"If a man takes no thought about what is distant, he will

find sorrow near at hand. He who will not worry about

what is far off will soon find something worse than worry."
—Confucius
THE NATURE OF STRATEGIC
MANAGEMENT
Week 1
When CEOs from the big three American automakers, Ford,
General Motors (GM), and Chrysler, showed up without a
clear strategic plan to ask congressional leaders for bailout
monies, they were sent home with instructions to develop a
clear strategic plan for the future.

Austan Goolsbee, one of President Obama’s top

economic advisers, said, “Asking for a bailout without a
convincing business plan was crazy.” Goolsbee also said,
“If the three auto CEOs need a bridge, it’s got to be a
bridge to somewhere, not a bridge to nowhere.”
“If the three auto CEOs need a bridge,
it’s got to be a bridge to somewhere,
not a bridge to nowhere.”

- Austan
Goolsbee
WHAT IS A
STRATEGY?
 ACTIVITY

On a ½ sheet of yellow paper, write how you define

“strategy” and give a certain moment on your life that
you strategize for something.
WHAT IS A STRATEGY?
Strategy means making clear-cut choices about how to
compete.
Jack Welch, Former CEO, General Electric

A strategy is a commitment to undertake one set of actions

rather than another.
Sharon Oster, Professor, Yale Uninersity

Without a strategy the organization is like a ship without a

rudder.
Joel Ross and Michael Kami
WHAT IS A STRATEGIC
MANAGEMENT?
STRATEGIC MANAGEMENT

Art and science of formulating, implementing,

and evaluating cross-functional decisions that
enable an organization to achieve its
objectives.
STRATEGIC MANAGEMENT FOCUSES ON
INTEGRATING:
• Management,
• Marketing
• Finance/accounting
• Production/operations
• Research and Development
• Information Systems

to achieve organizational success.

PURPOSE OF STRATEGIC MANAGEMENT

To exploit and create new and

different opportunities for tomorrow
WHAT IS A
STRATEGIC PLAN?
WHAT IS STRATEGIC PLAN?

In essence, strategic plan is the company’s

game plan (action plan) to:

Grow the business
Attract and please customers
Compete successfully
Conduct operations
Achieve the targeted levels of Organizational performance
 ACTIVITY
Make a group.

QCPU is just one of the universities in the Philippines. As

future Industrial Engineers, what would be your best ten
strategic plan to help QCPU achieve its objectives or to
make QCPU competitive?
STAGES OF
STRATEGIC
MANAGEMENT
THE STRATEGIC-MANAGEMENT
PROCESS CONSISTS OF THREE
STAGES:

•Strategy formulation
•Strategy implementation
•Strategy evaluation
STRATEGY
FORMULATION
STRATEGY FORMULATION
Developing vision and mission

Identifying an external opportunities and threats

Determining internal strengths and weaknesses

Establishing long-term objectives

Generating alternative strategies

Strategy selection
STRATEGY FORMULATION ISSUES:
 Businesses to abandon,
 Resource allocation,
 Whether expand or diversify,
 Enter international markets,
 Whether to merge or form a joint venture,
 Avoidance of hostile takeover.
Strategy Formulation decisions
commit an organization to specific
products, markets, resources, and
technologies over an extended
period of time.
STRATEGY
IMPLEMENTATION
STRATEGY IMPLEMENTATION
Establish annual objectives
Devise policies
Motivate employees
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 utilizing information systems
• Linking employee compensation to organizational
performance.
STRATEGY IMPLEMENTATION

Action Stage
Mobilization of employees and managers
Most difficult stage
Interpersonal skills is critically needed

Combines art and science

 STRATEGY IMPLEMENTATION
ANSWERS:
• How best can we get the job done?

• What must we do to implement our

part of the organization’s strategy?
STRATEGY
EVALUATION
STRATEGY EVALUATION
Internal Review
External Review
Performance Measurement
Corrective Action
 STRATEGY EVALUATION

There is a need to know when particular strategies are

not working well because all strategies are subject to
future modification ; strategy evaluation is the primary
means for obtaining this information.

Future Modification?
Strategy evaluation is needed because success today is no
guarantee of success tomorrow! Success always creates
new and different problems; contented organizations
experience failure.
INTEGRATING
INTUITION AND
ANALYSIS
The strategic management process attempts to organize
qualitative and quantitative information under conditions
of uncertainty.
WHAT IS INTUITION?
 Past experiences
 Judgment
 Feelings

Intuition is useful in decision making under the conditions of

 Great uncertainty
 Little precedent
 Highly interrelated variables
 Several plausible alternatives
Management in an organization
inject their intuition and judgment
into strategic-management
analyses. Analytical thinking and
intuitive thinking complement each
other.
Warning for Intuition!
The accelerating rate of change today is producing
a business world in which customary managerial
habits in organizations are increasingly inadequate.
Experience alone was an adequate guide when
changes could be made in small increments. But
intuitive and experience-based management
philosophies are grossly inadequate when decisions
are strategic and have major, irreversible
consequences.
KEY TERMS IN
STRATEGIC
MANAGEMENT
COMPETITIVE
ADVANTAGE
Strategic management is all about gaining
and maintaining competitive advantage.
COMPETITIVE ADVANTAGE

Anything that a firm does especially well

compared to rival firms.
COMPETITIVE ADVANTAGE ON
RECESSION

Some cash-rich firms are buying distressed

rivals.

• Windows bought Nokia

• Smart bought Sun Cellular
• Smart bought Araneta Coliseum
SUSTAINED
COMPETITIVE
ADVANTAGE
 HOW TO SUSTAIN
COMPETITIVE ADVANTAGES ?
• Continually adapting to changes in external
trends and events and internal capabilities,
competencies, and resources

• Effectively formulating, implementing, and

evaluating strategies that capitalize upon
those factors.
 SUSTAINED COMPETITIVE
ADVANTAGE
Newspaper circulation in the United States is
steadily declining. Most national newspapers are
rapidly losing market share to the Internet, and
other media that consumers use to stay informed.

If you will be the strategist, what will you do?

(30mins)
 SUSTAINED COMPETITIVE
ADVANTAGE
The six broadcast networks—ABC, CBS, Fox, NBC, UPN, and
WB—are being assaulted by cable channels, video games,
broadband, wireless technologies, satellite radio, high-
definition TV, and digital video recorders.

The three original broadcast networks captured about 90

percent of the prime-time audience in 1978, but today
their combined market share is less than 50 percent.

What is the reason of that decline? As a strategist, what will

you do?
STRATEGISTS
Strategists are the individuals who are most
responsible for the success or failure of an
organization.
STRATEGISTS
• Strategists help an organization gather,
analyze, and organize information.
• They track industry and competitive trends
• Develop forecasting models and scenario
analyses
• Evaluate corporate and divisional
performance
• Spot emerging market opportunities
• Identify business threats
• Develop creative action plans.
VISION AND MISSION
STATEMENTS
QCPU Vision

The constituents of the Philippines as a whole, while starting

in Quezon City in particular, enjoy the good life mainly as a
result of their native talent, gained wisdom and hard work.

QCPU Mission

To provide education that will awaken full understanding of

the essence of the natural resources of the country, and
the potentials of the human resources of the nation.
VISION STATEMENT

“What do we want to become?”

Developing a vision statement is often

considered the first step in strategic planning,
preceding even development of a mission
statement.
MISSION STATEMENT

“What is our business?”

Mission statements are enduring statements of

purpose that distinguish one business from other
similar firms.
Mission statement identifies the scope of a firm’s
operations in product and market terms.
MISSION STATEMENT
• Developing a mission statement compels strategists to
think about the nature and scope of present operations.
• Assess the potential attractiveness of future markets and
activities.
• Broadly charts the future direction of an organization.
• A constant reminder to its employees of why the
organization exists and what the founders envisioned
when they put their fame and fortune at risk to breathe
life into their dreams.
 CHARACTERISTICS OF A
MISSION STATEMENT
• Broad in scope; do not include monetary amounts,
numbers, percentages, ratios, or objectives
• Less than 250 words in length
• Inspiring
• Identify the utility of a firm’s products
• Reveal that the firm is socially responsible
• Reveal that the firm is environmentally responsible
• Include nine components
• Reconciliatory
• Enduring
 MISSION STATEMENT
COMPONENTS
1. Customers
2. Products or service
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
 MISSION STATEMENT
COMPONENTS
We believe our first responsibility is to the doctors, nurses,
patients, mothers, and all others who use our products
and services.
- Johnson & Johnson

We are dedicated to the total success of Corning Glass

Works as a worldwide competitor.
- Corning Glass Works
 IMPORTANCE OF VISION
AND MISSION
1. To ensure unanimity of purpose within the
organization
2. To provide a basis, or standard, for allocating
organizational resources
3. To establish a general tone or organizational climate
 IMPORTANCE OF VISION
AND MISSION
4. To serve as a focal point for individuals to identify
with the organization’s purpose and direction,
and to deter those who cannot from
participating further in the organization’s
activities
5. To facilitate the translation of objectives into a
work structure involving the assignment of tasks
to responsible elements within the organization
6. To specify organizational purposes and then to
translate these purposes into objectives in such a
way that cost, time, and performance
parameters can be assessed and controlled.
EXTERNAL
OPPORTUNITIES AND
THREATS
 EXTERNAL OPPORTUNITIES
AND THREATS
External opportunities and external threats refer to
economic, social, cultural, demographic, environmental,
political, legal, governmental, technological, and
competitive trends and events that could significantly
benefit or harm an organization in the future.

Opportunities and threats are largely beyond the control of

a single organization—thus the word external.
IN A GLOBAL ECONOMIC RECESSION, A FEW
OPPORTUNITIES AND THREATS THAT FACE MANY
FIRMS ARE LISTED HERE:

• Availability of capital can no longer be taken for

granted.

• Consumers expect green operations and products.

• Marketing has moving rapidly to the Internet.

• Consumers must see value in all that they consume.

• As the price of oil has collapsed, oil rich countries are

focused on supporting their own economies, rather
than seeking out investments in other countries.
IN A GLOBAL ECONOMIC RECESSION, A FEW
OPPORTUNITIES AND THREATS THAT FACE MANY
FIRMS ARE LISTED HERE:

• Too much debt can crush even the best

firms.

• U.S. unemployment rates continue to rise to

10 percent on average.

• The business world has moved from a credit-

based economy to a cash-based economy.

• There is reduced capital spending in

response to reduced consumer spending.
OTHER OPPORTUNITIES AND THREATS MAY
INCLUDE
• The passage of a law.

• Introduction of new product by a competitor

• A national catastrophe

• Unrest in the Middle East thus rising energy costs

• The war against terrorism could represent an

opportunity or a threat.
INTERNAL STRENGTHS
AND WEAKNESSES
Internal strengths and internal weaknesses are an
organization’s controllable activities
 INTERNAL STRENGTHS AND
WEAKNESSES ARISE IN:

• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research and Development
• Management Information Systems
LONG-TERM
OBJECTIVES
 LONG-TERM OBJECTIVES
Objectives can be defined as specific results that an
organization seeks to achieve in pursuing its basic mission.
Long-term means more than one year.
 OBJECTIVES ARE ESSENTIAL FOR
ORGANIZATIONAL SUCCESS
BECAUSE THEY:
• State direction
• Aid n evaluation
• Create synergy
• Reveal priorities
• Focus coordination
• Provide a basis for effective planning,
organizing, motivating, and controlling
activities.
 OBJECTIVES SHOULD BE

• Challenging
• Measurable
• Consistent
• Reasonable
• Clear
STRATEGIES
 STRATEGIES

Strategies are the means by which long-term

objectives will be achieved.

Business strategies may include geographic

expansion, diversification, acquisition, product
development, market penetration, reduction of
expenditure, liquidation, and joint ventures.
 ACTIVITY TIME
Guide Questions:

1. What line of business do the given companies belong?

2. What are the strategies that the above-mentioned

companies taken?

3. Why do you think they do such strategies?

BEST BUY COMPANY
As soon as Best Buy Company became victorious over longtime
archrival Circuit City Stores, Best Buy ran head on into a much
larger, formidable competitor: Wal-Mart Stores. Based in
Richfield, Minnesota, and having 3,900 stores worldwide, Best Buy
reported a 20 percent decline in March 2009 earnings as its new
rival Wal-Mart gained thousands of the old Circuit City customers.
But Best Buy now meets Wal-Mart’s prices on electronics items
and provides great one-on-one customer service with its blue-
shirted employees. Best Buy remains well ahead of Wal-Mart in
U.S. electronics sales, but Wal-Mart is gaining strength.
LEVI STRAUSS
San Francisco-based Levi Strauss added 30 new stores and
acquired 72 others during the second quarter of 2009.
Known worldwide for its jeans, Levi Strauss is expanding and
entrenching worldwide while other retailers are faltering in
the ailing economy. For that quarter, Levi’s revenues in the
Americas were up 8 percent to $518 million, although its
Europe and Asia/Pacific revenues declined 17 percent and
13 percent respectively. Levi’s CEO John Anderson says slim
fit and skinny jeans are selling best; and the two most
popular colors today are very dark and the distressed look.
NEW YORK TIMES COMPANY
New York Times Company’s CEO, Janet Robinson, says her
company is selling off assets and investing heavily in
Internet technology in order to convince advertisers that
the newspaper is getting ahead of technological changes
rapidly eroding the newspaper business. Ms. Robinson is
considering plans to begin charging customers for access
to the newspaper’s online content, because online
advertising revenues are not sufficient to support the
business. The 160-year-old New York Times Company’s
advertising revenues fell 30 percent in the second quarter
of 2009.
ANNUAL
OBJECTIVES
ANNUAL OBJECTIVES
Annual objectives are short-term milestones that
organizations must achieve to reach long-term objectives.

Like long-term objectives, annual objectives should be

measurable, quantitative, challenging, realistic, consistent,
and prioritized.
POLICIES
POLICIES
Policies are the means by which annual
objectives will be achieved.

Policies include guidelines, rules, and procedures

established to support efforts to achieve stated
objectives.

Policies are guides to decision making and

address repetitive or recurring situations.
 POLICIES

Policies, like annual objectives, are especially

important in strategy implementation because they
outline an organization’s expectations of its
employees and managers.

Policies allow consistency and coordination within

and between organizational departments.
MIDTERM PROJECT
• Make an interview on a certain typical Filipino
business organization.
– Company Profile
• Determine the following:
– Competitive Advantage
– Mission and Vision
– External Opportunities and Threats
– Internal Strengths and Weaknesses
– Long – term objectives
– Annual objectives
– Policies
Submission: Midterm Examination Day (Before the exam proper)