Modules for Strategic Management

Definition of Strategic Management:

Strategic management is the process of formulating, implementing, and

evaluating strategies to achieve long-term goals and objectives. It involves the
analysis of both internal and external environments of an organization to make
informed decisions, allocate resources efficiently, and ensure the organization’s
competitive advantage in a dynamic marketplace.

Key Components of Strategic Management:

1. Strategy Formulation: Developing the vision, mission, and long-term

objectives.
2. Strategy Implementation: Putting the formulated strategy into action
through resource allocation, organizational structure, and operational
decisions.
3. Strategy Evaluation: Monitoring and assessing the outcomes to
determine if the strategies are successful or need adjustments.

Importance of Strategic Management:

Clear Direction and Purpose: Strategic management provides a clear

roadmap for an organization, guiding decision-making and aligning efforts
towards common objectives. It ensures that all parts of the organization
work toward a unified goal.

Improved Decision-Making: By systematically analyzing both internal

and external factors, strategic management allows leaders to make
informed and data-driven decisions that can improve performance and
competitiveness.

Competitive Advantage: Through effective strategy formulation and

execution, organizations can position themselves better in the market,
differentiate their products or services, and gain a sustainable
competitive edge.

Resource Optimization: Strategic management ensures that an

organization's resources are used efficiently and effectively, helping to
reduce waste, streamline operations, and maximize value creation.

Adaptability to Change: A strategic management process helps

organizations anticipate and respond to changes in the business
environment, such as shifts in technology, consumer preferences, or
market trends.

Long-term Sustainability: It emphasizes long-term goals and

sustainability, helping organizations grow and remain relevant in the face
of evolving market conditions and challenges.

Levels of Strategy: Corporate, Business, and Functional

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
1 City University - CBAA
In strategic management, strategies are formulated at different levels within an
organization. These levels reflect different scopes of decision-making and
operational focus. The three primary levels of strategy are:

1. Corporate-Level Strategy:

Corporate-level strategy focuses on the entire organization and its overall

direction. This level is concerned with decisions related to the organization’s
portfolio of businesses, resource allocation, and strategic direction at a broad
level. It addresses questions like:

 What business or industries should the organization be involved in?

 Should the company diversify, merge, acquire, or divest?
 How can the company maximize shareholder value across all business
units?

Key Aspects:

 Diversification: Entering new markets or industries.

 Growth Strategies: Mergers, acquisitions, joint ventures, or expanding
into new geographic areas.
 Resource Allocation: Deciding how resources will be distributed across
different business units or departments.
 Corporate Governance: Setting the overall mission, vision, and ethical
guidelines for the organization.

Example: A multinational conglomerate deciding whether to expand into a new

market sector, such as technology or healthcare.

2. Business-Level Strategy:

Business-level strategy focuses on how to compete within a specific industry or

market. It addresses how an individual business unit or subsidiary can achieve a
competitive advantage. This level of strategy is often formulated by general
managers and is concerned with achieving sustainable profitability in a
competitive marketplace.

Key Aspects:

 Cost Leadership: Becoming the lowest-cost producer in the industry.

 Differentiation: Offering unique products or services that stand out in
the market.
 Focus Strategy: Targeting a specific niche or market segment with
tailored products or services.

Example: A smartphone company deciding whether to compete by offering the

best premium products (differentiation) or by becoming the lowest-cost provider
(cost leadership).

3. Functional-Level Strategy:

Functional-level strategy is concerned with the day-to-day operations and

specific functions within the organization, such as marketing, finance, human
resources, operations, and research and development. The goal is to support

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
2 City University - CBAA
business-level strategy by optimizing the performance of individual departments
or units.

Key Aspects:

 Marketing Strategy: Developing effective marketing campaigns or

product positioning.
 Operational Strategy: Improving production processes to enhance
efficiency or quality.
 HR Strategy: Recruiting, training, and retaining employees to support
organizational goals.
 Financial Strategy: Managing budgets, investments, and cost structures
to support broader business goals.

Example: A retail chain’s marketing department deciding on promotional

campaigns to increase sales or a manufacturing unit improving production
efficiency to reduce costs.

Level Focus Key Decision Examples

Corporate level Overall direction What industries/ A company
of the business to deciding to
organization operate in? diversify or enter
a new market
Business level How to compete How to achieve A smartphone
within a specific competitive company choosing
market/ industry advantage between cost
leadership
differentiation
Functional level Operational areas Have to support Marketing
within the business-level department
departments/units creating
campanigs to
boost sales.

o explore the Strategic Management Process and Strategic Management Models,

here are some key questions to help you understand these concepts more deeply:

Strategic Management Process Overview

How would you define the strategic management process? What are the main
steps involved in creating and implementing a strategic plan for an organization?

What are the key elements of a strategic analysis? How would you approach
analyzing the internal and external environment of a business (e.g., SWOT
analysis, PESTEL analysis)?

How do you formulate strategies in a strategic management process? Can you

describe how businesses develop long-term goals, competitive advantages, and
strategic objectives?

What role do corporate, business, and functional-level strategies play in the

overall strategic management process? How do they relate to each other?

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
3 City University - CBAA
 How do organizations implement their strategies? What factors (e.g.,
resources, leadership, organizational structure) are important for successful
execution?

How do businesses evaluate and control the implementation of their

strategies? What tools or metrics would you use to track progress and adjust
strategies as necessary (e.g., balanced scorecard, key performance indicators)?

What role does innovation play in strategic management? How do businesses

integrate innovation into their overall strategy to stay competitive?

Strategic Management Models

Are you familiar with the Porter's Five Forces model? How does it help
businesses analyze the competitive forces within their industry?

What is the SWOT analysis model? How do you use it to assess a company’s
strengths, weaknesses, opportunities, and threats, and how can this inform
strategic decision-making?

What is the BCG Matrix (Boston Consulting Group Matrix)? How can this
model help businesses allocate resources and manage their product portfolio?

What is the Value Chain Analysis model? How does it help organizations
identify areas for improvement and create a competitive advantage through
internal processes?

Are you familiar with the Ansoff Matrix? How does it help businesses identify
growth strategies (e.g., market penetration, market development, product
development, diversification)?

How does Blue Ocean Strategy differ from traditional competitive strategies?
What does it mean to create "blue oceans," and how can businesses apply this
concept to break free from intense competition?

What is the significance of the VRIO Framework (Value, Rarity, Imitability,

Organization)? How can businesses use this model to assess their resources and
capabilities in terms of gaining a sustained competitive advantage?

How does Resource-Based View (RBV) theory apply to strategic management?

How does it emphasize leveraging internal resources and capabilities to create
competitive advantage?

What is Strategic Fit? How do businesses ensure that their strategies are
aligned with their resources, capabilities, and market opportunities?

How would you use the PESTEL analysis model (Political, Economic, Social,
Technological, Environmental, Legal factors) to understand the macro-
environmental factors affecting business strategy?

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
4 City University - CBAA
The vision, mission, and values of an organization are foundational elements
that guide its strategic direction and decision-making processes. Here’s an
overview of their roles in shaping strategy:

1. Role of Vision in Strategy

Definition: The vision statement articulates what an organization aspires

to become in the future. It is a long-term goal that paints a picture of
success.

Role in Strategy:

o Direction: The vision serves as a guiding star for the company’s

long-term strategy. It helps align all actions, projects, and goals
with a common future objective.
o Inspiration: A strong vision motivates employees, leadership, and
stakeholders by presenting a compelling future state that everyone
can rally behind.
o Decision-making: The vision helps ensure that strategic
decisions are made with the end goal in mind. It acts as a
benchmark against which potential opportunities and risks are
evaluated.

Example: A tech company’s vision might be “To be the global leader in

sustainable technology innovation.” This vision would influence product
development, market expansion, and partnerships.

2. Role of Mission in Strategy

Definition: The mission statement explains the organization’s purpose—

why it exists—and its primary objectives. It tends to be more immediate
than the vision, focusing on the present.

Role in Strategy:

o Focus: The mission helps define the core activities of the business
and narrows down what strategies are necessary to fulfill its
purpose.
o Consistency: It provides a consistent framework for day-to-day
decision-making, ensuring that every action taken aligns with the
organization’s core purpose.
o Operational Planning: Mission statements guide the creation of
specific goals, initiatives, and resource allocation. It shapes
operational strategies by emphasizing what needs to be done in
the short and medium term.

Example: A healthcare provider’s mission might be “To provide

affordable and high-quality healthcare services to underserved
communities.” This mission will influence its strategies on service
delivery, pricing, and expansion.

3. Role of Values in Strategy

Definition: Organizational values represent the beliefs and ethical

principles that guide the behavior of employees and the organization as a
whole. These are the core ideals that shape the culture and how business
is done.

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
5 City University - CBAA
 Role in Strategy:

o Culture and Behavior: Values are central to shaping the

organizational culture and setting expectations for behavior and
decision-making. They influence how strategies are implemented
and help ensure that the company remains true to its ethical
standards.
o Reputation and Trust: Values are also important for building
trust with customers, investors, and other stakeholders. A
company’s commitment to its values can be a competitive
advantage, helping it stand out in the market.
o Strategic Alignment: Values guide strategic initiatives by
providing a set of ethical principles to consider in all decisions.
Whether launching new products or entering new markets,
companies must ensure that their strategies are aligned with their
values.

Example: A company’s values might include “Sustainability, Integrity,

and Innovation.” These values will inform the company’s strategy to
develop eco-friendly products, act ethically in business relationships, and
foster creativity in product development.

Integration of Vision, Mission, and Values into Strategy

When combined, the vision, mission, and values create a cohesive strategic
foundation:

 Vision guides the long-term aspirations, shaping the overall direction

and providing clarity about where the organization is heading.
 Mission provides the organization with its core purpose, helping
focus strategic objectives and defining how the company will succeed in
its industry or market.
 Values create a framework for decision-making, ensuring that the
company stays true to its ethical standards and organizational culture as
it pursues its strategic goals.

In practice, organizations align their strategies with these elements to ensure

that both long-term goals and short-term actions are consistent with the
company’s foundational beliefs. This alignment fosters a sense of purpose and
focus across all levels of the organization and improves the likelihood of strategic
success.

Strategic management plays a crucial role in organizations across various

contexts. While the overall process remains similar, its application can vary
depending on factors such as the organization’s size, structure, industry, and
goals. Here’s an overview of how strategic management can differ across
different organizational contexts:

1. Strategic Management in Small and Medium Enterprises (SMEs)

Flexibility and Adaptability: In SMEs, strategic management tends to

be more flexible and informal. The strategic planning process is often less
structured than in larger organizations, with a greater focus on
adaptability and quick decision-making.

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
6 City University - CBAA
 Resource Constraints: SMEs usually operate with limited resources, so
strategic decisions must prioritize efficiency and scalability. This often
leads to a focus on niche markets or specific competitive advantages.

Owner-Driven Strategy: In many SMEs, the vision and strategy are

shaped by the business owner or a small leadership team. This results in a
more centralized decision-making process.

Short-Term Focus: Due to resource constraints, SMEs often focus on

short-term survival and profitability rather than long-term expansive
growth.

Example: A local coffee shop might focus its strategy on providing

unique, high-quality products and a personalized customer experience,
while keeping overhead costs low and responding quickly to market
demands.

2. Strategic Management in Large Corporations

Formalized Processes: In large corporations, strategic management is

often more formalized, involving comprehensive planning cycles and a
structured approach to setting long-term goals. These companies tend to
have dedicated strategic management departments.

Complex Decision-Making: Large corporations operate in more

complex environments with multiple business units, geographies, and
product lines. This requires sophisticated tools like portfolio analysis (e.g.,
BCG Matrix) to evaluate and prioritize resources.

Diverse Stakeholders: The strategy must account for a broad range of

internal and external stakeholders, including shareholders, employees,
customers, and regulatory bodies.

Long-Term Planning: With more resources at their disposal, large

corporations tend to focus more on long-term strategic goals, such as
global expansion, mergers, acquisitions, and innovation.

Example: A multinational technology company like Apple or Microsoft

will have long-term goals centered on market leadership, innovation, and
global expansion, supported by structured, cross-functional strategies at
various levels of the organization.

3. Strategic Management in Nonprofit Organizations

Mission-Driven Strategy: For nonprofits, the mission statement takes

center stage in guiding strategy, as the primary focus is often on social
impact rather than profit maximization.

Resource Constraints and Donor Dependency: Nonprofits typically

operate under stricter financial constraints and rely heavily on external
funding sources such as donations, grants, and government support.

Stakeholder Engagement: Nonprofits need to align their strategy with

the interests of a diverse group of stakeholders, including donors,
volunteers, government bodies, and the communities they serve.

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
7 City University - CBAA
 Focus on Long-Term Impact: While nonprofits still need to consider
financial sustainability, their strategic decisions are often centered
around maximizing social, environmental, or cultural impact.

Example: A nonprofit organization focused on environmental

conservation might focus its strategy on raising awareness, lobbying for
policy changes, and managing local projects to reduce carbon emissions.

4. Strategic Management in Startups

Innovation and Disruption: Startups often focus on innovative business

models, disruptive technologies, and rapidly scaling to capture market
share. Strategy tends to be highly dynamic and geared toward testing,
learning, and iteration.

Lean and Agile Planning: Due to limited resources, startups prioritize

strategic agility, often pivoting quickly in response to market feedback or
new opportunities.

Entrepreneurial Leadership: In startups, the founder or a small

leadership team often has a significant influence on strategic decisions.
There is typically a strong entrepreneurial spirit in the development and
execution of strategy.

High Risk and Reward: Startups typically focus on achieving significant

growth and differentiation, often with high levels of risk and uncertainty.

Example: A tech startup offering a new software platform might focus its
strategy on gaining early adopters and expanding through viral
marketing, partnerships, and rapid feature development

5. Strategic Management in Government or Public Sector Organizations

Public Accountability: Public sector organizations operate under a

different set of rules, with strategic management heavily influenced by
political considerations, budget constraints, and public accountability.

Long-Term Policy Goals: The strategy of public sector organizations is

often oriented toward long-term social, economic, or environmental goals,
and success is measured by outcomes such as public welfare or service
delivery rather than profitability.

Stakeholder Diversity: These organizations deal with a complex web of

stakeholders, including citizens, government officials, other public
agencies, and external contractors.

Regulatory Constraints: Public sector organizations must operate

within the framework of laws, regulations, and political pressures, which
heavily influence their strategic choices.

Example: A public health agency’s strategy might involve long-term

initiatives to combat health disparities, while coordinating with national
health systems, conducting research, and ensuring equitable service
delivery.

6. Strategic Management in Family-Owned Businesses

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
8 City University - CBAA
 Generational Leadership: In family businesses, the strategic direction
often reflects the values, interests, and visions of the founding family
members. Family dynamics can influence the decision-making process,
making it both an asset and a challenge.

Succession Planning: A key concern in family businesses is the smooth

transition of leadership from one generation to the next, which requires
careful strategic planning and governance.

Long-Term Focus: Family businesses often have a longer-term

perspective than public companies, focusing on legacy building and
sustained success across generations.

Conservative Risk Appetite: Compared to other organizational types,

family-owned businesses may take a more conservative approach to risk,
prioritizing stability and tradition.

Example: A family-owned manufacturing company might prioritize

maintaining a strong reputation for quality products, while slowly
expanding into new markets in a controlled and methodical manner.

7. Strategic Management in Global/Multinational Organizations

Global Integration and Local Responsiveness: Multinational

companies must balance the need for a consistent global strategy with the
need for local responsiveness. This often results in a combination of
global and regional strategies.

Cross-Border Coordination: Global firms face challenges in

coordinating strategies across different cultures, legal environments, and
market conditions. This requires a high degree of strategic alignment and
communication across different regions.

Complex External Environments: MNCs must navigate complex

external environments, including foreign trade policies, currency
fluctuations, and geopolitical risks, which can all influence strategic
decisions.

Innovation and Scale: Large global firms often use their scale and
financial resources to drive innovation and maintain competitive
advantages in multiple international markets.

Example: A global automotive company might develop a core strategy

around sustainability while tailoring product offerings and marketing
campaigns for specific regional markets based on local preferences and
regulations.

Ket Take-away

Strategic management is a highly contextual process, and its application varies

greatly depending on the organization's structure, resources, and goals.
Regardless of the context, strategic management aims to guide an organization
toward achieving its objectives while navigating both internal and external
challenges.

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
9 City University - CBAA
If you have a specific context in mind or would like help applying these concepts
to your own organization or industry, feel free to share more details, and I can
provide tailored guidance!

Strategic Management By: Dr. Federico B. Ramos [Link]. Prof. IV- Quezon
10 City University - CBAA