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LESSON NO.4- STRATEGIC PLANNING AND MANAGEMENT

STRATEGIC PLANNING- It is the decision making and planning process that

charts an organization’s long-term course.It involves making decisions about the
organization's long term goals and strategies.

-Companies engage in strategic planning as an element of strategic

management.

STRATEGIC MANAGEMENT- is top-level management’s responsibility to define the

firm's position,formulate strategies and guide long-term organizational activities.

PURPOSE OF STRATEGIC PLANNING AND MANAGEMENT

-is to help position the organization to achieve a superior competitive fit between
the organization and its environment.

-only by being able to compete in its external environment can an organization

reach its objectives.

STRATEGIC PLANNING PROCESS- generates answers to these questions.

Designed to guide a company in achieving its comprehensive objectives, strategy
relies upon the four elements: Scope, Resources Deployment,Competitive
Advantage and Synergy.

SCOPE- it refers to the area, range, or size of the firm that chooses to develop or
maintain within its environment.
-included are the markets in which it elects to compete as well as the products
and services it will offer.

RESOURCES DEPLOYMENT- it is how the company intends to allocate its

resources— human, physical, and financial—to achieve its strategic objectives.

DISTINCTIVE COMPETITIVE ADVANTAGE- it refers to the benefits of an

organization’s unique position in relation to its competitors.

SYNERGY- it occurs when two forces , working together, create an effort that is
greater than the sum of what either force could produce alone. In the business
world, two parts of one organization may create synergy by working together. The
result may be an advantage in market share , technology, cost or management
skill.

LEVELS OF STRATEGY:

CORPORATE-LEVEL STRATEGY - the purpose of this strategy is to answer the

questions “what business are we in?”

BUSINESS-LEVEL STRATEGY- this strategy answers the question “how do we

compete?”. It focuses on how each product line or business unit within an
organization competes for the customer. The decisions at this level determine all
costs (advertising., research, equipment, product development etc.)

FUNCTIONAL-LEVEL STRATEGY- the strategy for the major functional

departments answers the question, “how can we support the business-level
strategy?”. It focuses on the major functions of the company: human resources,
research and development, marketing, finance and production.

STRATEGY- MAKING PROCESS: 6 STEPS

● EVALUATE CURRENT MISSION, OBJECTIVES AND STRATEGIES.
 ● ANALYZE THE ENVIRONMENT
SWOT Analysis (strengths, weaknesses, opportunities and threats)
INTERNAL STRENGTHS AND WEAKNESSES
EXTERNAL THREATS AND OPPORTUNITIES

● REASSESSING MISSION AND OBJECTIVES

● FORMULATE STRATEGIES
● IMPLEMENTING STRATEGIES
● MONITOR AND EVALUATE RESULTS

LESSON NO.5- STRATEGIC PLAN AND MANAGEMENT (CONTINUATION)

FORMULATING CORPORATE-LEVEL STRATEGY- recall that corporate-level

strategy involves determining what business/es the firm expects to compete in.
For companies with a single market or a few closely related markets, developing
corporate-level strategy involves making a grand, organization-wide strategy.

GRAND STRATEGY- it is the overall framework,or a plan of action, developed at the

corporate level to achieve an organization's objectives.

TYPES OF GRAND STRATEGY:

GROWTH STRATEGY- when an organization expands significantly in one or more

areas of operations or business units. It can be achieved internally by investment.
Organizations achieve external growth by acquiring other business units.

INTEGRATION STRATEGY- is adopted when managers see the need (1) to stabilize
supply lines and reduce cost (2) to consolidate competition.

Vertical Integration- the firm gains ownership of the resources, suppliers or

distribution systems on which it relies.

Horizontal Integration- the firm acts to consolidate competition by acquiring

similar products or services.

DIVERSIFICATION STRATEGY- is adopted when managers opt to offer new types

of products or enter new markets. Managers usually pursue diversification by
acquiring other businesses.

RETRENCHMENT STRATEGY- is adopted when managers reduce the size or scope

of a firm’s activities. Such strategies call for cutback in some areas or the
elimination of entire businesses.

STABILITY STRATEGY- in this strategy, managers decide than an organization

should stay the same.

PORTFOLIO STRATEGY- once the managers of a large diversified organization

decide on a grand strategy, they develop a portfolio strategy.
-focuses on the strategic business unit, and it involves determining the proper
mix of business units and product lines to provide maximum competitive
advantage.

FORMULATING BUSINESS-LEVEL STRATEGY- a business strategy that managers

formulate, within each SBU ( or within the firm itself for a single-product business)
to define how they choose to compete.

-The many possible approaches to business-level strategy can be grouped into:

Adaptive Strategies & Competitive Strategies
ADAPTIVE STRATEGIES- the philosophy behind this strategy is that a firm’s
strategy should suit its internal characteristics and external environment.

The Four Types of Adaptive Strategies are:

Prospector Strategy - this strategy calls for innovation, risk, the pursuit of
opportunities and expansion.

Defender Strategy - is the reverse of the prospector strategy. It calls for retaining
current market share or even retrenching. Companies using this strategy do not
seek to grow.

Analyzer Strategy- managers who adopt this strategy seek to maintain current
market share while innovating in some markets. This strategy calls for balancing
act, maintaining position in some markets while aggressively pursuing
opportunities in others.

Reactor Strategy - an organization whose managers have adopted this type of

strategy may be said to employ no strategy at all. Rather than formulate a plan to
fit a specific environment, reactors respond to environmental threats randomly.

COMPETITIVE STRATEGIES- are dictated by how the organization can best

compete. The ability to compete is based on internal skills, resources and
philosophy.

The Three Types of Competitive Strategies Are:

Differentiation Strategy- this strategy attempts to set an organization’s product

or services apart from those of other companies. This can be accomplished by
focusing on customer service, product design, technology or quality.

Cost-Leadership Strategy- this strategy focuses on keeping costs as low as

possible. The means to low cost are efficient operations and tight controls. The
company that is successful in maintaining low costs can charge low prices. Low
price becomes the organization’s distinguishing characteristic.

FORMULATING FUNCTIONAL-LEVEL STRATEGY- this level of strategy is that

developed by the major functional departments. These action plans support the
accomplishment of the business-level strategies for marketing, production,
human resources, finance, and research and development.

MARKETING STRATEGY- applies to the functional level of the company’s products

or services and focuses on pricing, promotion, packaging and distribution. The
decision in each area, taken as a whole, becomes a firm’s marketing strategy.

PRODUCTION STRATEGY- this involves manufacturing goods and providing

services. Decisions in this area influence how the organization will compete.

HUMAN RESOURCE STRATEGY- many experts believe that human resources is

the key functional area of an organization. It must address such issues as
staffing, internal training and development, replacement schedules,
compensation and recruiting.

FINANCIAL STRATEGY- the financial strategy of a firm involves decisions about

the action be taken with profits.

RESEARCH AND DEVELOPMENT STRATEGY- the functional level strategy for

research and development involves the invention and development of new
products and services.

STRATEGY IMPLEMENTATION AND CORPORATE CULTURES

- After the strategy is developed, the challenge facing management is
implementation. Many experts argue that strategy implementation is the most
difficult and important element of the strategic process.

LEADERSHIP- when implementing the strategy, leadership involves the ability to

persuade others in the organization to adopt the behaviors needed to put the
strategy into action.

ORGANIZATIONAL STRUCTURE- the implementation of strategy can be assisted

by changes in the structure of the organization as reflected in its organizational
chart.

HUMAN RESOURCES- an organization’s human resources are its people. To

achieve the Company’s strategic objectives, the human resource function recruits,
selects, trains, transfers, promotes, lays off and fires people.

INFORMATION AND CONTROL SYSTEMS- management must create a proper

blend of reward systems, policies, procedures, rules, incentives, information
systems and budgets to support strategy implementation.

LESSON NO. 6 & 7– ORGANIZING: BASIC ELEMENTS OF AN ORGANIZATIONAL

STRUCTURE

ORGANIZING- is very important because it is the means to align work with

resources so plans and decisions can be made and carried out effectively. It is a
continuing management function to keep the company moving on target.

DEFINITION OF ORGANIZATIONAL STRUCTURE- It is the framework that defines

the boundaries of the formal organization and within which the organization
operates. It is the formal pattern of interaction and coordination designed by
management to link the tasks of individual and groups in achieving
organizational goals.

ORGANIZATIONAL CHART- lt is a line diagram that depicts the broad outline of

the organization's structure. It indicates the way positions are grouped into
specific units, the reporting relationships and the channel of communication and
the visual map of the chain command.

CHAIN OF COMMAND- It is the unbroken line of authority that ultimately links

each individual in the organization. Basic idea is that everyone should be able to
identify his or her boss and traces the line of authority from bottom to top.

ELEMENTS OF ORGANIZATIONAL STRUCTURE:

Job Design- the assignment of tasks and responsibilities that define the jobs of
individuals and units.

-The different activities of the buyer and the salesperson reflect work
specialization.

- Work specialization is the degree to which the work necessary to achieve

organizational goals is broken down into various jobs. Without some
specialization, it would be difficult for most organizations to function. This is
because it is usually impossible for every organization member to have the entire
range of skills necessary to run an effective organization.

-Job Design is important to the organizing function for two major reasons: Task
activities need to be grouped in a logical way for workers to function effectively &
Jobs configuration or designation has an influence on employee motivation to
perform.

APPROACHES TO JOB SPECIALIZATION:

Job Specialization- breaking jobs into smaller tasks simple, easy-to-learn, and
economical can lead to low job satisfaction, high absenteeism, and turnover.

Job Rotation- periodically moving workers from one job to another.

Job Enlargement- increasing the number of tasks performed by a worker.

Job Enrichment- adding more tasks and authority to a worker’s job

-A related aspect of designing jobs is creating alternative work schedule, based
on adjustments in the normal work schedule rather than in the job content or
activities.

MAJOR TYPES OF ALTERNATIVE WORK SCHEDULES:

Flextime- it is a work schedule that specifies certain core hours when individuals
are expected to be on the job (say 8 hours/day) and allow flexibility in starting and
quitting times.

Compressed Workweek- it is a work schedule where employees work four 10-hour

days or some similar combinations rather than the usual five 8-hour days.

Job Sharing- a work practice where two or more people share a single full time
job. One person can work in the morning and the other in the afternoon, or
alternate days.

Departmentalization- the clustering of individual positions into units and of units

into departments and larger units to form an organization's hierarchy.

-This is another important aspect of organizational structure & is the clustering

of individuals into units and units into departments and larger units to facilitate
achieving organizational goals.
- Differing overall patterns of departmentalization are often referred to as
organizational design.

PATTERN OF DEPARTMENTALIZATION:

Functional Departmentalization- groups positions into units on the basis of

similarity of expertise, skills and work activities.

Product Departmentalization- groups positions into units according to similarity

of products.

Customer Departmentalization- groups positions into units on the basis of

similarity of markets or customers.

Geographic Departmentalization- groups positions into units on the basis of

geographical location.

Matrix Departmentalization- a hybrid structure in which two or more forms of

departmentalization are used together.

Vertical Coordination- top to bottom coordination such as number of persons

reporting to a supervisor and degree of delegation of authority.
MEANS OF ACHIEVING EFFECTIVE VERTICAL COORDINATION:

Formalization- It is the degree to which written policies, rules, procedures, and

other documents specify what actions are (or are not) to be taken under a given
set of circumstances. Most organizations rely on at least some means of
formalization.

Span of Management (Span of control)- It is the number of subordinates who

report directly to a specific manager. It directly influences the number of levels of
hierarchy in an organization.

TYPES OF ORGANIZATIONAL STRUCTURE BASED ON LEVEL OF HIERARCHY AND

SPAN OF CONTROL:

Tall Structure- it is one that has many hierarchical levels and narrow span of
control. When average spans of control in an organization are narrow, the
organization most likely is a tall structure.

Flat Structure- it is one that has few hierarchical levels and wide span of control.

Centralization versus Decentralization

-Centralization and decentralization form a continuum, with many possible
degrees of delegation of power and authority in between. The extent of
centralization affects vertical coordination by influencing the amount of decision
making at the upper and lower levels.

- Centralization has several positive aspects. If all major decisions are made at
the top levels, it can be easier to coordinate the activities of various units and
individuals. It can also promotes strong leadership in an organization because
much of the power remains at the top.

-Decentralization has also major advantages. Encouraging decision making at

lower levels tends to ease the heavy workloads of executives, leaving them more
time to focus on major issues. It also enriches the jobs of lower level employees by
offering workers the challenge associated with making significant decisions that
affect their work.

Delegation- Another means of vertical coordination that is closely related to the

centralization-decentralization issue is delegation.

How to Be a More Effective Delegator:

1. Trust your staff to do a good job

2. Avoid seeking perfection
3. Give effective instructions
4. Know your true interests
5. Follow up on progress
6. Praise the efforts of your staff
7. Don’t wait until the last minute to delegate
8. Ask questions, expect answers and assist employees
9. Provide sufficient resources
10. Delegate to the lowest possible level

Line and Staff Position- Another issue related to vertical coordination is the
configuration of line and staff positions.

-line position is a position that has authority and responsibility for achieving the
major goals of the organization. Line departments have line authority, which is
the authority that follows the chain of command established by formal hierarchy.
-staff position is a position whose primary purpose is providing specialized
expertise and assistance to line positions (e.g., administrative assistant to a
division head). Staff departments have functional authority, which is the authority
over the others in the organization in matters related directly to their respective
function.

Horizontal Coordination- linkages across departments, such as task forces and

interdepartmental teams.

METHODS OF HORIZONTAL COORDINATION:

Horizontal coordination provides an additional means of processing information

in organizations. It was argued that the more organizations need to process
information in the course of producing their products or services, the more
method of horizontal coordination they need to use.

Organizations typically need to process more information when they face

complex and/or changing technology, environmental uncertainty, and growing
size.

Because horizontal coordination facilitates processing information across the

organization, it also helps promote innovations. There are three reasons for this:
New ideas are more likely to emerge when a diversity of views are shared,
Awareness of problems and opportunities across areas can spark creative ideas
& Involving other in the development of ideas often positively influences their
willingness to help implement new ideas.

Useful means in promoting Horizontal Coordination are:

Slack Resources- One interesting means of supporting horizontal coordination is

the use of slack resources, a cushion of resources that facilitates adaptation to
internal and external pressures, as well as initiation of changes. Because
organizations face similar choices, they too, often use slack resources, such as
extra people, time, equipment, and inventory, to reduce the need for constant
coordination among units and to provide some latitude in how resources are
used.

Information System- Another important and growing means of horizontal

coordination is the use of information systems, particularly computerized ones,
to coordinate various parts of organizations.

Lateral Relations- Another approach to horizontal coordination that is

increasingly being used is lateral relations. It is the coordination of efforts
through communicating and problem solving with peers in other departments or
units, rather than referring most issues up the hierarchy for consideration.

Major means of Lateral Relations:

Direct Contact- communication between two or more persons at similar levels in

different work units for purposes of coordinating work and solving problems.

Liaison Roles- is a role to which a specific individual is appointed to facilitate

communication and resolution of issues between two or more departments.

Task Forces- is a temporary interdepartmental group usually formed to make

recommendations on a specific issue.

Teams- are either temporary or ongoing groups that are expected to solve the
problems and implement solutions related to a particular issue or area.
Managerial Integrators- is a separate manager who is given the task of
coordinating related work that involves several functional departments.
Such managers typically have titles like Project Managers, Product Managers or
Brand Managers and are not members of any of the different departments whose
activities they help coordinate.

Project Managers - coordinate projects until its completion.

Product Managers- coordinate launching of new products.
Brand Managers- coordinates efforts regarding particular brand-name
products.

LESSON NO. 8- MANAGING HUMAN RESOURCE

HUMAN RESOURCE MANAGEMENT (HRM)- is the management of various

activities designed to enhance the effectiveness of an organization’s workforce in
achieving organizational goals. It encompasses a number of important activities
as indicated in the HRM Process.

STRATEGIC HUMAN RESOURCE MANAGEMENT- forward looking organizations

like CARE, are the forefront of a trend toward recognizing human resource as a
crucial element in the strategic success of organizations.

THE HRM PROCESS- Human Resource Planning, Staffing, Development and

Evaluation, Compensation and Maintaining Effective Workforce Relationship.

HUMAN RESOURCE PLANNING- is the process of determining future human

resource needs relative to an organization’s strategic plan and devising the steps
necessary to meet those needs. Such planning relies on Job Analysis as a means
of understanding the nature of jobs under consideration.

Job Analysis- is the systematic collection and recording of information

concerning the purpose of a job, its major duties, the condition under which it is
performed, the contacts with others that the job requires and the knowledge, skill,
and abilities needed to perform the job effectively.

THE RESULT OF JOB ANALYSIS ARE OFTEN USED TO DEVELOP JOB

DESCRIPTIONS & JOB SPECIFICATIONS:

Job Description- is the statement of the duties, working conditions, and other
significant requirements associated with a particular job.

Job Specifications- is a statement of the skills, abilities, education, and previous

experience that are required to perform a particular job. It is also frequently
combined with Job Description.

DEMAND FOR HUMAN RESOURCES- a significant aspect of Human Resources

planning is assessing the demand for human resources. Such an assessment
involves considering the major forces that affect the demand and using basic
forecasting aids to predict it.

DEMAND- is the only side of the equation governing whether an organization will
have sufficient human resources to operate effectively, the other side is the
supply of human resources.

SUPPLY OF HUMAN RESOURCES- in assessing the supply, human resource

managers, consider both internal and external labor supplies. Major means of
assessing the internal labor supply include skill inventories, replacement
planning, and succession planning.
Skill Inventories- is a data bank (usually computerized) containing basic
information about each employee that can be used to assess the likely availability
of individuals for meeting current or future human resource needs. It typically
contains information regarding employee’s performance, knowledge, skill,
experience, interests, and relevant personal characteristics.

Replacement Planning- is a means of identifying potential candidates to fill

specific managerial positions.

Succession Planning- is a means of identifying individuals with high potential and

ensuring that they receive appropriate training and job assignments aimed at
their long-run growth and development. It provides the organization with a
well-qualified pool of individuals from which middle and top managers can be
drawn in the future.

EXTERNAL LABOR SUPPLY- periodic estimates of labor supplies in a variety of

categories are made by government agencies like DOLE and NSO and by
industry and human resource associations.

RECONCILING DEMAND AND SUPPLY- after estimating the demand and supply
of human resources, managers must often take steps to balance the two. It the
estimates show that the internal supply of labor is too large, then managers need
to make plans to reduce the number of employees through such measures as
resignation and retirement programs, or possibly layoffs.

STAFFING- it is the set of activities aimed at attracting and selecting individuals

for positions in a way that will facilitate the achievement of organizational goals.
The goal of staffing is to obtain the best available people for the organization
and to develop the skills and abilities of these people.

RECRUITMENT- is the process of finding and attempting to attract job

candidates who are capable of effectively filling-in job vacancies.

External Recruitment- is the process of finding potential external candidates and

encouraging them to apply for and/ or be willing to accept organizational jobs
that are open. Advertising is generally the most heavily used recruiting source.

Realistic Job Preview- An alternative approach. A technique used during the

recruiting process in which the job candidate is presented with a balanced view of
both the positive and the negative aspects of the job and the organization.

SELECTION- is the process of determining which job candidate best suit

organizational needs.

Validity- in order to make adequate assessments of candidates, selection

methods must have this. It addresses how well a selection device (such a test or
interview) actually predicts a candidate’s future job performance.

MAJOR SELECTION METHODS:

APPLICATION BLANK- is a form of containing a series of inquiries about an

applicant’s educational background , previous job experiences, physical health,
and other information that may be useful in assessing an individual’s ability to
perform.

SELECTION INTERVIEWS- is a relatively formal, in-depth conversation for the

purpose of assessing a candidate’s knowledge, skills, and abilities, as well as
providing information to the candidate about the organization and potential
jobs.
EMPLOYMENT TEST- a means of assessing a job applicant’s characteristics
through paper-and-pencil responses or simulated exercises.

ASSESSMENT CENTER- is a controlled environment used to predict the probable

managerial success of individuals, mainly on the basis of evaluations of their
behaviors in a variety of simulated situations.

REFERENCE CHECKS- are attempts to obtain job-related information about job

applicants from individuals who are knowledgeable about the applicants
qualification.

DEVELOPMENT AND EVALUATION- after individuals are hired, both they and
their employing organization will ultimately gain from efforts aimed at enhancing
their knowledge, skills, and abilities.

MAJOR APPROACHES TO INCREASING THE EFFECTIVENESS OF ORGANIZATION

MEMBERS INCLUDE TRAINING AND DEVELOPMENT AS WELL AS PERFORMANCE
APPRAISAL:

TRAINING AND DEVELOPMENT - it is a planned effort to facilitate employee

learning of job related behaviors in order to improve employee performance.

Training- denotes efforts to increase employee skill on present jobs

Development- refers to effort oriented toward improvements relevant to future

jobs.

PHASES OF TRAINING PROCESS:

ASSESSMENT PHASE- it involves identifying training needs, setting training

objectives, and developing criteria against which to evaluate results of the
training program.

NEED ANALYSIS- a training requirements are determined by conducting this

analysis. It is an assessment of an organization’s training needs that is developed
by considering overall organizational requirements.

TRAINING DESIGN AND IMPLEMENTATION PHASE- this involves determining

training methods, developing training materials, and actually conducting the
training.

EVALUATING PHASE- it entails, evaluating the results of the training in terms of

the criteria developed during the assessment phase.

TYPES OF TRAINING PROGRAMS:

ORIENTATION TRAINING- is usually a formal program designed to provide new

employees with information about the company and their jobs.

TECHNICAL AND SKILL TRAINING- is oriented toward providing specialized

knowledge and developing facility in the use of methods, processes, and
techniques associated with a particular discipline or trade.

MANAGEMENT DEVELOPMENT PROGRAM- Focus on developing managerial skill

for use at the supervisory, managerial and executive level.

PERFORMANCE APPRAISAL- it is the process of defining expectations for

employee performance, measuring, evaluating, and recording performance
relative to these expectations and providing feedback to the employee. The major
purpose of this is to influence in a positive way, employees’ performance, and
development.

COMPENSATION- it consists of wages paid directly for time worked, as well as

more indirect benefits, that employees receive as part of their employment
relationship with the organization.

WAGES- paid for time worked are typically payments made in cashable form that
reflect direct work-rek remuneration such as base pay, merit increases or
bonuses.

BENEFITS/EMPLOYEE BENEFITS- are [Indirect] forms of compensation beyond

wages for time worked, including various protection plans, (health and life plans)
services, ( organizational cafeteria) pay for time not worked ( vacations and sick
leave) and income supplements (stock ownership plan).

EQUITY- most organizations attempt to develop compensation systems that

carefully consider issues of equity or fairness. Equity issues are important
because individuals tend to compare their relative inputs and outcomes with
those of others in assessing the degree of equity treatment that they receive.

MAINTAINING EFFECTIVE WORKFORCE RELATIONS- maintaining positive

relations between an organization and its employees is an important aspect of
human resource management.

TWO AREAS OF PARTICULAR RELEVANCE:

LABOR MANAGEMENT RELATIONS- is the process through which employers and

unions negotiate pay, hours of work, and the other conditions of employment,
sign a contract governing such conditions for a specific period of time, and share
responsibility for administering the resulting contract.

UNIONS- are employee groups formed for the purpose of negotiating with the
management about conditions related to work.

CURRENT EMPLOYEE ISSUES- maintaining effective workforce relationships

requires that both human resource professionals and line managers stay abreast
of and make appropriate responses to issues affecting employees.

-Several areas of current concerns are the shifting nature of psychological

contract of employment, sexual harassment, drug and alcohol abuse, privacy
rights, and family issues