MGT004 - Strategic STRATEGIC MANAGEMENT PROCESS

Management
Consumer Behavior
Risks
Threats
China
Strategic Planning
The Mañana Habit
Competition

Topic 1: A STRATEGIC
MANAGEMENT MODEL

The 21st century is the epitome of the

reality of dynamism.
In fact, today's milieu is in a state of fluidity.
It is not static. Rather changes and
fluctuations are constantly happening in
the surroundings.
STRATEGIC ANALYSIS - consists of a
systematic evaluation of variables currently
existing in the external and internal environments.
STRATEGIC DECISION-MAKING - deliberately
bringing together the right resources for the
right markets at the right time.

These actualities are characterized by the STRATEGY FORMULATION - designing

occurrence of phenomenal situations, and
continuous challenges, in figuring forces that
provoke corresponding reactions.
As a result, the current landscape of
competition is highly threatening and
daunting.
strategies on the business and corporate levels
STRATEGY IMPLEMENTATION - employing
these crafted strategies to achieve
organizational set goals and objectives
STRATEGIC CONTROL - application of an
appropriate monitoring and feedback system

As the global economy expands, blurring

STRATEGIC MANAGEMENT MODEL
boundaries, any business needs to create its
own impact in any part of the world. Thus, it
is urgent for organizations and businesses to
strategize.

STRATEGIC MANAGEMENT - a continuous

process of strategy creation.
➔ Involves strategic processes like strategic
analysis and decision-making, strategy
formulation and implementation, and
strategy control with the primary objectives
of achieving and attaining better alignment Strategic management model - shows the
of corporate policies, priorities, and relationship between and among the input,
SUCCESS. process, and output.
The input in these models includes organizational
variables like the management and employees,
facilities and equipment, infrastructures, and
processes.
The strategic management process consists of
strategic analysis, strategic decision-making
strategy formulation, strategy implementation,
and strategic control.
When these specific processes are executed and
managed creatively, distinctly, and strategically,
the organization can ultimately achieve
organizational success.
STRATEGIC PLANNING - defined as a
continuous, repetitive, and competitive
process of setting the goals and objectives that
an organization aims to attain.
TYPES OF STRATEGIC PLANS
● MEDIUM/ LONG RANGE PLAN -
prepared in the context of the coming
three to five, ten, or more years.
● ANNUAL/ YEARLY PLAN - short-term
succinctly describes the organization's
present situation, its goals and
objectives, strategies, monitoring
mechanism, and the budget for the year
ahead.
Topic 2: Challenges in the
External Environment
Organizations exist to survive. Given their vision
and mission statements set goals and objectives,
it is for organizations to conduct themselves
clearly, deliberately, and strategically.
To achieve this, organizations should develop
"organizational intelligence".
Organizational intelligence - expertise, insight,
and wisdom possessed by an entity. It serves as
a valuable guide to its journey to becoming
competitive.
Thus organizations need to possess this
capability to be able to accurately audit the
environment and come up with creative and
cutting-edge strategies
Mission - defines your purpose
Vision - extends your mission to an ideal future
state
ENVIRONMENTAL SCANNING - the study and
interpretation of the forces existing in the
external and internal environments.
External environment: social, economic, political,
technological, and environmental forces that may
influence an organization, industry, or entity.
Conducting environmental scanning
● both easy and difficult as it is dependent
on the following:
1. The speed of the organization to
conduct scanning
2. The presence and availability to
complete information
3. The physical and financial
capability to do so
Environmental scan:
Internal Analysis - Strengths, Weaknesses
External Analysis - Opportunities, Threats
Strategic information - facts and data used by
organizations to assist them in achieving their
vision, mission, and goals.
Searching information can be drawn from both
external and competitive environments.
Information is either primary or secondary.
● Primary data gathered through personal
experience, observation, and
experimentation
● Secondary information or data is
collected from reports, internet sources,
and other published material
Modes of Environmental Scanning
Scanning the environment involves two
processes:
● First one - looking at or simply viewing
information,
● Second one - looking for or searching for
information.
According to Aguilar (1967), there are four ways
of environmental scanning:
1. UNDIRECTED VIEWING
➔ The individual is exposed to
information with no specific
information made in mind.
➔ Sources of information are
wide-ranging
➔ The chance of information is
quickly dropped from the
individuals' attention.
2. CONDITIONED VIEWING
➔ To individual, direct viewing of
information to specify the facts
and data to be able to assess
their general impact on the
organization
3. INFORMAL SEARCH
➔ The individual acts for information
to increase knowledge of a
particular issue.
4. FORMAL SEARCH
➔ The search is both focused and
structured and the research
methodology is clearly enumerated
and followed. The effort exerted by
the individual is deliberate and
planned.
THE SWOT MATRIX ANALYSIS
SWOT matrix - a structured assessment tool
used to evaluate an organization, industry, place,
or even a person in terms of set parameters like
strengths, weaknesses, opportunities, and
threats.
Credited to Albert Humphrey in 1960, the swot
matrix classifies strengths and weaknesses as
internal dynamics characterizing an organization
and threats and opportunities as external
influences.
STRENGTHS - are features that organizations
possess
WEAKNESSES - are characteristics that place
organizations at a disadvantage relative to
others
OPPORTUNITIES - are possibilities in the
external environment that organizations can
exploit to their advantage
THREATS - are challenges in the external
environment that can cause problems to
organization
THE EXTERNAL ENVIRONMENT
The external environment today is highly
complex. This fundamental paradigm
conspicuously characterizes to global scenario.
Nations possess different levels of growth and
development. For example, power relationships
have become dynamic, volatile, uncertain,
complex, and threatening. Multifaceted
concerns, although distinct, have become
primordial issues among countries, causing
differences in policies and global
interrelationships. Often times an atmosphere of
strategic negotiations, compromise, and survival
permits. Consequently, knowledge of the broad
environment is considered an advantage for
organizations when managers constantly develop
an audit intelligence of the environment.
Specifically, the external environment presents
varying forces that influence organizational
direction and strategic decision-making. These
forces are social, political, technological,
economic, environmental, and legal in
perspective. The confluence of these forces can
present themselves as threats and challenges
to organizations. On the other hand, they could
provide valuable opportunities.
There are crucial concerns confronting nations
today, and geopolitical issues have become
the focus of major political power. Some of
these issues are political independence, changing
government, the balance of power, terrorism,
suicide bombing, global alliances, and chemical
and nuclear warfare. These critical problems are
affecting the global political balance.
Society consists of individuals, families, and
communities, including their beliefs, aspirations,
traditions, and practices.
Some of the more critical social concerns are
1. changing social structure,
2. the world's aging population,
3. the great demand for health service,
4. evolving sophistication in the lifestyle of
people, and
5. cross-cultural implications of mobility of
peoples including migration among others.
Economic realities have concomitantly come to
the forefront. Economic issues greatly affect the
growth and development of a nation. Nations
are strategizing to maintain a continuum of
financial stability. Most often, trade and
investments are transacted to ensure monetary
security.
Globalization is one of the major determinants of
competition. Globalization can be viewed from
four perspectives: Products, people, ideas, and
money. Simple and traditional goods used to be
generally accepted, but today's consumers
demand flexibility and versatility in the products
they use.
We live in a digital world. Another important
catalyst of competition is technology. In the
1980s, information technology began its journey
toward radical communication and technology
growth. Significant changes happening in the
world today have been the result of rapid
developments in information technology. These
technological advances are observed in the
fields of communication, business, banking,
education, medicine, and security, and in all
facets of everyday living.
ENVIRONMENTAL FORCES - the safety and
survival of one should be the concern of others.
● CLIMATE CHANGE,
● ENVIRONMENTAL WASTE
MANAGEMENT,
● PRESERVATION OF RAINFORESTS
AND MARINE LIFE
Topic 3: Challenges in the
Internal Environment
Internal environment - presents a more direct
impact on how organizations should conduct
themselves towards success.
There are different challenges within the internal
environment of an organization. The internal
environment is the setting in which an
organization locally exists. These areas are
government, culture, stakeholders,
competitors, suppliers, customers, and the
community.
GOVERNMENT: BUSINESS CARETAKER
- sole legitimate institution tasked with overseeing
organizational operations in the country.
1. provides needed infrastructure
2. creates an atmosphere of fair robust
competition among industry and company
players, monitors and regulates
monopolies and oligopolies, and
eliminates unfair and illegitimate practices
3. formulates business policies, implements
business operating guidelines, and
regulates the conduct of business
activities such as payment of taxes,
health, and safety practices in food
manufacturing, construction, and other
service industries, ensures the quality of
products and services and mandates
minimum wages of employees and their
fair and just treatment.
● ROADS, ELECTRICITY, WATER
SERVICES, LOANS, BRIDGES, WASTE
MANAGEMENT POLICIES, COMMUNITY
SERVICES
● POLITICALLY, in terms of peace, security,
stability, and governance
● FAIR JUST TREATMENT THROUGH
THE FORMULATION OF BUSINESS
POLICIES
COMMUNAL CONVERGENCE
a nation's culture is the communal aggregation
and convergence of the country's philosophy,
beliefs, traditions, values, attitudes, aspirations
and practices that have historically evolved since
a nation's inception.

Communal convergence is greatly influenced by

diversity. Such evolution has nurtured in the
Filipino certain distinct beliefs, traditions, and
practices, which are either a pride to the country
or otherwise.

FILIPINO BELIEFS, TRADITIONS AND

PRACTICES: Organizations particularly businesses are the
● HOSPITABILITY lifeblood of any nation. They sustain the
● BAYANIHAN continued existence and staying power of
● RESPECT FOR THE ELDERS countries.
● STRONG FAMILY TIES
● MANAÑA HABIT The competitive environment is best described
● CRAB MENTALITY and illustrated by Michael Porter's Five Forces
● RESILIENCY Model of Industry Competition.
● KANYA- KANYA,
● BEING POLITICALLY INVOLVED

STAKEHOLDERS

The Business Investors

- individuals who are willing to take risks, invest
their capital, and engage in business activities in
exchange for a return.
- Involved or Preferred Investor

Michael Porter, an aerospace and mechanical

COMPETITORS: THE BUSINESS THREATS
Engineer, Porter pursued his doctorate degree in
industrial economics. He was a professor at
DIFFERENT CATEGORIES
Harvard Business School. His book Competitive
● SAME PRODUCTS - companies who sell
Strategy (1980), enumerated five forces that
exactly the same products or offer the
determine the intensity, profitability, and
same services. Ex. engaged in the same
attractiveness of an industry.
line of business (Unilever and Procter and
Gamble)
● SIMILAR PRODUCTS- companies who
sell similar products. Tea and coffee are
SUPPLIERS - sources of input needed to
similar products produce goods and services
● SUBSTITUTE PRODUCTS- companies
who sell substitute products. Ex. Fast BARGAINING POWER - firms should work
food, Convenience hard to move purchase decisions from price.
● DIFFERENT PRODUCTS- companies
who sells DIFFERENT product but market BARRIERS TO THREATS OF NEW
to the same segments. ENTRANTS
TO REDUCE THREATS: firms can produce
CUSTOMERS better products, increase their efficiency, create
The business challenge: and promote their brand image, enhance
Consumer behavior is a marketing reality that is relationships with suppliers and distributors, and
difficult to discern, understand and study with pursue aggressive marketing strategies
definiteness.
COMPETITIVE RIVALRY AMONG
PLAYERS - high when there are many players
with similar strategies rivalry are not
differentiated.

To deal with this situation, products and services

can be differentiated and price competition can
be avoided. Collaboration among competitors
can be promoted while different segments can be
focused.