CITY GOVERNMENT OF SAN PABLO

DALUBHASAAN NG LUNSOD NG SAN PABLO

CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

FIN M 12: STRATEGIC MANAGEMENT

Chapter 1: A STRATEGIC MANAGEMENT MODEL

Learning Outcomes

Particularly at the end of this chapter,the students should be able to:

1. Define strategic management;

2. Identify each of the components of the strategic management process and its
corresponding outcome;
3. Identify the strategic management model;
4. Differentiate strategic analysis from strategic decision making and strategic
intelligence from strategic thinking;
5. Explain the meaning of strategic planning;
6. Formulate a sample company vision, mission statement, and company goals and
objectives ;and
7. Compare organization climate and organizational culture.

The Reality of Dynamism

The 21st century epitomizes 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. 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 peoples –whether developed or undeveloped, large or small, powerful or weak. As
a result, the current landscape of competition and pursuit and transformation, volatility is a
ruthless reality. Impermanence and unpredictability are certainties. Nothing is stable; neither is
regularity a logical expectation. Competition has gone beyond nations, peoples, cultures,
geographic frontiers, and industries. As the glgobal economy expands, blurring boundaries, any
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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 over excitement and agitation. Hypercompetition occurs when product/service
offering and technologies are so new that standards become unstable and competitive
advantage is not sustainable. It is a 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 a sales, taking
competitors by surprise ,capturing a bigger market share, winning the business battle, and
seizing one slot.

In a strict sense, hypercompetition is a situation where both globalizations 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 a 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 the
need to strategize.
QUESTIONS 1.1
QUESTIONS
1. How1.1
will you describe in your own words the reality of dynamism? Cite examples to prove
why the environment is considered dynamic?
1. How will you describe in your own words the reality of dynamism? Cite examples to
2. Define hypercompetition. Give two important catalyst of competition and expound on their
prove why the environment is considered dynamic?
respective roles in setting off hypercompetition in the global environment.
2. Define hypercompetition. Give two important catalyst of competition and expound on
their respective roles in setting off hypercompetition in the global environment.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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 objective 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 at 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 objective while
strategic control is the application of an appropriate monitoring and feedback system.

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

enable an organization to achieve its goal and objectives, the components of the 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.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

Strategic Analysis Strategic Intelligence

Strategic Strategic Thinking

Decision- making

Strategy Organizational
Formulation Competitiveness

Strategy Comparative Advantage

Implementation

Strategic Control Strategic Performance

Figure 1.1 THE STRATEGIC MANAGEMENT PROCESS

 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
capabilities of thinking strategically. Strategic Thinking is the cognitive process of
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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 efficiency employed, organizations can achieve
comparative advantage. Comparative advantage refers to the ability of an organization
to produce a particular good and 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:

Organizational Input Strategic Management Organizational Success
Process
 Management/  Strategic
Employees  Strategic Analysis Intelligence
 Financial  Strategic Decision-  Strategic Thinking
Resources making  Organizational
 Facilities/  Strategy Competitiveness
Equipment Formulation  Comparative
 Infrastructures  Strategy Advantage
 Processes Implementation  Strategic
 Strategic Control Performance

Figure 1.2 A Strategic Management Model

 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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 consist 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
output are exhibited in the strategic intelligence acquired, strategic thinking mode developed,
organizational competitiveness, comparative advantage, and strategic performance attained by
the organization.

Questions
Questions1.2
1.2

1.1. How
Howwill
willyou
you define strategicmanagement?
define strategic management?
2.2. What
Whatrole
roledo
do organizational inputsplay
organizational inputs play
in in
thethe attainment
attainment of success
of the the success
of anof an
organization?
Identify each of
organization? these inputs.
Identify each of these inputs.
3. Differentiate strategic analysisform
3. Differentiate strategic analysis formstrategic
strategic decision-making. GiveGive
decision-making. an example.
an example.
4. Differentiate strategic intelligence from strategic thinking. Show this difference
4. Differentiate strategic intelligence from strategic thinking. Show this difference using using
companiesthat
companies that have
have demonstrated
demonstratedthe application
the application of both processes.
of both processes.
5. When does an organization enjoy competitiveness? Explain by giving an example.
5. When does an organization enjoy competitiveness? Explain by giving an example.
6. What is comparative advantage? Cite examples.
6. What is comparative advantage? Cite examples.
7. What role does strategic control play in the strategic management of an organization? Give
7. What role does strategic control play in the strategic management of an organization?
examples.
Give examples.eg

Strategic Planning
Oftentimes, the word strategic planning is more popular than strategic management.
Essentially, these two words are the same. In terms of purpose, both strategic management
and strategic planning have the same goals and objectives, that is, to devise a strategic mode of
preparing, addressing, and steering organization 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.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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 a 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 organization 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 ways, 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 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 ways to realize them in the context, and periodically but 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 levels. It formalizes all
plans with respect to type and extent.
3. It is the process of developing a strategic fit between the organization’s goal 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
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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.
9. It necessitates the leadership and support or 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 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 described the major factors or forces that affect the organizations 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 mechanism, and the budgets
for the year ahead.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

Whether the plan is long-range or annual, it can be strategic when the organization formulated
its actions plans and takes advantage of opportunities I 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 determined 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 determined the best way for the
organization to be where it wants to be and achieve it goals;
5. Monitoring the implementation of strategies to measure performances; and
6. Conducting periodic and continuous assessments 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 implantation. Concomitant to the process of implementing the
strategy/strategies, monitoring system has to be set in place. Periodic assessments then
follow to determine whether the chosen strategies were worthwhile and effective.

Need for Strategic Planning

Why is there a need for strategic planning? As a earlier stated, the reality of dynamism,
complexity, and hypercompetition characterizes today’s environment. To survive
organizations need to plan carefully their strategic approaches. Therefore, strategic plans
have to be prepared purposefully for effective and efficient implementation, thus leading to
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

the attainment of their set objectives. The benefits of designing and putting into effects a
strategic plan cannot be overemphasized.

Strengths and Limitations of Strategic Planning

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 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 limitation. 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. Similarity, conducting strategic planning
sessions may email cost that can be expensive to organizations.

Questions 1.3 Questions 1.3

1. Discuss in what ways strategic management and strategic planning are similar. In
what ways are the two different?
2. Give reasons why organizations undertake strategic planning. Do you agree with this
reason? Explain your answer
3. What are the disadvantages of conducting strategic planning? Will you still advise
organizations to conduct strategic planning? Why?
4. Define strategic planning and discuss its salient features.
5. Discuss and differentiate the two types of strategic planning.
6. Enumerate the steps in strategic planning.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

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
organization’s thrust of achieving
competitiveness.

The organizational vision is an

inspirational statement of what the
organization hopes to achieve at some point vision
in the future. It is the image of what an
organizations desires to achieve. It is short
and succinct, but it carries an extraordinary
force that will stir, motivate, and inspire Goals Mission
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 for
the organizational vision binds the company
and its employees together.

Figure 1.3 Relationship of the

Vision-Mission-Goals of an Organization
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 blinding everyone to a company’s
ultimate goal.

Mr. Amando Abril

Prepared By: