Final Module in Strategic Management

Compiled by:
JAIRUS ANTHOINY G. VALLEJOS

Instructor
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STRATEGIC MANAGEMENT
COLLEGE OF BUSINESS EDUCATION
OVERVIEW
This module presents….
Strategic Management aims to provide an understanding of strategic analysis, strategic
decision-making and strategic processes within and between organizations. The module content
combines approaches to strategic management, concepts and frameworks, and issues in strategic
management. In particular, the themes covered include: internal and external environment
analysis, strategic options, selection and evaluation, organizational structure and culture, the role
of knowledge, technology, innovation and entrepreneurship, corporate social responsibility,
international strategies, strategic change and building a cohesive strategy.
OBJECTIVES
After reading the module you should be able to:
1. Critically evaluate the role of strategic management within organizations and the
process issues associated with the strategic management of organizations
2. Explain the impact of structure, culture, control and information systems on the
strategic management process within organizations
3. Compare and contrast the relationship between the external context of an
organization and its internal context and their impact on its strategies
4. Critically understand organizational complexity
5. Critically apply theories, concepts and frameworks from strategic management to
analyze and explain strategy in organizations
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MODULE 3 in
Internal Operational
Environment of Business
Learning Outcomes:
After this lesson, the learner should be able to:

1. Understand the firm’s internal capabilities to win competitive advantage;
2. Understand how the firm will create value among its market;
3. Develop value chain analysis and know how to outsource materials requirement.
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How are you going to learn?
1. Examine carefully the module objectives.
2. Read through the module evaluation (self-tests) and try to answer

them to the best of your ability. Answers to these self-tests are to be
submitted to the faculty concerned after the term for assessment.
3. Answer the learning activity in the module. Evaluate your success by

using the answer key. Learning activity answer sheets (short bond
paper) will be submitted to the faculty concern.
4. Take note of the following icons presented within the module:
At the end of the module, you will find this icon. It signifies a
MODULE EVALUATION, to determine how well you have
achieved the objectives of the module. Answers to module tests are
written in a separate sheet of paper and to be submitted to the faculty
concerned for assessment.
This is the icon of a LEARNING ACTIVITY to perform. This refers

to the experiential exercises contained in the module. The way you
process or interpret these experiential exercises will show your
interest in the subject matter and further reinforce your
understanding. Just like your answers to the module evaluation,
learning activity shall also be submitted to the faculty concerned.
The Challenge of Internal Analysis

Deeply the strategic action must be the result of careful analysis of the business
conditions and the competitor’s strategy. The firm’s success is not rooted mainly in
identifying problems, developing alternative strategies, and protecting the corporate
resources but on how effective the process of analysis and cooperative thinking done by
all managers in crafting the strategic action.
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Managerial Decision Making

Managerial decision making is affected by the following:
1. Uncertainty
The general industry environment keeps changing overtime. Any changes would
need new approach and new strategy.
2. Complexity
The universe of decision making process is complex as the interrelated
environment is shaping so rapidly. Information gathering needs time and effort and
decisions needed sufficient data for analysis.
3. Intra-Organizational Conflict
Managers are working closely with their duties and responsibilities and would
like to protect their own identity in the organization.
Resources of the Internal Environment

Resources are the internal capabilities of the firm which could in turn be the
source of corporate core competencies. Corporate resources could be tangible and
intangible as they are assets that can be used for competitive advantage.
1. Tangible Assets
a) Financial Resources
This refers to the firm’s cash flow assets that can be used in the operation
of the business.
b) Organizational Resources
It refers to the organizational structure that plans, organize, directs and

control the operation of the business.
c) Physical Resources
This refers to plant facilities, machinery and equipment used to produce

products.
d) Technological Resources
It refers to the technology such as system and procedures, patents,

corporate trademarks, copyrights and trade secrets. This may also refer to new
inventions and innovation undertaken by the company to improve its products and
services to its clients.
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2. Intangible Assets
a) Human Resources
It refers to skills and knowledge base of the workers to see and
direct the corporate activities towards the profit objective of the firm.
b) Innovation Resources
It is the capacity to bring in new ideas and innovative strategies that would
be necessary in the change process.
c) Reputational Resources
It refers to the reputation the firm has earned overtime with its customers
and other stakeholders.
The Criteria for Sustainable Advantage
The firm achieves sustained competency when the competitors failed to duplicate
the products or services of the firm or failed in entering the firm’s market niche.
Competitors have always an eye to copy the product that sell in the market and will just
looking for opportune time when the firm slows down its operational strategy.
Criteria for Competitive Advantage
1. Valuable Capabilities
It refers to the state of how the firm can exploit opportunities and neutralize threats in
the external environment. It is also the creation of value among its customers and the
development of loyalty and patronage by sustaining the products quality and innovative
features.
2. Rare Capabilities
Rare capabilities are possessed by few of the competitors. Competitive advantage

results only when firms develop and exploit capabilities that differ from those shared
with competitors.
3. Imitation Cost Capabilities

Costly capabilities are corporate competencies that other firms cannot easily develop.
The combination of one or four reasons for firms to costly imitate are:
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a) Unique Historical Condition
These are firms that were established in the early development where they
acquired rights and franchise, and develop organizational culture in the early stage of
operation.
b) The Firm is Casually Ambiguous
It refers to the condition when the competitor cannot clearly understand how a
firm uses its capabilities as the foundation for competitive advantage.
c) Social Complexity
The internal personal relationship, trust and friendships among managers and
employees are the firm’s reputation with suppliers and customers.
d) Political Complexity and Government Regulations
Political connection is a competitive advantage. Government regulations are also

factors in competitive advantage as some industries are controlled by the government for
efficient and effective delivery of service.
4. Non-substitutable Capabilities
This refers to condition where there is no strategic equivalent to the firm’s existing
capabilities. The firm’s strategic value of competitiveness increases as they become more
difficult to imitate or substitute.
The firm’s specific knowledge and trust relationship among executives, managers,
and rank and file personnel are capabilities that are hard to identify in which finding a
substitute poses challenges to competitors. This value creating strategy is the bundle of
benefits generated by the firm through time with the protection of the corporate
knowledge base and the creation of sustainable level of customer relationships.
MATERIAL OUTSOURCING
Outsourcing inputs to production is the process of getting materials from external

sources and the trend continuous in the rapid pace in the new global economy. Effective
outsourcing develops value as few organization possess the resources and support
activities. Outsourcing enriched the firm’s competitive capability as they do not
overextend in areas they are not of their expertise and core values.
Relations with suppliers are developed with effective coordination in the delivery
of materials on time for production. Just in time delivery system is currently practiced by
most successful firm’s especially in the automotive industry like Toyota, which first
ventured and experimented on the system.
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Outsourcing needs managers and external outsourcing executives the following

characteristics:
1. Technical competence in evaluating the materials needed
2. Effective communication and human relations with intended suppliers
3. Coordination and effective control in inventory management
4. Honest and highly committed in following agreements to suppliers
5. Possess the expertise to assist technical improvements in materials development
Learning Activity 3
Read carefully the given questions and then briefly answer them. Place your
answers in a short band paper and will be compiled as part of your portfolio.
Answers will be graded using the rubrics below:

FACTORS 5 points 3 points 2 points
Accuracy The answer is 100% The answer is 75% The answer is 40%
in agreement with to 99% in agreement to 74% in
the module. with the module. agreement with the
module.
Distinctiveness There are several There are few There is a single
correct distinct correct distinct correct distinct
ideas/opinions. ideas/opinions. ideas/opinion.
1. How are you going to develop strategies to be competitive in the industrial world
of business?
2. What is value chain analysis and how can you use this as strategy for corporate
advantage?
3. As a management practitioner, how can you create customer value sustain above
return in investment in the firm’s operation?
4. How can you mobilize the resources of the internal environment and develop
greater competitive advantage?
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EVALUATION:
Read carefully the following questions and make a brief and concise explanation.
Place your answer in a short bond paper. Your answer will be graded base on the
following rubrics.
RUBRICS

Accuracy The answer is 100% in The answer is 75% to 99% The answer is 40% to
agreement with the in agreement with the 74% in agreement with
module. module. the module.
Distinctiveness There are several correct There are few correct There is a single correct
distinct ideas/opinions. distinct ideas/opinions. distinct ideas/opinion.
GROUP THOUGHT PAPER. Discuss in not more than 500 words.
1. Identify one core competency of a firm and how you can use the same as a tool for
strategic actions that will sustain economic advantage?
2. As strategic manager how can you mobilize the firm’s competencies and deliver the
desire profit objective for its various stockholders and satisfy the customers of the firm?
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MODULE 4 in
Corporate Expansion and

Strategic Actions
Learning Outcomes:

1. Develop corporate strategies for expansion in market niche and operation;
2. Identify the different levels and types of corporate diversification strategy; and
3. Give the reasons for corporate expansion and diversification.
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Corporate expansion and diversification plays a major role in the behavior of

large firms by studying the market and entering into its business niche after a careful
analysis of its profitability. Business expansion is saddled with fraught and uncertainty
and the decision to expand needs careful study of the market and its effect on the
company’s image. The decision to expand must have potential of improving the
marketing capabilities and it must result in better revenues or return in investment.
Before embarking on any decision to expand or diversify, the company must be

able to study the following dimensions:
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1. The business that would generate additional revenue using its core
competencies.
2. The management strategy that will be used to operate profitably.
3. The trusted people who will be assigned as part of the management team.
4. The investment needed and the resources available.
5. The relative importance of the business in building its corporate image.
CRAFTING THE CORPORATE STRATEGY

The corporate level strategy is expected to generate above average return on
investment by creating value. Creating value is the is the strategy of making the operation
of the new business venture under the umbrella of the mother corporation. The business
portfolio could be effectively managed and controlled when the mother company is
involved in its operation and financial control. This would require the assignment of
trusted and tested executives to carry the core values of the mother unit into the new
venture.
CORPORATE LEVELS OF DIVERSIFICATION
The corporate level of diversification varies among firms in the industry.

Aggressive corporations diversify into other industries while others diversify primarily on
related business. There are diversified firms that operate on dominant business categories
while the giants in the industry operate under several links in terms of product and
services.
SM has diversified into real estate development, construction and energy

investments. They have expanded their store operations to developed cities and provinces
and in the process of going global operations.
Levels and Types of Corporate Diversification Strategy
1. Diversification through expanded operation
It refers to corporate expansion where most of its sales revenue came from its core
competencies of operation. The chain of Andok’s Lechon Manok is an example of single
level diversification by establishing various store operations in developed areas. Others
copy the same system of operation like Baliwag chain of lechon manok and liempo.
Others go into franchising business and added some sales revenue for their royalty.
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2. Dominant or two layered diversification
Diversification of this nature focuses on strategic operation on a single type of

business with an added twist by offering other services or products that will generate
added revenues. Example is 7-11 group of business units operating 24 hours a day in
convenient locations. They now offer snacks foods for commuters and employees who
have night duties and those travelers wanting to get some snacks.
3. Inter-related diversification
This strategy is getting a certain percentage of their revenue from inter-related

operation. The link between operations are in the same area but the main business is the
one generating the greater share of revenue. An example of this operation is that of
Mercury Drug where they added some groceries and other medical supplies. They
expanded their operation in developed areas throughout the country with resulting twist
of a convenient store.
4. Backward diversification strategy
It is the process of getting the business operation wherein they used to source out
the inputs from an existing supplier. An example of this strategy is the Poultry and Hog
raisers who used feeds from Feed Millers. As a result of their expansion in requirements,
they either buyout the Millers or expanded into feed milling operations. The core
business expands backwards but in the process increases its revenue by reducing the cost
of its inputs in its core business.
5. Forward diversification strategy
It is the process of moving its business operation into two or three layers by
integrating its core businesses into other processing operation. La Suerte Enterprises in
Lucena City, used to be buyers of copra and other farm products for resell to coconut oil
millers. The company ventured and expanded into oil milling business from the volume
of purchases. The residues from copra cake added with corn and some other formulation
were made as poultry and hog feeds. Now the company expanded into third layer, which
is poultry and hog production. Further forward diversification could be into canning and
meat processing.
RATIONALE FOR CORPORATE DIVERSIFICATION STRATEGY
All firms dream for expansion and greatness, and amass the glory of superiority in
the market. Generally, firms diversify to increase value by improving their performance.
Value is created through related diversification to unrelated diversification when its
strategy allows the increase of their business revenue or reduce cost while implementing
their business level strategy. Greater power is created through vertical integration as it
involved the process of acquiring the related market share of the competitors.
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The Corporate Enhance Strategic Competitiveness
As the corporate base expands its operational efficiency, the firm develop
strategic competencies that have to be tasked to develop new ventures that will
increase the corporate revenue. The developed corporate resources in terms of
executive manpower and financial capabilities are strong driving force that motivates
the firm to expand vertically or horizontally. This strategic competitive advantage
could be divided further into the following;
a) The Power in the Economies of Scope
Sharing of related activities like purchasing function and distribution develop

economies of scale, and therefore operational cost is transformed into added revenue.
Firms like San Miguel Corporation that operate packaging plant could utilize their
added resources for other products. Their bottling plant could produce bottles for
wines and beverages.
b) The Power of Core Competencies and Operational Capabilities
As the firm develops its foothold in the business community, it developed

manpower based and executive abilities according to the core values of the firm. This
is transformed into core competencies through training and corporate interventions.
Corporate core competencies are complex sets of values and resources that link the
different business activities in the managerial and technological knowledge,
experience and expertise.
c) The Power of Market Related Diversification
It refers to the power of the firm when it is able to sell its products or services
below the competing firm or to reduce the cost of production and distribution by
offering similarity in product quality. This strategy can be used to gain market power
as they used their core competencies and capabilities to develop new products.
The power of market related diversification is created either the vertical or

horizontal integration as the firm develop the ability to save its operational expenses.
d) The Power of Corporate Financial Strategies and Capabilities
The corporate financial strategy refers to cost savings realized through improved
allocation of financial resources based on investment inside the corporate portfolio or
outside business investments. Big conglomerates with financial executive tasked to
develop strategies on proper investments in capital market view financial strategies in
two different dimensions:
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a) Efficiency in Capital Market Allocation
The source of capital investments came from profits generated in the firm’s
internal operation. The generated income could either be distributed to stockholders
or invested in new capital market to generate additional revenue.
b) Strategic Restructuring Processes
Conglomerate with resources at their disposals may buyout some non-performing

firms and develop them into profitable ventures that may be related or unrelated to
their operation. Buying the assets of losing firms, restructuring then and selling it at a
cost exceeding their investments generate positive returns on the firm’s capital
investment.
Learning Activity 4

module.
1. Why do corporation expand their operations in other areas of the industry?
2. Explain the power of market related diversification strategy?
3. Cite a dimension that must be studied carefully before the decision to diversify?
Why?
4. Discuss the values and economic advantage in the transfer of core competencies?
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EVALUATION:
following rubrics.
RUBRICS

1. Explain dominant or two layered diversification strategy?

2. Discuss the factors or dimensions that need to be taken before embarking into corporate
expansion?
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MODULE 5 in
International Strategy
Learning Outcomes:

1. Identify the opportunities in the global market;
2. Develop strategies for entry in international operation;
3. Give the importance of international strategic alliance; and
4. Know the strategies in greenfield venture operation.
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The international strategy is the selling of more goods and services outside of its
domestic market. It is the process of diversifying operation by expanding its market niche
to other countries for quality products, which the domestic market had been saturated.
There are products that could be produced at lower cost due to the presence of local
material inputs that is not available in other countries.
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THE MODE OF ENTRY IN INTERNATIONAL OPERATIONS
1. Exporting
It is the process of establishing marketing and distributing of products

through distributors or chain of retailers on contractual arrangements. Exporting
is most advantageous when the mother corporation is nearest the foreign market
due to the transportation cost or where facilities are available in bringing the
product to other countries are put in place.
Volume and heavy products need ships as means of transportation, while

high value and low volume products could be transported faster with the use of
air transport. The Asian Region need ships to export products to another
country.
Advantages:
a) Low capital requirement in establishing office
b) Ease in operation as distributors handle marketing
c) Less risk as it passes on to distributors
d) Immediate at increasing sales at low investments
e) Small and medium enterprises could penetrate export
market through the internet
Disadvantages:
a) Higher cost of products

b) Low control in operation and distribution
c) Difficulty in marketing competitive products
d) Presence of more competing products
2. LICENSING ARRANGEMENT WITH FOREIGN PARTNERS
It is the process of allowing a foreign firm to purchase the right to

manufacture the firms’ product within the host country. Under these
arrangement, the firm allows the use of its right to use the brand name of the
product, the features and specifications is paid a royalty for every product
produced and distributed.
The licensee takes the risks and makes monetary investment in facilities
for the manufacturing, marketing and distribution of the products. The licenser
has little control in the operation of the licensee except in coordinating in the
requirements of product quality.
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Advantages:
a) It is less costly in terms of investments

b) Less risky for the licenser
c) Enhancement of brand in the foreign market
Disadvantages:
a) Less control in the operation of the licensee

b) Profit is shared by the licenser and licensee
c) Risk in technology transfer after contract expires
d) Inflexibility in different ownership arrangement
3. INTERNATIONAL STRATEGIC ALLIANCE
This arrangement could be favorable to both partners as it can facilitate

the development of core competencies that contribute to the firm’s future
strategic competitiveness. The partnership could be brought by common
understanding of both corporate values and management and trust in its
capability to sustain profitable operation.
The partners in alliance bring their resources in both knowledge and

technology and develop competitive products for marketing in the host country
or its neighboring country regions. Most strategic alliance are formed with the
host country that knows and understand the competitive condition, political and
legal requirements and the cultural idiosyncrasies of the country which could
help the expanding firm manufacture and market the competitive product.
Advantages:
a) Development of competitive strategies

b) Share cost in facilities and resources
c) Share risk in production and marketing
d) Technology transfer to host country
e) Learning new corporate strategies and capabilities
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Disadvantages:
a) Problems of cultural integration
b) Differences in work values and perceptions
c) Incompatibility in management style
d) Difficulty in management due to language barriers
e) Trust of partners is critical
4. ACQUISITIONS OF EXISTING LOCAL FIRM
Big multi-national corporations, which have the resources and capital,

would like to expand their operation by buying out none performing firms in
some countries where they would like to penetrate the growing market needs.
The multi-national corporations believe that it is the easiest wat to penetrate the
international market for their products and services.
Getting the right firm to acquire and take over its operation pose legal
government regulations in terms of capital sharing arrangements. The
Philippines requires sixty (60) percent capital for locals and forty (40) percent
foreign partner investment.
Advantages:
a) Easy access to foreign market

b) Control of operations in the hands of investors
c) More products could be marketed in the foreign markets
d) Technology transfer to local firms
Disadvantages:
a) It requires big investments debt financing

b) Complicated operation due to cultural differences
c) Difficult to negotiate agreements
d) Difficulty in merging operational system due to differences in management
style
5. THE GREENFIELD VENTURE OPERATION
It is the establishment of a wholly owned new subsidiary in a foreign

country. This potential is especially true of firms with strong intangible
capabilities that have strong leverage in entering a country with opportunities
for investments for a greenfield venture.
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The foreign firm needs to establish manufacturing facilities, bring new

technology, establish distribution channels and networks and learned
appropriate marketing strategies in order to compete in the new market.
Advantages:
a) Technology transfer to the new country

b) Generation of employment opportunities
c) Operational control and management
d) New product development for new market
Disadvantages:
a) Costly on initial investments

b) Government requirements and regulations
c) Risky in competitive advantage over local firms with the similar
product
THE RISK INTERNATIONAL ENVIRONMENT
Firms expanding in the international environment carry multiple risks as it

is difficult to implement and manage. Highly diversified firms are accustomed to
market conditions yielding competitive situations differ from what was predicted.
The international environment is full of opportunities for growth and expansion
yet the turbulent scenario still lingers as risks in investment.
Several risks are involved with multinational operations. Foremost among

them are the following:
1. The Political Environment
It is related to instability in the government where the firm intends to

operate. Insurgency, civil wars and changes in national leadership are risks that
are difficult to predict and therefore pose as congruent risk in business
operation. Changes in political leadership and type of governance may create
new regulation of business operation for multinational firms such as tariff and
taxes, legal requirements, and the possible nationalization of private assets.
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2. The Economic Risk
The economic situation in the country may look very positive during the
initial operation of the multinational firm, yet the turbulent environment in
terms of difference and fluctuation on the value of different currencies which
could be partly due to the political risk. The firm’s competitive advantage
could be affected when the value of currencies in the country of operation
fluctuates eroding the possible gain in operation. Recession in the country
affects multinational operations.
Learning Activity 5

module.
1. How important is the licensing agreement?
2. Explain the political environment risk involved in multinational operations?
3. Discuss one of the benefit of global strategy?
4. Why presence of more competing products a disadvantage of exporting?
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EVALUATION:
following rubrics.
RUBRICS

1. Discuss one advantage of multi-domestic strategy?

2. How can we attract foreign investments and develop our industries and generate the
necessary employment for our people?
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MODULE 6 in
Corporate Social
Responsibility
Learning Outcomes:
1. Identify the approaches and program of CRS;

2. State the principles governing CRS;
3. Give the types of CRS; and
4. State the advantages and disadvantages of CRS.
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CSR is a business process which involve interaction with stakeholder, the

customer, the supplier, employees and its communities towards compliance with
government policies, environmental, social and economic concerns. It is focused on the
creation of shared values for business and society more than profit.
CSR is also continuing commitment by business to behave ethically and

contribute to the economic development while improving the quality of workforce and
their family, as well as the local community and society. CSR deals more on
sustainability of business not only to profit but to help alleviate the lives of their
employees and support their families through skills and leadership empowerment to
improve their communities and increase government revenues.
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CORPORATE SOCIAL RESPONSIBILITIES

APPROACHES AND PROGRAM
The rapid development of Corporate Social Responsibility among corporations
through the Philippines, have manifested various approaches and programs laying their
list of initiatives and beneficiaries with annual evaluation of how the initiatives, plans and
program benefited the communities.
Some of the approaches gathered are:
1. CSR as Value Creation/Innovation
a) Business Mission/Vision
b) Promote competitive edge among competitors
c) Integrate business and community
d) Skill Development/Human Capital Development
2. CSR as Risk Management
a) Promote Policy and Legal Compliance and Reporting

b) Promote acceptable Strategic Operational Impact
3. CSR as Corporate Philanthropy
a) Support and access to basic needs like Education
EXAMPLE OF TYPICAL PROGRAM OF CSR IN THE PHILIPPINES
Fujifilm Group established its approach to CSR in 2006 revised it in 2014 in step
with social changes to promote awareness in and implementation by every employee. The
Group developed the Six Policy statements:
1. Green Policy/Environment Policy
The Fujifilm Group companies around the world aim to stay at the forefront of efforts
to attain this goal in terms of environmental, economic and social terms. They strive
for customer satisfaction as well as contributions to “sustainable development” by
achieving high environmental quality in product, services and corporate activities.
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2. Social Contribution Policy
Fujifilm Group work together with local communities as a good corporate citizen and
contribute to society by responding sincerely to the demands and expectation of those
communities.
3. Guidelines for Biodiversity
The Group conducts a range of environmental activities to conserve biodiversity
4. Procurement Policy
The Group seeks to contribute to the development of society and enhancement of the
quality of life of people throughout the world by providing top-quality products and
services.
5. Quality Policy
To provide the market with products that had both high quality and high
environmental performance.
6. Occupational Health and Safety Policy
Ensure employee protection by placing top priority on safety and implementing,

exhaustive compliance with laws and regulations related to occupational health and
safety.
PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITY
There are three important principles that embodied the CSR to be realistic,
reliable and effective. These are:
1. Sustainability
It is a development action that requires the stakeholder to check internally their

operational activities if it affects the community in terms of social, environment or
economic development. If its impact will affect the community, it should ways and
means to reduce its impact through better and effective waste disposal system and
other ways not to compromise the future needs of the future generations.
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2. Accountability
Accountability is prerequisite, by being responsible for all the undertaking and

programs of the CSR. All programs as well as list of initiative must be accounted for
if such beneficiaries were able to benefit with the program, if not there should be a
check and balance of the probable reasons why such initiative fails and how to
prevent such actions not to happen again.
3. Transparency
Transparency is the act of opening communications with stakeholders characterized

by a reliable level of information disclosure, clarity and accuracy.
TYPES OF CORPORATE SOCIAL REPONSIBILITY
1. Basics
Corporate social responsibility is the commitment a company has to the community

outside of its shareholders and employees.
2. Traditional Conflict Model
Under this model, corporations opting to practice forms of social responsibility are
likely to see added costs for doing so. Proponents of this conceptual model generally
argue that the nature of business is one of trade-offs between economic and moral
values and corporate managers will inevitably be forced to decide between their
social and fiduciary responsibilities of their commitment to shareholder equity value.
3. Added Value Model
It sees and environmental commitments as a means to increase profit. While

proponents of this model tend to acknowledge that conflicts persist in business
decisions, they also believe that CSR investments are also capable of generating new
revenues.
This model tends to focus on issues like the value of CSR in attracting socially
conscious consumers, finding socially conscious employees and managing the risks
of negative press.
4. Multiple Goals Model
Under this model, corporations have goals beyond shareholder value, including the
enhancement of their community without respect to monetary gain. According to
Redman, this model is thought to be relatively radical, though some corporate officers
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have expressed support for it. Proponents of this model emphasize quality of life as
the basis of economic activity.
It is a form of corporate self-regulation integrated into a business model. CSR policy

functions as a self-regulatory mechanism whereby a business monitors and ensures its
active compliance with the spirit of the law, ethical standards, and international
norms.
It also a business practice that involves the stakeholders, the society and the
government to set standards, policies towards the development of business to gain
profit and to create shared value for business and society.
Advantages of Corporate Social Responsibility
a) Improved Financial Performance
b) Enhanced Brand Image and Reputation
Excellent and motivated employee, customer and community relations are more
important than strong shareholder returns in earning corporations.
c) Increased Sales and Customer Loyalty
Customer satisfaction can generate customer loyalty.
If the Company produced products that are in good quality at low price, safe and
convenient and environment friendly products, with smaller environmental
impact, and absence of genetically modified materials or ingredients, it increased
sales and customer loyalty.
d) Increased Ability to Attract and Retain Employees
Companies perceived to have strong CSR commitments often find it easier to

recruit employees, particularly in tight labor markets.
e) Reduced Regulatory Oversight
Companies that demonstrate that they are engaging in practices that satisfy and go
beyond regulatory compliance requirements are given less scrutiny. Permits and
zoning variance are likely given at once.
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f) Easier Access to Capital
It is clear that companies addressing ethical, social and environmental

responsibilities have rapidly growing access to capital that might not otherwise
have been available.
Disadvantages of CSR
The results of CSR compliance are generally viewed as a good thing by most
companies. Disadvantages lie in allocating time and resources necessary to
develop a CSR approach that meets governmental and social standards and
achieves compliance with informal CSR guidelines related to social and
environmental responsibility.
a) Less Profit
Companies usually do not invest in programs with no profits, if return of

investment is still uncertain, stakeholders do not approve CSR programs.
b) Competitive Disadvantage
Issues on non-compliance of competitor companies affected.
c) Loss of Focus
A main driver at the onset of CSR was increased interest in making the customer
a primary focus of business operations. This coincides with continued realization
that customer retention and loyalty are keys to long term business success.
Detractors of CSR argue that guidelines have expanded beyond basic initial
emphasis. Many companies that abide CSR guidelines may do so more from fear
of public backlash than because they believed it is good for long term business
performance.
d) Lasting Impact
How long CSR will remain a prominent business concern is opened to question.
CSR has existed for decades, but its prominence as a major business consideration
has increased due to heightened awareness of ethical issues in business and
environmental preservation standards.
30
e) Costs
Cost represents one of the biggest arguments against adopting corporate social
responsibility as a policy. Program to reduce environmental impact often require
expensive changes in equipment or ongoing costs without any clear way to recoup
those losses. There is no clear evidence that adhering to a policy of corporate
social responsibility generates a significant increase in sales or profit.
Learning Activity 6

module.
1. Describe the importance of transparency as a principle of CSR?
2. Why less profit a disadvantage of CSR?
3. Discuss basics as a type of corporate social responsibility?
4. Explain why reduced regulatory oversight is an advantage of CSR?
31
EVALUATION:
following rubrics.
RUBRICS

1. Discuss CSR as Corporate Philanthropy?
2. Cite other corporate social responsibility practiced by firms in the Philippines for the
betterment of their stakeholders?
32
REFERENCES
Pereda, Pedrito R., Arcega, Raymundo P., Ferrer, Marissa P. and Robles,
Ester V., Strategic Management, Copyright 2015, Unlimited Books
Library Services & Publishing Inc., Intramuros, Manila, Philippines
Bratton, John, Strategic Human Resource Management, 2009,

http://mywebsearch
http://mywebsearch.com
33

Final Module in Strategic Management

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Final Module in Strategic Management

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JAIRUS ANTHOINY G. VALLEJOS

COLLEGE OF BUSINESS EDUCATION

After reading the module you should be able to:

COLLEGE OF BUSINESS EDUCATION

After this lesson, the learner should be able to:

COLLEGE OF BUSINESS EDUCATION

How are you going to learn?

1. Examine carefully the module objectives.

2. Read through the module evaluation (self-tests) and try to answer

3. Answer the learning activity in the module. Evaluate your success by

4. Take note of the following icons presented within the module:

This is the icon of a LEARNING ACTIVITY to perform. This refers

The Challenge of Internal Analysis

COLLEGE OF BUSINESS EDUCATION

Managerial Decision Making

Resources of the Internal Environment

It refers to the organizational structure that plans, organize, directs and

This refers to plant facilities, machinery and equipment used to produce

It refers to the technology such as system and procedures, patents,

COLLEGE OF BUSINESS EDUCATION

The Criteria for Sustainable Advantage

Criteria for Competitive Advantage

Rare capabilities are possessed by few of the competitors. Competitive advantage

3. Imitation Cost Capabilities

COLLEGE OF BUSINESS EDUCATION

a) Unique Historical Condition

b) The Firm is Casually Ambiguous

d) Political Complexity and Government Regulations

Political connection is a competitive advantage. Government regulations are also

Outsourcing inputs to production is the process of getting materials from external

COLLEGE OF BUSINESS EDUCATION

Outsourcing needs managers and external outsourcing executives the following

1. Technical competence in evaluating the materials needed

2. Effective communication and human relations with intended suppliers

3. Coordination and effective control in inventory management

4. Honest and highly committed in following agreements to suppliers

5. Possess the expertise to assist technical improvements in materials development

Answers will be graded using the rubrics below:

COLLEGE OF BUSINESS EDUCATION

FACTORS 10 points 6 points 2 points

GROUP THOUGHT PAPER. Discuss in not more than 500 words.

COLLEGE OF BUSINESS EDUCATION

Corporate Expansion and

After this lesson, the learner should be able to:

COLLEGE OF BUSINESS EDUCATION

How are you going to learn?

1. Examine carefully the module objectives.

2. Read through the module evaluation (self-tests) and try to answer

3. Answer the learning activity in the module. Evaluate your success by

4. Take note of the following icons presented within the module:

This is the icon of a LEARNING ACTIVITY to perform. This refers

Corporate expansion and diversification plays a major role in the behavior of

Before embarking on any decision to expand or diversify, the company must be

COLLEGE OF BUSINESS EDUCATION

CRAFTING THE CORPORATE STRATEGY

CORPORATE LEVELS OF DIVERSIFICATION

The corporate level of diversification varies among firms in the industry.

SM has diversified into real estate development, construction and energy

Levels and Types of Corporate Diversification Strategy

1. Diversification through expanded operation

COLLEGE OF BUSINESS EDUCATION

2. Dominant or two layered diversification

Diversification of this nature focuses on strategic operation on a single type of