CORPORATE STRATEGIC MANAGEMENT

CASE ANALYSIS 1

BEN SANTOS
Point of View:
Managerial View
Objective:
To evaluate, install and implement the proposed Corporate Planning System in all
divisions of H. Braun Philippines effectively.
Problem:
What would Ben Santos do in their one-day planning workshop in order to
overcome the resistance of all division managers to institutional change and to
convince them to install and implement the Corporate Planning System?
Areas of Consideration:
A. The Company Background
H. Braun, Philippines (HBP) is a multi-division, multi-product wholly-owned
subsidiary of a West German multinational corporation which manufactured a line of
medical and chemical products in Europe, Asia, and Latin America. The Philippine
subsidiary was organized into five operating divisions, each distributing a selected line
of products to institutional and retail outlets. HBP has always been headed by a West
German national. The current president has no previous experience in the Philippines
but was transferred from a Latin American assignment to assume the position in the
Philippines, carrying with the agenda that there is a need for a better corporate
planning system for the company.
(Please see below the Partial Organizational Chart of HBP)
Board of Directors
President and Executive Officer
Accounting and Finance
Treasury

Chemicals
Sales
Industrial
Chemicals

Administration
and Personnel

Agricultural

Hospital

Chemicals

Supplies

Plant Manager

Assistant to the President

Pharmaceuticals

Indent

Plant Manager

B. Ben Santos
Ben Santos, 27 years old, was an accountancy graduate from a leading university
in Manila. After two years of work, he went back to school and obtained his MBA degree
in 1982. He was recruited in May 1986 and headed the Indent Division as well as the
Finance and Accounting Departments. He was a member of the Strategic Planning
Committee and the president as the chairman of the committee. Santos, as the most

senior of the division heads in HBP, was assigned the primary task of preparing the
proposals for the corporate planning system of the company. Prior to joining HBP,
Santos performed financial analyst and staff planning work with three financial
institutions in the Philippines.
C. The Planning System at HBP
The current system consisted of the preparation of a two-year revenue and costs
budgets for each of the divisions based on guidelines originating from West Germany.
These few guidelines consisted of prescribed budget formats and a target return which
the Philippine subsidiary had to try to achieve. It includes sales growth objectives for
specific new products sold by certain divisions.
Santos learned that the target ROE had been set at 20% and that the target return
represented head quarters assessment of the opportunity cost of capital. Bonuses for
HBP employees were paid when HBP made profits however, although, targets were
taken seriously, there were no heavy sanctions and penalties.
After familiarization, Santos compiled the set of materials to comprise the new planning
system at HBP. He then prepared and presented a new Corporate Planning System (CPS)
to the president which he approved for dissemination. Following this, the latter
endorsed it to the division managers for compliance.
D. Initial Reactions from the Manager
The manager from pharmaceutical and medical divisions implied that Santos copied
the system straight-out-the book. Chemical products division saw no need for a new
system. His forecast was based on the production of textile mills and he was able to
increase the growth rate targets. Santos reported the negative reactions with the
president. The latter suggested conducting a workshop to discuss the proposal. Santos
worries on how to best present and propose the corporate planning during the
workshop.
E. TOWS MATRIX (see next page)
TOWS MATRIX

External
Factors

External Opportunities

Increase of growth targets

Increase of market performance

Investors

Internal
Factors

Strengths
HBP is a multinational
corporation that
manufactures various
medical and chemical
products overseas

Strategies to use of opportunity through

strength

To distinguish products or lines of

business with great potential and in
which firm is prepared to invest.

External Threats
Technology/Innovation
Cultures and Customs
Economic Condition
Monetary and Credit Situation

Strategies to use of threats through

strength

Has a Strategic Planning

Committee to
comprised the new
planning system

Weaknesses

Resistance of
Division
Managers to the
proposed
corporate
planning system

Tendency of

Strategies to use of opportunity to minimize

weakness

Sharing responsibility and participation

of all divisions for the various corporate
planning steps. Key people in the HBP
especially the corporate planning
committee might need to understand
the state of progress around them to
see how they affect other plans, actions
and objectives.

Introduce to the managers the

basis of the proposed corporate
planning system. The strategies to
be used and implemented should
be agreed by all the corporate
people involved in the plans.

Strategies to minimize the potential

dangers lying in sectors where threats
meet weakness

To regulate, impose and properly

carry out the objectives of the
corporate planning of the company
which includes the standard
planning formats and general
assessment

CPS
implementation
failure

Target ROE had

been set to 20%.
Bonuses for HBP
employees were
paid when HBP
made profits
however,
although, targets
were taken
seriously, there
were no heavy
sanctions and
penalties.

Ben Santos as the senior head in HBP

should modify everything prior to his
presentations with considerations from
the negative feedbacks by the division
managers.

Flexibility must be introduced in the

plan whenever necessary so that the
employees can work with sustained
interest and effort. The management
shall not use pressure tactics and force
employees to work for the sake of
attaining the daily or weekly targets.

Enact
and
strengthen
the
proposed
corporate
planning
system

Alternative Courses of Action:

1. Make presentations concerning the objectives
planning,
the
existing
proposal
and
the
recommendations of division managers.

of the corporate
suggestions
and

Ben Santos should present and discuss the objectives of the corporate planning
of the company. To wit:
a. To allow constant awareness of both internal and external environmental
development and how they affect the companys future growth.
b. To establish a companys overall direction and the specific targets that
contribute to the achievement of set targets and conformity with the planned
direction of the enterprise.
c. To monitor and control all activities to ensure achievement of set targets and
conformity with the planned direction of enterprise.
He should also include the elements of strategic planning which depicts the nature and
scope of business that involves answering these three questions:
a. What has the business been?
b. What is unique about the business?
c. What should the business be?
By answering these questions, the corporate strengths and limitations can be defined.
Therell also be a review and evaluation of the following:
a. The companys present abilities relating to its business.
b. The companys abilities in the future.
Such evaluation should focus on key areas:
a. Product
b. Production
c. Market
d. Finance
e. Human resource
f. Management
After these, Santos should also identify the external factors that affect the companys
operation. Ben Santos should obtain information from the managers regarding the
companys market performance and about the past operations of the company. There
should be an involvement of all managers here. The external factors are as follows:
1. Market

2.
3.
4.
5.
6.
7.
8.
9.

Competition
Customer
Technology
Industry
Economic trends and General Business Indicators
Monetary and Credit Situation
Government
Social Considerations

After the identification of corporate strengths, limitations and the assessment of

environment can be interpreted through business screen as shown on the next page.

Business Strengths
High

HIGH

MEDIUM

LOW

Medium
Low
Invest/G
row
Selected/Earnin
gs
Harvest/Divest

Invest/Grow indicates products or lines of business with great potential and in which
firm is prepared to invest. Selectivity/Earnings are products/lines for their short term
earnings. Harvest/Divest are products that is reviewed as relatively weak and the
industry as having only marginal interest.
Moreover, Santos may also recommend that the company can use TOWS Analysis in
analyzing and formulating strategies for the company and TOWS Matrix for matching
the environmental threats and opportunities with the companys weaknesses and
especially its strengths.
The second part of the presentation is to introduce to the managers the basis of the
proposed corporate planning system. By sharing this information and deliberating all
the essential information needed, Ben Santos can listen to the suggestions and
recommendation of the managers. The strategies to be used and implemented should
be agreed by all the people involved in the plans.
2. Demand for implementation and adherence to the proposed planning
system.
The basis for the proposal is the researches made by Ben Santos which includes the
standard planning formats and general assessment taken from presidents memo, re:
Corporate Planning for HBP, 1986-1990. Ben Santos should answer all the queries
raised by the managers. Several changes are to be encountered in the first phase and it
will take time for the division managers to acclimatize the said system. Going through
this for the first time, managers might feel that the process is intense and time
consuming. But Ben Santos must guarantee the managers that its far easier to get this
right from the beginning when your whole team is together than it is to try to back-fill
later. However, he can still demand for immediate implementation since the president
directed it.
3. Revise and improve the propose planning system.

The last alternative is to rework the whole proposal. Ben Santos should take note
take into consideration the suggestions of the division managers. In order for
majority to agree with his proposal, he should take into account the suggestions. In
way, managers will feel that they are really part of the planning, thus they
participate and cooperate during implementation.

and
the
this
will

In addition, each planning step needs to have one person responsible for leading the
plan and that is Ben Santos, but division managers must share responsibility for the
various planning steps. Key people in the HBP especially the corporate planning
committee might need to understand the state of progress around them to see how
they affect other plans, actions and objectives.
Conclusion:
To install and implement the Corporate Planning System in all divisions of H. Braun
Philippines effectively, Ben Santos should consider alternative course of action number
one (1).
Recommendation:
As the person assigned in the corporate planning of HBP, Ben Santos should consider
the following beneficial steps to make corporate planning effective from
www.bizcovering.com. Hereunder are the steps that are relevant, to wit:
1. The Success of planning depends upon the effectiveness with which the forecast has
been made. If the forecast is accurate, there is every possibility that the plan will be
success.
2. Flexibility must be introduced in the plan whenever necessary so that the employees
can work with sustained interest and effort. The management shall not use pressure
tactics and force employees to work for the sake of attaining the daily or weekly targets.
3. All the members concerned with the organization must be involved in the task of
preparing the plan. The viewpoints of the employees, who are actually going to perform
the tasks, must be secured and their ideas may be incorporated in the plans, if found
suitable.
4. The plan should not be prepared to focus on the financial goals of the business alone.
It must have something for the employees. There must be some provision in the plan to
reward efficient workers. Some inducement is necessary in the plan to motivate the
employees to work harder.
5. The plan must be realistic. It should take into account the capabilities of both the
managers and the employees. Both shall not be required to work beyond their capacity.
In other words, the plan must not expect too much out of every person.
6. The plan must be communicated effectively to all the subordinate staff. Their consent
may also be obtained. The successful implementation of the plan depends on the extent
to which subordinates participate willingly in the performance of the tasks.
7. A co-ordinated effort on the effort on the part of every department is required for the
success of the plan. To achieve this, the departments concerned shall work with proper
understanding.