strategic management

• Internal environment


  The setting in which an organization locally exists, with unique and interrelated variables that directly affect the organization
• Variables in the internal environment

  • Government
  • Culture
  • Stakeholders
  • Competitors
  • Suppliers
  • Customers
  • Community
• Government's role


  1. Provides infrastructure (physical, technological, economic, social, political)

  2. Creates fair and robust competition

  3. Formulates business policies, implements guidelines, regulates business activities
• Culture


  The communal aggregation and convergence of a country's philosophy, beliefs, traditions, values, attitudes, aspirations, and practices
• Stakeholders


  Business investors, both active and silent, who provide capital and engage in business activities in exchange for profit
• Types of stakeholders


  • Business owners
  • Employees
  • Government
  • Community
• Competitors


  Companies that offer and sell their products and services, continuously striving to outplay and outsmart each other
• Types of competitors


  • Same products
  • Similar products
  • Substitute products
  • Different products
• Competitor strategies


  • Complementary competition
  • Collaborative competition
  • Corrupted competition
• Identifying competitors


  1. Determining similarity in characteristics

  2. Studying consumers

  3. Researching company data

  4. Considering corporate success
• Customers


  The focus of companies' business plans and programs, the reason for their existence
• Customer behavior is difficult to discern, understand, and study with definiteness
• Good product/service


  Gives customer satisfaction, elicits customer approval
• Quality product/service


  Provides customer delight, assures customer patronage
• Customers


  The very reason why companies pursue new product developments and differentiate their existing products and services
• Without consumers, companies have no reason to exist
• Consumer behavior


  A marketing reality that is difficult to discern, understand, and study with definiteness
• Levels of change in customer behavior

  • Customer satisfaction
  • Customer delight
  • Customer intimacy
• Customer satisfaction


  Any product must fulfill its intended use, and that is to attract customers and gain customer approval
• Customer delight


  A condition where customers become excited over the products or the services offered
• Customer intimacy


  The relationship between the company and the customers, best described as warm, complimentary, supportive, and "businessly" personal
• Customer intimacy seals customer patronage or better referred to as customer loyalty
• Customer relationship management (CRM)


  The emphasis of most companies, revolving around the interplay of three significant variables: the company, the product, and the customers
• Suppliers


  Individuals and companies engaged in the delivery of raw materials, machinery, technology, labor, expertise, skills, and other forms of services
• Suppliers


  • They are responsible for the quality of the products produced and the services rendered
  • They affect continuity in operational processes (e.g., production, scheduling, and delivery)
• Community


  The intermixture of peoples coming from all walks of life with different "provincial or city cultures," different values, attitudes, aspirations, traditional beliefs, standards of living, family backgrounds, religions, and educational attainments
• The community is the rationale of the "business framework" and the primary concern of the government
• When a community is not able to attain self-sufficiency, the government, stakeholders, customers, competitors, and suppliers have a societal responsibility to help the deprived and marginalized poor improve and attain quality life
• Porter's Five Forces Model is a popular way of strategizing an organization to attain profitability and market share by scanning the competitive environment
• The five forces in Porter's model

  • Bargaining power of suppliers
  • Bargaining power of buyers/customers
  • Ease of entry of new firms
  • Availability of substitute products
  • Rivalry among existing firms within the industry
• Bargaining power of suppliers

  High when: few large suppliers dominate the market, no substitutes for the specified input, high switching costs, and fragmented customers
• Bargaining power of customers


  High when: customers buy in large volumes, products are not unique, suppliers are fragmented, and product switching is easy
• Barriers to threats of new entrants


  Financial (economies of scale, high initial investments, fixed costs, learning curve), marketing (brand loyalty, controlled distribution channels, protected intellectual property, supplier-customer relationships), and production/operation (access to raw materials, qualified labor)
• Threats of substitutes


  Present when complementary, alternative, and similar products are in existence and sold at lower prices
• Competitive rivalry among players


  High when: many players with similar strategies, rivalry is not differentiated, high barriers for exit, and growth of a company is at the expense of the other
• Porter's three fundamental generic strategies

  • Cost leadership
  • Differentiation
  • Focus
• Complementary Competition


  Companies appear to compete with themselves by producing the same products, using different brand names, and targeting different market segments
• Complementary Competition


  • A real estate company that sells low-cost housing to target markets, classes C and D; and average-cost housing to middle-income class families
• Collaborative Competition


  Companies whose relationships among each other are strategic and cooperative
• Collaborative Competition


  • Oil companies in the country, they are in "friendly" competition