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Part 1- STRATEGIC ANALYSIS

WHAT IS STRATEGIC ANALYSIS?

 Strategic analysis refers to the process of conducting research on a company and its operating
environment to formulate a strategy. The definition of strategic analysis may differ from an
academic or business perspective, but the process involves several common factors.

WHY DO WE NEED TO LEARN STRATEGIC ANALYSIS?

 Strategic analysis plays a crucial role in the strategic decision-making process. It often brings
important information about the evaluation and development of the environment inside and
outside the company and reveals possible opportunities and threats that need to be considered
in strategic decision-making.

WHAT IS STRATEGIC MANAGEMENT

Refers to the the process of setting goals, procedures, and objectives in order to make a company or
organization more competitive. … Often, strategic management includes strategy evaluation, internal
organization analysis, and strategy execution throughout the company.

 Consist of the analyses, decisions, and actions an organization undertakes in order to create and
sustain competitive advantages, . This definition captures two main elements that go to the field
of strategic management.

First Strategic Management of an organization entails three (3) processes:

1. Analyses

Strategic Management is concerned with the analysis of strategic goals (vision, mission, and strategic
objectives) along with the analysis of the internal and external environments of the organization.

2. Decisions

Leaders must make strategic decisions. These decisions, broadly speaking, address two basic questions;
1. What industries should we compete in?
2. How should we compete in those industries
Note: These questions also often involve an organization’s domestics and international operations.
3. Actions

Last are the actions that must be taken. Decisions are of little use, of course, unless they are acted on.
Firms must take the necessary actions to implement their strategies. This requires leaders to allocate the
necessary resources and to design the organization to bring the intended strategies to reality.

Second, the essence of strategic management is the study of why some firms outperform others. Thus,
managers need to determine how a firm is to compete so that it can obtain advantages that are
sustainable over a lengthy period of time. That means focusing on two fundamental questions.

1. How should we compete in order to create competitive advantages in the


marketplace?

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Managers need to determine if the firm should position itself as the low-cost producer or
develop products and services that are unique and will enable the firm to change premium prices.
Or should they do some combination of both?

 How can we create competitive advantages in the marketplace that are unique, valuable, and
difficult for rivals to copy or substitute? That is, managers need to make such advantages
sustainable, instead of temporary.

Sustainable competitive advantage cannot be achieved through operational effectiveness alone. The
popular management innovations of the last two decades- total quality, just-in-time, benchmarking,
business process reengineering, outsourcing-are all about operational effectiveness.
WHAT IS OPERATIONAL EFFECTIVENESS?

Operational effectiveness means performing similar activities better than rivals. Each of these
innovations is important, but none lead to sustainable competitive advantage because everyone is doing
them. Strategy is all about being different. Sustainable competitive advantage is possible only by
performing different activities from rivals or performing similar activities in different ways.

A company with a good strategy must make clear choices about what it wants to accomplish. Trying to
do everything that your rivals do eventually leads to mutually destructive price competition, not long-
term advantage.

Intended versus Realized Strategy

Henry Mintzberge, a management scholar at McGill University, argues that viewing the strategic
management process as one in which analysis is followed by optimal decisions at their subsequent
meticulous implementation neither describes the strategic management process accurately nor
prescribes ideal practice. He sees the business environment as far from predictable, thus limiting our
ability for analysis. Further, decisions are seldom based on optimal rationality alone, given the political
processes that occur in all organizations.

Taking into consideration the limitations discussed above, Mintzberg proposed an alternative model. As
depicted in figure 1.2, decisions following form analysis, in this model constituted the intended strategy
of the firm. For a variety of reasons, the intended strategy rarely survives in its original form. Unforeseen
environmental developments, unanticipated resource constraints, or changes in managerial preferences
may result in at least some parts of the intended strategy remaining unrealized.

Module 2

Stages of strategic management

The strategic management process is more than just a set of rules to follow. It is a philosophical
approach to business. Upper management must think strategically first, then apply that thought to a
process. The strategic management process is best implemented when everyone within the business
understands the strategy. In this module, discussion of this process is given an emphasis.

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The strategic management process is more than just a set of rules to follow. It is a philosophical
approach to business. Upper management must think strategically first, then apply that thought to a
process. The strategic management process is best implemented when everyone within the business
understands the strategy.

purpose of goal-setting

The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying
three key facets: First, define both short- and long-term objectives. Second, identify the process of how
to accomplish your objective. Finally, customize the process for your staff, give each person a task with
which he can succeed.

Note: Keep in mind during this process your goals to be detailed, realistic and match the values of your
vision. Typically, the final step in this stage is to write a mission statement that succinctly or briefly
communicates your goals to both your shareholders and your staff.

IMPORTANCE OF ANALYSIS

Analysis is a key stage because the information gained in this stage will shape the next two stages. In this
stage, gather as much information and data relevant to accomplishing your vision. The focus of the
analysis should be on understanding the needs of the business as a sustainable entity, its strategic
direction and identifying initiatives that will help your business grow. Examine any external or internal
issues that can affect your goals and objectives. Make sure to identify both the strengths and
weaknesses of your organization as well as any threats and opportunities that may arise along the path.

STEP IN FORMING STRATEGY

The first step in forming a strategy is to review the information gleaned from completing the analysis.
Determine what resources the business currently has that can help reach the defined goals and
objectives. Identify any areas of which the business must seek external resources. The issues facing the
company should be prioritized by their importance to your success. Once prioritized, begin formulating
the strategy. Because business and economic situations are fluid, it is critical in this stage to develop
alternative approaches that target each step of the plan.

IMPLEMENTING YOUR STRATEGY

Successful strategy implementation is critical to the success of the business venture. This is the action
stage of the strategic management process. If the overall strategy does not work with the business’
current structure, a new structure should be installed at the beginning of this stage. Everyone within the
organization must be made clear of their responsibilities and duties, and how that fits in with the overall
goal. Additionally, any resources or funding for the venture must be secured at this point. Once the
funding is in place and the employees are ready, execute the plan.

STRATEGY EVALUATION AND CONTROL

Strategy evaluation and control actions include performance measurements, consistent review of
internal and external issues and making corrective actions when necessary. Any successful evaluation of
the strategy begins with defining the parameters to be measured. These parameters Noshould mirror
the goals set in Stage 1. Determine your progress by measuring the actual results versus the plan.

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Monitoring internal and external issues will also enable you to react to any substantial change in your
business environment. If you determine that the strategy is not moving the company toward its goal,
take corrective actions. If those actions are not successful, then repeat the strategic management
process. Because internal and external issues are constantly evolving, any data gained in this stage
should be retained to help with any future strategies.

Example of external factors: Political- new legislation, economic- inflation and unemployment, social-
changes in taste and fashion, etc technological- online selling and the like.

Internal factors-flaws, weakness, mistake, deficit that needs to be fixed, character traits that cause harm
or hurt others, and threats or anything that may cause harm to the organization.

The Six Steps of the Strategic Management process

Strategic management is construed in the context of a process. Strategic management process 6 steps is
an identifiable flow of information through interrelated stages of analysis directed toward achieving an
aim. In the strategic management process 6 steps, the strategists primarily determine objectives and
make strategic directions and actions. It is involved with the development of an effective strategy to help
achieve organizational objectives.

Our operational definition of strategic management process 6 steps are:

1. Developing the Organization’s Vision and Mission


2. Strategic Analysis of the Organization
3. Establishing Objectives
4. Strategy Formulation
5. Strategy Implementation
Developing
6. Strategic Evaluation and Control
Organizations
Strategic
Vision &
Evaluation and
Mission
Control
Ste Ste
p p
01 04

6 Steps
Strategic in Ste
Ste Strategy
Analysis of Strategic p
p Implement
the Manage 05
02 ation
Organization ment

Ste
Ste p
p 06
03
Strategy
Establishing
Formula
Objectives
4 tion
This definition encompasses six inter-related issues of strategic management process 6 steps. Such as:

First, the strategy-makers develop a vision for the organization and then formulate a mission in the light
of the vision. While a vision states ‘where we are going,’ a mission describes its present business and its
purpose for existence.

Secondly, the strategy-makers conduct a thorough analysis of the organization’s internal and external
environments to gather enough information for setting objectives.

They set objectives in the third phase. These objectives subsequently use for measuring the
organization’s performance and progress.

Fourthly, they embark upon the most important task in strategic management – formulation of a
strategy to achieve the objectives in the third phase. A strategy comprises the organization’s managers’
actions and approaches to effectively and efficiently achieve the vision, mission, and objectives.

In the fifth phase of the strategic management process 6 steps, the managers accomplish all the
necessary organizational tasks for the sound implementation of the chosen strategy.

Finally, managers monitor developments, evaluate the performance of all those involved with
implementing a strategy and make corrective adjustments in the organization’s objectives, strategy, or
implementation plan based on actual situations, including new developments in the environment well
new ideas and opportunities. That means strategic evaluation and control attempts to establish
standards of performance, monitors progress during the implantation strategy, and (if anything goes
wrong) intimate corrective adjustments.

Strategic Analysis of the Organization:


The analysis is a main phase of the strategic management process 6 steps because the information
added in this phase will form the next two phases. In this phase, fold as much material and information
relevant to completing your vision. The emphasis of the examination should be on thoughtful business
desires as a defensible unit, its strategic track, and classify creativities that will benefit your business
raise. Scrutinize any outside or interior topics that can touch your goal line and purposes. Make sure to
categorize both the strong point and dimness of your organization over and above any intimidations and
changes that may arise along the trail.

Establishing Objectives:

It is the third step of the strategic management process 6 steps. Establishing an objective is a direction-
setting task. A mission statement provides an organization’s overall goal but does not enable managers
to go for action. Managers, consequently, need to change the mission to precise performance objects.
Establishing objectives adapts vision and mission to explicit performance consequences. Objectives must
set for monetary performance and plan performance for accomplishment. Top managers set broader
objectives with longer time horizons than do successively lower levels of managers. Lower-level
managers set objectives based on middle-level objectives. In effect, lower-level objectives provide the
means for achieving middle-level objectives and, in turn, middle-level objectives provide the means for
achieving top-level objectives.

Strategy Formulation:
After completing the strategic analysis of a company, managers are now in possession of a strong pool of

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information regarding the industry competition, external opportunities and threats, and weaknesses.
They would logically proceed with term objectives for the would formulate appropriate endeavor to gain
a competitive market.

Formulation of strategy (fourth step of the strategic management process 6 steps) is to ease the strategy;
managers need to have an in-depth look at several issues. They expect to identify the generic. And other
competitive strategies as applicable to single-business companies and match the strategies to industry
and company situations. Under this step of the strategic management process 6 steps

Under this step of the strategic management process 6 steps; the following topics should be discussed:

1. Formulation of competitive strategies that a single business company can employ for
achieving competitive advantages
2. Matching strategy with the industry and company situations and
3. Formulation of corporate strategy.

How do we formulate Competitive Strategies?

 First consider your business situation. …


 Research your target markets and competitive environment. …
 Identify current or potential sources of competitive advantage (differentiators) …
 Validate your competitive strategy. …
 Develop an implementation plan.

Strategy Implementation

The fifth step is the strategy implementation of the strategic management process 6 steps. Effective
strategy implementation is precarious to the attainment of the business endeavor. This is the stroke
phase of the Strategic management process 6 steps. If the general strategy does not effort with the
business’ existing construction, a fresh construction should be fitted at the opening of this point. Every
person within the business must make rich of their farm duties and responsibilities, and how that
hysterics in with the general objective. Furthermore, any capitals or backing for the endeavor must
protect by this argument. Once the aid is in place, and the staffs prepare, perform the design.

Strategic Evaluation and Control

Strategic evaluation and control is the final one of the strategic management process 6 steps. The
internal and external environments of an organization are constantly changing. Such changes can make
the organization’s strategies obsolete. Thus, it is essential to periodically review, evaluate, and control
the strategies that the organization has been implementing. Timely evaluation and control would help
managers take corrective measures to keep everything on track. These are the strategic management
process 6 steps in the strategic management concept. You can use or follow the attached links for getting
more knowledge about the Strategic management process 6 steps of strategic management
overview with its important types.

Module 3:Benefits of Strategic Management

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There are many benefits of strategic management and they include identification, prioritization, and
exploration of opportunities. For instance, newer products, newer markets, and newer forays into
business lines are only possible if firms indulge in strategic planning. Next, strategic management allows
firms to take an objective view of the activities being done by it and do a cost benefit analysis as to
whether the firm is profitable.

Just to differentiate, by this, we do not mean the financial benefits alone (which would be discussed
below) but also the assessment of profitability that has to do with evaluating whether the business is
strategically aligned to its goals and priorities.

The key point to be noted here is that strategic management allows a firm to orient itself to its market
and consumers and ensure that it is actualizing the right strategy.

FINANCIAL BENEFITS

It has been shown in many studies that firms that engage in strategic management are more profitable
and successful than those that do not have the benefit of strategic planning and strategic management.

When firms engage in forward looking planning and careful evaluation of their priorities, they have
control over the future, which is necessary in the fast changing business landscape of the 21 st century.

It has been estimated that more than 100,000 businesses fail in the US every year and most of these
failures are to do with a lack of strategic focus and strategic direction. Further, high performing firms
tend to make more informed decisions because they have considered both the short term and long-term
consequences and hence, have oriented their strategies accordingly. In contrast, firms that do not
engage themselves in meaningful strategic planning are often bogged down by internal problems and
lack of focus that leads to failure.

NON-FINANCIAL BENEFITS

The section above discussed some of the tangible benefits of strategic management. Apart from these
benefits, firms that engage in strategic management are more aware of the external threats, an
improved understanding of competitor strengths and weaknesses and increased employee productivity.
They also have lesser resistance to change and a clear understanding of the link between performance
and rewards.

The key aspect of strategic management is that the problem solving and problem preventing capabilities
of the firms are enhanced through strategic management. Strategic management is essential as it helps
firms to rationalize change and actualize change and communicate the need to change better to its
employees. Finally, strategic management helps in bringing order and discipline to the activities of the
firm in its both internal processes and external activities.

How to identify opportunities thru STRATEGIC MANAGEMENT?

A good entrepreneur is always on the hunt for new opportunities. One of the best ways to identify
opportunities within your business is to complete a SWOT analysis.

1. Identify business strengths

2. Evaluate your weaknesses

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3. After doing these one and two steps consider now your opportunities

4. After knowing your opportunities determine the threats

Here are a few categories to consider when looking for business opportunities:

Economic trends: Look at the economy in your area.

Market trends: Your target market could be driving new trends that could open doors for your business.

Funding or cash flow changes: Think about that new big fish customer, or maybe you’ve received a
business loan or some outside investment.

Political support: Consider changes in political ties.

Government regulations: Think of regulations that are changing that might afford you new opportunities.

Changing relationships: Consider shifting relationships with vendors, partners, or suppliers.

Target audience shift: Your target market might be expanding, aging, or shifting.

Questions to ask to find opportunities

Questions that may help you brainstorm possibly opportunities.

1. Economic trends:

Is the economy in your area looking up?

Will the economy enable your audience to make more purchases?

Are economic shifts happening that impact your target audience?

Is the price of sourcing materials going down?

Market trends

How is your market changing?

What new trends could your company take advantage of?

What kind of timeframe surrounds these new trends? Could it be a long-term opportunity?

Funding changes

Do you expect an increase in grant funding or donations this year (if you’re a nonprofit)?

Did you land a new contract (assured new income)?

Did you secure a loan or investment funding?

How will funding changes help your business?

Political support:

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Do you anticipate a shift in political support this year?

What opportunities could be created with new political partnerships?

Government regulations
Are any regulations shifting that could lead to a positive change?

Changing relationships:
Are there positive changes happening within any of your outside business relationships?

Are vendors changing or expanding?

Has your partner decided to move on, creating an opportunity to work with someone new?

Target 📌 audience shift:


How is your demographic shifting?

What opportunities can you think of that can move with these changing demographics?

Is your audience expanding? If so, how can you capitalize on this increase?

Is there a related product or service that you could launch that allows you to gain a new market share?

Module 4

What is EXTERNAL ASSESSMENT

In business, the External Assessment, or External Environmental Scan, is an inventory of the political,
economic, social, and technological forces that influence the mission and goals of an organization, and
how it functions. It involves analysis of the current environment and the trends that may affect it.

Importance of External Assessment in Strategic Management

External forces directly affect both suppliers and distributors. Identifying and evaluating external
opportunities and threats enables organizations to develop a clear mission, to design strategies to
achieve long-term objectives, and to develop policies to achieve annual objectives.

The Nature of an External Audit

The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm and
threat that should be avoided. As the term finite suggests, the external audit is not aimed at developing
an exhaustive list of every possible factor that could influence the business rather, it is aimed at
identifying key variables that footer actionable responses.

External Forces can be divided into five broad categories:

1. Economic forces
2. Social, cultural, demographic and natural environmental forces
3. Political, governmental, and legal forces
4. Technological forces
5. Competitive forces

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Purpose of External Assessment:
Economic indicators, global, political, social, demographic, and technological analysis. The primary
purpose of external analysis is to determine the opportunities and threats in an industry or any segment
that will drive profitability, growth, and volatility.

 The Process of performing an External Audit


The process of performing an external audit must involve as many managers and employees as
possible. Individual employees appreciates having the opportunity to contribute ideas and to
gain a better understanding of their firms industry, competitors, and markets. To perform an
external audit, a company must:
 Gather competitive intelligence and information about economic, social, cultural, demographic,
environmental, political, governmental, legal and techno logical trends.
 Once information is gathered, it should be assimilated and evaluated.
 Other variables included: market share, breadth of competing products, world economies,
foreign affiliates, proprietary, and key account advantages, price competitiveness, technological
advancement, populations shifts, interest rates, and pollution abatement.

How to Identify External Factors that may


affect Your Strategic Plan
While external factors are uncontrollable, they don’t have to be unforeseeable. Here’s how to find them.

How to Conduct An Environmental Scan:

A PESTEL Example

Let’s walk through how you might use the above PESTEL areas as a guide for scanning the external
environment, using the COVID pandemic as an example.

Step 1: List the external factors that might affect your business in each area.

Conduct a brainstorming session with a group that includes those who have expert knowledge
of the business and/or the world outside the business.

PESTEL

Political factors:

 What’s happening politically in the environment in which you operate?


 Paycheck Protection Program (PPP) for eligible businesses
 New unemployment regulations
 New regulations extending health insurance coverage and paid sick leave

Economic factors:

 What are the economic conditions, and how might they affect your business?
 Potential need for layoffs or furloughs
 Reduction in disposable income could potentially decrease future sales revenue
 Inflation/interest rates will likely reduce the future availability of credit
 Tax relief for retirement fund withdrawals will impact retirement planning, making it necessary
for some employees to work longer than originally expected

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 Future costs of providing healthcare services with the required PPE may become a long-term
issue

Social factors:

 What social behaviors are changing, and how might that affect the business?
 Changing preferences for in-office vs. remote work
 Parents working remotely will need to juggle work and childcare
 Remote/hybrid work could negatively impact company culture
 Possible need for social distancing customers when the business re-opens

Technological factors:

•What are some of the technological changes that might impact how we deliver our product or
service?

 Remote work will necessitate the use of more digital tools to carry out certain internal processes
 Restricted physical interactions may require new digital ways of working with customers

Environmental factors:

 What are some environmental considerations that could affect the business?
 New strains of COVID may continue to affect operations over the long term
 Returning to the workplace may require air quality monitoring and sanitization products to
create a safe environment

Legal factors:

 What potential legislative actions might impact the business?


 Uncertain timeline around returning to work safely and how to manage individual preferences
for work location
 Implications of mandatory vs. voluntary COVID vaccination for employees
 Considerations for reopening physical store locations safely for customers

Step 2: Analyze the implications of each PESTEL factor on the business.

 Assess the implications of each external factor by considering these questions:


 What is likely to be their impact over time—in the short, medium, and long term?
 What type of impact are they likely to have—positive or negative?
 What is the importance of each factor? How significantly would its implications affect your
business if they did (or didn’t) become a reality?

Step 3: Rate the impact and likelihood of each factor.

Taking into consideration your analysis from Step 2, rate each factor according to its overall potential
impact on the business (high or low) and the likelihood of it happening (high or low). Which areas are of
highest concern? Which areas might impact the strategic direction of the company? Keep in mind that
not everything will (or should) rank as important. Your goal here is to identify high-impact influencers
that warrant further consideration.

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Step 4: Take action to either leverage potential opportunities or mitigate potential threats.

 Once you’ve determined the external factors that will most likely materially affect your business,
think about possible ways to address them. It’s appropriate to have a plan of action for the items
you think could actually occur, even if you don’t apply resources to your plan at this time.
 Because the PESTEL is just one piece of the strategic planning puzzle, we recommend
incorporating more reading about strategic management and what you’ve learned into other
strategic planning activities. The next step is to further analyze your business (and business
prospects) using a SWOT Analysis. SWOT helps you understand your
organization’s internal strengths and weaknesses; combining that information with what you’ve
learned about the prevailing external factors will help identify the best path forward.

Module 5
Internal Assessment

What is Internal Audit


It is also known as internal strategic management audit. So it is a process in which the information about
key internal factors is gathered and compiled. Specifically in order to ascertain the strengths and
weaknesses of the organization. Moreover in the functional areas of marketing, management, finance.
Along with production or operations and research or development etc. This internal audit is conducted
for the assistance of the organization to positively utilize its strengths for success. Although while
improving its identified weaknesses.

Nature of Internal Audit

 Performing an internal audit requires gathering, assimilating, and evaluating information about
the firms operations. Critical success factors, consisting of both strengths and weaknesses, can
be identified and prioritized.
 Following points highlight the nature of internal strategic management audit.
 All the strategies & objectives of the organization are based on it.
 The internal strengths/weaknesses are assessed and clear statement of mission is also
established
 It may be different for different kinds of organizations.

Determine a firm’s internal Strengths and Weaknesses

 Like every small business, your company does some things really well and occasionally falls short
in other areas. For example, you may excel at distribution, but continuously grapple with
responding to customer complaints in real time. Or you may have a powerful marketing
message, but little to no social media presence. Whatever the situation, every business should
thoroughly grasp the full spectrum of its strengths and weaknesses—or risk falling victim to
unrealized opportunities or being outsmarted by the competition.
 How should you go about identifying these strengths and weaknesses?

Start with a SWOT analysis

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 A SWOT analysis studies internal and external factors that are helpful or harmful to your
business and the way it’s run. This approach focuses on identifying factors in the following 4
categories:
 Strengths – The strongest parts of your business model and your most effective selling points.
The core competencies of your team and your investments.
 Weaknesses - The weakest parts of your business model and weak spots in the sales funnel.
What’s lacking in your team and missing from your investments.
 Opportunities - Potential leads, investors, events, and even new target markets.
 Threats - Potential competitors, reasons investors would cut funding, or negative market
developments.
 “A weakness isn’t necessarily a weakness if all the competitors in a market suffer from
it,” Forbes notes. When assessing both weaknesses and strengths, it’s best to “zoom out and
evaluate SWOT components from the entire market’s perspective.” This helps you gain insights
into how things look from the perspective of your intended customer base.
 Of course, you’re the expert on your business. But potentially valuable information is possible if
you take time to consult with different stakeholders, including customers, suppliers, and
employees. Through formal or informal methods, seek their input into the company’s perceived
strengths and weaknesses. There’s a strong likelihood you’ll garner insights into everything from
pricing strategy to customer service that you may not otherwise have considered. All of that data
can be factored into a comprehensive look at what your company does best, and where its
efforts might be improved.

Match your business against the competition


There’s a lot you can learn about your own company by viewing it through the lens of the
competition. Just as you strive to examine your business objectively, take an equally dispassionate
look at what your competitors do well and where there are gaps in their market performance:

Is their website more impressive than your own, or is it difficult for prospective customers to
navigate?

Do competitors place sufficient emphasis on high-quality customer service or does that message get
lost in their other marketing themes?

What aspects of their business appear more or less efficient and cost-effective than your own?

Looking closely at their promotional/advertising materials—as well as checking out their social
media platforms—might offer a valuable perspective on your own operations and processes.

Join a Peer Advisory Board

Perhaps the best way to get an up-close, impartial look at your business is by joining a peer advisory
board like The Alternative Board. In a confidential setting, CEOs and business owners share ideas and
insights, take turns discussing their challenges and receiving advice (and accountability), and learn
from the experience of their executive-level peers.

Understanding Management functions is important in the internal assessment

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Management

The functions of management consist of five basic activities: Planning, organizing, motivating,
staffing, and controlling. These activities are important to assess in strategic planning because an
organization should continually capitalize on its management strengths and improve on its
management weak areas.

Planning

Planning consist of all those managerial activities related to preparing the future. Specific task
include forecasting, establishing objectives devising strategies, developing policies, and setting goals.

Organizing

Organizing includes all those managerial activities that result in a structure or task and authority
relationships. Specific areas includes organizational design, job descriptions, job specifications, span
of control, unity of command, coordination, job design, and job analysis.

Motivating

Motivating involves efforts directed toward shaping human behavior. Specific topics included
leadership, communication, work groups, behavior modification, delegation of authority, job
enrichment, job satisfaction, needs fulfilment, organizational change, employee morale, and
managerial morale.

Staffing

Staffing activities are centered on personnel or human resource management. Included are wage
and salary administration, employee benefits, interviewing, hiring, firing, training, management
development, employee safety, affirmative action, equal employment, union relations, career
development, personnel research, discipline policies, grievance procedures, and public relations.

Controlling

Controlling refers to all those managerial activities directed toward, ensuring that actual results
are consistent with planned result key areas of concern include quality control, financial control,
sales control, inventory control, expense control, analysis of variances, reward and sanctions.

Role of Management Information Systems (MIS) in Strategic Management

Management information systems (MIS) is a changing and challenging field. Modern businesses can’t
survive for long without using some sort of MIS to manage massive amounts of data, and there are
plenty of opportunities to study or work in the discipline. In this article, we’ll cover what is
happening with MIS in both business and academia. You’ll learn about what constitutes an MIS, their
origin and evolution, their capabilities, and also gain insights from experts in the field.

In business, management information systems (or information management systems) are tools
used to support processes, operations, intelligence, and IT. MIS tools move data and manage
information. They are the core of the information management discipline and are often considered
the first systems of the information age. (Andy Marker & Maeve Cummings (2021))

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Module 6

The Business Mission & Vision

Understanding MISSION/VISION in Strategic Management


-A Mission Statement defines the company’s business, its objectives and its approach to reach those
objectives. A Vision Statement describes the desired future position of the company. Elements of
Mission and Vision Statements are often combined to provide a statement of the company’s
purposes, goals and values.

What Is a Vision Statement and Why Is it Important?

Every new business or organization begins with an idea. Behind the idea is a vision of what the
organization could be if they have the right structure, the right leadership, adequate funding, and a
group of people that believe in the vision. The vision speaks to the organization’s purpose and why
it’s important for the organization to exist.

All types of organizations, including for-profit companies, nonprofits, charities, and other groups use
vision statements to guide them with their important work. They need to be clear on what role the
vision will serve in the organization. So, what is a vision statement?

Defining the Strategic and Organizational Vision

Every vision starts with a visionary leader who is able to create mental and verbal pictures of
desirable future states. It’s also important for visionary leaders to share their vision with their
partners including customers, suppliers, and employees.

The board of directors needs to understand the importance of taking sufficient time to define the
mission, vision, and values statements. The vision statement is the basis for everything else they do.
Employees look to the vision statement for long-term direction.

Corporations exist to make a profit and work in the best interests of their shareholders. Beyond that,
many companies are interested in many other things as well. A long-term approach to business
means that the company desires to serve like-minded customers. A vision statement caters to the
characteristics and lifestyle of the customers they serve as well as the market conditions.

Writing Vision Statement

Writing Vision Statement is part of the strategic vision planning process. It takes planning, time, and
consideration. It’s important for boards of directors to give the process of writing their vision
statements the adequate time because it’s a critical step in building a business. In simple terms, a
vision statement is a written document that describes where an organization is going and what it will
look like when it gets there.

A vision statement can be short or long. The length of the vision statement can be telling about the
company. A vision statement describes the company’s purpose, what the company is striving for, and
what it wants to achieve.

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Most writers of vision statements find that it’s a rewarding and inspiring process. It gives them the
chance to articulate the characteristics that influence the organization’s strategy. Writing the vision
statement should be a somewhat challenging process because it has a bearing on many other parts
of the business.

A vision statement is something that’s meant to be shared and proud of. The vision communicates
your organization’s value and its commitment to achieving its goals.

Why Is a Vision Statement Important?


A vision statement isn’t just an exercise. It defines the core reason for a company’s existence and
makes work more meaningful. A vision statement usually helps to attract and engage passionate,
like-minded employees, one of the main purposes of a vision statement. Companies can more easily
build an appropriate organizational vision culture around the vision statement and work towards
strengthening the culture.

A corporate vision statement gives everyone clarity around the big picture which sets the stage for
improved decision-making and targeting the right customers.

Examples of Good Corporate Vision Statements:


To be a nerd for all your needs. It’s short, sweet, catchy, and has a nice ring to it.

To make people happy. It’s short and to the point and it dovetails nicely with their tagline, “The
happiest place on earth.”

Been bTo be the company that best understands and satisfies the product, service and self-
fulfillment needs of women—globally. Based on qualities that women appreciate.

What is Vision Statement


A vision statement describes what a company desires to achieve in the long-run, generally in a time
frame of five to ten years, or sometimes even longer. It should be time bound, ambitious but
realistic, have a geographical and target market focus that will enable the entrepreneur to plan
strategically.

-Vision is what the company wants to become in the future. It answers the question: “where do we
want to go”

What is Mission Statement?


A mission statement specifies the product or services to be rendered which in effect also defines the
market. It summarizes the purpose or the reason for the company’s existence, It tells what the
company is now and what it is doing at the present. It tells what types of customers are being
served, how the company does its products or services and its desired level of performance.

How Important are Mission and Vision Statements


Both the mission and vision statement play an important role in the organization: … The mission
statement provides the organization with a clear and effective guide for making decisions, while the
vision statement ensures that all the decisions made are properly aligned with what the organization
hopes to achieve. It has been found in studies that organizations that have lucid, coherent, and
meaningful vision and mission statements return more than double the numbers in shareholder
benefits when compared to the organizations that do not have vision and mission statements.

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Indeed, the importance of vision and mission statements is such that it is the first thing that is
discussed in management textbooks on strategy.

Why are they important?


Mission statements are an incredibly important navigational tool when you are thinking about the
future of your company. By identifying the purpose of your work, you can better understand the
goals your company should be committed to accomplishing.

A vision statement is important to a company because it serves as a strategic plan for success. It can
act as a guide when employees encounter challenges. Vision statements also help motivate
employees to work toward shared goals. … A vision statement can also help a business identify its
organizational culture.

benefits of having a vision and mission statement are discussed below

Above everything else, vision and mission statements provide unanimity of purpose to organizations
and imbue the employees with a sense of belonging and identity. Indeed, vision and mission
statements are embodiments of organizational identity and carry the organizations creed and motto.
For this purpose, they are also called as statements of creed.

Vision and mission statements spell out the context in which the organization operates and provides
the employees with a tone that is to be followed in the organizational climate. Since they define the
reason for existence of the organization, they are indicators of the direction in which the
organization must move to actualize the goals in the vision and mission statements.

Module 7

STRATEGY IMPLEMENTATION

Strategy Implementation is the sum total of the activities and choices required for the execution of a
strategic plan. It is the process by which strategies and policies are put into action through the
development of programs, budgets, and procedures. Although implementation is usually considered
after strategy has been formulated, implementation is a key part of strategic management. Strategy
formulation and strategy implementation should thus be considered as two sides of the same coin.
Poor implementation has been blamed for a number of strategic failures.

To begin the implementation process, strategy makers must consider these questions:

• Who are the people who will carry the strategic plan?
• What must be done to align the company’s operations in the new intended direction?
• How is everyone going to work together to do what is needed?

These questions and similar ones should have been addressed initially when the pros and cons of
strategic alternatives were analyzed. They must also be addressed again before appropriate
implementation plans can be made. Unless tope management can answer these basic questions
satisfactorily, even the best planned strategy is unlikely to provide the desired outcome.

WHO IMPLEMENTS STRATEGY?

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In most large, multi-industry corporation, the implementers are everyone in the organization. Vice
Presidents of functional areas and directors of divisions work with their subordinates to put together
large-scale implementation plans.

Levels of Strategy:

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

• 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.
 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
 Management of Relationships. The strategies should be shared and coordinated to all
employees.
 Management Practice. A company should decide how the employees are to be
governed in the achievement or corporate objectives.
• Business strategy. It is a set of decisions that provides ways on how 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.
• Functional Strategy. It comprises of decisions the different functions of the organization
that support the business strategy. These functions include marketing, production,
finance, research and development, and human resources.

This is 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.

FUNCTIONAL STRATEGIES IN MARKETING

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.

Customer Analysis. To be able to define the target market, it is important to analyze the
personalities, economic status, gender, and other demographical aspects to come up with strategies
what would be essential in setting up overall company goals, objectives as well as its mission and
vision statements. The gathering of pertinent information seems tedious but a successful
organization always monitors the market and studies the buying patterns of people, both existing
and potential customers.

Selling of products and services. In here, it is not just selling the product or service. It is also
including another task that will help in selling the product. Tasks like advertising and promotion are
crucial especially if there are new products. The use of print, television, radio, film, brochures, flyers,
tarpaulins, among others. The internet has also become an effective tool in communicating the
message across all sectors of the target market.

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Selling of 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 services 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 segment and the locations
of where to conduct the market test. Test marketing eliminates the possibility of heavy losses or
possible product failure.

The fourth function in marketing is that of pricing. There are major considerations with regard to
pricing. The first one is the capacity of the consumers to buy. Can the consumers 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.

The fifth function is distribution. This includes locations or retail sites, sales territories and channels,
transportation carriers, whole selling and retailing. Some manufacturers or producers would prefer
intermediaries rather than distributing the product directly to consumers.

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.

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.

Investment decision is also called capital budgeting. It involves the allocation of resources 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.

Dividend decision. Concerns the right period or time frame by which the organization will issue a
percentage of income to stockholders through dividends. It also determines the issuance or stocks
and the earnings retained to the firm.

FUNCTIONS IN PRODUCTION

The production or operations function includes those activities that transform inputs to products or
services.

1st function is Process. This includes various activities such as the use of facilities, production flow
analysis, and physical distribution system.

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2nd function is Capacity. Capacity is concerned 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.

3rd 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, job
enrichment, among others.

Last one is Quality. It denotes the production of quality goods and services. This includes testing,
quality assurance, and cost control.

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.

The internet enables consumers to compare prices, products and services of suppliers. On the part
of the suppliers, there is an intensive price war. To overcome it, some suppliers request buyers to
enter a code before they can collect prices.

Price lining. Refers to the practice of offering the same products at price points depending on
consumer needs.

Smart pricing. Refers to the practice of charging various prices form one market to another
depending on the conditions of the market.

Another strategy is by achieving cost leadership in a particular market of industry.

Module 8
STRATEGY EVALUATION FRAMEWORK

Once the prerequisites for the implementation of strategy have been fulfilled, the next thing to be
done by the organization is strategic evaluation. Strategy evaluation is the last phase of the strategic

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management process in which managers try to assure that the strategic choice is properly
implemented and is meeting the objectives of the organization.

In fact, in strategy evaluation, managers review or appraise the progress in the performance related
to strategy implementation, try to find out any deviations of actual performance from the chosen
strategy that has been put into action, and then take appropriate actions for making the strategy
work.

Strategy evaluation is one kind of follow-through on strategy. Strategy evaluation requires an


effective computerized information system for providing managers with timely feedback in order to
enable them to promptly act on the data. In practice, strategy evaluation during, (and/or after)
implementation requires a control system -both are integral parts of the monitoring system of the
organization.

Both the systems, help the managers monitor the progress of a strategic plan. The essence of
strategy evaluation is keeping track of current performance and anticipating changes

Necessity of Strategic Evaluation and Control Systems


Strategy evaluation and control systems help managers to find out;

• Whether the implementers of strategy are making decisions consistent with the
organizational policies;
• Adequate resources have been allocated and they are being used wisely;
• The events in the external environment are, occurring as anticipated;
• The long-term and short-term goals are being met; and
• The strategy-implementers are on the right track. The evaluation process alerts the
implementers to any unexpected events in the above issues. Thus, they can take
corrective action either to get back to the track or change the track or make changes in
other relevant aspects of strategy.

Strategy-managers need to continually evaluate and monitor the progress in the strategic actions
undertaken for strategy implementation.

The systematic review provides adequate data for finding out any deviations in the actual activities
from the planned activities. Based on these data, managers can then undertake appropriate actions.

Here we discuss the necessity of strategy evaluation under the following heads;

Obtaining data for corrective actions


Dynamic environments compel organizations to carefully evaluate their strategic actions. The key
internal and external factors change quickly and dramatically. These changes affect strategy
implementation.

Regular evaluation of strategy while being implemented provides relevant data for taking corrective
actions.

Keeping track of progress

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Regular evaluation of strategic actions during the implementation of competitive strategies
facilitates tracking of progress.

Evaluation results/information help managers gauge the actual situations in respect of the
implementation of strategies. They can go for instant actions if there is slow progress.

Detection of flaws
Nobody could guarantee that a particular strategy will work or that it is the most sound strategy.
Therefore, strategy should be evaluated for critical flaws.

The strategy managers, through a review of results and future possibilities, determine whether the
strategy is working. If any flaw is detected in the implementation of strategy, they take steps to make
it work.

Making managers proactive

Installation of an evaluation system . puts the managers in a systematic trap, which compels them
not to/ neglect the importance of assessing the impact of changes in the organizational
environments.

It reminds them not to be complacent about the present achievement It makes them feel that
success today is no guarantee for success tomorrow.

Developing a sense of commitment

When all managers and employees are involved in the process of evaluating strategy on a continuing
basis, they become committed to keeping the company moving steadily toward achieving objectives.

Adjustments or modifications may be needed in the vision of mission, or objectives strategies or in


the approaches to execution of the strategies. If corrective actions or adjustments am not initiated
properly and on time, it may invite catastrophe consequences for the organization.

Requirements of Effective Strategic Evaluation Systems

A strategy-evaluation system in order to be effective and successful must meet certain requirements.
These requirements are the characteristics of an effective evaluation system.

We discuss below the-major requirements of an ideal strategy-evaluation system:

Economical The activities related to the evaluation of strategy must be economical. If they are not
cost-effective, wastage would creep up, a balance needs to be maintained in obtaining information;
not too much or not too little Very often, too much data and too many controls do more harm than
good.

Meaningful. The strategy-evaluation activities must be meaningful in the sense that they have to be
related specifically to the objectives against which strategy has been adopted.

Providing useful information The information collected through evaluation must be useful.
Redundant information is useless to managers in decision-making.

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Providing timely information The strategy-evaluation system should be established in such a way
that it can provide information to relevant managers on time. Untimely delivery of information may
mean ‘no information’ as because they cannot be used whenever they were heeded.

Providing a true picture of events The strategy-evaluation activities should be able to provide true
picture of what is happening in the organization regarding the implementation of the strategy.

Being directed towards right persons The strategy-evaluation system should be: directed to the right
persons who really matter in taking actions based on data. Thus, it should try to facilitate rather than
simply providing information for information’s sake.

Being elaborate and detailed In large organizations, the strategy-evaluation system should be
elaborate and detailed. This is needed because the existence of many departments/divisions
requires effective coordination.

Strategy Evaluation Framework: 3 Activities of Strategy Evaluation;


1. Reviewing bases of strategy

Internal strengths and weaknesses, as well as external opportunities and threats, form the bases for
a strategy. The opportunities, threats, strengths, and weaknesses are hot likely to remain valid for a
long time.

So, when the implementation of a strategy takes a long time (some strategies may even take several
years for full implementation), these bases (i.e., SWOT data) of strategy should be reviewed.

A review would reveal how competitors have reacted to the firm’s strategies, how competitors have
changed their strategies in response of (our) company’s strategies, whether strengths and
weaknesses have changed, whether new opportunities by now have emerged or new threats have
surfaced, and above all whether the already-identified opportunities, threats, strengths, and
weaknesses are still as they were at the time of SWOT analysis, an many other issues like these.
Review of the bases of strategy enables the managers to identify the real reasons for unsatisfactory
results.

It may so happen that ineffective strategy has been chosen or strategy has been implemented very
poorly, or sudden changes in the external factors (such as changes in demand, changes in
technology, new policies by government, or actions by competitors) have prohibited the company
from achieving the objectives.

The review helps in discovering these changes.

2. Measuring organizational performance

The second component or activity of the strategy-evaluation framework is the measurement of


organizational performance.

Managers need to compare the planned activities against the actual progress toward achieving
stated objectives. That is, actual results are compared with the planned results.

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Then, deviations are detected, if there is any. Evaluation is also made of individual performance.
Progress toward achieving original objectives is evaluated.

3. Taking corrective actions

Corrective actions are not necessary if there are no significant differences between the planned
resort and the actual results.

In such a situation, managers will continue to present a course of action managers take corrective
actions only when significant deviations exist.

Actions need to be undertaken on the basis of the nature of the deviation and the causes of such
deviation. It may be necessary to make directives in objectives, the strategy itself, organization
structure, human resources deployed on strategy implementation, policies, resource allocation,
reword systems and more.

Module 9

Organizing

Strategy Implementation often boils down to Organizing People to carry out the Programs, Activities
and Tasks for each strategy. Organizing mandates the strategist to accomplish the trilogy of
Organizational Architecture. These are Organizational Diagnosis.Organizational Design and
Organizational Development.

Organizational Diagnosis

The strategist can use the Ten Levels of Internal Assessment (see Chapter 4) and the guidelines on
Strategy Implementation and Resource Mobilization (see Chapter 6) for diagnosing whether the
organization can implement the strategies or not. The Programs, Activities and Tasks laid out for each
Strategy would spell out the required knowledge, skills,competencies and attitudes needed by the
organization. They would specify the management processes and functions necessary to attain the
envisioned outputs and outcomes. These processes and functions would he embodied in the
Projects, Products and Functional Strategies demanded by the strategies chosen by the enterprise.

The Organizational Diagnosis should reveal where the organization’s qualitative and quantitative
gaps are.

1. The qualitative gaps refer to the lack of the sophistication, complexity and expertise of the staff
vis-à-vis the technology selected to carry out the chosen Strategy. Qualitative organizational
diagnosis assesses the ability of the staff to deliver the right outcomes for the customers through
the production of the right outputs
2. Quantitative gaps refer to the number of people (with the right competencies) needed to
implement the Programs, Activities and Tasks. Quantitative organizational diagnosis evaluates
whether or not the enterprise has the required capacity to deliver all the required outputs and
outcomes.
3. Technology Hardware and Software (described in Chapter 6) and Total Capacity to deliver the
outputs and outcomes are,thus,the two major drivers of Organizational Diagnosis. The more
thorough the strategist lays out the Strategy Implementation and Resource Mobilization plan,

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the better he or she can do the Organizational Diagnosis. The detailed Programs, Activities and
Tasks will define the Organizational Competencies,while the Resources (People, Pcsos and
Physical Assets) needed to deliver them will define the Organizational Capacity. The Pesos and
Physical Assets are included here because these two other Resources enhance and empower the
People Resources. Shown below in Diagram 7.1 is a Framework for Determining Organizational
Competencies and Capacity.

Seasonal demand and supply,as well as daily peaks and valleys,can be

Addressed in three ways:

1. First, the organization can gear itself for even (constantly stable) production runs or service
levels. This is to reduce the overall capacity of the factory or service establishment. In order to
meet seasonal highs, the enterprise has to build up its inventory levels during seasonal lows. This
build up of inventory will eventually get drawn down when demand rises. For service
firms,customers are enticed to arrive at “dead” hours or lean months to avoid peak periods.
Often, there is a price discount given or promotions offered during off-seasons. This is practiced
by hotels, department stores and telecommunications companies.
2. Second, the organization can install a high-capacity factory or service outlet which can
accommodate the seasonal or hourly peaks. Fruit processing plants, for example, only operate
for several months in a year when the fresh fruits are being harvested. Hence, the capacity is set
high to accommodate all the harvest. Office canteens, abattoirs and convention centers operate
similarly. They are designed for very high traffic during specific seasons of the year or hours of
the day.
3. Third,the enterprise can rely on subcontractors and alternative delivery systems to fill in
whatever capacity gaps there are, if not outsource the production and service delivery
altogether. A furniture exporter,for example, relies on sixty subcontractors.A jeep maker
outsources all of the different processes in making jeep parts.The company simply focuses on the
assembly of the outsourced parts and quality control. Then there is franchising,which transfers
the operational and selling tasks to other entrepreneurs.

From Organizational Diagnosis, the strategist can then proceed to Organizational Design,which is the
act of creating the Organizational Structures and Systems that would best implement the Strategies,
Programs, Activities and Tasks chosen.

Organizational Design

Organizing often starts from the top,from where the Board of Directors and the CEO sit. It then
proceeds to the lower levels,down to where the rank and file stand. Organizations should change
their top-down approach by, once again, beginning with the end in mind-where the customers make
their purchasing transactions.

1. Organizing for Customers

Customers are more informed today. The mass media, the Internet,mushrooming malls, ubiquitous
billboards and public transport advertising overwhelm the eyes and ears of consumers. As a
result,the consumer’s range of choices and buying behavior have changed. In order to sell their
products, enterprises must work on the four stages of consumer metamorphosis.

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First, there is a need to make the customers aware of the product or service.There are TV ads and
word of mouth endorsements,consumer testimonials and screen-idol mimicry, trade journal articles
and Website pages. Multiple awareness-creating opportunities abound but only a few are effective
for certain types of products and target customers.

Second, the customers’ interest to buy must be aroused. Sometimes,this comes along with the
awareness campaign. Sometimes, it does not. Closer customer contact is often necessary to prick
customer interest.Customers may need some confirmation that the product or service would
actually benefit them. Physical outlets and other readily accessible means (such as friends and
relatives patronizing the products,or goods and service being brought to customers’ doorsteps) may
be crucial to arouse interest.

Third, the customer undergoes an educated evaluation process. Some customers may buy a few
items on impulse but many products and services require careful customer deliberation.Customers
shop around and compare prices, product attributes and after-sales services. They ask “experts” or
people who have tried the products. They surf the Net,read brochures and scrutinize manuals.
Talking to flesh-and-blood representatives of the enterprise is important to inquisitive customers.

Fourth,the customer makes the decision to purchase and physically gets hold of the products or
services. This may be the point of highest customer contact when the final purchase agreement is
made. It can,however,be a low contact proposition for some if the merchandise is delivered by
couriers, or if the products are commodities.

Analysis of the four levels of customer metamorphosis from awareness creation to final purchase
should lead to the first organizing effort.

1. How should the enterprise organize for awareness? Should the company have a direct marketing
group or use a call center?Should it rely on an external advertising agency or use an in-house
promotions group? Should it have a good Website or rely on word of mouth testimony?
2. How should the enterprise organize for arousing consumer interest? Should it provide in-store
demos or rely on broadsheet infomercials? Should there be promotional tours or point-of-
purchase displays?
3. How should the enterprise organize for helping the customer evaluate its products or services
properly? Should the enterprise refer to “independent” evaluators of products in trade journals
or Internet sources? Should free samples be given in supermarkets? Should there be a trial
period for testing the product? Should there be manuals or brochures filled with technical
specifications?
4. How should the enterprise organize for closing the purchase transaction with the customer?
Should there be branches,outlets or franchises? Should there be distributors or dealers? Should
the company tie up with courier services?

The strategist can rely on a range of information delivery systems for consumer awareness and
interest building. Basic product information with a positioning message can be delivered through TV
and radio ads. More functional information can be handled through print ads.brochures,
infomercials. Events and sales promotion. Detailed specifications can be given through manuals,
Websites and expert evaluations(see Table 7.1).

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Table 7.1:Range of Information Delivery Systems for Consumer Awareness and Interest Building

Basic Infromation Functional Information Detailed Specifications

 Televisions Ads Brochures Manuals

 Radion Ads “Infomerials” Websites

Print Ads Sales People

Promo Events

Experts’ Evaluation

Table 7.2 presents the Organizational Modalities for Consumer Awareness and Interest Building. One
modality is for the strategist to outsource marketing services from ad agencies, events managers, call
centers and telemarketers. Two, the strategist can use in-house personnel who report to marketing,
sales, public relations, corporate affairs and support departments. A third approach is through
collaborative or joint efforts with other institutions such as product principals or distributors and
dealers. The organization can, likewise, apply for membership in an industry experts’ information
research and publication effort.

Table 7.2:Organizational Modalities for Consumer Awareness and Interest Building

Outsource Collaborative Effort In-House

 Ad Agencies

 Event Managers

 Call Centers and Telemarketers

Collaborative Effort

 With Product Principals

 With Distributors and Dealers

 With Trade Journals

 Active Contribution to Industry Experts’ Information

In-house

Marketing Department

 Sales Department

 Public Relations

 Corporate Affairs

 Telemarketers

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 ITC Department

Table 7.3 presents the Consumer Evaluation Process. This starts with the potential Customers’ Initial
Evaluation where they compare and contrast product or service attributes through largely informal
processes.These include window shopping,Internet browsing,brochures collection and
comparison,querying friends and relatives, etc. Potential customers may simply be using their gut
reaction at this stage. Next, potential customers may seek testimonials and experts’ evaluation.
Testimonials may come from customers who have previously tried the products or services, a
professional evaluator’s guide book and testimonials from commercial endorsers. If potential
customers witness existing customers actually using the product or service often enough, they may
follow suit.Finally,the potential customers actually test the product or service or they are invited to
product or service demonstrations. Some enterprises

2. Organizing for Operations

After designing the organization for reaching the customers,tl enterprise can now Organize for
Operations. The main purpose of tl Operations function is to produce goods and services that
customers ne or want. Hence, it is concerned with the enterprise delivery system f generating
Outputs.

There are three distinct phases of the Operations functions: Pr Operations, Operations proper and
Post-Operations. Under each phase a set of Activities which follows. An Operations Flowchart. This
depicted in Diagram 7.2.

The Pre-Operations Activities are spearheaded by four major enterprise decisions. First, the
enterprise has to choose the correct Production or Service Site. Should the site be near supply
sources of near the market? Is the locational “cost of doing business” a significant consideration in
choosing a site? Will access to major traffic routes an logistical issues be important variables?
Second, the enterprise has to select the Appropriate Technology. Usually, smaller production
volumes do not justify automation while large volumes necessitation highly- automated state-of-the-
art technology. The enterprise mus balance quality, cost and volume considerations in the choice o
technology. Third, the enterprise must determine the Required Capacity of the factory or service
establishment. ‘Since this is a major capital expenditure, the enterprise has to calibrate its decision
based on the amount of money needed, the cost of capital, the expected returns market demand
and competitors’ moves. Fourth, the enterprise then proceeds to designing the Operations Work
Flow and the best Operating Systems or Methods for producing goods or rendering services. The
four major decisions lead to their natural consequences. Site choice should lead to physical
Construction or the Leasehold Improvement of the selected premises. The technology chosen and
desired plant capacity should lead to the Acquisition of Machinery and lead to proper Layouting and
commissioning of Operating Manuals (with the accompanying Administrative Manuals).

Once the physical plant and operating systems are set up, the enterprise can start Operations. In the
Pre-Operations phase, the inputs of Money Methods, Machinery and Equipment should have been
put in place already. The next three inputs of Materials, Manpower and Management enter the
picture in the Operations phase. To a large extent, the initial decisions made at the Pre-Operations
phase will dictate what competencies, skills and attitudes are needed by the Manpower inputs, what
exact specifications the Materials should have and what Management proficiency and expertise is

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needed. Still, there is a need to make Operations run at high efficiency and economy
levels.Hence,the right Administrative Support Services must be installed. (Organizing for Support
Services will be discussed in later sections.)

With all the Inputs in place, the enterprise can go into Actual Production or Service Delivery, using
the best management and technical practices possible. The dynamics of the Operations
processes,which comprise the enterprise Throughputs, go into full gear. The objective of Operations
is to come out with Quality Outputs, at High Productivity Levels, yielding good Cost Economies and,
consequently, large Profits. Operations should be organized to meet this objective by using 10
criteria.

 The first criterion in Organizing for Operations is to choose the correct Inputs and Throughput
or Transformation Process to achieve the desired Quality Outputs.

 The second criterion is to find the highest Output-to-Input ratio,which is the point of greatest
productivity.

 The third criterion is to produce the required volume of outputs to meet customer demand at
all times.

 The fourth criterion is to achieve the lowest cost possible without losing quality.

 The fifth criterion is to minimize or eliminate reworks, rejects and returns.

 The sixth criterion is to match machine capacity with labor productivity,which means that the
enterprise should aspire for the optimal man-to-machine ratio.

 The seventh criterion is to reduce throughput or cycle time per unit produced.

 The eighth criterion is to reduce wastage and unnecessary expenses.

 The ninth criterion is to minimize working capital.

 The tenth criterion is tc maximize returns on the capital invested in Operations.

Finally, there are the Post-Operations Activities. These include Warehousing, Delivery and
Distribution, which are the connecting points to the customers. After Operations, Brand Building and
Marketing takes over. If successful, there is good Customer Acceptance. If not, then there is
Customer Rejection. Channel management is the nexus point between Operations and-
Marketing.What should drive the enterprise decision process on the best strategy for Channel
Management is the previous discussion on Organizing for Customers.

2. Organizing for Suppliers

The Operations of an enterprise can become rather large and complicated if it decides to be a fully
integrated production, logistics and selling unit,taking care of its own raw materials and supplies (e.g.
fruit growing ,processing, packaging, distributing, selling and delivery). Such enterprises hardly rely
on external suppliers, except perhaps for consulting, advisory and auditing services.Some
enterprises,however,prefer to manage only the brand building and marketing of products or

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services. All other activities are outsourced from suppliers. Between the two extremes are various
organizational modalities of In-house and Outsourced products and/or services. This is depicted in
Diagram 7.3which provides six typical organizational modalities. Level I is mainly In-house while
Level VI is mainly Outsourced.Levels II to V illustrate organizational hybrids between the two
extremes.

Needless to say, the Supply Chain will differ considerably for the six different levels shown in Diagram
7.3. A global computer company,for example, outsources its CPU, software, production and assembly
operations to top-notch suppliers. It has elected to focus its efforts only on direct marketing and
brand building. Another global company specializes in managing the entire supply chain for ready-to-
wear garments for its 60 large customers. Fabric and yarn manufacturing,sewing, accessorizing, and
packaging are done in different countries. Its organization is configured to address the specific orders
of its 60 major clients. Each major client is attended to by a customer servicing team which presents
proposals for new product designs to the client every year. If the client agrees to buy certain designs,
the customer servicing team mobilizes its disaggregated supply chain, which are composed of
factories and service establishments who have contracted a portion or all ‘of their production
capacity to the company.

Organizing for Support Services

After the enterprise has organized for Customers, for Operations and for Suppliers, there is that all
important function of Organizing for Support Services. Consistent with the flow of the organizing
effort, which starts from the Customers and proceeds to Operations and the Supply Chain, Support
Services should take into account two major Customers:External Customers and Internal Customers.
External Customers comprise the market for the goods and/or services of an enterprise. Internal
Customers are groups, units or functions within the enterprise who demand goods and services from
the other units of the enterprise. Both External and Internal Customers expect good performance
from their respective suppliers of goods and services. Hence, the recommended framework that can
be used by enterprises when they Organize for Support Services is to map out a Total Enterprise
Performance Management System. Such a framework is illustrated in Diagram 7.4.

5. Organizational Structuring

The Organizational Structure of an enterprise must be designed to achieve maximum responsiveness


to its External Customers. Once this is attained,the enterprise can concentrate on the harmonious
alignment of various Internal Customers as they work and-relate with one another.

Those are some enterprises which have achieved tremendous success by adopting a customer-
centric organizational structure. The discussion on Organizing for Suppliers gave two examples of
this. Both the global computer and apparel companies formed customer-centric units,each
dedicated to only one or a few preferred clients. The structure they adopted is similar to Diagram
7.5.

Organizational Development

The third leg of Organizational Architecture is Organizational Development, which directs,


capacitates and builds the full potentials of the strategizing entity. Organizational Development has
seven pillars.

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1. Direction Setting

Organizational Development begins with clarity of vision and well defined goals. Always, the leader
must have purpose and direction to guide the shaping and transformation of the organization. The
leader must have performance milestones that would measure how far down the road the
organization has traveled.

2. Competency and Capability Building

With goals clearly spelled out, the leader’s task is to ensure that the organization has the people
with the right technical,managerial and moral capacity to reach those goals. If not, the leader must
install a continuing capacity-building program that would not only reduce the competency gaps but
would, in fact, enable the organization to exceed its performance targets.

Capacity-building programs must precisely address the competency gaps. In order to do this, the
organization should determine where the areas of poor performance are because these are the most
likely suspects of incompetency. If the people are competent but performance is p poor. Then the
culprit may very well be the lack of direction or low employee morale.

Many organizations have training programs that are there without any real basis. In conducting a
training needs assessment, it is not sufficient that people be asked what training programs they
would like to have because their answers may just reflect their personal wants but not the
organizational needs. The training needs assessment must be supported by organizational
performance measurements that actually define where the competency gaps are.

Training programs must also address both the short-run as well as the long-term competency
requirements of the organization. Short-run requirements revolve around the current activities and
tasks which the staff have to do. Long-term capacity building develops the potentials of people to
assume greater responsibilities as well as take on new tasks dictated by the ever-changing
competitive environment.

3. Culture Nurturance

Culture defines the norms of behavior, values, personal relationships,professional standards,


customs and mores, rites and rituals that the people of an organization believe in and practice. While
Competency defines the hard-core capabilities of an organization, Culture defines the softer
dimensions of personal attitudes and human character.

Culture sets the tone and the “rules of engagement” by which people in the organization conduct
themselves. The most competent group of individuals may totally underperform because of an
oppressive or “damaged” culture while a less-than-competent team may push itself to the limits
because of a highly supportive and empowering culture.

The leader plays a crucial role in culture building or culture changing. The leader is like the drummer
who provides the beat through the pace he sets and the fervor he exudes. The leader and the
chosen band members supply the rhythm (or the norms and standards of behavior), the melody (or
the strategies, programs, activities and tasks)and the base (or the fundamental values of the
organization). To be sure, the organization’s past leaders and staff would have contributed their own

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indelible marks on the organization. If these marks are strong,new leaders would have to adapt
themselves first to the existing culture before introducing their own cultural inputs.

Since Culture touches the inner worth or values of an organization, it is quite difficult to change
without investing a lot of management time on understanding, appreciating, inspiring and
influencing people.

4. Installing Systems, Processes and Procedures

Systems are the formal processes and procedures by which an organization conducts its business.
They may be cross-functional management processes discussed in Level Four of the Ten Levels of
Internal Assessment in Chapter 4. They can also be functional management processes discussed in
Level Five of the Ten Levels of Internal Assessment.

Systems are often contained in Operating and Administrative Manuals.They are the rules and
regulations which govern the actuations of people and the interactions between and among units of
the organization.

Systems emanate from official policy statements as well as informal guidelines on how people should
transact with one another. When management practitioners talk about “professionalizing the
organization,” they are usually referring to a code of behavior that is standardized in a system, a
process, a manual or a set of procedures. They are usually referring to an objective, impersonal, just
and fair way of managing and its people.

Enterprises which carry technically sophisticated products and services require marketing teams that
are quite knowledgeable in what they are selling. For these enterprises, it is advisable to organize
along product or service lines. Pharmaceutical companies, for example, are organized by Product
Group, with teams dedicated to cardio-vascular,anti-infective,respiratory and other ailments (see
Diagram 7.6).

5. Achieving the VSOP Fit

Organizational Development should work towards the attainment of the Vision-Strategy-


Organization-People Fit. This Fit is discussed in Level Ten of the Ten Levels of Internal Assessment in
Chapter 4.

Essentially,the Vision,along with the Mission, Objectives,Key Result Areas and Performance
Indicators (VMOKraPI) constitute the heart and soul of any Organizational Development. Everything
must revolve around the attainment of this VMOKraPI. This includes the Strategies, Programs,
Activities and Tasks (SPAT), the Organization (Structure, Systems and Resources) and the People
(Capabilities and Attitudes). The management processes linking Strategies, Organization and People
must ensure that the VMOKraPI are achieved.

6. Morale Raising

All organizations must strive for a strong esprit de corps, which means that organizational morale
should be maintained at a high level.Every person in the organization must think and feel that he or
she is part of a winning team that will brave all odds in order to succeed.

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Morale is usually high when people have a significant say and stake in their future. They possess a
very strong sense of organizational belonging. They are encouraged to participate and get highly
involved in decision making. They are given the freedom to “author” plans,programs and projects,
and the power to implement them. They are recognized for their accomplishments and rewarded for
their performance. There is a level playing field where people can advance on the basis of merit.
There is transparency and accountability as well as justice and integrity in the organization.

7. Provisions of Proper Guidance

In developing an organization,there is a need to create a cadre of leaders and dedicated followers.


Training programs will not suffice. What is required is space for personal growth and development.
This can be accomplished through mentoring and coaching.

Organizations need mentors who have the capacity to bring out the best in their mentees as persons
and not merely as employees.Mentors are “spirit guides” because they inspire mentees to aspire for
their better selves and to go for their greatest goals.

Organizations need coaches who will transform people into winning teams by combining the
discipline of drills and the derring-do of dreams.

Leaders and managers must provide guidance to their people as they pursue their career paths
within the organization. Many organizations follow the sink-or-swim method of promoting or culling
their people.This does not always work because there are people who have great potential but still
need guidance to realize it. Survivors of the sink-or-swim method may even lose that all-important
human touch to rally their own followers.

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