SANTO TOMAS COLLEGE OF AGRICULTURE,

SCIENCES AND TECHNOLOGY

Feeder Road 4, Barangay Tibal-og Santo Tomas Davao del Norte, 8112, Philippines

ABM 111
STRATEGIC MANAGEMENT

MODULE 1 TOPICS

Lesson 1: Strategic Management

Definition

A Strategic
Lesson 2: Strategic Planning
Management
Model Lesson 3: Strengths and Limitations
of Strategic Planning

INTENDED LEARNING OUTCOMES

 Identify each of the components of the strategic management process and

its corresponding outcomes.
 Discuss the meaning of strategic planning.
 Formulate a sample company vision, mission statement, and company goals
and objectives.

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Module No. MODULE 1
and Title

Lesson No. Lesson 1: Strategic Management Definition

and Title

Learning Identify each of the components of the strategic management process and
Outcome its corresponding outcome.

Time Frame 3 Hours

Hi dear students. Good day everyone. At the end of week 5, we will be able to learn the
importance of Strategic Management its nature and definition. There will be activities that
would really test your acquired standard theories.

Hooray! And welcome student in this second semester (S.Y. 2022-2023). The
journey in this pandemic has been tough yet you made it. New normal has come, but the
learning must continue. This would be happy and exciting! As we start digging through
Introduction this course pack, we will focus on the topics dedicated to ABM 111- Strategic
Management. This module will guide you through the ideas of the above-mentioned
subject. This module is specifically crafted to focus on the concept of Strategic
Management and activities that will assess your level in terms of skills, comprehension
and knowledge with the expectation to demonstrate through the learning materials.

So, explore and experience the module and be a step closer to successful management.

To launch your understanding on the topic, give me a word or two that comes into your
mind when you hear or read the word:

Activity 1. Strategic Management

2. Strategic Analysis
3. Hyper competition
4. Reality of dynamism
5. Comparative advantage

With your answers on the activity above, can you share your thoughts now? Do the above
Analysis words associate with each other? If yes, in what form? Expound your answer.

THE REALITY OF DYNAMISM

The 21st century epitomizes the reality of dynamism. In fact, today’s milieu is in a
Abstraction state of fluidity. It is not static. Rather, changes and fluctuations are constantly happening
in the surroundings. These actualities 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 people – whether developed or undeveloped, large or
small, powerful or weak. As a result, the current landscape of competition is highly
threatening and daunting. With an environment that is characterized by drive, energy and
pursuit and transformation, volatility is a ruthless reality. Impermanence and
unpredictability are certainties. Nothing is stable; neither is regularity a logical
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 expectation. Competition has gone beyond nation, people, blurring 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.

HYPERCOMPETITION

HYPERCOMPETITION is a fundamental feature of the new economy. As the

word implies, it carries a note of overexcitement and agitation. It occurs when
product/service offering and technologies are so new that standards become unstable and
competitive advantage is not sustainable. It is the condition where strategic maneuverings
have escalated to bigger business exposure, more sophisticated marketing positioning,
aggressive selling, and innovative products and services. Doing business has become
intense and more deliberate. It seems like a big waste not to discern and take advantage of
every opportunity. The business atmosphere is characterized by activities such as
outdoing each other, surpassing sales, taking competitors by surprise, capturing a bigger
market share, winning the business battle, and seizing the number 1 slot.

EXAMPLE: You are planning to replace the leading brand of soft drinks globally which
is the COCA COLA, even though your company is still newbie in the soft drink
competition.

LEADING BRAND OF SOFTDRINK INDUSTRY (TOP 1)

CHALLENGER’s BRAND IN SOFTDRINK INDUSTRY (TOP 2

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 In a strict sense, hyper competition is a situation where both globalization and
technology collaborate to create a heightened cut-throat situation. It means that
businesses compete with each other whether they have same products, similar products,
substitute products and different products. Competitors continuously strive to outplay and
outsmart each other. They need to DEVISE WAYS AND MEANS TO SURVIVE and
deal with this super competitive and turbulent reality. New value creation, competitive
pricing, innovation in supply chain management, and high degrees of quality are logical
responses of companies. In short, the name of the game today is tougher and smarter
competition, quantitative and qualitative organizational changes, and sustainable
competitive advantage. In this hypercompetitive environment, only the most adaptive and
nimble organizations will survive. Thus, there is a need to strategize.

Strategic Management Defined

Strategic management is a continuous process of strategy creation. It involves

strategic processes 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 consists 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 and 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.

Defined as the science of creating, executing, and evaluating cross-functional

decisions to enable an organization to achieve its goal and objectives, components of
strategic management process have to be effective. As shown in Figure 1.1 output may
materialize when each of the components of the strategic management process is
appropriately executed.

Strategic Analysis Strategic Intelligence

Strategic Decision-Making Strategic Thinking

Strategy Formulation Organizational Competitiveness

Strategy Implementation Comparative Advantage

Strategic Control Strategic Performance

Figure 1.1 The Strategic Management Process

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  If strategic analysis is accurately conducted, organizations can develop strategic
intelligence. Like an antenna, strategic intelligence is the capability of an
organization to possess relevant and related knowledge, abilities, foresight, and
systems thinking, such that it 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.
 If strategic decision-making is correctly affected, organizations can acquire the
capability of thinking strategically. Strategic thinking is the cognitive process of
competently and analytically weighing factors and arriving at critical decisions in
the context of the current milieu of which an organization is part.
 If strategy formulation is uniquely designed and effectively communicated,
organizations have greater possibilities of attaining organizational
competitiveness. Organizational competitiveness pertains to the ability of any
business/company to utilize its resources optimally and sustainably for maximum
performance and productivity.
 If strategy implementation is efficiently employed, organizations can achieve
comparative advantage. Comparative advantage refers to the ability of an
organization to produce a particular good or service at lower marginal and
opportunity costs than its competitors.
 If 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 context of lean and
quantifiable management.

Thus, the strategic management model is illustrated as follows:

The strategic management model (Figure 1.2) shows the relationships between and
among the input, process and output. The input in this model includes organizational variables
like management and employees, financial resources, facilities and equipment, infrastructures,
and processes. The strategic management process consists 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. In particular, the
outputs are exhibited in the strategic intelligence acquired, strategic thinking mode developed,
organizational competitiveness, comparative advantage, and strategic performance attained by the
organization.

Application Essay Writing:

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 1. What role does strategic control play in the strategic management of an
organization? Give 3 examples. 10 points
2. When does an organization enjoy competitiveness? Explain by giving an example.
10 points
3. Differentiate strategic intelligence from strategic thinking. Show this difference
using companies that have demonstrated the application of both processes. 20
points
4. Differentiate strategic analysis from strategic decision-making. Give an example.
10 points

Essay Rubrics
Outstanding Good Fair Poor Very Poor
5 points 4 points 3 points 2 points 1 point
 Well written  Writes fairly  Minimal  Somewhat  Lacking effort.
and very clear. effort. unclear. Very poor
organized.  Good Minimal  Shows little grammar
 Excellent grammar grammar effort. mechanics.
grammar mechanics. mechanics.  Poor grammar  Very unclear.
mechanics.  Good  Fair mechanics.  Does not
 Clear and presentation presentation.  Confusing and address topic.
concise and  Few choppy, Limited
statements. organization. supporting incomplete attempt.
 Excellent effort  Sufficient details. sentences.
and effort and  No
presentation detail. organization of
with detail. thoughts
 Demonstrates
a thorough
understanding
of the topic.

Lesson No. Lesson 2: Strategic Planning

and Title

Learning Discuss the meaning of strategic planning.

Outcome

Time Frame 3 Hours

Introduction Welcome to our lesson 2! This part will give you an information on what is
strategic planning all about and how it differs from strategic management.

To launch your understanding on the topic, give me a word or two that comes into your
mind when you hear or read the word:
Activity
1. Strategic planning
2. Organizational plan
3. Long-range plan

With your answers on the activity above, can you share your thoughts now? Do the above
words associate with each other? If yes, in what form? Expound your answer.
Analysis

Oftentimes, the word strategic planning is more popular than strategic

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 management. Essentially, these two words are the same. In terms of purpose, both
strategic management and strategic planning have the same goals and objective. That is,
to devise a strategic mode of preparing, addressing. And steering organizations to where
they want to go. Particularly, both undertakings endeavor to understand the strategic
position of organizations-their set goals, preferred choices and deliberate and calculated
strategies. Furthermore, both strategic management and strategic planning use the same
processes to attain their goals.
On the other hand, strategic management differs from strategic planning, in that
the former is tackled in the context of an academic environment where it is approached
and treated theoretically while the latter is the buzzword in the business world.
Practitioners and organizations conduct strategic planning yearly or as often as they feel
the need to do so. Secondly, strategic management generally presents all the possible
strategic approaches and techniques that organizations can avail of. It is conducted with a
view of the individuality and distinctiveness of the organization, its current condition,
specific needs, and desired outcomes. In this way, we can say that strategic management
is the springboard of strategic planning. Strategic management is a generic approach
while strategic planning is a distinct and focused approach that is unique to the specific
organization.
Strategic planning is defined as a continuous, repetitive, and competitive process
of setting the goals and objectives that an organization aims to attain, defining the means
to achieve them and assessing the best way to realize them in the context of the prevailing
environment while measuring performance through set standards, and periodically but
Abstraction
continuously conducting reassessments.

Strategic planning exhibits the following properties:

1. It generates the blueprint of what the organization intends to accomplish.

2. The strategic plan presents the grand scheme of the organization and outlines all
the set activities, ranging from the organizational to the departmental level. It
formalizes all plans with respect to type and extent.
3. It is the process of developing a strategic fit between the organization's goals and
capabilities in the context of changing opportunities.
4. It is a process that involves carefully delineated steps. As stated in the definition,
strategic planning is structured, in that it begins with reviewing the environment,
setting goals, adopting and monitoring strategies, and continuously redesigning
them as the needs arise.
5. It is proactive, in that it is written in the context of anticipated future realities.
Strategic planning does not make future decisions. Instead, plans are made in
anticipation of future changes and developments.
6. It is a philosophy because it evolves a dynamic way of conducting and managing
an organization. Strategic planning involves a unique a way of thinking and doing
things. It is an intellectual exercise that embraces a belief that convinces
organizations of their worth and importance. In other words, values are integrated
within the philosophy of an evolving organizational culture.
7. It links the organizational plan with functional and operational plans. Strategic
planning speaks of two types of planning: (a) the organizational grand plan; and
(b) the departmental tactical plans.
8. It is intricately interwoven within the defined managerial functions of organizing
directing, staffing, and controlling. Although strategic planning is a strictly formal
and separate function of management, it is subtly intertwined in all the other
functions and responsibilities of a manager. In other words, no manager can fully
accomplish his/her responsibilities effectively if strategic planning is disregarded
or overlooked.

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 9. It necessitates the leadership and support of top management and, at the same
time, employee participation and commitment. Successful implementation of
strategic planning is largely dependent on responsibility, support, and sustained
leadership coupled with acceptance and involvement of employees. There should
be synergistic interrelationships between departments and intra-relationships
within departments.

Types of Strategic Plans

There are two principal types of plans:

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 organization's long-
term objectives, strategies, and resources required.
2. Annual/yearly - plan-short-term; succinctly describes the organization's present
situation, its goals and objectives, strategies, monitoring mechanisms, and the budget for
the year ahead.

Whether the plan is long-range or annual, it can be strategic when the

organization formulates its action plans and takes advantage of opportunities in the
constantly changing environment while maintaining a tactical alignment between the
organization's goals, capabilities, and opportunities. The steps involved in strategic
planning are iterative, cyclic, and integrative. They include:

1. making a situation audit to ascertain where the organization is today;

2. stating the respective goals and objectives of the organization, the values and
value systems it espouses, its business definition, and its corresponding strategy
statements to determine where it wants to go;
3. delineating appropriate strategies to be carried out in order to help direct the
organization to where it wants to be;
4. identifying and then choosing the soundest strategy to determine the best way for
the organization to be where it wants to be and to achieve its goals;
5. monitoring the implementation of strategies to measure performances; and
6. conducting periodic and continuous reassessments in order to implement
improvements and suggested changes.

The steps in strategic planning will be tackled in detail in the next chapters.
Initially, an organization conducts an environmental scanning to determine where it is
today. Then, with respect to the organization's vision, mission, goals, and objectives, as
well as its value system, apt strategies are identified to help direct the organization to
where it wants to go. There can be more than one strategy of choice. Once the studied
strategies are enumerated, the best strategy that will significantly bring about the
achievement of desired outcomes is specified for implementation. Concomitant to the
process of implementing the strategy/strategies, the monitoring system has to be set in
place. Periodic assessments then follow to determine whether the chosen strategies were
worthwhile and effective.

Application
Essay Writing:

1. What are the disadvantages of conducting strategic planning? Will you still advise
organizations to conduct strategic planning? Why? 10 points
2. Discuss in what ways strategic management and strategic planning are similar. In
what ways are the two different?10 points
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 3. Give reasons why organizations undertake strategic planning. Do you agree with
these reasons? Explain your answers. 10 points

Essay Rubrics
Outstanding Good Fair Poor Very Poor
5 points 4 points 3 points 2 points 1 point
 Well written and  Writes  Minimal  Somewhat  Lacking
very organized. fairly effort. unclear. effort. Very
 Excellent clear. Minimal  Shows little poor
grammar  Good grammar effort. grammar
mechanics. grammar mechanics  Poor mechanics.
 Clear and mechani . grammar  Very
concise cs.  Fair mechanics. unclear.
statements.  Good presentati  Confusing  Does not
 Excellent effort presenta on. and choppy, address
and presentation tion and  Few incomplete topic.
with detail. organiza supporting sentences. Limited
 Demonstrates a tion. details.  No attempt.
thorough  Sufficien organization
understanding of t effort of thoughts
the topic. and
detail.

Lesson No.
and Title Lesson 3: Strengths and Limitations of Strategic Planning

Learning Formulate a sample company vision, mission statement, and company goals and
Outcomes objectives.

Time Frame 3 Hours

Introduction Well done! You are now on last part of our module. This lesson will deepen your
understanding in strategic planning as we will discuss its strengths and limitations.

To launch your understanding on the topic, give me a word or two that comes into your
mind when you hear or read the word:

Activity 1. Organizational vision

2. Mission statement
3. Organizational goals
4. Organizational objectives

With your answers on the activity above, can you share your thoughts now? Do the above
Analysis words associate with each other? If yes, in what form? Expound your answer.

Abstraction Strategic planning defines an organization's vision, mission, and set objectives. It
provides organizations the opportunity to assess the milieu and specify strategies to
achieve their goals Strategic planning helps organizations to stay focused. It makes things
happen. Furthermore, strategic planning helps reduce the chances of committing
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 mistakes, thus, increasing the organization's efficiency. Strategic planning helps in the
more efficient allocation of organizational resources, better collaboration among cross-
departmental employees and functional units, and communication between
managers/supervisors of all levels. Lastly, when cautiously, clearly, and proactively
undertaken, strategic planning provides leverage and competitive advantage to the
organization.

While strategic planning has its advantages, it also has its limitations. Although
conducted yearly or even more often, the strategic plans prepared in some instances are
good only "in paper Some organizations fail to follow faithfully their prepared strategic
plans. If in cases these strategic plans are followed religiously, some organizations may
not be flexible enough to make the needed adjustments and realignments due to inevitable
or forthcoming external or internal challenges. Similarly, conducting strategic planning
sessions may entail costs that can be expensive to organizations.

Figure 1.3 Relationship of

the Vision-Mission-Goals of an Organization

Organizational Vision

To help organizations achieve strategic direction, they need to articulate and have
a commonality in vision, mission, and goals. The interrelationships between and among
these three variables are essential in the organizations' thrust of achieving
competitiveness.
The organizational vision is an inspirational statement of what the organization
hopes to achieve at some point in the future. It is the image of what an organization
desires to achieve. It is short and succinct, but it carries an extraordinary force that will
stir, motivate, and inspire employees to work and refocus toward its desired optimal
future state. Having a strong sense of vision can move the organization to be what it
wants to be. Like an unseen force, the organizational vision binds the company and its
employees together.
An example of a vision statement is: "An educational institution ablaze with the
Spirit of Excellence. This is the vision statement of the educational institution, College of
the Holy Spirit Manila. The statement energizes the administrators, faculty, students, and
staff. It brings singleness in their desire and coherence in their efforts. Although difficult
and in fact, not measurable, the organizational vision is an effective mode of binding
everyone to a company's ultimate goal.

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
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 does, for whom it is done, and how it does what it does.
The mission statement of the College of the Holy Spirit Manila is as follows:
"We build, through Christian and holistic formation, new generations of responsible
citizens who are agents of transformation. Here, what the organization does is "to build";
it does this "for new generations of responsible citizens"; and how it does what it does is
"through Christian and holistic formation."
Mission statements are likewise short and easy to remember. It gives employees
a better perspective on how their tasks contribute to the attainment of organizational
goals. Oftentimes, vision statements are more enduring compared to mission statements.
Mission statements are expected to change in the context of shifting economic realities or
unexpected circumstances like challenges, threats, and even opportunities.

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. They vary and
are essentially dependent on their respective purpose and direction. One of the implied
basic goals of any organization is to use economic resources efficiently and effectively
such that survival, if not profit, is at least secured, thus, ensuring the continuity of the
organization. Goals are macro, encompassing in perspective, and prospective in nature. In
fact, goals represent the overall vision of an organization. By their very nature, goals have
the following properties:

1. Goals provide organizations focus and direction. They neatly converge toward the
purpose of any firm, thus, streamlining all unnecessary and redundant
considerations.
2. Goals move organizations to action. Because goals have to be attained,
organizations are motivated to function and perform toward their vision.
3. Goals develop in organizations the trait of persistence. Thus, organizations
continue to persevere until they achieve their desired success.

Nevertheless, for goals to be attained, they have to be supported by objectives.

Objectives are different from goals; in that they are micro and specific in perspective.
They should possess the following characteristics:

1. Objectives need to be clearly defined and formulated, carefully chosen, specific,

and definite.
2. Objectives may be immediate or short-term.
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 3. They need to be prioritized into a hierarchy of objectives.
4. Objectives need to be realistic and attainable. They need to be flexible, consistent,
and strategic.
5. Objectives need to be measurable over time.

The relationship between goals and objectives can be concretely illustrated. In

Figure 1.4, organizations have overall goals referred to as the organizational goal. To
support and achieve this grand goal, objectives are enumerated. These mentioned
objectives are actually the goals of the respective departments or business units that will
likewise have their own objectives. Because of these interrelationships, objectives need to
be consistently aligned and be within the framework of the given goal.

Figure 1.4 Relationship

between Organizational Goal and Objectives

Strategic objectives are, in general, externally focused. According to Peter Drucker

(2008). objectives fall into eight major classifications:

1. Market standing (e.g., desired share of the current and new markets);
2. Innovation (e.g., development of new goods, services, and of skills and methods
required to supply them);
3. Human resources (e.g., selection and development of employees);
4. Financial resources (e.g., identification of sources of capital and their uses);
5. Physical resources (e.g., equipment and facilities and their uses);
6. Productivity (e.g., efficient use of the resources relative to output);
7. Social responsibility (e.g., awareness and responsiveness to the effects on the
community of the stakeholders); and
8. Profit requirements (e.g., achievement of measurable financial well-being and
growth).

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. They are both intellectual and behavioral, serving as bases for the
organization's actions and way of thinking.
Values are generally exhibited in two different ways, namely, beliefs and
attitudes. More particularly, beliefs are cognitive manifestations while attitudes are
characteristically behavioral. They are fundamental and intricately integrated in the
particular organization's value system. Take note that the values projected by
organizations are largely dependent on any or all of the following: the stockholders, the
Board of Directors, and the top management.

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 Figure 1.5 Value System
of an Organization

Strictly speaking, the values of an organization are not synonymous to its value
system. The value system is characteristically broader in scope; aside from values, it
includes other variables such as the organization's dreams, aspirations, interests,
expectations, philosophies, as well as leadership and management styles and ethical
practices. Moreover, the value system indicates the hierarchy of values ranked by
organizations. Because values are distinct, they differ from one organization to another.
This explains why one organization may be perceived as socially and community-active,
while another is business-oriented. Hence, the importance of these value qualities and
value systems for organizations cannot be underestimated.

Organizational Climate and Culture

The concepts of organizational climate and culture are interrelated,

interdependent, and sequential. They are interrelated, in that organizational climate is
often defined as the regular and repetitive patterns of attitudes and behavior exhibited by
employees of an organization. It is a measure of the health of an organization. It manifests
whether its employees are happy, hardworking, and motivated, or otherwise; whether
good interpersonal relationships exist between and among different levels of
management; and whether the work environment is acceptable and conducive to
productivity. Organizational climate is easier to assess and change. It lends to flexibility.
It precedes and somehow contributes to the solidification of the culture of an
organization.
On the other hand, organizational culture has been variously defined (Hofstede
1980a; Schein 1990). Organizational culture denotes a wide range of social phenomena,
including an organization's customary dress, language, behavior, beliefs, values, symbols
of status and authority, myths, ceremonies and rituals, and modes of deference and
subversion; all of which help to define an organization's character and norms (Scott et al.
2003). Culture, in the sense that it is used here, can be understood as an idealized system
(Schein 1999) because a system focuses on types of meanings represented by values,
formal rules, knowledge, beliefs, and expressive forms (Pettigrew 1990; Parker 1992;
Patrick 2010).
Application
Essay Writing:

1. Why is the mission statement important to an organization? 10 points

2. What values/value system do you want an organization to demonstrate? Explain
your answer. 10 points

Discussion

1. Develop a new vision and mission statement for a business activity that you would
like to form as a business manager of a new small enterprise. 20 points
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