Philippine Christian University

Graduate School of Business & Management

Master in Business Administration

Course Title: Strategic Management

Credits: 3 units

STRATEGIC AUDIT

A strategic audit assesses the current business strategy, how suitable it is for the business and
whether the company is in position to execute the strategy. Performing a strategic audit on a
regular basis is crucial to the success of the business, as the strategy needs to constantly be taking
into account market conditions and changes. So how does a strategic audit work?
It Asks the Right Questions
The strategic audit should make you consider the most basic questions about the business and
the market and help you answer them more substantially. For example, “what business am I in?”
might seem like a simple question with a simple answer. But you need to think past the obvious
answer and take a closer look. A ‘retail clothing store’ is a simple answer, whereas upon closer
inspection the answer should extend to ‘retail store offering luxury clothing to a high-end
market’.
It Evaluates the Current Strategy
The strategic audit asks to look at how the business views itself currently in the marketplace, and
where it wants to view itself. As part of this, a SWOT analysis will be done to reassess the
strengths, weaknesses, opportunities and threats, ensuring your current strategy is working
towards success based on these. If the findings are different and the current strategy is no longer
in line with these, then it needs to be re-evaluated.
It Highlights Strategic Risks
Failing to recognize risks has proven to be the undoing of many businesses, and traditional audits
rarely incorporate risk identification in the process. It’s important to highlight the risks to your
success, which could include a drop-off in demand for your products/services or a critical
manager leaving the company to work with a competitor. A strategic audit sheds light on these
risks, allowing you to decide which ones are the most significant and how you can act to avoid a
critical situation down the line.
It Assesses the Need For Resource Changes
If your business goals don’t match up with the resources you currently have available, then you
must either change your goals or adjust the resources available. For example, if you want to open
up a new store in the next year, but you currently have negative cashflow at your current store,
you have to assess if the goal is realistic. Another example would be if your goal was to bring a
new innovative product to market, but have no research and development dedicated to
discovering innovative products.
Implementing The Strategic Audit
The findings of the strategic audit will need to be implemented, but it isn’t as simple as that. You
also need to consider how you will measure and evaluate the performance of the implemented
changes. It’s advisable to create a plan on how you intent to measure the effectiveness of the
implementation, to evaluate whether or not the changes worked as intended. It is important to
perform regular strategic audits and measure implementation in order to keep on top of shifts in
the environment and ensure you are always on the right path.
 GUIDE IN STRATEGIC AUDIT STRUCTURE

I. Company Background

II. Past Corporate Performance Indexes

• Market size or Market Share
• Financial Performance (How did the corporation perform the past year overall in
terms of financial ratios)
✓ Liquidity Ratios
✓ Leverage Ratios
✓ Activity Ratios
Return of Investment
Profitability Performance
Net Sales
Gross Profit
Domestic Segment
International Segment
Net Profit after tax

III. Strategic Posture

A. Current Company Vision
• Is the Vision Statement clearly stated?
• Proposed Vision Statement, if any
B. Current Mission Statement
• Is the Mission Statement clearly stated?
• Evaluate the current Mission Statement. Is it still relevant?
• Proposed Mission Statement, if any

For a mission to be effective it must include the following 9 components:

1. Customers. Who are your customers? How do you benefit them?
2. Products or services. What are the main products or services that you offer? Their
uniqueness?
3. Markets. In which geographical markets do you operate?
4. Technology. What is the firm’s basic technology?
5. Concern for survival. Is the firm committed to growth and financial soundness?
6. Philosophy. What are the basic beliefs, values and philosophies that guide an
organization?
 7. Self-concept. What are the firm’s strengths, competencies or competitive
advantages?
8. Concern for public image. Is the firm socially responsible and environmentally
friendly?
9. Concern for employees. How does a company treat its employees?
C. Current Corporate Values
The company’s innate values and standards that govern the business operation and its
relationships with society, customers, employees, suppliers, the local community and
other stakeholders.
D. Current Objectives
• What are the corporate, business, and functional objectives?
• Are they consistent with each other, with the vision and mission statements, and with
the internal and external environments?
E. Current Strategies
• What strategy or mix of strategies is the corporation following or implementing?
F. Current Policies
• What are the corporation's policies?

Do the current mission, objectives, strategies, and policies reflect the corporation's
international operations, whether global or multi-domestic?

(SWOT Analysis begins)

IV. Corporate Governance
A. Board of Directors
1. Who are the Board Members/Top Management? Are they internal or external
members?
2. Do they own significant shares of stock?
3. Is the stock privately held or publicly traded? Are there different classes of stock with
different voting rights? What do the board members contribute to the corporation
in terms of knowledge, skills, background, and connections? If the corporation has
international operations, do board members have international experience?
4. How long have members served on the board?
5. What is their level of involvement in strategic management? Do they merely rubber
stamp top management's proposals, or do they actively participate and suggest
future directions?
B. Top Management
V. External Environment (EFAS: Opportunities and Threats (SWOT)

SWOT Analysis
Strength and weaknesses are internal to the business and opportunities and threats are
external. All SWOTs should be strength or weakness, and an opportunity or threat, they
cannot be both.

A. Industry Trends
• Changes in Industry, i.e, growth, maturity, product offering, niches etc.
How has the industry changed, or has it, since the business started? Do these
changes present an opportunity or threat?
B. Competitive Environment
• Who are your competitors?
• Are competitors entering/leaving the marketplace? What is their performance like,
likely plans, strengths and weaknesses? Does the competitive environment present
a threat or opportunity?
C. Society Trends and Economic Environment
• The marketplace (customers, demographics/social issues, distribution channels)
may be changing due to trends in society and the economic conditions. Do the
trends changes present an opportunity or threat?
D. Technological Environment
• Has the introduction of new technologies impacted the need for fundamental
changes in products, process, etc.? Do the changes in technology present an
opportunity or threat for the business?
E. Legal and Political Environment
• Do current or potential future activities in the legal and/or political environment
have an impact on the company? Does the environment present opportunities or
threat?
F. Summary of External Factors

VI. Internal Environment (IFAS: Strengths and Weaknesses (SWOT)

Internal environment refers to matters concerning resources, programs, and organization
within the company. A company has control over its internal environment.
A. Corporate Structure
B. Corporate Culture
C. Corporate Resources
 1. Marketing – sales, distribution channels, promotion, support
2. Management – expertise, systems, resources
3. Operations and Logistics – efficiency, capacity, process
4. Products/Services – added value, services, quality, pricing, feature/benefits, range
of offerings, competitiveness
5. Finances – performance, resources, cost management, productivity, purchasing
6. Research and Development – effort, direction, resources
7. Human Resources – personnel needs, skills, benefits, employee manuals, job
descriptions, Etc.
6. Information Technology – organization, structure, technology
D. Summary of Internal Factors

VII. Analysis of Strategic Factors (SWOT/SFAS)

A. Key Internal and External Strategic Factors (SWOT)
Do IFE Matrix (Internal Factor Evaluation)
1. Strengths
2. Weaknesses
Do EFE Matrix (External Factor Evaluation)
3. Opportunities
4. Threats

Note the most important or significant SWOTs. List the major strengths and
weaknesses and the major opportunities and threats. Differentiate between
current SWOTs and potential future SWOTs.

Key Strengths (Current) Key Strengths (Future)

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

Key Weaknesses (Current) Key Weaknesses (Future)

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
 Key Opportunities (Current) Key Opportunities (Future)
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

Key Threat (Current) Key Threat (Future)

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

B. Review of Mission and Objectives

Given an analysis of the company’s current and future internal strengths and
weaknesses and its current and future external opportunities and threats, is it
necessary to make any modifications to the proposed vision, mission, values, and
objectives?
1. Proposed changes to Vision:
✓ Where do you see the organization in 3-5 years?
✓ What about in 10-25 years?
2. Proposed changes to Mission:
✓ How to accomplish the vision?
✓ What is the purpose?
3. Proposed changes to Values:
✓ What values are important to the organization
4. Proposed changes to Objectives:
✓ Objective are specific and measurable that contribute in attaining the mission

C. Case Analysis
1. Central Problem
2. Support Evidence of the Problem

(SWOT analysis ends, Recommendation begins)

VIII. Alternatives and Recommendations
A. Strategic Alternatives (pros and cons)
Based on the SWOT analysis, and the company’s inherit vision, mission, values and
objectives, the specific strategies for achieving desired outcomes can now be
formulated. Here, the company describes its approach to the marketplace.

In writing strategies, be sure to build on strengths, resolve weakness, exploit

opportunities and avoid threats. Consider any new dimensions revealed by vision
and mission. List at least three (3) major strategies and list the advantages and
disadvantages of each strategies. Propose the best STRATEGY (choose one only)
and provide the rational in choosing the strategy. These strategies can cover the
business as a whole (diversification, acquisition plans, product development, market
development, etc.) or they can relate to key functional areas (finance, marketing,
management, operations, etc.) List must do and should do strategies (a must do is an
unavoidable requirement or a necessity; a should do is no more than a desirable
goal).

Must Do Strategies Should Do Strategies

1. 1.
2. 2.
3. 3.

DO THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

Recommendation:
• Primary Strategy
• Secondary Strategy

B. Goals on the recommended strategy

Goals should be specific, measurable, achievable/attainable, result focused and time bound
(SMART). Goals are what a company hopes to achieve by implementing strategies in pursuit
of the company’s objectives. They can relate to factors such as sales, market size/share,
products, profitability, finances, etc.

List major goals:

1.
2.
3.
4.
 C. Strategic Action Programs for the recommended strategy
Programs are the tools which set out the implementation plans for the key strategies.
These should cover resources, time frames, budgets, deadlines and performance
targets. Outline up major action programs in order of importance. For each, specify
who, what, where, how and when.

Person/Department
Strategy/Activity Objective Involved Time Frame Budget

1.

2.

3.

4.

5.

6.

IX. Cost-Benefit Analysis

Cost benefit analysis is the process for calculating and comparing benefits and costs of a
project. A cost benefit analysis finds, quantifies, and adds all the positive factors (the
benefits). Then it identifies, quantifies, and subtracts all the negatives (the costs). The
difference between the two indicates whether the planned action is advisable. The real
trick to doing a cost benefit analysis well is making sure you include all the costs and all the
benefits and properly quantify them.
Make a financial projection for 3-5 years.

X. Implementation
A plan that does not get implemented is an exercise in futility. Set up a designated time of
when implementation will take place, i.e. January 2023. Develop a specific tactics that
help the plan achieve its goals and objectives.

XI. Evaluation and Control

The final stage is evaluation and control. All strategies are subject to future modifications
because internal and external factors are constantly changing. Strategy evaluation is the
process through which the strategists know the extent to which the chosen strategy is able
 to achieve the organization’s objectives. After successfully evaluated the changes required,
take control by implementing measures to help the company get back on track.

Balance Scorecards

XII. Conclusion

XIII. References

XIV. Appendix

XV. Curriculum Vitae with picture (of each group members)