1648 Taft Avenue Corner Pedro Gil Street

Malate, City of Manila, Philippines

GRADUATE SCHOOL OF BUSINESS AND MANAGEMENT

Master in Business Administration

In Partial Fulfilment for the Requirements in

Strategic Management I

RETURN PAPER
“STRATEGIC MANAGEMENT IN PROFIT AND
NOT-FOR-PROFIT ORGANIZATIONS”

Submitted by:

Risyad Ananda Putra

Student, Master in Business Administration

Submitted to:

Edilberto A. Lagunda, Ph.D.

Professor, Strategic Management I

October 19 2019
Strategic Management
What is Strategic Management?
Strategic management can be defined as the art and science of formulating, implementing, and
evaluating cross-functional decisions that enable an organization to achieve its objectives. As this
definition implies, strategic management focuses on integrating management, marketing,
finance/accounting, production/operations, research and development, and information systems to
achieve organizational success. The term strategic management in this text is used synonymously with
the term strategic planning. The latter term is more often used in the business world, whereas the former
is often used in academia. Sometimes the term strategic management is used to refer to strategy
formulation, implementation, and evaluation, with strategic planning referring only to strategy
formulation. The purpose of strategic management is to exploit and create new and different
opportunities for tomorrow; long-range planning, in contrast, tries to optimize for tomorrow the trends
of today.
Process of Strategic Management
The strategic-management process consists of three stages: strategy formulation, strategy
implementation, and strategy evaluation. This paper will only discuss about strategy formulation, because
it is what differs profit and not-for-profit organizations. Strategy formulation includes developing a vision
and mission, identifying an organization’s external opportunities and threats, determining internal
strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and
choosing particular strategies to pursue. Strategy-formulation issues include deciding what new
businesses to enter, what businesses to abandon, how to allocate resources, whether to expand
operations or diversify, whether to enter international markets, whether to merge or form a joint venture,
and how to avoid a hostile takeover.
Because no organization has unlimited resources, strategists must decide which alternative
strategies will benefit the firm most. Strategy-formulation decisions commit an organization to specific
products, markets, resources, and technologies over an extended period of time. Strategies determine
long-term competitive advantages. For better or worse, strategic decisions have major multifunctional
consequences and enduring effects on an organization. Top managers have the best perspective to
understand fully the ramifications of strategy-formulation decisions; they have the authority to commit
the resources necessary for implementation.
Strategy Formulation: The Business Vision and Mission
Developing a Vision and Mission
A vision statement should answer the basic question, “What do we want to become?” A clear
vision provides the foundation for developing a comprehensive mission statement. Many organizations
have both a vision and mission statement, but the vision statement should be established first and
foremost. The vision statement should be short, preferably one sentence, and as many managers as
possible should have input into developing the statement.
Asking the question “What is our business?” is synonymous with asking the question “What is our
mission?” An enduring statement of purpose that distinguishes one organization from other similar
enterprises, the mission statement is a declaration of an organization’s “reason for being.” It answers the
pivotal question “What is our business?” A clear mission statement is essential for effectively establishing
objectives and formulating strategies. Sometimes called a creed statement, a statement of purpose, a
statement of philosophy, a statement of beliefs, a statement of business principles, or a statement
“defining our business,” a mission statement reveals what an organization wants to be and whom it wants
to serve. All organizations have a reason for being, even if strategists have not consciously transformed
this reason into writing
Importance of Vision and Mission
1. To ensure unanimity of purpose within the organization
2. To provide a basis, or standard, for allocating organizational resources
3. To establish a general tone or organizational climate
4. To serve as a focal point for individuals to identify with the organization’s purpose and
direction, and to deter those who cannot from participating further in the organization’s
activities
5. To facilitate the translation of objectives into a work structure involving the assignment of
tasks to responsible elements within the organization
6. To specify organizational purposes and then to translate these purposes into objectives in
such a way that cost, time, and performance parameters can be assessed and controlled.
Characteristic of a Mission Statement
A Declaration of Attitude
A mission statement is more than a statement of specific details; it is a declaration of attitude and
outlook. It usually is broad in scope for at least two major reasons. First, a good mission statement allows
for the generation and consideration of a range of feasible alternative objectives and strategies without
unduly stifling management creativity. Second, a mission statement needs to be broad to reconcile
differences effectively among, and appeal to, an organization’s diverse stakeholders, the individuals and
groups of individuals who have a special stake or claim on the company.
A Customer Orientation
A good mission statement describes an organization’s purpose, customers, products or services,
markets, philosophy, and basic technology. A good mission statement reflects the anticipations of
customers. Rather than developing a product and then trying to find a market, the operating philosophy
of organizations should be to identify customers’ needs and then provide a product or service to fulfill
those needs.
Mission Statement Components
1. Customers—Who are the firm’s customers?
2. Products or services—What are the firm’s major products or services?
3. Markets—Geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to growth and
financial soundness?
6. Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the
firm?
7. Self-concept—What is the firm’s distinctive competence or major competitive advantage?
8. Concern for public image—Is the firm responsive to social, community, and environmental
concerns?
9. Concern for employees—Are employees a valuable asset of the firm?
Differences Between For Profit and Not-For-Profit Organization