(Source: Ybanez Jr., Antonio Errol B.

Applied Strategic Management and

Business Policy: A Case Study Method. Makati City: Katha Publishing Co., Inc.
2014.)

Implementing: Realization of Strategy

Elements of the Implementation Stage

Three Hierarchical Level of Strategy
The levels of strategy serve as guide for decision-making and vary in
degree, urgency, and required sources needed and link formulation to
implementation.
1. Corporate or Directional Level of Strategy. Strategies are laid down to
determine the direction of the business on a board or corporate level. It is
the basis of the Strategic Business Units (SBU) to develop their strategies.
Under this level, the owners and shareholders are very much concerned
with the yield or spread of their investments. “What business are we in?” is
answered in this level.
Wheelen and Hunger (2010) three directions of corporate level strategies:
a. Growth strategies are designed to achieve growth in sales, assets,
profits, or other combinations (mergers, acquisitions, strategic
alliances.
b. Stability strategies. A firm may simply opt to stay put or maintain the
current array of businesses. Examples: pause/proceed with caution, no
change, profit strategy
c. Retrenchment strategy is applied when the company has a weak
competitive position in some or all of its product lines resulting in poor
performance (i.e. sales are down and profits are becoming less). This
strategy imposes a great deal of pressure to improve the firm’s
performance to go back to growth and profitability. Examples:
turnaround (contracting and consolidation), sell-out/divestment,
bankruptcy, liquidation)

Orcullo presented Thompson’s and Cats-Barrils four generic ways that a

corporate strategy can evolve:
1. Exit – the form of making some sacrifice by dropping some product
lines and services or business units deemed uncompetitive or
unprofitable or less profitable to operate
 2. Enhance – adding functionalities or improving a product or service
that is being currently offered
3. Extend – adopting a new business model or entering a new business
4. Expand – adding products and services within an existing business

2. Business or Portfolio Level Stage. A hierarchical level of strategy where

tactics are mapped out to beat competition through its products and
strategic business units(SBUs) such as competitive, cooperative, and
integration among others. The SBU is a business unit within the overall
corporate identity especially for large companies that are comprised of a
number of businesses. Strategic issues are less about the coordination of
operating units and more about developing and sustaining a competitive
advantage for the goods and services that are produced. The question,
“How to compete?” is answered.
3. Functional or Parenting Level Strategy. Operational methods and
processes are properly coordinated and involve transferring of resources
and cultivating capabilities among product lines and business units.
Strategic directions are translated into strategic actions by directly
influencing the design of operational process and networks, humans, and
other resources.
This level covers management and operations, marketing and sales, finance
and accounting, human resources, research and development, engineering
and management information system. “How do we maximize the
productive use of internal resources, capabilities and competencies?”
Corporate Governance
Good Corporate Governance (GCG) refers to balancing the interests of and
relationships among stakeholders (shareholders, management, customers,
suppliers, investors, government and the community) that is used to determine
and control the strategic direction and performance of organizations. It is
concerned with the rules, practices, and processes as well as to ensure the
strategic directions are made effectively to institute system of checks and balance
among the company among the owners and its top-level managers. The GCG is
anchored in FAIRNESS, ACCOUNTABILITY and TRANSPARENCY (FAT). To ensure
FAT in the firm, the separation of powers should be respected i.e. ownership
belongs to shareholders; governance is the responsibility of the board of
directors; and management is delegated to the CEO and his team of officers.
Board of Directors (BOD)
BOD is the highest governing authority in an organization. It is the highest
policy-making body. The shareholders elect the members of the board to serve
during a certain period. BOD should be comprised of the following individuals:
Insiders, Related Outsiders, and Outsiders.
Insiders (President, CEO, General Manager, other Senior Officers)
Related Outsiders – individuals that do not have involvement with day-to-day
operations but who have relationship with the company (i.e. audit committee)
Outsiders – individuals who are not involved with the firm’s day-to-day
operations and who do not have a relationship with the company.
 Main concern and responsibility of the BOD is to protect the shareholders’
investments and to ensure they receive a decent yield.
Best practices to have GCG:
1. Separate ownership with managerial control. This is to encourage
autonomy and independence in living up to the mandate of maximizing
shareholders’ wealth, guiding and shaping corporate strategy, and
overseeing the firm’s operations. Director must not do business with the
company or accept consulting or legal fees from the firm. There must be no
interlocking directorships where a director or CEO sits on another director’s
board. Finally, the acquisition of business opportunity belongs to the
corporation.
2. Increase diversity of board members. This is to diffuse ownership
concentration. In so doing, the audit, compensation, and nominating
committees are made up of outside directors.
3. Establish formal processes for evaluation of the BOD’s performance. As
such, the shareholders have considerable power and information to choose
and replace directors.
4. Promote democracy in the boardroom. Creating an atmosphere of
openness encourages the board to participate and contribute to the
discussions especially in crafting strategies. Likewise, a democratic
atmosphere promotes shared responsibility for the decisions made. Each
director must attend at least 75% of all meetings.
5. Receive compensation (per diems) in accordance to the capacity of the
firm. Sec.30 of the Corporation Code of the Philippines.