STRATEGIC MANAGEMENT

Prof. Arlenie R. Salamat

Discussion Outline:
 - Things to check for 2nd Meeting
 - The 3 Strategic Management Process
 - Strategy Formulation:
 a. Direction Setting - Vision and Mission
 b. External Environment Analysis
 - Macro (PEST)
 - Worksheets to be submitted next meeting on June 25, 2013 (Vision and
Mission Statement Analysis and PEST Analysis Worksheets)
 - Some reminders
 - Guidelines on how to submit the worksheets online
 - Requirements during reporting



Strategic Management
 - defines as managing/harnessing the different
resources of the organization in a cohesive way to
attain its objectives

 3 Critical Processes of Strategic Management

 a. Strategy Formulation
 b. Strategy Implementation
 c. Strategy Evaluation
Strategy Formulation
- is regarded to be the most critical of the three because this is where
relative and important data and pieces of information are acquired
and analyzed as bases for the next process (strategy implementation)

- includes:
a. developing Vision and Mission
b. identifying opportunities and threats
c. determining internal strengths and weaknesses
d. establishing long-term objectives
e. generating alternative strategies
f. choosing the strategies to pursue
Strategy Implementation
 - often is called the "action stage" of strategic
management. this is often regarded to be the most
difficult stage in Strama because it requires
discipline, commitment, and sacrifice.
Strategy Evaluation
 - is the stage wherein managers would know if
strategies implemented are not working.

 - sometimes the process being ignored which is a big

risk since all strategies are subject to future
modification because external and even internal
factors are constantly changing.

 - is always connected with the strategy formulation

process.
 Three Fundamental Strategy Evaluation activities:

 - Reviewing external and internal factors that are the

bases for current strategies

 - Measuring Performance

 - Taking corrective actions

Strategy Formulation Stages
 1. Developing Vision and Mission
 - a BUT...

 *Analysing the current Vision and Mission as the first

stage instead

 a. Vision Statement
 - "What do we want to become?"
 - it is important in any organization to agree
upon the basic vision that the firm strives to achieve
in the long-term.
For Worksheet preparation:
 *Questions to be answered and justified in Vision Statement Analysis:

ex. "We envision SM to be a Filipino brand that is world class. We see

SM as a market leader that constantly innovates to provide best-
value products and services to its millions of customers"
 1. Does it clearly answer the question "What do we want to become?"
 2. It is concise yet inspirational?
 - motivates not just the employees but also the external
stakeholders - customers, suppliers, creditors, shareholders,
government, etc.



 3. Is it aspirational?
 - a statement of being goal-oriented
 4. Does it give a clear indication as to when it should
be attained?

 b. Mission Statement
 - "What is our business?"
 - A mission statement is a statement of purpose
that distinguishes one organization from other similar
enterprises.
 - A declaration of an organization's "reason for
being"
 *Components to check in Mission Statement Analysis:
 1. Customers - who are the firm's customers?
 - this should be specific
 2. Products/services
 3. Demography/market - where does the firm
compete?
 4. Technology - is the firm technolohically current?
for sustainability and competitiveness?
 5. Conern for survival, growth and profitability -
must be an indication of desire for growth
 6. Philosophy - values, conviction that defines the
firm
 7. Self-concept - what is the distinct competitive
advantage of the company?
 8. Concern for public image - being responsible as
an organization towards social, community and
environmental concerns
 9. Concern for employees - are the employees the
valuable assets of the firm? how does it state this?
Strategy Formulation Stages
 2. Identifying Opportunities and Threats
 - through External Environment Analysis
 Three levels of External Environment Analysis:
 a. Macro Environmental Analysis
 - use of PEST tool (Political, Economic, Social
and Technological)
 b. Industry Analysis
 - use of tools like Porter's 5 Forces, Value Chain,
Perception Mapping and Competitive Profile
Analyses
 c. Market Analysis
 - Market Segmentation
Macro Environment Analysis:
PEST
 The external forces can be divided into four broad
categories:

 1. Economic forces
 2. Social, Cultural, demographic and Environmental
 3. Political, Legal, Government
 4. Technological forces
For Worksheet preparation:
 Characteristics of factors to look into:
 - Factors that drive/impact revenue and cost
 *INCLUDE DATA and SOURCE
 - Site latest trend and latest forecasts
 - Include approximate impact in the industry
 *Provide computations to show such impact
 - Look for factors that have Cost impact and Price impact
 *Check first if it is really a macro factor
 *Is it a future event or trend?
 *If it is a past event, will it still be relevant in
the future?

Cont...
 Then summarize the factors and its impacts to the
company in the first page

 Always compute! (make initial assumptions on the

impact of a factor to the operating profit to show the
relevance of that factor)

 Always QUANTIFY!

 Always update your data every now and then.

Examples of Economic Factors
and how can they be utilized...
 - Factors that have a direct impact on the potential
attractiveness of various strategies

 interest rate (up/down)

 - you can compute the impact of this factor to
the company's long term debts
 - show impact on availability/ attractiveness to
borrow or lend

 Ph = $ exchange rate
 - imported supplies, etc. and its impact on the
operating cost
Cont...
 inflation rate
 - can impact the purchasing power of your
target market
 - can increase or decrease costs of supplies,
labor cost (again, operating cost)

 Price of Petroleum products

 - again, how would it affect your costs
Examples of Social Factors and
how can they be utilized...
 *All types of organizations are being staggered and
challenged by changes in these factors that will
embody/become either opportunities or threats

 1/4 of the OFW's belong to the younger bracket (24-

35 yrs. old) and almost half is getting old (NSCB)

 Studies on more environmental disasters to come

 Migration of rural folks to Manila

 Over congestion of Manila

Examples of Political Factors and
how can they be utilized...
 National and local governments are major regulators,
deregulators, employers, and even customers of
organizations... and can therefore represent key
opportunities and threats

 A bill authored by Sen. Santiago on the banning of the

production of incandescent bulbs and promoting the use of
fluorescent lamps
 - check the status of the bill, (if it is in the 3rd
reading, there is a possibility that it would be
passed)

 Modifying the Anti Money Laundering Law

 - how could affect the operations of financial
institutions?
 Plans of the government for more infrastructure
projects
 - How can this affect you if you are a
construction company like DMCI?

 The Generic drugs law of 2007 had significantly/

severely hurt pharmaceutical companies

 Territorial dispute between PH and China

 - How can this affect you if your suppliers are
from China for its low prices?
Examples of Technological Factors and how
can they be utilized...
 - represent major opportunities and threats that must
be considered in formulating strategies

 - affect products, services, markets, suppliers,

customers, etc.

 *Most often than not, these factors are being ignored

- associated with higher cost (buying, training
people, maintenance and updating)
Remember:
 Include factors that will have a relevant impact to
the industry NOT ONLY TO THE COMPANY!
Some reminders:
 *Send it to my email NOT to the yahoo groups
 arlenie.salamat@yahoo.com

 *filename:
 company name_1 (if it is the first draft)
 company name_2 (if it is the final draft)