Strategic Management

• Strategic Management


  The ongoing planning, monitoring, analysis and assessment of all necessities an organization needs to meet its goals and objectives
• Strategic Process


  1. An organization's leaders define their vision for the future and identify their organization's goals and objectives

  2. A planning process of setting goals and creating an action plan to implement the strategies

  3. Concerned with making decisions

  4. Used to match the ever-changing market environment and the competitive structure of the business involving material and production resources
• Industry-Based model (Industrial-based model)

  • Analysis of the prevailing industry where the firm has its competitive advantages over other firms in the environment
  • Corporate strategy must focus on industry search and scanning of the most profitable business activities that would give the best returns on investments
  • An economic and production system based on large-scale manufacturing, standardized processes, and mechanized production methods
• Key characteristics of the industrial-based model

  • Mass production
  • Standardization
  • Division of Labor
  • Mechanization and Automation
• Resource-Based model


  • Analysis of the prevailing resources available to the firm that are present in the internal environment which could then be utilized in the development of competitive advantage
  • A theory that suggests that a company's resources and capabilities can give it a competitive advantage
  • The capabilities of the human resources that could be linked to the need of the present technological development as highly trained manpower could develop new products
• Strategic Vision


  • The advantage of the firm's resources and core competencies to accomplish its goals in the competitive environment
  • An aspirational description of what an organization wants to achieve or accomplish in the mid-term or long-term
  • A long-term, comprehensive picture of an organization's goals and the methods for achieving those goals
  • A set of goals should be developed that give the organization a direction and future purpose
• Concept-based vision statements


  • BBC: "To be the most creative organization in the world"
  • Disney: "To make people happy."
  • Google: "To provide access to the world's information in one click"
  • IKEA: "To create a better everyday life for the many people"
  • Instagram: "Capture and share the world's moments"
  • LinkedIn: "Create economic opportunity for every member of the global workforce"
  • Microsoft: "To help people throughout the world realize their full potential"
  • Nike: "To bring inspiration and innovation to every athlete in the world"
  • Sony: "To be a company that inspires and fulfills your curiosity."
  • Uber: "We ignite opportunity by setting the world in motion"
  • Whole Foods: "To nourish people and the planet."
• Quality-based vision statements


  • Amazon: "Our vision is to be earth's most customer-centric company, where customers can find and discover anything they might want to buy online."
  • Avon: "To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women—globally."
  • Ford: "People working together as a lean, global enterprise to make people's lives better through automotive and mobility leadership."
  • IBM: "To be the world's most successful and important information technology company. Successful in helping our customers apply technology to solve their problems. Successful in introducing this extraordinary technology to new customers. Important because we will continue to be the basic resource of much of what is invested in this industry."
  • McDonald's: "To move with velocity to drive profitable growth and become an even better McDonald's serving more customers delicious food each day around the world."
  • Starbucks: "To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow."
• Strategic Mission


  • The statement of the firm's direction in the pursuit of its operation in the production and marketing of its products and services
  • The statement says the organization's goal and what it wants to do
  • Provides general description of the products and services that the firm offers to its various stakeholders based on its own core competencies
  • Explains why the organization exists, its purpose, and what it serves
• Trends & Condition that Alter Competition

  • Increased rate of technological change
  • The Advancement in Information Linkages
  • Knowledge-based Intensity
• Increased rate of technological change

  • The period of Innovation
  • The diffusion of technology for companies to innovate in the world of business
  • Innovation is covered by patent
  • The internet age plays a great role in the marketing of products and services
• The Advancement in Information Linkages

  • The advancing technology in the exchange of Information in recent years brought by presence of new computers and wireless transformation of messages across countries
  • The effective and efficient use of technology, the resultant factor is the progressing of competitive advantage by most industries
  • The speed of technological linkages and interconnections reduces the cost of message transformation, hence making business connection more efficient and effective
• Knowledge-based Intensity


  • In the new century, knowledge based on new technology and its application is the organizational corporate resource that develops greater competitive advantages
  • The capacity to learn is another strategy to develop competitive advantage
  • Continuous learning is the product of innovativeness
• External Influence on Return on Investments

  • The availability of fixed assets
  • The Economies of Scale
  • Barriers to Market entry
  • Corporate Vertical and Horizontal Diversification
  • Degree of Market Concentration
• The availability of fixed assets

  • The firm that has a well asset management could compete with other firms within the industry as they have the capital base to mobilize resources to take advantage of the prevailing opportunities within the business environment
  • Example: Camella Properties in the real estate business is brought about many real properties that their inventory for development
  • San Miguel Corporation diversified in other areas of business in other profitable ventures like food, beverages, meat & processed, wine & beer, energy & power generation, and construction & development
• The Economies of Scale

  • The firm that produces more products not only for local market but for the global supply that has a greater advantage of the economies scales
  • The more products that the firm produces, the lesser are the cost of production as the fixed cost is maximized and marketing strategy is spread to greater market niche
  • Example: Nestle – they penetrate not only the local market but also other countries that depended on quality affordable products. They import some of its inputs, their economy of scales put them in great advantage
• Barriers to Market entry

  • Factors that can prevent or impede newcomers into a market or industry sector, and so limit competition
  • These can include high start-up costs, regulatory hurdles, or other obstacles that prevent new competitors from easily entering a business sector
  • Common barriers to entry include special tax benefits to existing firms, patent protections, strong brand identity, customer loyalty, and high customer switching costs
  • Example: Jollibee bought all possible competitors (Mang Inasal, Chowking, Greenwich and other smaller fast food outlets)
  • Smart and Globe Communication – Smart (Pldt)
• Corporate Vertical and Horizontal Diversification

  • Horizontal diversification: Expanding forward or backwards in your supply chain or production process, adding new products or services that are related to your existing ones, but appeal to different customers or segments
  • Vertical diversification: Expanding into products or fields that are somewhat unrelated to current business activities, moving up or down the supply chain of your industry, and take control of more stages of production or distribution
• Degree of Market Concentration

  • Companies that acquire and develop skills needed to implement strategies required to succeed in their chosen field of operation, developed competitive advantage by concentrating on their field of expertise
  • Expertise and market concentration are two important ingredients that will generate increase in return on investment and gradually expand to other markets and products through diversification and integration
• Influence of Internal Factors on Return on Investments

  1. Study the business environment

  2. Locate the industry with high potential or above average returns

  3. Identify the strategy needed by the industry that will generate greater returns

  4. Develop and acquire the needed assets and skills to implement strategy

  5. Use the corporate skills that were developed, and implement the strategy