Ricardo Julio Mamahit

18061102383 – 6C IBA

STRATEGIC MANAGEMENT

Midterm Exam

1. What is Strategic Management ? and Describe the strategic-management process?

 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 and accounting, production and operations, research and development, and information
systems to achieve organizational success.
 The strategic-management process consists of three stages: strategy formulation, strategy
implementation, and strategy evaluation.
1. The 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, 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. Strategy-formulation decisions commit an organization
to specific products, markets, resources, and technologies over an extended period of time.
2. Strategy implementation requires a firm to establish annual objectives, devise policies,
motivate employees, and allocate resources so that formulated strategies can be executed.
Strategy implementation includes developing a strategy-supportive culture, creating an
effective organizational structure, redirecting marketing efforts, preparing budgets,
developing and using information systems, and linking employee compensation to
organizational performance. Strategy implementation often is called the "action stage" of
strategic management. implementing strategy means mobilizing employees and managers
to put formulated strategies into action. Often considered to be the most difficult stage in
strategic management, strategy implementation requires personal discipline, commitment,
and sacrifice. Successful strategy implementation hinges on managers' ability to motivate
employees, which is more an art than a science. Strategies are formulated but not
implemented serve no useful purpose.
3. Strategy evaluation is the final stage in strategic management. Managers desperately need
to know when particular strategies are not working well; strategy evaluation is the primary
means for obtaining this information. all strategies are subject to future modification
because external and internal factors are constantly changing. three fundamental strategy-
evaluation activities are (1) reviewing external and internal factors that are the bases for
current strategies, (2) measuring performance, and (3) taking corrective actions. Strategy
evaluation is needed because success today is no guarantee of success tomorrow! Success
always creates new and different problems; complacent organizations experience demise.
2. Compare and contrast vision statements with mission statements ?

The Difference Between Mission and Vision Statements

 An organization’s mission describes the overall purpose of the organization. It paints a picture of
what the organization currently is and will be doing for the next one to three years. The mission
statement describes what you do, who you do it for and the benefit that it provides. It’s usually
a short statement — something that all employees can easily recite and be proud to wear on a
T-shirt.
 Conversely, the vision statement pertains to where the company or organization hopes they will
be going in the future if they can fulfill their mission. The vision should be worded so that it
provides guidance and inspiration. It’s a forward-thinking statement that should be fulfilled in
the five- to 10-year time frame

For example Toyota Motor Sales U.S.A. Inc.

 Mission Statement. “To attract and attain customers with high-valued products and services and
the most satisfying ownership experience in America.”
 Vision Statement. “To be the most successful and respected car company in America

A company's vision statement attains great importance as it precedes the mission statement and aids in
its development: "A clear vision provides the foundation for developing a comprehensive mission
statement". Additionally, the vision statement addresses the following critical question: "What do we
(the company) want to become?" As illustrated by the preceding question, the vision statement serves
as the succinct, foundational statement that guides the long-term direction of a company, applying input
from all levels of management. At minimum, a vision statement should identify the type of business the
firm engages, and it should ideally outline long-term aspirations.

Contrastingly, a mission statement asks the following question: "What is our (the company's) business?"
As illustrated by the aforementioned question, the mission statement serves to identify the underlying
purpose, objectives, morals, and values that guide a company. As stated within the course text, a
mission statement should address the following: “A mission statement should define what the
organization is and what the organization aspires to be, be limited enough to exclude some ventures
and broad enough to allow for creative growth, distinguish a given organization from all others, serve as
a framework for evaluation both current and prospective activities, and be stated in terms sufficiently
clear to be widely understood throughout the organization. In terms of length, a company's mission
statement is typically longer than that of the vision statement (less than or equal to 250 words), as it
requires greater explanation and contains more information. Furthermore, mission statements are
broad in scope and exclude monetary amounts, numbers and other similar figures. A successful and
influential mission statement should contain the following nine components: customers, products or
services, markets, technology, concern for survival, growth, and profitability, philosophy, self-concept,
concern for public image, and concern for employees. Both statements should acquire the input of
additional managers to optimize the outcome as well as encourage unity throughout the company
through the collaboration; collectively deriving these two foundational statements leads to a body of
workers that work together to accomplish the established goals.
3. Identify three companies that use outsourcing effectively. Explain how and why those firms
utilize this management approach?

 Google

Google started as a simple search engine but has since become a massive organization offering
hardware and software services in addition to its advertising services with employees distributed around
the world. Today Google is almost a proverb for the internet itself, and its name has become a verb used
by everyone when talking about searching online.

While Google’s creed of “Don’t be evil” is no longer part of its code of conduct, it is a company with
exceptional business practices and policies. Google is a technology company – that is, its strength and
the heart of its business. They are one of the major companies that outsource and have been
outsourcing non-core functions like admin and IT work for years.

However, Google also understands that even with its size, it cannot do it all. To that end, they have also
been outsourcing development work, email support for products like AdWords, and more. Google is
expanding this even further and in addition to email support, also offering phone support with staff
around the world. These individuals are seamlessly blended into their inhouse support team, providing
clients with improved response times at a reasonable cost. All these make Google a perfect outsourcing
example to illustrate the reasons for outsourcing.

Reasons for outsourcing: accessing the pool of talents and skills, solving capacity issues, improving
quality, reducing costs.

Lessons to learn

Google understood that size is irrelevant when it comes to outsourcing. By understanding what work
can be outsourced and what work needs to stay in-house, Google was able to maximize its budget
utilization.

 Alibaba

When talking about online e-commerce firms, several names come to mind. You have Amazon and eBay,
of course, but a company that has quickly come to the fore is Alibaba. Alibaba is another example of
companies that outsource, but unlike Amazon and eBay, Alibaba is based in China, which makes the
challenges of outsourcing somewhat different.

In most cases, companies that outsource do so based on cost. Often this is to lower-cost countries like
India, China, and the Far East. However, when the company itself is based in that region, the paradigm
shifts. Alibaba understood that while they could keep their manufacturing and resource costs low
locally, the skills they needed to grow were not available at scale in their region.

With this in mind, Alibaba started looking for partners and outsourcers early in their development across
a host of different projects and found many of the skills they needed in the US. By outsourcing web
development to the US, the site flourished and grew at an astronomical pace.

Reasons for outsourcing: accessing the pool of talents and skills, improving quality, greater focus on core
business.
Lessons to learn

The main point to pick up on here is that you need to have an understanding of your requirements. By
knowing what skills were lacking in their region, Alibaba was quickly able to find resources elsewhere
able to accomplish the tasks they needed to get done.

 WhatsApp

WhatsApp is a well-known name when it comes to communication. It’s being used globally by millions
and has recently started making forays into online payments to benefit customers further. However,
WhatsApp did not start out as the company you see today.

When thinking about companies that outsource, WhatsApp is a good example of outsourcing as it has
been doing it from the very beginning. As early as 2012, WhatsApp was a small organization with only 30
full-time employees and five part-timers. Based out of Mountain View California, they understood that if
they wanted to grow, they needed to keep costs down. For WhatsApp, Russia was the answer, and they
sourced development resources from Russia for a small fraction of what they would have had to pay in
the US.

Reasons for outsourcing: reducing costs, a greater focus on core business.

Lessons to learn

The WhatsApp team understood that geography should not be a boundary. To that end, they identified
what they needed to grow and then looked globally for where they could gain access to those skills cost-
effectively.

4. Explain why the ratings in an IFE Matrix should be 4 or 3 for strengths, and 1 or 2 for weaknesses
as compared to the EFE Matrix, where the ratings should be 1, 2, 3, or 4 among both the opportunities
and threats?

 IFE Matrix. Strengths and weaknesses are used as the key internal factors in the evaluation.
When looking for the strengths, ask what do you do better or have more valuable than your
competitors have? In case of the weaknesses, ask which areas of your company you could
improve and at least catch up with your competitors?
IFE Matrix. The ratings in internal matrix refer to how strong or weak each factor is in a firm. The
numbers range from 4 to 1, where 4 means a major strength, 3 – minor strength, 2 – minor
weakness and 1 – major weakness. Strengths can only receive ratings 3 & 4, weaknesses – 2 & 1.
The process of assigning ratings in IFE matrix can be done easier using benchmarking tool.
 EFE Matrix. When using the EFE matrix we identify the key external opportunities and threats
that are affecting or might affect a company. Where do we get these factors from? Simply by
analyzing the external environment with the tools like PEST analysis, Porter’s Five
Forces or Competitive Profile Matrix.
EFE Matrix. The ratings in external matrix refer to how effectively company’s current strategy
responds to the opportunities and threats. The numbers range from 4 to 1, where 4 means a
superior response, 3 – above average response, 2 – average response and 1 – poor response.
Ratings, as well as weights, are assigned subjectively to each factor. In one example, a
 company’s response to the opportunities is rather poor, because only one opportunity has
received a rating of 3, while the rest have received the rating of 1. The company is better
prepared to meet the threats, especially the first threat.

5. What is the relationship between personal ethics and business ethics? Are they, or should they
be the same?

 Personal ethics is what an individual standard of values and morals. Personal ethics usually
influenced by society, culture, and by religious upbringing. With personal ethics these values are
different from person to person. Business ethics is also being a standard of values that the
business should follow. The standards that should be considered are what is right and honest
way to conduct business. Business and personal ethics are the same because they are the things
that influence the way you conduct your life or a business. Everyone should conduct themselves
in a honest and decent manner that reflects good upon themselves. Business should conduct
business in the same manner. They should always choose to do the right thing even if it is hard
to do. Their actions should have what is in the best and honest way to conduct their business
that will reflect good upon themselves and their employees and community. It would be nice to
have the personal ethics and business ethics be the same but not everyone has the same
personal ethics since it personal ethics vary from individuals and cultures. Keeping that in mind
it is important to have a solid business ethics that all employees can adhere to.

6. Identify four major strengths and weaknesses each, of your college or university. Rank each
factor in terms of importance?

Strengths Rank: 1. Outstanding quality of lecturers

2. Accredited A

3. Strategic location because it is in the city center

4. Provides many scholarships as well as a path to build relationships

Weaknesses Rank: 1. Facilities for students such as air conditioning are not well provided

2. The distribution of information for students is uneven

3. Selection for scholarships is unfair, the rich are richer, the poor are denied
opportunities

4. Lecturers who teach are often absent