STRATEGIC PLAN

Whichever of the strategic management models is used or looked upon, the end-result in going
MODULE 6: STRATEGIC MANAGEMENT MODELS
through the models is the strategy.
Wright, Kroll and Parnell model - Considers analyzing external environment opportunities and
What comes with strategic plan?
threats as the beginning approach. Specifically pointed out the need to begin with a corporate
strategy followed by a business level strategy down to the functional level strategy.  Vision-Mission Statement
 Strategic Objectives
Thompson and Strickland model - Identified five specific tasks that comprise the process of
developing the strategy:  Strategies
 Strategy implementation/execution plan
1) Develop a strategic vision and mission  Monitoring, evaluation, and taking corrective actions
2) Set objectives
3) Craft a strategy to achieve objectives Short, Medium, and Long-term Plan
4) Implement and execute strategy
Short-term strategic plan- refers to a plan to be carried out or achieved within the ensuing
5) Monitor, evaluate and take corrective action year
F. R. David model - Has six tasks:
Medium-term strategic plan- covers a period beyond the short-term usually ranging from 1 to
1) Develop mission statement 3 years
2) Establish long-term objectives Long-term strategic plan- talks about what to achieve beyond the medium-term period usually
3) Generate, evaluate, and select strategies
anywhere between 3 to 5 years or even more.
4) Establish policies and annual objectives
5) Allocate resources
6) Measure and evaluate performance
MODULE 7: ENVIRONMENTAL SCANNING
Wheelen and Hunger model
Nature of Environmental Scanning – It is a process that takes into account both external and
1) Environmental scanning- unique to this model and it is indeed extremely important internal environment. (Wheelen and Hunger; Rayport and Jaworski). Covers a broader context
to consider environmental factors as it involves evaluating, monitoring, and dissemination of information from the external and
2) Strategy formulation internal environments to key people within the corporation (Wheelen and Hunger, 2004)
3) Strategy implementation
4) Evaluation and control Macro Environment - Essentially refers to all forms of direct or indirect factors of overall
environmental conditions at large considered external or outside the business organization.
Rayport and Jaworski model - Consider setting goals premised on a corporate or
organizational mission. A shortcoming of this model is the absence of a system of feedback to SWOT ANALYSIS - A popular tool for doing qualitative analysis of the potentials of business
allow revision of strategy as necessary. organizations particularly in the context of assessing their competitiveness. Stands for
Strengths, Weaknesses, Opportunities, and Threats.
Pitts-lei model - Resembles that of Wheelen and Hunger model that also considers the
importance of analysis of external and internal environment before mission and policies are set. In relation to strategic management, the strengths and weaknesses component of
Feedback is encourage at each level or task just like the other model. the SWOT represents its internal environment whereas the opportunities and threats
component of the SWOT represents its external environment.
The Hybrid model - Comes in six tasks and subsumed into the six tasks are the variety of
component tasks that need to be addressed as also emphasized by Thompson and STRENGTH
Strickland, F.R. David, Wheelen and Hunger, Rayport and Jaworski, as well as Wright, It is something a firm does well or a characteristic that enhances its competitiveness.
Kroll and Parnell. Important to this mode is the role played by the operating officers and Board
of Directors Consists of:
  Valuable competencies or know-how ORGANIZATIONAL COMPETENCIES
 Valuable physical assets
Competency of a firm evolves around the company’s asset or primary strength upon which
 Valuable human assets
the conduct of business is anchored upon
 Valuable organizational assets
 Valuable intangible assets Competency of business organizations is viewed as the product of organizational experience
 Important competitive abilities and represents real proficiency in performing an internal activity.
 Attribute that places a company in a position of market advantage
Core Competency- refers to a well-performed internal activity that is central to a company’s
WEAKNESS competitiveness and profitability

It is something a firm lacks, does poorly, or a condition placing it at a disadvantage. Deficiencies - May be developed along the way as the business accumulates experience and as it employs
of the firm which are considered competitive liabilities creative, innovative and experience employees

Relates to: Distinctive Competency- is a competitively valuable activity that a company performs better
than its rivals.
 Deficiencies in know-how or expertise or competencies
 Lack of important physical, organizational, or intangible assets BGC Matrix - Stands for the Boston Consulting Group which developed the so-called BGC
 Missing capabilities in key areas Matrix

OPPORTUNITIES Four-quadrant diagram showing categorization of products or services handled by the firm.

Refer to situations where there are potentials from developing into products or services or other FOUR CATEGORIES:
business opportunities.
 Question marks- sometimes called “problem children” or “wild cats”
THREATS  Stars- products/services in this category are market leaders
 Cash cows- products/services that typically bring in far more money than is needed
Usually come in the form of internal and external factors that may put the firm in uncompromising  Dogs- has low market share.
situation
COMPANY COMPETITIVE INDEX
Examples of situation which can pose as threats:
Addresses the individual competitiveness of each of the players within the industry.
 Emergence of cheaper/better technologies Computation of the company competitive index is done by way of listing down a set of
 Introduction of better products by rivals parameters or criteria common to the business organizations under consideration.
 Intensifying competitive pressures
 Onerous regulations STEPS IN DEVELOPING INDUSTRY MATRIX
 Rise in interest rates 1) In column 1, list as many (key success factors) that appear to determine current and
Relevance of SWOT in Strategic Management expected success in the industry.
2) In column 2 (weight), assign a weight to each factor from 1.0 (most important) to 0.00
SWOT Analysis comes as handy tool for putting forward a simplistic approach to strategizing (not important) based on that factor’s probable impact on the overall industry’s current
or strategic planning. Strategists must endeavor to search and discover for opportunities as and future success. All weight must sum to 1.0 regardless of the number of strategic
window for strategizing. Factors considered as threats for the firm should be averted to avoid factors.
converting itself into a weakness. 3) In column 3 (company A rating) examine a particular company within the industry. Each
rating is a judgment regarding how well that company is currently dealing with each
Micro Environment - Internal environment or the environment within the business key success factor.
organization itself.
 4) In column 4 (company A weighted score) multiply the weight in column 2 for each Market-based Strategy- concerns with adopting the product to a particular market are or
factor times its rating in column 3 to obtain a factor times its rating in column 3 to obtain sector the business seeks to penetrate.
the factor ranging from 5.0 (outstanding) to 1.0 (poor) with 3.0 as the average.
5) In column 5 (company B rating) assign a rating to each key success factor from 5.0 OVERALL LOW-COST PROVIDER STRATEGY - Means having low overall costs, not just low
(outstanding) to 1.0 (poor) based on company B’s current response to each particular manufacturing or production costs but in other costs as well thus resulting to relatively low
factor. market price and hence, competitiveness on the part of the business firm.
6) In column 6 (company B weighted score) multiply the weight in column 2 for each factor ACHIEVING OVERALL LOW-COST STRATEGY
times its rating in column 5 to obtain that factor’s weighted score for company B.
7) Finally, add the weighted score for all the factors in columns 4 and 6 to determine the Thompson and Strickland advocate the following generic approach to achieving low-cost
total weighted scores for companies A and B. The total weighted score indicates how advantage:
well each company is responding to current and expected key success factors in the
Approach 1: Do a better job than rivals of performing value chain activities efficiently and cost-
industry’s environment
effectively.

Approach 2: Revamp value chain to bypass cost-producing activities that add little value from
the buyer’s perspective.

CONTROLLING COST DRIVERS

Are cost components or inputs to a product or services that constitute a large part or portion of
the overall cost of producing a product or service.

Any changes, downward or upward of that particular cost component, will drive the cost and
market price of the finished product or service which has impacts on its competitiveness in the
market.

DIFFERENTIATION STRATEGY - Is biased on the notion that the business exists because of
MODULE 8: COMPETITIVE STRATEGIES the variety of market or consumers it serves.

Competitive strategies focus on particular areas of concern the company believes it has the Either in products or services context concerns with the process of creating a competitive
advantage or edge to be able to outrace its competitors in a particular context of doing business. advantage by designing a variety of products and services to satisfy wants and needs of the
customers.
Competitive strategies consist of specific efforts of the business organization meant to outwit
or outcompete direct and indirect competitors. FOCUSED OR NICHE STRATEGY

OBJECTIVES OF COMPETITIVE STRATEGIES Focus Strategy- concentrates on serving a particular market niche, which can be
geographically, by type of customer, or by segment of the product line.
May be proactive (offensive strategies) and reactive (defensive strategies)
Niche- term synonymous to focus is used to refer to a different or unique kind of market which
Unlike corporate or business level strategy, competitive strategies are generally narrower in is usually limited in number.
scope or focused in their direction.
FOCUS/NICHE STRATEGY - The sole objective of a focus or niche strategy is to concentrate
GENERIC COMPETITIVE STRATEGIES its attention on a narrow piece of the total market with a view of fully serving the needs of that
particular market.
Price-based Strategy- relies on market price of the product as the selling point
BEST-COST PROVIDER STRATEGY
Product-based Strategy- talks about product content and quality as the driver of business
competitiveness Combines strategic emphasis on low-cost and differentiation strategies
Its basic characteristics are: d) Secure best geographic locations
e) Obtain business of prestigious customers
a) Make an upscale product at a lower cost f) Expand capacity ahead of demand in hopes of discouraging rivals from following suit
b) Give customers more value for their money g) Build an image in buyers’ minds that is unique or hard to copy.
OFFENSIVE STRATEGIES - is presumed to have sufficient resources and organizational
strength as well as superior product or service to be able to launch and sustain an offensive
strategy. END

TYPES OF OFFENSIVE STRATEGIES

Frontal assault- the firm goes head-to-head with its competitor

Guerilla warfare- uses the principle of surprise and hit-and-run to attack in locations and at
times where conditions are most favorable
Bypass attack- directly attacking the established competitor frontally or on its flanks

Flanking attack- a firm may attack a part of the market where the competitor is weak.

DEFENSIVE STRATEGY - Defensive strategy is an option taken by business organizations that

Basic approach to dealing with defensive strategy:

a) Block avenues open to challengers

SOME SPECIFIC DEFENSIVE OPTIONS

a) Raise structural barrier- raising the walls of the business to avoid being attacked
b) Lower the inducement for attack- meant to reduce a challenger’s expectations of
future profits in the industry
c) Increased expected retaliation- any action that increases the perceived threat of
retaliation for an attack.

PREEMPTIVE STRIKES AND SOME OPTIONS TO TAKE - Preemptive strategies takes the
form of an effort to do something in case of eminent danger or before any perceived untoward
incident happens.

May come in the following:

a) Acquire firm which has exclusive control of a valuable technology