WEEK 3-4

Name:
_________________________________ Section: _______________________
Teacher’s name: ________________________ Date: _________________________
Lesson 2.1: Local Networks

At the end of this module, the students should be able to:

a. Define strategic analysis and intuitive thinking.

b. Explain strategic analysis and intuitive thinking.
c. Attain facility in strategic analysis.

In the previous module, you have learned about the concept of trend, which is a prevailing idea or movement that
snowballs and remains over a period of time. A trend ultimately affects the lives of many people that follow it.

In this module, you will be introduced to the concept of network. A network is a particular type of relation that links
certain sets of people, events, or objects. This module discusses a local network, which refers to interconnected processes
internal to the individual person's mind, mental faculty, or thoughts such as strategic analysis and intuitive thinking that are
ultimately demonstrated in decision-making.

The actions of an individual influence other people and their surroundings. It is similar to a trend, which starts from
a trendsetter and is expressed through an action that gains the support and following of other people. Connections, linkages,
and relationships come to the fore. The circles of relations and interconnections grow wider and more complex as you go
from one kind of network to another. The succeeding modules about global networks, planetary networks, as well as the
similarities of neural network and social network will demonstrate this development.

Strategic Analysis and Intuitive Thinking

Strategic analysis is the process of examining using one's rationality or reason, the organization's surroundings
and resources, and how they relate with each other to formulate a strategy to meet objectives and improve performance. It is
the understanding of an organization's external and internal environments to create a strategy for better use of resources in the
pursuit of the organization's objectives and priorities. Such understanding is drawn from facts, data, and instructions at hand.

Strategic analysis, for example, can be done by an organization to analyze its losing performance based on data and
information about the internal profile of its employees and their capabilities and work attitudes. Strategic analysis can also be
done by the organization to investigate the external profile of its surroundings, opportunities, and possible rivals.

Intuitive thinking is sensing or knowing without using rational processes such as reading facts and instructions.
According to the dictionary, intuition is "something that is known or understood without proof or evidence." Simply put,
intuitive thinking is making choices and decisions according to one's hunch and gut feeling without knowing the reason why.

Good intuition results from long years of knowledge and experience, which enable you to comprehend how people
think, act and react, perceive and interpret, and interact with one another.

The conduct of strategic analysis involves identifying and evaluating necessary data for formulating a strategy,
description of the organization's internal and external environment, and identification and use of certain analytical tools or
methods. Basically, it involves reviewing the strengths, weaknesses, opportunities, and threats found in both the
organization's internal and external environments.

In conducting strategic analysis, one must employ rationality and critical and logical thinking in arriving at certain
decisions. The strategy will be used to solve problems, use human and material resources, and attain objectives of the
organization in accordance with its mission and vision. Mission refers to the organization's main task that it wants to
perform, whereas vision refers to what the organization foresees itself to be (for example, a school's mission is to provide
world-class education for all its students, while its vision is to become a leader in academic excellence among other schools).

A person who performs strategic analysis is usually systematic and analytical and takes time to arrive at decisions. A
manager, for example, simplifies a complicated problem by breaking it down into smaller components and then solving them
in a logical and integrated way. The manager formulates a plan or strategy before plunging into action and gathers sufficient
information before making a decision.

A critical mind doing strategic analysis always raises these questions: "Does/Will this make sense? Why or why
not?” A pre-evaluation is sometimes made. A critical mind not only welcomes new knowledge, experiences, and
alternatives but also tests these against past knowledge and experiences.

A critical or analytical mind usually exercises strategic thinking. Samantha Howland (2013) identified six elements
of strategic thinking designed to encourage strategic leadership among today's executives, drawn from a study of more than
20 000 executives in more than 175 countries. The six key elements are abilities to anticipate, challenge, decide, interpret,
learn, and align.

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 1. The ability to anticipate enables the executives to not only focus on the current situation but also to look at the
future. They should monitor the environment to foresee significant changes in the industry to prepare them for possible
threats as well as opportunities. For instance, an executive who keeps abreast with trends and engages in trendspotting is
more likely to be open to product changes or to beef up the company's product strength in anticipation of a trend, just like the
measuring tape that helps one measure how far these trends may go and up to what extent will one respond to changes. An
example is when a garment executive spots a consumer preference for plain print, he or she gradually reduces the production
of apparels with floral design and shifts to plain print.

2. The ability to challenge involves raising questions instead of merely accepting information as it comes. The
purpose of raising questions is to trace the root causes of problems, to challenge existing beliefs, and to find out biases and
possible manipulation of the situation, just like the saw that helps one cut down unnecessary stuff that may hinder one's
success. Probing and investigation may also be employed.

3. The ability to interpret is shown by testing a variety of hypotheses as well as comparing and contrasting certain
data prior to making decisions on particular issues. It is like the drilling machine, which allows one to connect the patterns
between different pieces of information. The executive avoids jumping into conclusions without sound basis.

4. The ability to decide, as symbolized by the hammer, enables the executive to make a stand with courage and
conviction despite incomplete information at hand. The executive combines speed and quality in doing this, and avoids
indecision or "analysis paralysis," which prevents a leader from acting fast, thereby missing chances of opportunities.

5. The ability to align enables the executive to have different divergent viewpoints, opinions, and agenda to attain
common goals and to pursue mutual interests, just like a ruler that helps one draw a smooth line and align objects properly.
Open communication and dialogue will help address the problem of misalignment and build trust leading to consensus and
agreements.

6. Like the wrench that helps in fixing broken or malfunctioning parts, the ability to learn is demonstrated by an
executive who accepts feedback, constructive criticism, and even failure, which are altogether viewed as sources of critical
and valuable insights. He or she shows willingness to immediately return to the right course when going off track. Failures
are considered lessons for success.

Strategic analysis is useful not only to an organization but also to an individual such as a student like you. Your
current situation, which is striving to finish senior high school, can be assessed by knowing your strengths such as your
competencies and values, weaknesses such as negative attitudes and needs to be filled, threats such as events and situations
that prevent you from focusing on your studies, and other factors that can help you improve your skills. Are you failing or
getting poor grades? What good habits can you develop to address this problem? Whom can you approach to help you
improve your grades? Strategic analysis is a means to turn your weaknesses into strengths and to take advantage of situations
and other factors that will boost your strengths as a student. It will guide you in staying on course toward finishing senior
high school.

The honing and nurturing of a critical mind or strategic thinking must start at an early age. Students like you should
be provided with opportunities to develop this ability for self- improvement and for giving service to others (e.g., as an
officer in the student council). In such case, the student develops strategic thinking, which is reflected in his or her abilities to
anticipate, decide, challenge, learn, align, and interpret.

Intuitive thinking involves a more spontaneous, instinctive, and unplanned process of solving a problem. Evaluation
of the situation and the perceived alternative course of action are quick and broad. Actions and decisions spring from hunches
and gut feeling based on unpremeditated ideas or experiences rather than from facts and hard data. Intuitive thinking tends to
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be imaginative and more applicable in situations where facts are insufficient and previous related decisions are not readily
available.

Intuitive thinkers do certain things that others do not. Carolyn Gregoire (2014), a senior writer of The
Huffington Post, provided in her article "10 Things Highly Intuitive People Do Differently" some activities that intuitive
thinkers do. Presented here are six activities:

1. Listening to an inner voice. They pay attention to intuition and allow it to guide them.

2. Taking time to be alone and to reflect. Spending time in solitude is their way of engaging in deeper thoughts and
creative thinking. It is also called "mindfulness," which is looking into one's current experience without making
judgment.

3. Listening to their bodies. They tune in to their bodies for gut feeling and physical sensation or emotion associated
with intuition.

4. Observing everything. They take note of the occurrence of odd things and keep an eye on the frequency of
coincidences, unexpected connections, and instantaneous decisions or actions done.

5. Paying attention to their dreams. It is their way of getting in touch with their "unconscious thinking process" and
of capturing information on how to live their lives.

6. Connecting deeply with others and staying in a positive mood. They can read a person's mind through his or her
words, feelings, and actions. Avoiding negative emotions helps boost their intuitive judgment.

Analytical thinking applied in strategic analysis is focused on logic. It deals with one thing at a time and is
concerned with time. It is linear and inclined toward the abstract. It efficiently works in a condition with sufficient time,
relative stability, and established criteria for analysis such as rules. It comes in handy when an explanation is needed. The
process can be taught and learned in the classroom.

Intuitive thinking, on the other hand, possesses characteristics that mostly runs in contrast to analytical thinking. It is
based on gut feeling, unfocused, and is not time-bound. It views many things simultaneously, is nonlinear, and is inclined
toward the concrete and the real. It efficiently works in dynamic conditions, under time pressure, and is instantaneous. It
works well when observer has gained experience in a particular situation and is ready to act on hunches and feeling,
especially when an explanation is not needed. It is learned through experience.

The limitations of intuitive thinking are shown in the face of complex tasks, in a situation where the observer has
inadequate experience, or if the observation is unreliable due to fixed ideas and biases. The weakness of intuitive thinking
lies in its tendency to cater to fixed attitude that disregards new data for interpretation.

The combination of systematic, analytical abilities needed in strategic analysis, on one hand, and the spontaneity
characterizing intuitive thinking, on the other hand, is said to benefit decision-making and management processes. In such
cases, intuitive thinking is supported by sufficient data, thorough analysis and deliberation, and experience.

Legal practitioner and mediator Charles B. Parselle (2005) believes that combining analytical and intuitive
abilities leads to holistic thinking abilities, which are essential to move people out of a rights/obligation/win-lose mindset into
a needs/interests/mutual gain mindset. This means the concern for individualistic, legal and predictable aspects is balanced by
the concern for cultural, flexible, and mutual or communitarian aspects.

For Francis Cholle (2011), an international business consultant, we need both instinct and reason to make the best
possible decisions for ourselves, our businesses, and our families. “Intuition plays a good part at it as it is" bridging the gap
between the conscious and nonconscious parts of our mind, and also between instinct and reason.

While intuitive thinking is historically old and has been in use since the beginning of time, analytical thinking
employed in strategic analysis is historically new. It is said to have been introduced by the Greeks, developed by the Romans
and rediscovered during the Age of Enlightenment after its "disappearance" during the Dark Ages in Europe.

Facility in Strategic Analysis

Strategic analysis is commonly applied through a process called strategic planning. Strategic planning may be
divided into three phases.

 Phase 1: Establishing the identity of the organization or unit.

This covers who or what the organization or unit is, where it wants to be, and where it is now. It concerns the
organization's core values, mission and vision, objectives or strategic priorities, members and stakeholders, and partners
and competitors. Both the internal and external environments are taken into consideration.

 Phase II: Developing and implementing an action plan or strategy to attain priorities.

This answers the question, "How will the organization or unit get to where it wants to go?" It concerns the goals and
outcomes, structural and financial changes, and other initiatives of the organization or unit.

 Phase III: Evaluating how the organization manages its actions toward its priorities.

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 The question raised here is how well the organization or unit knows its performance. This needs performance
standards and measurements or yardsticks such as monthly or annual reports.

Analytical Tools

A variety of analytical tools can be employed in the conduct of strategic analysis. The purpose of an analytical tool
is to sharpen the focus of the analysis and to ensure a methodical and balanced approach. This means that the analysis will
center only on the questions being raised by the organization and will follow step-by-step, logical, and integrated procedures.

The tools are also used in making strategic decisions. Two of the most commonly used analytical tools are the
SWOT Analysis and the PEST Analysis. Another popular analytical tool is the value chain analysis, developed by Michael E.
Porter, which is based on the principle that organizations are created to produce value for their clients.

SWOT Analysis is applied particularly in phase I where situational scanning is undertaken. The internal and external
factors that are favorable and unfavorable for the attainment of objectives and priorities are identified. It focuses on the
organization's strengths and weaknesses and the opportunities and threats it faces.

 Strengths - These are the internal attributes of the organization that can contribute to the attainment of its objectives
and priorities.
 Weaknesses - These are the internal attributes of the organization that can obstruct the attainment of its objectives
and priorities.
 Opportunities - These are external factors that can contribute to the attainment of its objectives and priorities.
 Threats - There are external factors that can obstruct the attainment of the organization's objectives and priorities.

The SWOT Analysis can be represented visually as thus:

Take, for example, the case of Felix. He inherited his family's business of silkscreen T- shirt printing. Being a young
entrepreneur, Felix wanted to introduce digital T-shirt printing through heat transfer. In the planning stage, he had to answer
the following framework questions:

1. Who are we and where are we now? (Phase I: Identity and current situation)

2. Where do we want to be? (Phase I: Mission and vision)

3. How will we get there? (Phase II: Plans and programs)

4. How will we know how we are doing? (Phase III: Measurement)

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 The T-shirt printing business of Felix's family has been profitable for 20 years, as it largely catered to customers
within the area and in several adjacent towns. Felix wanted to expand the operations of the shop and to bring their products to
more customers, and possibly to be a retailer of printed shirts itself. In the past, their shop only took set orders from
customers, mainly from schools, sports clubs, and campaign-related groups. Now, Felix is planning to set up an apparel line
based on customized designs to tap the market of young customers and professionals. But before he could make plans and
programs, he employed SWOT Analysis to scan the situation of the shop.

Strengths: The strengths of the business included the equipment and manpower the shop already has. Felix
has contacts with various visual artists, mostly his friends, to help him with the new designs that
he wants. The shop has regular patrons who can be its customer base.

Weaknesses: To pursue the digital printing side of the business, the shop has to invest in buying new equipment
such as computers, printers, and heat press machines. The business still does not have enough
capital to invest in this new equipment.

Opportunities: The popularity of online shopping gives the shop a venue to market its services, designs, and new
apparel line to more customers. The shop can expand its silkscreen printing services, which means
it is not only limited to customers visiting the physical shop. It can take orders from many parts of
the country, provided that it sets up an easy cashless payment scheme.

Threats: This new venture is a huge risk in itself, as much as being a success. It is up to the marketing arm
to get a considerable number of new customers to keep the business running smoothly.
Additionally, there are many competitors offering the same services.

Felix has to think of ways to minimize, if not eradicate, the weaknesses and threats. He needs to keep track of
weekly and monthly reports to check if the new venture is working together with the old silkscreen printing business. With
the help of this analysis, Felix can plot new goals, set out plans, gather resources, and arrange a time frame. In addition, he
can gather his resources to work on the expansion of the family business.

A gap assessment or gap analysis should be conducted to determine what has been achieved so far by the present
state of the business, and what else ought to be done in the attainment of the new goals. The aim gap assessment is to reduce
or eliminate the gaps between the target goal and the actual performance.

Gap assessment involves the following steps: (1) listing of the current attributes and achievements, (2) listing of the
desired activities and objectives, and (3) determining of the steps and measures to undertake and the needs to be filled to
bridge the gap between the actual performance and the target goals within a specific time frame.

Personal SWOT Analysis can also be conducted by an individual. Such is applicable to senior high school graduates looking
for a job or pursuing a goal. Here is an example.

S W
 What values and achievements
are you proud of?
 Why do people praise and
commend you?
 What do you do better than
others?
 What are the resources that you
can access?
 What are your special or unique
skills and talents?
 What negative study and work
habits impede you?
 What skills and talents are deficient
in?
 What are the resources that you lack
of?
 What obstructive personal traits do
you need to overcome?
 What are your traits that people
often criticize?

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O T
 What job openings need to be  What could derail your interests and
filled? goals?
 Who are your contacts to help  How strong is the demand for the
and advise you? skills and specialties that you
 What are the situations that you possess?
can take advantage of?  What obstacles are you facing?

PEST Analysis surveys the bigger environment where the organization operates. It scans the political, economic,
social (or sociocultural), and technological factors in the environment that affect the existence of the organization. For
business enterprise, PEST Analysis is conducted to evaluate its standing in the market, whether it experiences growth or
decline, and what direction the business is heading to.

 Political factors include the rules, regulations, laws, and policies imposed by a government, which all affect the
organization. Political factors also include political stability and peace and order in the area where the organization
operates.
 Economic factors cover purchasing power, capital outlay, interest rates, tariff rates, inflation, currency exchange
rates, and employment-unemployment rates, among others.
 Sociocultural factors include people's preferences, needs, demographics, attitudes toward using a product or service,
and cultural backgrounds and diversity.
 Technological factors cover those related to technological innovation as well as their positive and negative impacts
on the organization. Technological factors also include incentives for investments and pace of technological
transformation.

Take the case of a newspaper publishing company.

PE
The newspaper company advocates truth, The newspaper company experiences higher
justice, and responsible journalism. production cost due to inflation. Competition
Because democracy is valued in the with other newspapers, nonetheless, is
country, the newspaper is generally free to healthy.
report even the corrupt practices of
government officials.

ST
Readers seem to allot less time in reading
the articles. They have been exposed to
visual culture, which means they prefer
information that is presented visually
Smartphones and connectivity allow people
to access news content anywhere, anytime
without buying a printed newspaper.

The newspaper company has been exceptional in its coverage of events and special reports, and is considered as one
of the most respected and trusted newspapers in the country. It has to increase the price of the newspaper, only slightly higher
than its competitors due to higher production costs. Considering the new reading habits of its readers, the newspaper did a
layout redesign, putting more pictures on the front page and less text, and using new typefaces. Unfortunately, print
circulation slightly decreased as more people prefer reading online. The newspaper company then decided to synergize its
platforms to produce unified content for print, online, and mobile readers.
The PEST factors can be classified as opportunities or threats in SWOT Analysis. For a better understanding of a
situation, it is recommended to accomplish the PEST Analysis first before conducting the SWOT Analysis.

Another popular analytical tool, especially among business firms, is the value chain analysis (VCA). It promotes
the idea that an organization exists to produce value to its clients; that the organization's reason for being is creating
something of worth to its customers. The VCA is concerned with understanding how the organization's sets of activities
produce added value and satisfy clients. Each activity that adds value serves as a source of competitive advantage, which is
being able to maintain performance superiority over rivals. The competitive advantage may be in terms of product, cost,
niche, or sustainability. A company that offers products or services that, for example, have lower cost, better quality, unique
features, or outperforming attributes is usually preferred by customers over the rival companies. This is how brand loyalty or

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 sustained patronage is developed.

Conducting a VCA involves the following steps.

1. Categorize the operations of the organization into primary activities and support activities.

Primary activities are those involved in the production, marketing, sale, and delivery of a product. Tasks
that facilitate primary activities comprise the support activities such as promotion, advertising, customer service, and
other post-sales activities (repair and maintenance, for instance). Usually, the procurement office buys the materials
for the products to be manufactured; the quality control office makes sure that the products are made according to
specifications; and the packaging section takes care of the preparation of the products before delivery to outlets and
clients to ensure that the items are in good condition. The company fleet, including the drivers, has a particular role
too, without which the company operation will not be successful.

2. Provide budgetary allocation for each activity.

Cost information allows the manager to assess the internal capabilities and strengths of the company. If the
company can afford to produce high-end products and still remain profitable, its stability is guaranteed. A manager
who lacks knowledge of the declining financial standing of the company may propose an impractical project that
will involve an unreasonable amount such as buying new air-conditioning units, refrigerators, and custom-made
chairs for the officials. Instead of cost-cutting measures, the manager goes on a spending spree, which will
eventually leave the company in a financial crisis.
3. Determine which activities are vital to customer satisfaction and the success of the market.
Perceived as important to market success are the company's mission, which affects the choice of activities
to undertake; the nature of the industry to where the company belongs (educational, banking, industrial, medical,
etc.), and the value system of the company that covers, among others, the value chain and partners in supplying
products for the customers.

The VCA is a technique for evaluating the company's sources of competitive advantage The results of the VCA are
used as basis for planning the client's trajectory in the future.

Strategic planning, therefore, is concerned with making the organization function well in its field, and in maximizing
its resources in the pursuit of its objectives. It is concerned with reducing, if not eliminating the perceived weaknesses and
obstacles while boosting identified strengths and opportunities. For those in the business sector, strategic planning is
positioning the business in the market effectively. This can be done by conducting a thorough analysis of the business and the
market.

Keep in mind that a thorough analysis of both the organization and its clients is essential. To reiterate, strategic
planning can be used for renewing your organization, leading to the enhancement of the organization in the succeeding years.
Remember the summary of procedures using the acronym SPADE:

S - Start by organizing to plan and to engage commitment of affected parties.

P - Purpose, objectives, and targets should be plotted to guide everyone involved.

A - Analyze the organization's strengths, weaknesses, opportunities, and threats, and lay down options.

D - Decide and choose strategies from the options or alternatives.

E - Execute, evaluate, and monitor the strategies.

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