CHAPTER 1

INTRODUCTION

THE REALITY OF DYNAMISM

The 21st century epitomizes the reality of dynamism. In fact, todays milieu is in the state
of fluidity. It is not static. Rather changes and fluctuations are constantly happening in the
surroundings. These activities are characterized by the occurrence of phenomenal situations,
continuous challenges, and triggering forces that provoke corresponding reactions. The certainty
of change is universal and this foregone conclusion is largely experienced by all nations and
peoples—whether developed or undeveloped, large or small, powerful or weak. As a result, the
current landscape of completion is highly threatening and daunting. With the environment that is
characterized by drive, energy,and pursuit and transformation, volatility is a ruthless reality.
Impermanence unpredictability is certainties. Nothing is stable; neither is regularity a logical
expectation. Completion has gone beyond nation, people, cultutes, geographic frontiers, and
industries.

HYPERCOMPETITION

Hypercompetition is a fundamental feature of the new economy. As the word implies, it

carries a note of overexcitement and agitation. Hypercompetion occurs when product/service
offerings and technologies are so new that standard becomes unstable and competitive advantage
is not sustainable. It is a condition where strategic maneuvering have escalatedtobigger business
exposure, more sophisticated marketing positioning, aggressive selling and innovative products
and services.

Hypercompetition is a situation where both globalization and technology collaborate to

create a heightened cut-throat situation. It meansthat business compete with each other whether
they have same products, similar products, substitute products, and different products.
STRATEGIC MANAGEMENT DEFINED

Strategic Management – Is a continuous process of strategy creation. It involve strategic

process like strategic analysis, and decision-making, strategy formulation and implementation, and
strategy control with the primary objectives of achieving and maintaining better alignment of
corporate policies, priorities, and success.

Strategic Analysis – consist of a systematic evaluation of variables currently existing in

the external and internal environments while Strategic decision-making is deliberately bringing
together the right resources for the right markets at the right time. Strategy formulation is
designing strategies on the business and corporate levels. Strategy implementation is employing
these crafted strategies to achieve organizational set goals and objectives. While, strategic control
is the application of an appropriate monitoring and feedback system.
 Figure 1.1 The strategic management process

Strategic analysis is accurately conducted, organizations can develop strategic

intelligence. Like an antenna, strategic intelligence is the capacity of an organization to possess
relevant and related knowledge, abilities, foresight, and system thinking, such that is able to assess
its own strengths and vulnerabilities, the pressing challenges confronting the organization, as well
as the trends and opportunities existing in the environment.

Strategic decision-making is correctly affected; organization can acquire the capability of

thinking strategically. Strategic thinking is the cognitive process of competently and analytically
weighing factors and arriving at critical decision is the content of the current milieu of which an
organization is part.

Strategic formulation is uniquely designed and effectively communicated; organizations

have greater possibilities of attaining organizational competitiveness. Organizational
competitiveness pertain to the ability of any business/company to utilize its resources optimally
and sustainably for maximum performance andproductivity.
 Strategic implementation is effectively employed, organizations can achive comparative
advantage. Comparative advantage refers to the ability of an organization to produce a particular
good or service at lower marginal and opportunity cost than its competitors.

Strategic control is productively monitored, organizations can realize strategic

performance. Strategic performance is the accomplishment of a high level of productivity that
is characterized by efficiency in the content of lean and quantifiable management.
 ss

Figure 1.2 strategic management models;

This strategic management model figure1.2 shows the relationships between and among
the input, process, and output.

When these specific processes are executed and managed creatively, distinctly, and
strategically, the organization can ultimately achieve organizational success.

STRATEGIC PLANNING
Oftentimes, the word strategic planning is more popular than strategic management. Essentially,
these two words are the same. In terms of purpose, both strategic management and strategic
planning have the same goal and objectives, that is , to device a strategic mode of preparing,
addressing, and steering organizations to where they want to go.

Strategic planning is defined as a continuous, repetitive, and competitive process of setting the
goal and objectives that an organization aims to attain, defining the means to achieve them and
assessing the best way t to realize them in the context of the prevailing environment while
measuring performances through set standards, and periodically but continuously conducting
reassessments.

Types of Strategic Plans

These are two principal types of palns:

1. Medium/long-range plan- prepared in the context of the coming three to five, ten or more
years. It describes the major factors or forces that affect the organizations long term
objectives, strategies, and resources required.
2. Annual/year plan- short-term; succinctly describes the organizations present situation, its
goal and objectives, strategies, monitoring mechanisms, and the budget for the year ahead.

ORGANIZATIONAL VISION

To help organizations achieve strategic direction, they need to articulate and have a
commonality in vision, mission, and goals.
Organizational vision is an inspirational statement of what the organizations hopes to achieve at
some point in the future.

MISSION STATEMENT

The mission statement differs from the organizational vision. The Mission Statement defines the
current purpose of an organization; it answers what the organization does, for whom it is done,
and how it does what it does.

ORGANIZATIONAL GOALS AND OBJECTIVES

To operationalize the mission statement, organizational goals and objectives are defined. All
organizations have set goals. These are referred to as organizational goals. Organizational goals
are pursued to make the specified strategies succeed.

Properties of Goals

1. Goals provide organizations focus and direction.

2. Goals move organizations to action.
3. Goals develop in organizations the trait of persistence.
 Figure 1.4 relationship between organizational goal and objectives.

VALUES AND VALUE SYSTEM

Organizations are guided by values, which vary from one organization to another. Values are
inherent roots of motivation within an individual, an organization, a community, or a nation. They
are by nature, ingrained and thus, are more stable and enduring.

Values
are generally exhibited in two different ways, namely, beliefs, and attitudes. More particularly,
beliefs are cognitive manifistations while attitudes are characteristically behavioral.
Values System is characteristically broader in scope; aside from values; it includes other variables
such as the organizations dreams, aspirations, interests, expectations, philosophies, as well as
leadership and management styles and ethical practices.

ORGANIZATIONAL CLIMATE AND CULTURE

Organizational Climate is often defined as the regular and repetitive patterns of attitudes and
behavior exhibited by employees of an organization.

Organizational Culture has been variously defined (Hofstede 1980a; Schein1990). Denotes a wide
range of social phenomena, including an organizations customary dress, language, behavior,
beliefs, values, symbols of status and authority, myths, ceremonies and rituals, and models of
deference and subversion; all of which help to define an organizations character and norms (scott
et al. 2003).

CHAPTER TEST

NAME:_________________________________________
DATE:_________

I. Multiple Choice

Directions: Read each item carefully. Write the letter of the correct answer.

1. The 21st century is marked by the following characteristic:

a. A spirit or predictability
b. An environment of certainty
c. The reality of dynamism
2. The current landscape of completion today:
a. Is highly threatening
b. Static
c. Friendly

3. In a hypercompetitive environment, organizations:

a. Do not help each other
b. Do not collaborate with each other
c. Outsmart each other

4. Organizations conduct their business by offering:

a. Less product
b. Few products
c. Innovative products

5. In surviving this cut-throat competition, the challenge today is:

a. To adopt traditional activities
b. To adopt to the changing times
c. To employ tried and tested activities

6. Strategic management is:

a. Coming up with organizational policies
b. A continuous process of strategy creation
c. Managing people
7. Strategic intelligence is:
a. Ensuring that everyone has the same mindset
b. Possessing and using relevant and related knowledge, abilities, foresight, and systems
thinking in an organization.
c. Thinking about the welfare of every employee

8. Strategic decision making is greatly demonstrated when:

a. All employees are happy and contented
b. The stakeholders earn good profits
c. The right resources for the right markets at the right time are brought together.

9. This is needed to systematically evaluate the values currently existing in the external and
internal environments:
a. Strategic analysis
b. Strategic formulation
c. Strategic decision-making
10. Uniquely designed and effectively communicated formulated strategies allow
organizations to attain:
a. Organizational competitiveness
b. Competitive advantage
c. More profit

11. The grand plan is also known as:

a. The departmental plan
b. The unit plan
c. The organizational plan

12. A medium/long-range plan is prepared:

a. For one year
b. Less than one year
c. From three to five, ten or more years

13. The mission statement of an organization:

A. Is the same as the vision
B. Never changes in time
C. Defines the current purpose of the organization

14. The goal of an organization:

a. Is micro in perspective
b. Is macro in perspective
c. Is the same as organizational objectives

15. The values system of an organization

a. Is only behavioral
b. Is only attitudinal
c. Is both behavioral and attitudinal

II. IDENTIFICATION

DIRECTION: Read each item carefully. Identify the correct terminology to complete
the given statement.
1. ______________ consists of the organization dreams, aspirations, interests, expectations,
philosophies, as well as leadership and management style and ethical practices.
2. ______________ is a measure of the health of an organization.
3. ______________are pursued to make the specific strategies succeed.
4. ______________is a fundamental feature of the new economy characterized by a note of
overexcitement and agitation.
5. _____________ is employing crafted strategies to achieve organizational set goals and
objectives.
6. _____________are specific goals.
7. _____________denotes a wide range of social phenomena, including an organizations
customary dress, language, behavior, beliefs and values.
8. _____________is a systematic evaluation of variables currently existing in the external
and internal environment.
9. _____________is deliberately bringing together the right resources for the right markets
at the right time.
10. ____________is the application of an appropriate strategic monitoring and feedback
system.

III. ESSAY

1. Discuss the importance of strategic management process.

2. What are the difference between strategic analysis and strategic decision making?
3. Enumerate the steps in trategic planning.
4. Give reason why organizations undertake strategic planning. Do you agree with
these reason? Explain your answer
5. Define organizational vision by using an example.