STRATEGIC MANAGEMENT PAPER (As of 1st Term, 2011-2012) Module I: Introduction I. Table of Contents II. Introduction III.

Executive Summary IV. Definition of Terms Module II: Environmental Scanning: External Analysis I. Industry Analysis
A.

Definition of the Industry

CONSTRUCTION GENERAL ENGINEERING CIVIL ENGINEERING WORKS SPECIALIZED CONSTRUCTION (Special Trades)
Construction industry is one of the booming industries nowadays with the continuation of the development process especially in the developing countries like Philippines. This industry is mainly an urban based one which is concerned with site preparation, complete construction of buildings, residential or non residential construction, repairing of any existing building, building components and installation contractors, electrical and mechanical works and other building completion activities as well as renting of construction equipments and demolition works. Construction industry is categorized into three categories namely: General Construction includes the construction of buildings of all kinds. Civil Engineering works like construction of bridges, roads, tunnels, railways, airfields, harbours, irrigation systems, industrial facilities etc. Specialized construction also known as Special trades which involves primarily in the construction of parts of building and civil engineering works without responsibility for the entire projects Reference: NSCB, PSIC (2011)

Industry Characteristics 1. Size : # of Companies in the Industry/Industry Shares by Companies 2. Industry Profitability and Growth Rate 3. Industry Life Cycle 4. Scope of Competitive Rivalry Construction industry is composed of local, international and global companies. Major players in the industry compete on an international level. However, some of the smaller companies focus on specific regions for international players under take high-cost, complexity and sometimes high-risk projects.
B.

Product Characteristics Construction industry encompasses a wide range of activities from the construction of residential and non residential, urban development to commercial, industrial buildings and infrastructure such as road transportation, harbours and airports.
5. 6. Customers The industry primary caters institutional customers since it is engaged on subcontracting projects and other construction activities. In the Philippines setting, there are two types of clients: informal and formal groups which are composed of the public and private sectors. 7.

Degree of Vertical Integration

8. Technology / Innovation One of the latest technologies used in Construction industry is Building Information Model (BIM). BIM is a set of interacting policies, processes and technologies generating a methodology to manage the essential building design and project data in digital format throughout the life-cycle of a building. This technology helps all the factors in a collaborative and concerted manner solely based on the platform of Information Technology.

Learning and Experience Effects It required a thorough understanding on all aspects of the construction as well as the technology. In coordination with the technology, knowledge on all the machines and equipments is necessary
9. 10.

Capacity Utilization

C. Key Success Factors in the Industry II. Identification of External Environmental Factors

A.

General Environment 1. Current Scenario i. Socio-Cultural ii. Technological iii. Economic iv. Environmental v. Politico-Legal vi. Demographic vii. Global 2. Potential Changes in the General Environment Task Environment 1. Current scenario i. Threat of New Entrants ii. Bargaining Power of Suppliers iii. Bargaining Power of Buyers iv. Threat of Substitute Products v. Force of complementors (if any) vi. Summary of the overall pressure exerted by the task environment
2.

B.

Potential Changes in the Task Environment

NB: The objective is to describe the industry dynamics by looking at the effect of each of the forces on the industry. The end product of Items 1 5 is to determine the pressure the above-mentioned forces exert on the industry.
C.

Competitor Environment Identification of Competitors Strategic Group Map i. Illustration ii. Explanation of x-axis factor iii. Explanation of y-axis factor iv. ANALYSIS 3. Current Scenario in Competitor environment i. Numerous and Equally Balanced Competitors ii. Industry Growth iii. Fixed / Storage Costs iv. Differentiation and Switching Costs v. Capacity Augmented in Large Increments vi. Diversity of Competitors vii. Strategic Stakes viii. Exit Barriers
1. 2.

4.

Potential Changes in the Competitor Environment

III.

I.

External Environmental Analysis A. Summary of Potential Changes and Environmental Scanning (General, Task, Competitor) B. Issues Priority Matrix C. Analysis of Potential Changes using Porters 5 Forces of Competition Summary of Threats and Opportunities

Module III: Environmental Scanning: Internal Analysis I. Company Profile A. Brief History of the Company B. Board of Directors & Top Management i. Corporate governance analysis (relate to SEC requirements for Board of Directors) C. Organizational Chart D. Company Vision Mission E. Current Objectives/Strategies II. Functional Areas (where applicable)
A.

Operations and Logistics i. Description of Operations of Firm in terms of processes, technology, automation, capacity, etc ii. Supply Chain iii. Comparison of Operations with closest rivals or benchmark Marketing i. General description of 4Ps ii. Current Marketing Objectives, Policies and Programs iii. Comparison of Marketing with closest rivals or benchmark Human Resource i. General description of Human resource programs and practices ii. Current HR objectives, policies iii. Comparison of HR practices with closest rivals or benchmark Information Systems i. Description of MIS or ERP system of company ii. Comparison of ERP system with closest rivals or benchmark Research and Development

B.

C.

D.

E.

i. ii.

Description of general practice, policies, programs on R&D Comparison of R&D practice with closest rivals or benchmark

F.

Finance i. Presentation of financial statements (I/S, B/S. CFS) a. Vertical Analysis of Income Statement b. Horizontal Analysis of Income Statement c. Vertical Analysis of Balance Sheet d. Horizontal Analysis of Balance Sheet e. Financial Ratios Analysis ii. Summary of assessment of financial health of the firm

III. Value Chain Analysis A. Value Chain analysis of company B. Value Chain of closest rival or benchmark IV. Summary of Functional and value chain and determination of Strengths and Weaknesses
A.

Analysis of Strengths and Weaknesses using ASSIST and VRIO Framework

Module IV: Strategic input I. External Factor Evaluation Matrix (EFE) Matrix Analysis II. Internal Factor Evaluation Matrix (IFE) Matrix Analysis III. Competitive Profile Matrix (CPM) Matrix Analysis IV. TOWS Matrix Analysis of the key issues faced by the firm as it relates to the external (Threats/Opportunities) and internal (Strengths/Weaknesses). This portion makes use of the outputs in I, II, and III of this section. This is NOT merely a tabular listing of the TOWS, but an in-depth analysis of potential key issues the firm faces.

The key strategic issues must be defined in this portion of the paper. This is the SOFA part of the paper, meaning State of the Firm Analysis. In this part of the paper, one should be able to articulate where the industry seems to be heading, what the core competencies of the organization is/are, and what effects these factors might have on the choice of a strategy. Module V: Strategy Formulation A. Possible Tools and Frameworks for Use I. Strategic Position and Action Evaluation (SPACE) Matrix Matrix Analysis II. Boston Consultancy Group (BCG) Matrix Matrix Analysis III. Internal-External (IE) Matrix Matrix Analysis IV. Grand Strategy Matrix Matrix Analysis V. Quantitative Strategic Planning Matrix Matrix Analysis VI. Blue Ocean Strategy Matrix Analysis B. Identification of Chosen Strategy Matrix Justification of Chosen strategy Capital budgeting (NPV, IRR, Discounted payback period)

Module VI: Strategy Implementation

I.

Balanced Scorecard a. Vision

b. c. d. e. f. g. h. i. j. k.

Most Attractive Strategy Form 1: Objectives i. Portfolio Form 2: Themes Form 3: Measures Form 4: Perspectives Form 5: Initiatives Form 6: Milestones Summary Strategy Cause and Effect (Illustration) GANTT Chart

Module VII: Financial Projections I. Assumptions to Projections II. Financial Projections (3 years) Balance Sheet Income Statement Cash Flow Statement III. Financial Projections Vertical Analysis Horizontal Analysis