A Strategic Management Model Strategic Decision-Making

- Is deliberately bringing together the right

Hypercompetition resources for the right markets at the right
- Is a fundamental feature of the new time.
economy; it carries a note of
overexcitement and agitation; it occurs
when a product/service offerings and
technologies are so new that standards
become unstable and competitive
advantage is not suitable.

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 Strategy formulation is designing strategies on
objectives of achieving and maintaining the business and corporate levels.
better alignment of corporate policies,
Strategy Implementation is employing these
priorities, and success.
crafted strategies to achieve organizational set
goals and objectives.

Strategic Control is the application of an

appropriate monitoring and feedback system.

Strategic Analysis
- Consists of a systematic evaluation of
variables currently existing in the external
and internal environment. It is the science
of creating, executing, and evaluating
cross-functional decisions to enable an
organization to achieve its goals and
objectives.
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.
TYPES OF STRATEGIC PLANS:
1. Medium/Long-range plan – prepared in the
context of the coming three to five, ten, or more
years. It describes the major factors 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
mechanisms, and the budget for the year
ahead,
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.
Mission statement defines the current purpose of
an organization; it answers what the organization
does, for whom it is done, and how it does what it
does. It gives employees a better perspective on
how their tasks contribute to the attainment of
organizational goals.
Values are generally exhibited in two different
ways, namely, beliefs and attitudes. The values
projected by organizations are largely dependent
on any or all of the following: the stockholders, the
Board of Directors, and the top management.
Beliefs are cognitive manifestations while
attitudes are characteristically behavioral.
Challenges in the External Environment
Environmental Scanning
 Environment: everything around us
 Business environment refers to the sum total
of all the forces surrounding and influencing the
life and development of the firm.
 Environmental Scanning is the monitoring,
evaluating, and disseminating of information
from external and internal environment to key
people in company.
SWOT Analysis
- SWOT matrix, or SWOT analysis, is a
strategic planning tool businesses and
individuals use to identify and assess the
strengths, weaknesses, opportunities and
threats associated with an organization,
project, business plan or activity. This
technique helps managers gauge how
internal and external factors can affect the
success or viability of new projects.
PESTLE Analysis
- Is a tool designed to examine a company’s
external environment.
  What is the political situation of the
country and how can it affect the
industry?
 What are the prevalent economic
4. Defensive position – an unattractive industry,
factors?
 How much importance does culture
have in the market and what are its
determinants?
 What technological innovations are
likely to pop up and affect the market
structure?
 Are there any current legislations that
regulate the industry or can there be
any chance in the legislations for the
industry?
and think about the possibilities of the
penetration into the industry more attractive
and reduce costs.
___________
_______________________
the company lacks competitive products and
___________
financial resources, a critical factor is the
competitiveness, the company should reduce
costs, reduce investment and consider leaving
the industry.

SPACE Matrix
- The Strategic Position & Action Evaluation
matrix or SPACE matrix focuses on
strategy formulation especially as related to
the competitive position of an organization.
It is broken down to four quadrants
(Aggressive Position, Competitive Position,
Conservative Position, & Defensive
Position) where each quadrant suggests a
different type of a strategy depending on
which quadrant the outcome of the analysis
place the organization.

The Internal Strategic Dimensions is based

on the analysis of two areas; What is an INDUSTRY?
1. Financial Strength (FS) - An Industry is a group of companies that
2. Competitive Advantage (CA) produce similar products or offer similar
services that are close substitutes. An
The External Strategic Dimensions is based industry’s profit potential is a function of the
on the analysis of two areas; five forces of competition:
1. Environmental Stability (ES)
2. Industry Strength (IS) Porter’s Five Forces is a model that identifies
and analyzes five competitive forces that
Four Quadrants if SPACE Matrix shape every industry and helps determine an
1. Aggressive position – an attractive and industry’s weaknesses and strengths.
_____________
relatively stable industry, the company has a
competitive advantage and it can protect is, a
critical factor is the possible entry of new
competitors into the industry.
2. Competitive position – attractive and
_________________
relatively unstable environment, the company
has ________________
some competitive advantage, a critical
factor is the company’s financial strength.
__________
3. Conservative position – a stable industry with
________
low growth rate and financially stable company,
a critical factor is in the product
competitiveness, company should protect its
successful products and develop new ones
 The primary force comes from customer Example of EFE Matrix
segments that make up the markets. The size
and importance of customers provide the
power to negotiate prices and deals that
reduce the profitability of the industry. The size
and growth of segments determine their
potential influence on product development
and level of competition.
 The secondary force comes from the
competitors and their strategies for gaining
market share. Each competitor offers a set of
products and services that attempts to provide
higher value to the product-market segments
they address. Competitive Profile Matrix (CPM)
 The third force comes from the industry - Is a strategic analysis that allows you to
suppliers. Industry suppliers often control compare your company to your
critical inputs that can affect a firms’ ability to competitors, in such a way as to reveal your
compete. Access to critical equipment, relative strengths and weaknesses. The
materials, or components can determine what profile matrix identifies a firms’ key
firms will lead the industry. For this reason, competitors and compares them using
increased outsourcing often leads to lower industry’s critical success factors. The
entry barriers for new competition. analysis also reveals company’s relative
 The fourth force represents the barriers to strengths and weaknesses against its
change in industry structure, either from new competitors. As a result, a company can
competitors entering the industry or current easily identify the areas it should improve
competitors existing the industry. Barriers to and the areas it should protect.
entry often include heavy investment in capital,
equipment, and market development.
 The fifth force represents the potential for
change in product-market structure of the
industry through the substitution of products or
services with alternative approaches to
satisfying the customer’s needs. This requires
the identification of potential substitutes and
the characteristics that would cause rapid
substitution.

Strategy Tools in Evaluating the Firms’

External Environment

External Factor Evaluation (EFE) Matrix

- Is a strategic tool used for the external
evaluation of a firm. External factors
consist of opportunities and threats which
needs to be identified and should be
responded in order to utilize the available
opportunities and eliminate or reduce the
impact of threats. The EFE matrix could be
used to find out how a firm has been
responding to the external factors.