Module 5: Strategic Management (Strategy Implementation)

Topic #1: Levels of Strategy

A strategy can be defined in many perspectives. A manager can simply define it as a strategic goal. In
another way, it is a battle plan, a technique or a tactic in the art if war. It is a method of facing competition. It
is a set of integrated decision.

Strategy comes from a Greek word which means “the art of the general.” A strategy in not realized all
the time, 100% of its intentions. The conditions in the environment may affect an intended goal or objective to
strategy. Employees may lack the needed commitment to make the strategy work. The entire organization
may resist the change at the last minute. This list goes on and on.

A strategy falls into three different levels. They are the following: corporate, business, and functional
strategies.

1. Corporate strategy. It comprises of decisions that give the organization what industry it will be and not be
in and how it will allocate specific resources.

When the Ayala Corporation gave up Purefoods, it concentrated on land and real estate development.
The kind of decision highlights a corporate strategy, when a company chooses what kind of industry it wants
to concentrate.

Since corporate strategy concerns the whole corporation, it usually fulfills the mission and vision of the
company. It generally analyzes the whole system on the basis of participation of the different business units.
The corporate strategies establish the framework by which all other strategies are formulated and
implemented.

What is crucial strategic management is of course the corporate level strategies. It is concerned with
the proper selection of business which company should compete in, here are the considerations to be
followed in corporate level strategy:

Scope. It means identifying the overall goals of the corporation and the types of business in which the
companies should get in.

Access to Competition. It means identifying and defining where the company should be accessible, in
comparison to target market and identified competition.

Management of Relationships. The strategies should be shared and coordinated to all employees.

Management Practices. A company should decide how the employees are to be governed in the
achievement of corporate objectives.

Implementing a strategy is a challenging task for many organizations. In many aspects, while there are
already strategies to be implemented, there are emotional attachments involved. Of course, different
employees have different views on hot to execute a strategy and hot to execute a change.

Analysts have pointed out that it is now harder to execute a strategy than before. The fast - paced
change in technology and high participation of society makes puts the stability of organizations to the test.

With this kind of environment companies are facing right now, strategy implementation should be
accompanied by effective leadership and communication. There should be a formulation of vision, mission,
and valued. There should be enthusiasm in all levels. Commitment should emanate, that will spell sound
result. The organizational structure of the company should allow empowerment and there is accountability on
all strategic actions. Short-term goals should also be created at the business level.
2. Business strategy. It is a set of decisions that provides ways on hot the organization competes in the
industry it chooses to be in and eventually sustains a competitive advantage. Business strategies are basically
positioning strategies, making the companies secure a foothold in the market. It also positions the brand and
enables brand awareness to the customers. It also instills loyalty on the brand. Jollibee has sustained a
competitive advantage against its rivals. The same is true for Coca-Cola.

3. Functional strategy. It comprises of decisions in the different functions of the organization that support the
business strategy. These functions include marketing, production, finance, research and development, and
human resources.
Also called operational strategies, they translate the strategies in the corporate and business levels to
departmental or functional units. They are transformed into specific processes, human and other resources.
Each functions develops and implement a set of decisions. For example, marketing has its own four Ps:
product, pricing, placement, and promotion. The human resource function has recruitment, training,
compensation, and industrial relations. It depends on the company on how it can unite all the functions into
one whole, and make the strategy works.

Topic #2: Functional Strategies in Marketing, Finance, and Production

Marketing is always described as the process of creating and satisfying consumer needs and wants
through products and services. Marketing encompasses a wide range of basic functions, all of which provide
customer satisfaction.
The first is Customer Analysis. To be able to define the target market, it is important to analyze the
personalities, economic status, and other demographical aspects to come up with strategies that would be
essential in setting up overall information seems tedious but a successful organization always monitors the
market and studies the buying patterns of people, both existing and potential customers.
The second function is the Selling of Products and Services. In here, it is not just selling the product
or service. It also includes other tasks that will help in selling the product. Tasks like advertising and promotion
are crucial especially if there are new products. They take in many forms like using the media (print, television,
radio and film), brochures, flyers, tarpaulins, among others.
The internet has also become an effective tool in making the message across all sectors of the target
market. It is also necessary to maintain the power of the brands in the minds of the consumers. Personal selling
is a tool for products like industrial goods or those that need a more personalized and more detailed discussion
of the features of the product like a car.
Selling the product does not end in the actual purchase of the product or availment of a service. After
sales transactions involve the feedback from customers and how the product or service can be improved through
the comments and suggestions of customers. Marketers maintain and retain customer loyalty. They also attend
to customers complaints.
The third function is Product or Service Planning. The most popular and most effective option is test
marketing. It predicts future sales of new products and services. Marketers should be able to plan out carefully
the segments and the locations of where to conduct the market test. Test marketing eliminates the possibility of
heavy losses or possible product failure.
Product and service planning also includes brand positioning and packaging. These are relevant on
maintaining superior brand power by positioning the products or service; making the customers to remember
the brand. Packaging speaks well of the product and a good packing attracts the target consumers. Planning
provides the development of features, styles and quality of the product, it also determines options on products of
brands that should be phased out and which products or brands should be diversified.

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 The fourth function in marketing is that of Pricing. There are major considerations with regard to
pricing, the first one is the capability of the consumer to buy. The question is: Can the consumer afford to buy
the product at a certain price? On the other hand, the government controls certain prices like oil prices so
suppliers cannot charge exorbitant prices to the detriment of the consumers. Another consideration is the price
of raw materials in producing the product. It makes sense when a manufacturer charges a reasonable price with
consideration also to the costs and the markup of the product offering. A manufacturer should also consider its
price and the markup of the distributor before the product reaches the final consumer. Prices should be
competitive with the other brands as well.
The fifth function is Distribution. This includes locations of retail sites, sales territories and channels,
transportation carriers, wholesaling and retailing. Some manufacturers or producers would prefer intermediaries
rather than distributing the product directly to consumers. Small-scale manufacturers would opt for distributors
because of the financial constraints attached to distributing the product directly. Medium- to large-scale
producers, on the other hand, use intermediaries to divert their resources in the improvement of their production
process.
Marketing research is the systematic gathering and analyzing of data that relates to the marketing of
goods and services. There are various ways in doing marketing research. Large companies employ market
research firms to conduct surveys, tests, and the like to monitor further the strength of their products in the
market.
And lastly, Opportunity Analysis. It is equivalent to cost benefit analysis, companies obviously
determine whether benefits outweigh the costs.
FUNCTIONS IN FINANCE
There are three important decisions: investment decision, financing decision, and the dividend decision.
The Investment decision is also called capital budgeting. It involves the allocation of resource including
capital to projects, products or services, and assets. This is an efficient placement of capital to various means.
Financing decision examines and finds the best capital structure for the organization. It determines how
the firm can raise capital such as selling of assets, issuing stock or obtaining a debt facility.
The Dividend decision concerns the right period of time frame by which the organization will issue a
percentage of income to stockholders through dividends. It also determines the issuance of stocks and the
earnings retained to the firm.

FUNCTIONS IN PRODUCTIONS
The production or operations function includes those activities that transform inputs to products or
services.
The first function is Process. This includes various activities such as the use of facilities, production
flow analysis, and physical distribution system.
The second function is Capacity. Capacity decisions concern with the determination of optimal output
levels for the firm without going over or under production. To achieve this, the company makes a forecast and
schedule production operations.
The third decision is Inventory. Of course, there is a need to manage the level of raw materials, work in
process and finished goods inventory. This also summarizes the size, quantity, and period of orders. On the
other hand, workforce decisions include the management of skilled, unskilled clerical and management
employees. There should be appropriate motivation techniques, job design, and job enrichment, among others.
The last one is Quality. It denotes the production of quality goods and services. This includes testing,
quality assurance, and cost control.

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Topic #3: Implementing Strategies and E-Commerce

e-commerce has essentially changed the way business is conducted. There is a constant
restructuring of business processes to enable companies to attract more customers via the worldwide
web.
The Internet has actually eased up entry barriers for new companies because they do not need high
capital to invest in sales forces. The internet has become a tool in making business and transacting with
companies.
One advantage of the internet is the ease for the customers to compare prices. It is relatively easy
for the customers to collect information about products and services without having to go to the stores.
One of the strategies that a company can implement is through product bunch. It gives the buyer
the chance not to compare prices individually but on a whole package.
Another strategy is the introduction of niche products. Through the direct access available in the
internet, companies can identify target consumers and this introduces products and services that will cater
to their needs.
Customer-centered strategy enables a company to pull out information from consumers to improve
the company’s performance.

The Internet enables consumers to compare prices, products

Topic #4: Model “7S”

Based on the figure 2 we can see that Model 7S” consists from “hard and soft” factors. Hard elements are
easier to define and management can directly influence them. The three hard elements of the model are
(Mallya, 2007):
• Strategy – express how the company achieves its vision and how responds to opportunities and threats
from environment, means awareness of the strategy, its explanation to external subjects not only to
internal,
• Structure – the way how the company is structured, inferiority and superiority relations, organizational
structure supports the implementation of the strategy,

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• Systems – formal and informal everyday activities and procedures carried out by employees, it is about
systems of planning, control and information that support the implementation of the strategy.
On the other hand soft elements of the model are more difficult to define, they are less specific and
influenced by company´s culture. Despite the soft elements are as important as hard if the company wants
to achieve success. Soft elements of the model are (Papula & Papulová, 2012):

 Style – style of leadership and choice of the appropriate style of leadership of the company belong to
important factors affecting the implementation of the strategy,

• Staff – employees and their basic skills are key factors of the success, companies should have right
people on the right place,
• Skills – actual skills and abilities of company´s employees, companies should focus on the development
of the skills in the future, extension of knowledge and acquisition of experiences,
• Shared values – values enforced in the strategy are based on shared interests and are included in the
mission of the company, they are a key element that influences the effectiveness of all other factors, it is
an important feature of company´s culture that supports the creation and implementation of the strategy
Model 7S” represents a model that can be applied in any company and if something does not work in the
company probably is there a conflict between some elements listed in the model.