Jonam Tabuzo-Valeza
Strategic Management
•The process of developing a game plan to
guide a company as it strives to accomplish
its vision, mission, goals, and objectives and
to keep it from straying off course. & SWOT
•Competitive Advantage apart from its
competitors and unique image Developing a
Strategic Plan
•specific geographic market area.
•close contact with their customers, giving
them valuable knowledge
Strategic management process:
•Use a relatively short planning horizon – two
years or less for most small companies.
•Be in formal and not overly structured; a
“shirtsleeve” approach is ideal.
•Encourage the participation of employees
and outside parties to improve the reliability
and creativity of the resulting plan.
•Focus on the customer.
•Do not begin with setting objectives because
extensive objective setting early on may
interfere with the creative process of strategic
management.
•Focus on strategic thinking, not just
planning, by linking long-range goals to day-
to-day operations. Strategic thinking
encourages creativity, innovation, and
employee involvement in the entire process.
THE STRATEGIC MANAGEMENT
PROCESS
•Step 1: Develop a Clear Vision and
Translate It into a Meaningful Mission
Statement
•Step 2: Define the Firm’s Core
Competencies and target Market
•Step 3: Assess the Company’s Strengths
and Weaknesses
•Step 4: Scan the Environment for Significant
Opportunities and Threats
•Step 5: Identify the Key Factors for Success
in the Business
•Step 6. Analyze the Competition
•Step 7. Create Company Goals and
Objectives
•Step 8: Formulate Strategic Options and
Select the Appropriate Strategies
Step 1: Develop a Clear Vision and Translate
It into a Meaningful Mission Statement
VISION
•It is an expression of what the owner stands
for and believes in.
•dream of something that does not exist yet
and the ability to paint a compelling picture of
that dream for everyone to see.
Decisions,motivation, values
MISION
Elements of a Mission Statement
•beliefsWhat do we stand for?
•target customers?
•basic products and services? What customer
needs and wants do they satisfy?
•Why should customers do business with us
rather than the competitor down the street (or
across the town, on the other coast, on the
other side of the globe)?
•What constitutes value to our customers?
How can we offer them better value?
•What is our competitive advantage? What is
it source?
•In which markets (or market segment) will
we choose to compete?
•Who are the key stakeholders in our
company and what effect do they have on it?
*To be effective, a mission statement must
become a natural part of the organization,
embodied in the minds, habits, attitudes and
decisions of everyone in the company every
day.
Step 2:Core Competencies and target
Market
•The key to success is building these core
competencies (or identifying the ones a
company already has) and then concentrating
them on providing superior service and value
for its target customers.
•MARKET SEGMENTATION
A strategy that involves carving up the mass
market into smaller, more homogeneous units
and then attacking certain segments with a
marketing strategy designed to appeal to its
members.
POSITIONING
•A technique that involves influencing
customers’ perceptions to create the desired
image for a business and its goods and
services.
Step 3: Strength/Weakness
Step 4: Opportunities and Threats
Step 5: Identify the Key Factors for
Success in the Business
KEY SUCCESS FACTORS
•Relationships between a controllable
variable (e.g. plant size, size of sales force,
advertising expenditures, product packaging)
and a critical factor influencing the firm’s
ability to compete in the market.*For example,
one restaurant owner identified the following
key success factors:
•Tight cost control
•Trained, dependable, honest in-store
managers
•Close monitoring of waste
•Careful site selection
•Maintenance of food quality
•Consistency
•Cleanliness
•Friendly and attentive service from well-
trained wait staff.
Step 6. Analyze the Competition
Business is like a battlefield. And if you want
to win it, you have to know who you are up
against. This style is significant for several
reasons. One is to avoid surprises from
existing competitors’ new strategies. Two, to
identify potential competitors. It will also help
you improve your reaction time to
competitors’ actions. Lastly, you will be able
to anticipate your rivals’ next strategic moves.
Two things are required in this stage.
The first one is competitor analysis. This
involves gathering information on the situation
of your rivals, SWOT analysis, its buyers,
financial resources, etc. These things will be
your comparison or benchmark in developing
your product or service.
The cost of gaining rivals’ information
can be minimal. Look through magazines,
Internet, customers, suppliers, libraries and tv
are some of the sources you can consult to
get what you need to know. With this
information, come up with a competitive
profile matrix and evaluate how far ahead or
away you are from your competitors.
Step 7. Create Company Goals and
Objectives
Step 8: Formulate Strategic Options and
Select the Appropriate Strategies
Strategy
• a road map of the actions an entrepreneur
draws up to fulfill a company’s mission,
goals and objectives
•the mission, goals and objectives are the
ends, the strategy are the means
•master plan that covers all the major parts
of the organization and ties them together into
a unified whole
•the plan must be action oriented
•a successful strategy is comprehensive and
well integrated
“ A flawed strategy-no matter how brilliant the
leadership, no matter how effective the
implementation-is doomed to fail. A sound
strategy, implemented without error, wins
every time.” – Joseph Picken and Gregory
Dess (Mission Critical: The 7 Strategic Traps
That Derail Even the Smartest Companies)
THREE BASIC STRATEGIES
(Michael Porter)
Cost Leadership
a strategy in which a company strives to be
the low-cost producer relative to its
competitors in the industry.
–(+) Low-cost leaders have a competitive
advantage in reaching buyers whose primary
purchase criterion is price.
–(-) Sometimes a company focuses
exclusively on lower manufacturing costs w/o
considering the impact of purchasing,
distribution or overhead costs
–(-) misunderstanding the firm’s true cost
drivers
Differentiation
a strategy in which a company seeks to build
customer loyalty by positioning its goods or
services in a unique or different fashion.
•(+) A firm strives to be better than its
competitors at something that customers
value.
•(-) Sustainability of a product or service’s
differentiation
•(-) overdifferentiating and charging so much
Focus
a strategy in which a company selects one or
more market segments, identifies customers’
special needs, wants, and interests, and
approaches them with a good or service
designed to excel in meeting those needs,
wants and interest.
•(+) the focusing firm specializes in serving a
specific target segment or niche
•(-) Companies must struggle to capture a
large enough share of a small market to be
profitable
•(-) there is danger of larger competitors
entering the market and eroding it
Step 9: Translate Strategic Plans into Action
Plans
•Implement the strategy by dividing the plan
into projects
•Involving employees and delegating
adequate authority to them is essential
because these projects affect them most
directly.
Step 10: Establish Accurate Controls
Accurate Controls…
•Control the strategy- plans created in the
strategic planning process become the
standards against which actual performance
is measured
•Identify and track key performance
indicators
•Balanced Scorecard: set of measurements
unique to a company that includes both
financial and operational measures and gives
manager a quick yet comprehensive picture
of the company’s performance