Subject: BM229 – Strategic Business Management  Top management attempts to program future success

Reporter: John Paul G. Preston through detailed analysis of:

Professor: Dr. Terry L. Andaya o Profitability / Prices
o Efficiency / Costs
o Market Share / Growth
CHAPTER 2. THE STRATEGIC MANAGEMENT
o Market demands
PROCESS
o Utilization of Resources
2.3 Strategizing for Competitive Advantage: How is Strategy o Contribution of Stakeholders
Made? o Reputation and Survival
 Five year plans and correlated budgets
FRAMEWORK FOR FORMULATING STRATEGIES
 Just like people, organizations are different and unique AFI FRAMEWORK FOR TOP-DOWN STRATEGIC PLANNING
from each other.
 Strategies, and ultimately the competitive advantage, are
derived from Mission, Vision, Values, and Goals of the
organizations.
 To guide us in formulating strategies, the following
framework is to be considered:

SHORTCOMINGS OF THE TOP-DOWN APPROACH

 May not adapt well to change
 Formulation separate from implementation
 Information flows top-down (one-way)
 The leader’s future vision can be wrong

2.5 Scenarios

SCENARIO PLANNING
 Uses a top-down approach
 Generates a dominant plan, that is, must implement
the most probable option
 Asks “WHAT-IF” questions
o Top management envisions different
scenarios
o Then they derive strategic responses
 Consider optimistic and pessimistic futures
 Examples:
 Three Approaches to Strategize for Competitive Advantage o New laws restrict carbon emissions
o Strategic Planning – a formal, top-down o Demographic shifts
approach o Changing economic conditions
o Technological advances
o Scenario Planning – a formal, top-down
planning approach
AFI FRAMEWORK FOR SCENARIO PLANNING
o Strategy as planned emergence – begins with
a strategic plan, less formal

2.4 Strategic Planning

TOP-DOWN STRATEGIC PLANNING

 Rational, data-driven strategy process
 Define mission, vision and goals (strategic intent)
 External analysis of opportunities and threats
 Internal analysis of strengths and weaknesses
 Create strategic fir through SWOT
 Formulate appropriate strategy
 Implement chosen strategy
 Monitor performance and modify if necessary

BM 229 Strategic Business Management

Chapter 2, The Strategic Management Process
John Paul G. Preston
FORMULATION & IMPLEMENTATION USING SCENARIO o Allows for new emerging ideas to become
PLANNING realize
 Formulation stage o Resources-allocation process (RAP)
o Identify strategic options o Serendipity can have dramatic effects
o Develop contingency plans
o Use analytical tools  Strategy as Planned Emergence relies on data, plus:
o Build future options o Personal experience
 Implementation stage o Deep domain expertise
o Execute dominant strategic plan o Front line employee insights
 The option that best matches the
current reality KEY POINTS ABOUT STRATEGY
 Modifications made as needed  Intended Strategy
o Determine if alternate scenario should be o The outcome of a rational and structured top-
used down strategic plan
 Emergent Strategy
STRATEGY AS PLANNED EMERGENCE: TOP DOWN AND o Any unplanned strategic initiative
BOTTOM-UP o Bubbles up from the bottom of the
 Strategic Initiative organization
o Any activity a firm pursues to explore and o Can influence and shape a firm’s overall
develop: strategy
 New products and processes  Realized Strategy
 New markets o Combination of intended and emergent
 New ventures strategy
o Can bubble up from deep within a firm
through: 2.6 Implications for the Strategist
 Autonomous actions
 Strategic initiatives TWO FOUNDATIONAL INGREDIENT FOR COMPETITIVE
undertaken by employees ADVANTAGE
 In response to unexpected 1. Inspiring vision and mission statement
external or internal o Backed by ethical values
opportunities o Customer-oriented / problem-defining
 Serendipity  Correlated with success
 Random events, surprises, o Allow for strategic flexibility to change
coincidences  To meet changing customer needs
 Has an effect on strategic  To exploit external opportunities
initiatives 2. An effective Strategic Management Process
 Resource-allocation process (RAP)
 How a firm allocates THE THREE STRATEGY PROCESSES HAVE STRENGTHS &
resources based on policy WEAKNESSES
 Mintzberg's Planning Framework  Effectiveness dependent on rate of change
o Reflects, if strategies can be planned or can o Slow / stable firms would choose top-down
emerge from the bottom-up  Effectiveness dependent on firm size
o Provides more integrative and complete o Large firms would choose top-down or
framework scenario planning
o Relies on the assumption, that planning
should start with a rational structured, top- ALL EMPLOYEES SHOULD BE INVOLVED IN MISSION/VISION
down strategic plan (intended strategy) STATEMENT CREATION
o Mintzberg’s Planning Framework:  Belief in the vision and mission is motivating.
 Every employee plays a strategic role.
 Any employee can have great ideas.

 Strategy Can Come from Top Down and Bottom Up

o Bottom-up strategic initiatives emerge
o Evaluated and coordinated by management
o Some intended strategies drop off in the
process

BM 229 Strategic Business Management

Chapter 2, The Strategic Management Process
John Paul G. Preston