Chapter 1
A STRATEGIC
MANAGEMENT
MODEL
Learning Outcomes
Particularly at the end of this chapter, student should be able to:
Define strategic management
Identify each of the components of the strategic management process
and its corresponding outcome.
Identify strategic management model;
Differentiate strategic analysis from strategic decision-making, and
strategic intelligence from strategic thinking;
Explain the meaning of strategic planning;
Formulate a sample company vision, mission statement, and company
goals and objectives, and
2
STRATEGIC MANAGEMENT DEFINED
Strategic management – is a continuous
process of strategy creation. It involves strategic
processes like strategic analysis and decision-
making, strategy formulation and
implementation, and strategy control with the
primary objectives of achieving and maintaining
better alignment of corporate policies,
priorities, and success.
STRATEGIC MANAGEMENT DEFINED
Defined as the science of creating,
executing, evaluating cross functional
decisions to enable an organization to
achieve its goals and objectives, the
components of the strategic management
process have to be effective.
Strategic analysis – consist of a systematic
evaluation of variables currently existing in the
external and internal environment while strategic
decision-making is deliberately bringing together
the right resources for the right markets at the
right time.
Strategic decision-making is deliberately bringing
together the right resources for the right markets
at the right time.
Strategy formulation is designing strategies
on the business and corporate levels.
Strategy implementation is employing these
crafted strategies to achieve organizational
set goals and objectives
Strategic control is the application of an
appropriate monitoring and feedback system.
FIGURE 1.1 THE STRATEGIC MANAGEMENT PROCESS
Strategic Analysis Strategic
Intelligence
Strategic Decision- Strategic Thinking
Making
Strategy Organizational
Formulation Competitiveness
Strategy Comparative
Implementation Advantage
Strategic Control Strategic
Performance
FIGURE 1.1 THE STRATEGIC MANAGEMENT PROCESS
• If strategic analysis is accurately conducted, organizations can
develop strategic intelligence. Like an antenna, strategic intelligence
is the capability of an organization to possess relevant and related
knowledge, abilities, foresight and system thinking, such that is able
to assess its own strengths and vulnerabilities, the pressing
challenges confronting the organization, as well as the trends and
opportunities existing in the environment.
• If strategic decision-making is correctly effected, organizations can
acquire the capability of thinking strategically. Strategic thinking is
the cognitive process of competently and to utilized its resources
optimally and sustainably for maximum performance and
productivity.
FIGURE 1.1 THE STRATEGIC MANAGEMENT PROCESS
• If strategy formulation is uniquely designed and effectively communicated,
organizations have greater possibilities of attaining organizational
competitiveness. Organizational competitiveness pertains to the ability of any
business/company to utilize its resources optimally and sustainably for
maximum performance and productivity.
• If strategy implementation is efficiently employed, organizations can achieve
comparative advantage. Comparative advantage refers to the ability of an
organization to produce a particular good or service at lower marginal and
opportunity costs than its competitors.
• If strategic control is productively monitored, organizations can realize
strategic performance. Strategic performance is the accomplishment of a
high level of productivity that is characterized by efficiency in the context of
lean and quantifiable management.
Thus, the strategic management model is illustrated as follows:
Organizational Input Strategic Management Organizational Success
• Management/ Process • Strategic Intelligence
Employees • Strategic Analysis • Strategic Thinking
• Financial Resources • Strategic Decision- • Organizational
• Facilities/ making Competitiveness
Equipment • Strategy • Comparative
• Infrastructures implementation Advantage
• Processes • Strategic control • Strategic
performance
Figure 1.2 A Strategic Management Model
The strategic management model (Figure 1.2) shows the relationship between
and among the input, process, and output. The input in this model includes
the organizational variables like management and employees, financial
resources, facilities and equipment, infrastructures, and processes. The
strategic management process consists strategic analysis, strategic decision-
making, strategy formulation, strategy implementation, and strategic control.
When these specific processes are executed and manage creatively,
distinctly, and strategically, the organization can ultimately achieve
organizational [Link] particular, the output are exhibited in the strategic
intelligence acquired, strategic performance attained by the organization.
STRATEGIC PLANNING
Oftentimes, the word strategic planning is more popular than
strategic management. Essentially, these two words are the same. In
terms of purpose, both strategic management and strategic planning
have the same goals and objectives, that is, to devise a strategic mode
of preparing, addressing, and steering organizations to where they
want to go. Particularly, both undertakings endeavor to understand the
strategic position of organizations – their set goals, preferred choices,
and deliberate and calculated strategies. Furthermore, both strategic
management and strategic planning use the same processes to attain
theirs goals.
STRATEGIC PLANNING
Strategic Planning is defined as a continuous,
repetitive, and competitive process of setting the goals and
objectives that an organization aims to attain, defining the
means to achieve them, and assessing the best way to
realize them in the context of the prevailing environment
while measuring performance through set standards, and
periodically but continuously conducting reassessments.
Strategic planning exhibits the following properties:
1. It generates the
blueprint of what the 3. It is the process of
organization intends
developing a strategic fit
to accomplish.
between the
organization’s goals and
capabilities in the context
2. The strategic plan presents the of changing opportunities.
grand scheme of the organization and
outlines all the set activities, ranging
from the organizational to the
departmental level. It formalizes all
plans with respect to type and extent.
Strategic planning exhibits the following properties:
4. It is a process that involves 5. It is proactive, in that it is
carefully delineated steps. As written in the context of
stated in the definition,
strategic planning is structured,
anticipated feature
in that it begins with reviewing realities. Strategic planning
the environment, setting goals, does not make future
adopting and monitoring decisions. Instead, plans
strategies, and continuously are made in anticipation of
redesigning them as the needs
arise. future changes and
developments.
Strategic planning exhibits the following properties:
6. It is philosophy because it 7. It links the organizational
evolves a dynamic way of plan with functional and
conducting and managing an
organization. Strategic planning
operational plans. Strategic
involves a unique way of planning speaks of two
thinking and doing things. It is types of planning : (a) the
an intellectual exercise that organizational grand plan ;
embraces a belief that and (b) the departmental
convinces organizations of their
worth and importance. tactical plans.
Strategic planning exhibits the following properties:
9. It necessitates the
8. It is intricately interwoven leadership and support
within the defined managerial of top management
functions of organizing, and, at the same time,
directing, staffing, and
controlling. Although strategic employee participation
planning is a strictly formal and commitment.
and separate function of
management, it is subtly
intertwined in all the other
functions and responsibilities
of a manager.
TYPES OF STRATEGIC PLANS
1. Medium/long-range plan – prepared in the context o the
coming three to five, ten or more years. It describes the
major factor or forces that affect the organization’s long-
term objectives, strategies, and resources required.
2. Annual/yearly plan – short-term; succinctly describes the
organization’s present situation, its goals and objectives,
strategies, monitoring mechanism, and the budget for the
year ahead.
***Whether the plan is long-range or annual, it can be strategic when the organization formulates its action plans
and takes advantage of opportunities in the constantly changing environment while maintaining a tactical
alignment between the organization’s goals, capabilities, and opportunities.
The steps involved in strategic planning are iterative, cyclic, and integrative.
They include:
1. Making a situation audit to ascertain where the organization is
today;
2. Stating the respective goals and objectives of the organization,
the values and value systems its espouses, its business
definition, and its corresponding strategy statements to
determine where it wants to go;
3. Delineating appropriate strategies to be carried out in order to
help direct the organization to where it wants to be;
The steps involved in strategic planning are iterative, cyclic, and integrative.
They include:
4. Identifying and then choosing the soundest strategy to
determine the best way for the organization to be where it
wants to be;
5. Monitoring the implementation of strategies to measure
performance; and
6. Conducting periodic and continuous reassessments in order to
implement improvements and suggested changes.
To survive, organizations need to
plan carefully their strategic approaches.
Therefore, strategic plans have to be
prepared purposefully for effective and
efficient implementation, thus, leading to
the attainment of their set objectives.
The benefits of designing and putting
into effects a strategic plan cannot be
overemphasized.
WHY IS THERE A
NEED FOR
STRATEGIC
PLANNING?
Strengths and Limitations of
Strategic Planning
Strategic planning defines an organization’s vision, mission, and set
objectives. It provides organizations the opportunity to assess the milieu
and specify strategies to achieve their goals. Strategic planning helps
organizations to stay focused. It makes things happen. Furthermore,
strategic planning helps reduce the chances of committing mistakes, thus,
increasing organization’s efficiency. Strategic planning helps in the more
efficient allocation of organizational resources, better collaboration among
cross-departmental employees and functional units, and communication
between managers/supervisors of all levels. Lastly, when cautiously, clearly,
and proactively undertaken, strategic planning provides leverage and
competitive advantage to the organization.
Strengths and Limitations of
Strategic Planning
****while strategic planning has its advantage, it also has its
limitations. Although conducted yearly or even more often strategic plans
prepared in some instances are good only “in paper”. Some organizations
fail to follow faithfully their prepared strategic plans. If in cases these
strategic plans are followed religiously, some organizations may not be
flexible enough to make the needed adjustments and realignments due to
inevitable or forthcoming external or internal challenges. Similarly,
conducting strategic planning sessions may entail cost that can be expensive
to organizations.
VISION
GOALS
MISSION
Relationship of the
Vision-Mission-Goals
of an Organization
ORGANIZATIONAL VISION
To help organizations achieve strategic direction,
they need to articulate and have a commonality in
vision, mission, and goals. The interrelationship between
and among these three variables are essential in the
organizations’ thrust of achieving competitiveness.
The organizational vision is an inspirational statement of what
the organization hopes to achieve at some point in the future. It is
the image of what an organization desires to achieve. It is short
and succinct, but it carries an extraordinary force that will stir,
motivate a, and inspire employees to work and refocus towards its
desired optimal future state. Having a strong sense of vision can
move the organization to be what it wants to be. Like unseen
force, the organizational vision binds the company and its
employees together.
ORGANIZATIONAL VISION
An example of a vision is: “And educational institution ablaze with the
Spirit of excellence.”
This is the vision statement of the educational institution, College of
the Holy Spirit Manila. The statement energizes the administrators, faculty,
students, and staff. It brings the singleness in their desire and coherence in
their efforts. Although difficult and in fact, not measurable, the
organizational vision is an effective mode of binding everyone to a company
ultimate goal.
MISSION STATEMENT
The mission statement differs from the organizational vision. The
mission statement defines the current purpose of an organization; it answer
what the organization does, for whom it is done, and how it does what it
does.
Mission statements are likewise short and easy to remember. It gives
employees a better perspective on how their task contribute to the
attainment of organizational goals. Oftentimes, vision statements are more
enduring compared to mission statements. Mission statements are expected
to change the context of shifting economic realities or unexpected
circumstances like challenges, threats, and even opportunities.
MISSION STATEMENT
The mission statement of the College of the Holy Spirit
Manila is as follows: “We build, through Christian and
holistic formation, new generations of responsible
citizens who are agents of transformation.”
Here, what the organizations does is “to build”; it does
this “for new generations of responsible citizens”; and
how it does is “through Christian and holistic formation.”
Organizational Goals and Objectives
To operate the mission statement, organizational goals and
objectives are defined. All organizations have set goals. These are
referred to as organizational goals. Organization goals are pursued
to make a specified strategies succeed. They vary and essentially
dependent on their respective purpose and direction. One of the
implied basic goals of any organization is to use economic
resources efficiently and effectively such that survival, if not profit,
is at least secured, thus, ensuring the continuity of the
organization.
Organizational Goals and Objectives
Goals are macro, encompassing in perspective and prospective in nature.
In fact, goals represent the overall vision of an organization. By their very
nature, goals have following properties:
1. Goals provide organizations focus and direction. They neatly converge
toward the purpose of any firm, thus, streamlining all unnecessary
redundant considerations.
2. Goals move organizations to action. Because goals have to be attained,
organizations are motivated to function and perform toward their vision.
3. Goals develop in organizations the trait of persistence. Thus,
organizations continue persevere until they achieve their desired success.
Nevertheless, for goals to be attained, they have to be supported by
objectives. Objectives are different from goals, in that they are micro and
specific in perspective. They should possess the following characteristics:
• Objectives need to be clearly defined and formulated, carefully chosen,
specific, and definite.
• Objectives may be immediate or short-term.
• They need to be prioritized into a hierarchy of objectives.
• Objectives need to be realistic and attainable. They need to be flexible,
consistent, and strategic.
• Objectives need to be measurable overtime.
Organizational Goal
Objective 1 Objective 3
Objective 2 Objective 4
Figure 1.3 Relationship between Organizational Goal and Objectives
Strategic objectives are, in general, externally focused. According to Peter Ducker
(2008), objectives fall into eight major classifications:
1. Marketing standing (e.g., desired share of the current and new market);
2. Innovation (e.g., development of new goods, services, and of skills and methods
required to supply them);
3. Human resource (e.g., selection and development of employees);
4. Financial resources (e.g., identification of sources of capital and their uses);
5. Physical resources (e.g., equipment and facilities and their uses);
6. Productivity (e.g., efficient use of the resources relative to output);
7. Social responsibility (e.g., awareness and responsiveness to the effects on the
community of the stakeholders); and
8. Profit requirements (e.g., achievement of measurable financial well-being and growth).
Values and Value System
Organizations are guided by values, which vary from one
organization to another. Values are inherit roots of motivation
within an individual, an organization, a community, or a nation.
They are by nature, ingrained and thus, are more stable and
enduring. They are both intellectual and behavioral, serving as
bases for the organization’s actions and way of thinking.
Values and Value System
Values are general exhibited in two different ways, namely,
beliefs and attitudes. More particularly, beliefs are cognitive
manifestations while attitudes are characteristically behavioral.
They are fundamental and intricately integrated in the particular
organization’s value system. Take note that the values projected by
organizations are largely dependent on any or all of the following:
stockholders, the Board of Directors, the top management.
VALUE SYSTEM
Values Interests
Dreams & Leadership &
aspirations Management Styles
Philosophies
Ethical Practices
Expectations
Value System of an Organization
Values and Value System
Strictly speaking, the values of an organization are not
synonymous to its value system. The value system is
characteristically broader in scope; aside from values, its include other
variables such as the organization’s dreams, aspirations, interest,
expectations, philosophies, as well as leadership and management styles
and ethical practices. Moreover, the value system indicates the hierarchy
of values ranked by organizations. Because values are distinct, they differ
from one organization to another. This explains why one organization may
be perceived as socially and community-active, while another is business-
oriented. Hence, the importance of these values qualification and
value systems for organizations cannot be underestimated.
END OF CHAPTER 1