance the production and inventory
storage in warehouse which impact to lack of inventory
control.

II. LITERATURE REVIEW
Early definition of internal control is the plan of
organization to coordinate methods and measure all the
element in process business safe, accurate, reliable,
encourage the prescribed managerial policies [10]. Another
definition of internal control is philosophy of risk alignment,
risk management, ethics, policies, resources, tasks and
responsibilities according to organizational capacity to
manage risk [12].
In warehousing planning and control, company produces
various product, company needs good control over its
inventory which two main objectives such as (1) warehouse
inventory planning and control; (2) reliable inventory report
to support financial statements [11]
Related to COSO framework, basic concepts of internal
control are:(a) internal control is an integrated process and a
tool that can be used to achieve organization goals; (b)
Internal control is not only limited to policies and

procedures but should include all levels within the
organization; (c) Internal control can only provide a
reasonable guarantee, not an absolute guarantee, because
there are limitations that can obstruct the absoluteness of the
internal control itself; (d) Internal Control will ultimately
result in achievement of goals in categories of financial
statements, compliance, operational activities [13].
Using COSO framework for evaluating the internal
control helps company to calculate the probability of risk
which can occur adversely [2]. However COSO can
maintain and support the company to maintain risk which
known can give positive feedback nor negative [12].
COSO framework is consist of five: (1) Control
environment; (2) Risk assessment; (3) Control activities; (4)
Information & Communication; (5) Monitoring activities
[7].

Figure 1. The COSO Cube [3]
Table 1. Component of Internal Control in COSO [1]
III. METHODOLOGY
With COSO framework approach this research starting
with process business analysis as preliminary measurement
and basic analysis in PT. XYZ then continue with internal
control evaluation as follow:
Figure 2. The Research Flow for Warehouse Management
Evaluation in PT. XYZ
For detail performed as follows:
1) Meeting related to explaining flow of evaluation
process.
2) Conducting interviews with stakeholders such as IS
team leader operations, IS analyst, supervisor factory
logistics, team leader factory logistics, warehouse staff,
forklift drivers, internal control, and IPG (Information
Protection & Governance) to observe and also learn

detail about how the business process run, systems
used and also the company's internal control
procedures.
3) Documents checking related to the process of the
finished goods inventory.
4) Doing directly observations in order to learn and
understand more clearly about the working procedures
associated with the process of finished goods
inventory.
IV. ANALYSIS AND RESULT
A. FINDINGS
Based on the results of research and interviews as
part of internal control evaluation, here are the results:
Based on the result above, total of 17 principles from
COSO framework known as 2 principles is in red area for
medium and high risk area, 6 principles is in yellow area
which “not fully adapted” for medium and high risk area
and green area for total 9 principles from low and high
risk area.
For the red area, we conducted deeply investigation
as high level evaluation for give the best
recommendation. We found incorrect procedure during

the process of inventory cycle in warehouse, due to goods
receipt in warehouse is not loaded to the shelf directly
and it put to wrong shelf. The impact, a lot of expired
inventory due to incorrect process in goods issue. The
inventory are stored in a multilevel shelf. During the
good issue and shipment for delivery, it was taken
randomly.
Another issued for the red area is control activities for
control over technology. PT. XYZ not only use
warehouse management but also already used one of the
systems like robot machine systems for put the inventory
during the goods receipt. The process starts when
shipping case sent by the conveyor and the systems will
create into one pallet by robot machine then the next step
is data will be stored in the robot database, but once in
while systems went down, there is no back up so the
process will be stopped or create manually. The effect for
this case is lack of control for goods receipt.
B. RECOMMENDATION
After we found the fact findings about internal control
evaluation for warehouse management in PT. XYZ, the
recommendation is as follow:
• Conducting customization through warehouse
management system at PT. XYZ.
• Change business processes related to system

requirements.
The recommendation above expected, will support and
improved the process in PT. XYZ such as:(1) Eliminate the
manual process; (2) Provide reliable information about
location of inventory stored and retrieved; (3) Trackable
inventory; (4) Provide real-time information related to
inventory in the warehouse.
The recommendation of design architecture for
warehouse management customization is using Three-Tier
Architecture. While the warehouse management will
integrated with robot machine and the application will store
into one single application server. This design purpose with
benefit: (1) optimized the server for storage, data process
and retrieving database; (2) Reduce data duplication [5].
Figure 3. Three-Tier Architecture [5]
The business process changes purposed as follow:

Robot Machine
Systems
Warehouse
Management
Systems
DATABASE
Interface Process Integration
Mobile Scanner (Goods Issue)
Inventory Barcode Create
Automatic Inventory Stock Calculation
Recommendation for Goods Issue
Movement (First In First Out Method
Adoption)
Figure 4. System Design
System design from figure 4, describes about additional
interface process integration as bridging between warehouse
management systems and robot machine systems which all

data from the systems will save into single database.
Otherwise the process will improve since the inventory
movement will follow with FEFO (First Expired First Out),
like picture describe in figure 5.
Table 2. Coso Matrix Performance in PT. XYZ
In the figure 5 shown the inventory movement while
systems automatically will scan and check the criteria. If the
criteria of the product proper the next step systems will
input into inventory systems and robot systems will take the
product into the pallet specifically based on criteria and
create delivery notes, afterwards the inventory staff will put
into shelf storing. For the next process, PT. XYZ move the
process of inventory into FEFO System (First Expired First
Out): the systems will create the delivery note (inventory
selection based on expired date) and show which the

inventory should out and help the inventory staff find the
correct inventory.
V. CONCLUSION
COSO framework not only providing better internal
control but also measurement of compliance risk due to
reviewing the organization operational as well. COSO
framework can support the risk mitigation, which can give
recommendation and also solution to the company.
Through 5 elements and 17 principles, it will help
company reach the objective nor goal of effectiveness and
efficiency company operation. Another opinion COSO
framework is likely common audit that enables controls not
the business operations but also all personnel inside of
company.
REFERENCES
[1] COSO Framework. (2016). Retrieved from
http://www.bussvc.wisc.edu/intcntrls/cosoframework.h
tml
[2] Diane J. Janvrin, E. A. (2012). The Updated COSO
Internal Control— Integrated Framework:

Recommendations and Opportunities for Future
Research. JOURNAL OF INFORMATION SYSTEMS,
189-213.
[3] J. Stephen McNally, C. (2013, June 2013). The 2013
COSO Framework & SOX Compliance : ONE
APPROACH TO AN EFFECTIVE TRANSITION.
Retrieved from
https://www.coso.org/documents/COSO%20McNallyT
ransition%20Article-
Final%20COSO%20Version%20Proof_5-31-13.pdf
[4] Jokipii, A. (2009). Determinants and consequences of
internal control in firms: a contingency theory based
analysis. Springer Science-Business Media, 115-144
[5] Kambalyal, C. (2010). Three Tier Architecture.
Retrieved from
http://channukambalyal.tripod.com/NTierArchitecture.
pdf
[6] Makumbi, R. (2013). Introduction to Warehousing

Principles and Practices. Lambert Academic
Publishing.
Figure 5 – The Process of Inventory Movement
[7] Martin, K., Sanders, E., & Scalan, G. (2014). The
Potential Impact of COSO Internal Control Integrated
Framework Revision on Internal Audit Structured
SOX Work Program . Elsivier - Research in
Accounting Regulations.
[8] Mary B. Curtis, F. H. (2000). The components of a
comprehensive framework of internal control. The
CPA Journal, 64-66.
[9] Miles E.A. Everson, S. E. (2013). Internal Control —
Integrated Framework. NY: Committee of Sponsoring
Organizations of the Treadway Commission.
[10] Procedure, A. I. (2008). Codification of auditing
standards and procedures . University of Mississippi
Library. Accounting Collection.

[11] Ravee, J. M. (2009). Pengantar Akuntansi-Adaptasi
Indonesia . Jakarta: Salemba Empat.
[12] Thomas V. Scannell, S. C. (2013). Supply Chain Risk
Management within the Context of COSO’s Enterprise
Risk Management Framework. Journal of Business
Administration Research, 15-28, Vol. 2, No. 1.
[13] Tsay, B.-Y. (2010). Designing an Internal Control
Assessment Program Using COSO's Guidance on
Monitoring. New York: The CPA Journal.

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