TEMPLATE 3: Module Template

Module No. & Title MODULE 4: BUSINESS STRATEGIES

Hi dear students. Good day everyone. At the end of week 16, we
will be able to learn the different strategies in the business. 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 this
course pack, we will focus on the topics dedicated to ABM 2-
Module Overview
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.

At the end of Module 4, you should be able to:

a. Discuss the components of supply chain management;

b. Define and explain the importance of inventory management;
c. Contrast manufacturing from assembly;
d. Examine the interrelationships of the sequential processes of the
Module
Objectives/Outcomes logistics circle;
e. Assess the different popular competitive strategies;
f. Distinguish the role of innovation as a competitive strategy; and
g. Explain why companies opt to implement stability or retrenchment
strategies.
 This module 4 will tackle the following topics:
Lessons in the module
Lesson 1: Supply Chain Management; and
Lesson 2: Competitive Strategies

TEMPLATE 4: The Lesson Structure

Module No.
MODULE 4: BUSINESS STRATEGIES
and Title
Lesson 1: Supply Chain Management; and
Lesson No.
and Title Lesson 2: Competitive Strategies

a. Discuss the components of supply chain management;

b. Define and explain the importance of inventory management;
c. Contrast manufacturing from assembly;
d. Examine the interrelationships of the sequential processes of the logistics
Learning
Outcomes circle;
e. Assess the different popular competitive strategies;
f. Distinguish the role of innovation as a competitive strategy; and
g. Explain why companies opt to implement stability or retrenchment
strategies.
Time
Week 14-16
Frame

Hello student! Let us fill this lesson with self-trust and self-motivation. For
sure, you will enjoy this lesson because this is one of the best parts where
Introductio we explore the overview of management where it embraces the operations
n management’s definition, the origin and its nature and the total contribution
of this subject to your chosen degree/endeavor.

So, what are we waiting for let’s begin!

Activity 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:
1. Supply Chain Management
2. Supply Management
3. Sourcing and Ordering
4. Inventory Management
5. Inventory Models
 6. Production and Operations
7. Marketing and Sales
8. Growth Strategies

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

Abstraction LESSON 1: SUPPLY CHAIN MANAGEMENT

VALUE CHAIN ANALYSIS – As global markets widen; businesses have

to pay closer attention to where their raw materials come from, how they
are produced, how finished products are stored and transported and what
their end products users are really asking for. The main business definitions
of any organization is to produce goods or render services, and to achieve
these set goals and objectives, it engages in a series of activities. If an
organization wants to be profitable, it has to sell value to its buyers – value
that is worth paying for.

VALUE CHAIN – is a general term that refers to a sequence of interlinked

undertakings that an organization operating in a specific industry engages
in. It looks that every phase of the business from the time of procurement of
raw materials to the time its product reaches its eventual end users or
consumers. The value chain concept is concretized in supply chain
management.

SUPPLY CHAIN MANAGEMENT

Is a broad continuum of specific activities employed by the

company. It consists of the following:

 PURCHASING OR SUPPLY MANAGEMENT – which includes

the sourcing, ordering, and inventory storing of raw materials, parts
and services.

 PRODUCTION AND OPERATIONS – also known as

manufacturing and assembly.

 LOGISTICS – which is the efficient warehousing, inventory

tracking, order entry, management, distribution and delivery to
 customers; and

 MARKETING AND SALES – which includes promoting and

selling to customers.

SUPPLY MANAGEMENT – is now a popular term used for purchasing

which was formerly termed as procurement. It is a key business function
that is responsible for:

(1) identifying material and service needs;

(2) locating and selecting suppliers; negotiating and closing contracts;
(3) acquiring the needed materials, services, and equipment;
(4) monitoring inventory stock keeping units; and
(5) tracking supplier performance.

SOURCING AND ORDERING

The following are the steps to take when an organization needs to

source out raw materials or parts.

1. Specify the need clearly by writing down the details. Normally, the
stock keeping unit (SKU) is coded with brief but complete details
like date, identification number, the originating department, the
account to be charged, complete description of the raw
material/service, date needed, any special instruction, and signature
of authorized person making the request.

2. Identify and analyze possible sources of supply. Generally, more

than one supplier should be considered. The criteria for choosing
 suppliers are sound business sense and attitude, good record of
accomplishment, sound financial base, suitable technical capability,
quality orientation, customer service mentality, and effective
logistical arrangements.

a. USE A REQUEST FOR QUOTATION when the need is clear, the

commodities are in constant use, the quotation and easily
obtainable.

b. USE A REQUEST FOR PROPOSAL when the buyer has complex

requirements and plans to use negotiation to determine price and
terms.

c. USE A REQUEST FOR BID when the desire is a competitive bid

process.

3. Ask potential suppliers for their respective quotations, proposals and

bids.

4. Compare and evaluate submitted documents, then select the

suppliers. Both buyers and suppliers agree and determine the terms
of the contract. Correspondingly, the negotiated order placements
follow.

5. Prepare, place, follow-up, and expedite the purchase order (PO).

The purchase order is a written requisition placement to purchase
supply.

6. Confirm that the order placed has actually arrived in good condition
and at the quantity. Forward, the shipment to its destination,
properly document and register the receipt, and forward it to the
accepting party/parties.

7. Lastly. Invoice clearing and payment follows.

INVENTORY MANAGEMENT

Another facet of supply management is inventory management.

The role of inventory is to buffer uncertainty. It includes all purchased
materials and goods, partially completed materials and component parts,
and finished goods. There are four (4) broad categories of inventories.

1. All unprocessed purchased input or raw materials for

 manufacturing. Companies purchase supplies for any of the
following reasons: to avail of quantity discounts, to anticipate future
price increases, to safeguard against supplier problems, to minimize
transportation costs, and to avoid supply shortage.
2. Work-in-process (WIP)
3. Finished goods include all completed products for shipment.
4. Maintenance, repair, and operating supplies (MRO) include the
materials and supplies used when producing the products but are not
parts of the products.

INVENTORY MANAGEMENT - Is ordering the right quantity of SKUs at

minimum inventory costs.

INVENTORY COST is the sum total of ordering costs and carrying costs.

ORDERING COST (set-up-cost) are variable costs associated with placing

an order with the supplier like managerial and clerical costs in preparing the
purchase.

CARRYING COSTS (holding costs) are costs incurred for holding

inventory in storage like handling charges, warehousing expenses,
insurance, pilferage, shrinkage, taxes, and costs of capital.

PRODUCTION AND OPERATIONS

- are processes that transform operational input into output to satisfy

consumer needs and requirements. This transformational process
consists of manufacturing and assembly.

MANUFACTURING

Is the process of producing goods using people or machine

resources.
It commonly refers to industrial production where raw materials are
converted into finished goods.
ASSEMBLY
Is the process of putting together raw materials into a desired
output. Quality raw materials and parts, efficient production layouts and
processes, and employees with skills and motivation are essential to
effective transformational processes. Once achieved, value can be generated
through appealing product designs, quality and reliability, efficient service
performance, accessible location site, attractive store displays, affordable
prices, and good customer service.

THE LOGISTIC CIRCLE – now is the popular term in supply

management includes the supervision of certain sequential processes. These
include warehousing, scheduling, dispatching, transportation and delivery.

WAREHOUSING is the function of physically packing finished goods or

merchandises in a building, room or any space for temporary storage. While
these items are stocked in storerooms, they are timetabled for release to
customers or buyers.

SCHEDULING is the act of organizing these inventory units and booking

them for delivery.

DISPATCHING products are for transfer; this may include posting,

mailing, shipping out, transmitting, forwarding, or releasing commodities.

TRANSPORTATION scheduling and other logistics are necessary to make

dispatching cost efficient. The goal is to minimize transportation costs.
Therefore, considerations have to be prioritized in terms of location site,
ease or gravity of traffic, safety and labor requirements.

DELIVERY to the specified site is undertaken. It closes the entire logistics

circle.

MARKETING AND SALES

Products are produced and services rendered for ultimate release to

customers. Therefore, there is a need to market this merchandise to
interested buyers. Companies can adopt different modes of marketing to
attract and sell o customers.

GROWTH STRATEGIES

The adoption and implementation of a growth strategy is one of the

most important considerations for every organization. Particularly, growth
strategies are carefully studied and deliberately carried out by organizations
for the following reasons:

 they want to survive the hypercompetitive environment and not

perish;
 they want to increase their earnings or income;
 they want to create their advantage among competitors; or
 they may want to increase their market leadership in a given
industry.

INTERNAL GROWTH STRATEGIES

Internal growth strategies are approaches adopted within the
company. These broad growth strategies can be any of the following:
MARKET PENETRATION, MARKET DEVELOPMENT, PRODUCT
DEVELOPMENT, AND DIVERSIFICATION. The interrelationship of
these four constructs are shown in Table 4.1. In this table, the two main
variables considered are products and markets, possessing two properties:
current and new.
  MARKET PENETRATION suggests that for an organization to
increase its growth, market penetration can be actualized by selling
more of its current products/services to its current customers or
buyers.

 MARKET DEVELOPMENT is the process where a company can

sell more of its current products by seeking and tapping new
markets.

 PRODUCT DEVELOPMENT is an internal, growth strategy where

company sells new products to an existing market. In this strategy,
there is a need for the organization to be more creative in coming up
with differentiated products and services.

 DIVERSIFICATION is a product mix growth strategy that involves

creating differentiated products for new customers.

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LESSON 2: COMPETITIVE STRATEGIES

COMPETITIVE STRATEGIES are essentially long-term action plans

prepared with the end goal of directing how an organization will survive
and compete.
  LOW-COST LEADERSHIP STRATEGY. The objective of the
low-cost leadership competitive strategy is to offer products and
services at the lowest cost possible in the industry. This strategy is
implemented when the organization makes every effort to be the
most effective, if not overall, low-cost provider of a service or
product.

Example: Cebu Pacific Airlines uses the low-cost leadership strategy to

capture the broadest reach of air traveling customers by offering airfares at
low prices.

 BROAD DIFFERENTIATION STRATEGY. The objective of the

broad differentiation competitive strategy is to provide a variety of
products, services or product/service features that competitors do
not offer or are not able to offer to consumers. This strategy is
implemented when the organization offers a unique product/service
with distinct traits and features that will appeal better to its
consumers/buyers.

Example: a mobile phone with television feature is a broad differentiation

strategy product. This is true of fast foods with playgrounds like slides and
see-saws.

 BEST-COST PROVIDER STRATEGY. This strategy is a

combination of the low-cost leadership and broad differentiation
strategies. It is implemented when the organization gives its
customers more value for money by emphasizing both low-cost
products and services with unique features. The end goal is keeping
 its customers.

Example: Baclaran increases its customer base by selling varied, wide-

ranged numbers, and low-cost products in large quantities.

 FOCUSED/ MARKET-NICHE LOWER COST STRATEGY. This

strategy is implemented when the organization on a limited market
segment and creates a market niche based on lower costs.

Example: There are low-cost condominium units that cater to middle class
employees. An affordable and relaxed dwelling residence is an example of
using a focused/market -niche lower cost strategy. Another example is a
specialized audio and video equipment store that sells only these two types
of products. Being dedicated, the store can purchase stocks in bulk, avail of
price discounts, and therefore, sell it low prices.

 FOCUSED/MARKET-NICHE LOWER COST STRATEGY. This

strategy is implemented when the organization concentrates on a
limited market segment and creates a market niche based on
differentiated features like design, utility, and practicality.

Example: Rolex has an elite clientele base. It sells limited editions of

watches. One look and one can immediately say that person is wearing a
Rolex watch. Cost, design, quality, and branding are distinct features of
Rolex watches

Application DIRECTION: Write A if the item is under PRODUCT LINE

Write B if the item is under PRODUCT MIX

1. Sunsilk
2. Shampoo
3. Furniture
 4. Motorcycle
5. Car
6. Samsung J1
7. Nokia 1100
8. Cellphone
9. RTW
10. LEE jeans (small)
11. Toothpaste
12. Tootbrush
13. Colgate toothpaste
14. Colgate toothbrush
15. TMX 125 motorcyle
16. JAG jeans
17. Ranger car
18. Laptop
19. Tablet
20. Lenovo cellphone

Well done! You have just finished MODULE 4 in this course subject.
Should there be some parts of the lesson which you need clarification,
Closure please ask you instructor during your face-to-face interactions.

Now if you are ready, please proceed MODULE 5 which will discuss about
Corporate Strategies.