Basic Concepts in Business

Policy and Strategy

Chapter 1
THE STRATEGIC MANAGEMENT
PROCESS
 THE STRATEGIC MANAGEMENT PROCESS

• Situation Analysis – It provides necessary information

necessary to formulate the company’s vision/mission
statement.
• External Environment
• Internal Environment
 THE STRATEGIC MANAGEMENT PROCESS

• Strategy Formulation – This involves the development of

company strategies. Strategy formulation is composed of three
organizational levels:
• Operational Strategy – various operational departments.
• Competitive Strategy – techniques in competing in certain industry.
• Corporate Strategy – direction for the organization.
 THE STRATEGIC MANAGEMENT PROCESS

• Strategy Implementation – This involves the

development of procedures, programs and
activities to put the strategies into practice.

• Strategy Evaluation – It includes appraising the

company’s performance.
STRATEGIC MANAGEMENT:
PLANNING PHRASES
STRATEGIC MANAGEMENT: PLANNING PHRASES

• Phase 1: Planning Financial aspects, this is usually the phase

when Financial data is planned.
• Phase 2: Forecasting, For long term planning.
• Phase 3: External Planning, usually the task of top management.
• Phase 4: Strategic Management, the strategies formulated will be
worthless without the commitment of all employees.
 GLOBALIZATION
• It has changed the way people do business. As the
name implies, globalization is the
internationalization of markets and corporation.
• To maintain quality and competitive pricing,
companies have redesigned their organizational
structures and strategically placed regional or
country units instead of having one international
division to serve all international transactions.
THE ELECTRONIC AGE
 THE ELECTRONIC AGE
Some advantages in Electronic Age are as follows:
• Internet has become a force for companies to improve and
enhance the way they transact business.
• Distribution have changed drastically through the years.
• Customers have more power than ever.
• Firms are now exploring endless possibilities to innovate using
the internet.
• Business pacing is increasing.
• Internet is putting corporations out of their traditional
boundaries.
ORGANIZATIONAL ADAPTATION
 ORGANIZATIONAL ADAPTATION

Aside from globalization and electronic commerce,

a company should always be updated on what is in
store in all facets of the business environment.
 ORGANIZATIONAL ADAPTATION

• Population Ecology – explains that when a company is able to

take hold of a formidable position in the industry, the tendency is
for that company not to adapt to changing conditions.
• Institution Theory – focuses on the more obvious and important
aspects of the social structure which includes norms, rules and
policies which form the basis for social behavior.
• Strategic Choice Perspective – theorizes that an organization not
only adapts to a changing environment but also tries to reshape
its environment.
 ORGANIZATIONAL ADAPTATION

• Organizational Learning Theory – it uses knowledge as

an important component for the company to respond in
a changing environment. It has two views:
• Technical View – focuses on the processing, preparation and
interpretion.
• Social View – includes the experiences of people at work and
relevance to organizational performance
 STRATEGIC INSIGHTS
(adapted and inspired by the book: On the Profession of Management by Peter Drucker 2003)
 STRATEGIC INSIGHTS

Ducker defines the theory of the business is several

assumptions.
• It assumes that a business becomes obsolete when the
business goals are already attained.
• That a business should work on its core competencies
• That a business should not only concentrate on the
customers but also noncustomer.
THANK YOU !