LP - Caliao - CBMC 002 - Strategic Management

PWC of Davao Course: CBMC 002 Strategic Management
MODULE 1
Title : Orientation
Period : 1 hour
I. Objectives:
At the end of the period, the students should be able to:
1. tell something about themselves;
2. list the things that they value;
3. share their expectations about the subject.
II. Subject Matter
1. Topics
1.1. Getting-to-know-you
1.2. Overview of the course syllabus
1.3. Discussions of strategic analysis and decision-making
2. Educational Resource(s)
Parnell, John A. (2014). Strategic Management: theory and practice, 4th
edition. Los Angeles, California: Sage Publications, Ltd
Perreault, W., Cannon, J. & McCarthy J. (2015). Essentials of Marketing:

marketing strategy planning approach 14th edition. USA: McGraw-Hill
Companies, Inc.
3. Materials
3.1. Coupon bond
3.2. Markers
3.3. Course syllabus
3.4. Handouts
3.5. Worksheets
3.6. Computer
4. Values Focus
Commitment to innovation, excellency, and to acting in an environmentally
friendly way.
III. Learning Procedures and Strategies

a. Preparatory Activity
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The first days of school are always important. It is where teachers and
students build rapport, set class goals and objectives, rules and regulations,
and establish initial trust and confidence. Therefore, it is fitting and proper
that students and teachers involve themselves in activities that could help
them attain harmonious relationships.
1.1 Activity 1. “Hands-on”
1.1.1 Students begin this activity by listing at least 25 words that

describe them and the things they value. No sentences allowed,
just words.
1.1.2 Each student must use a dark pen to trace the pattern of his/her
hand with the fingers spread apart. They will use another set of
paper to place on top of the tracing.
1.1.3 Because the tracing was done with a dark pen, the outline
should be visible on the sheet below. Students have to use the
outlines as guides and to write their words around it.
1.1.4 Allow the students to share their work with the class.
1.2 Activity 2. Chain Gang
1.2.1 Students work individually;

1.2.2 Begin by sharing each talents;
1.2.3 Students will be asked “Who can do something really well?”
after a brief discussion about some of their talents.
1.2.4 Let the students write down five things they do well on five
separate different-colored paper strips.
1.2.5 On separate different-colored paper strips, have the students
write a different talent. Then create a mini paper chain with the
strips by linking the five talents together.
1.2.6 The students will give their perspective about the linked chains.
Later on, there will be a discussion about what the chains
demonstrate. It should focus on the student’s individual talents
and the importance of different things they possess and the
benefits of teamwork.
Processing Questions:
1. What are the benefits of teamwork in an organization?
b. Lesson Proper
I. COURSE IDENTIFICATION
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Title Strategic Management

Credit 3
Prerequisite None
Course This course emphasizes the value and process of strategic
Description management. This is designed to explore an organization’s vision,
mission, examines principles, techniques and models of
organizational and environmental analysis, discuss the theory and
practice of strategy formulation and implementation such as
corporate governance and business ethics for the development of
effective strategic leadership.
II. COURSE OBJECTIVES

General At the end of the course, the students should be able to
Objective demonstrate knowledge of the interrelatedness of local, global,
international, and intercultural issues, trends, and systems.
Specific At the end of the course, the students should be able to:
Objectives 1. develop a clearer sense of strategic vision;
2. analyze, synthesize and anticipate the effects of strategic
choices;
3. realize how decisions impact individuals and teams in the
organization;
4. demonstrate the knowledge and abilities in formulating
strategies and strategic plans; and
5. analyze the competitive situation and strategic dilemma in
dealing with dynamic global business environments, market
trends and technological advancement.
III. COURSE OUTLINE

Day Modules Hour
s
1 Module 1: Orientation
1
● Getting-to-know-you
● Expectation Setting
● Online setting policy/settings

3
●
Module 2: Strategy, Business Models and Competitive
Advantage
2.1. A Strategic Management Model
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2 2.2. Challenges in the External Environment 4

2.3. Challenges in the Internal Environment
3 Module 3: Strategy Formulation
3.1. Business Strategies 4
3.2. Corporate Strategies
4 3.3 The Basis of Strategy: Structure
3.4. The Levels and Formulation of Strategy
5 Module 4: Strategy Implementation
4.1. Organizational Systems 4
4.2. Strategic Asset Management
6 Module 5: Strategic Control and Monitoring

5.1. Strategic Control Mechanisms 4
7 Module 6:Strategic Choice
6.1. Develop the Strategy 4
6.2. Strategy Evaluation and Selection
8 Module 7: Strategic Implementation 4
7.1. Marketing Issues
7.2. Financial Issues
9 7.3. Research and Development Issues 4
7.4. HR Issues
7.5. Management Change Issues
10 Module 8: Strategy from a Deeper Perspective 4
8.1. The Strategy Framework
8.2. Perspectives of Strategy
11 Module 9: Strategic Perspective of National Development 4
9.1. Strategy and National Development
12 Module 10: Matching Structure with Strategy 4
10.1. Designing Organization Structure
10.2. Designing Strategic Control System
13 Module 11: Strategic Analysis in Action 4
11.1. Case Analysis
14 Module 12 – Assessment: Written report of a given task. 4
Total Number of Hours 48
IV. Types of Assessment

Quizzes, exercises, written technical reports, virtual presentation of reports, case
study, Preliminary, Midterm, and Final Examination
V. Grading System
Quizzes (40%); Exam (40%); Other requirements (20%)
Quizzes, Written Technical Reports, Oral Presentation of Reports (40%); Written

Examination (40%); Oral Recitation, Assignment, Projects/Portfolio/Research Output
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(20%).
Based 40
Assessment
What is the importance of this course in their chosen career?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Rubric: Content (10 points); Grammar (10 points) = 20 points
MODULE 2
Title : Strategy, Business Model and Competitive Advantage

Period : 4 hours
I. Objectives:
1. define strategic management;
2. identify each of the components of strategic management process and its
corresponding outcome;
3. identify the strategic management model;
4. explain the meaning of strategic planning;
5. formulate a sample company vision, mission statement, and company
goals and objectives; and
6. compare organization climate and organizational culture.
II. Subject Matter
1. Topics
1.1. A strategic management model
1.2.Challenges in the external environment
1.3.Challenges in the internal environment
2. Educational Resources

Companies, Inc.
3. Materials
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3.2. Handouts
3.3. Worksheets
4. Values Focus
Commitment to innovation, excellency, and to acting in an environmentally
friendly way.

Before we begin, let’s understand the concept of strategy:
According to The Economist, a leading publication on business,

economics, and international affairs, “In business, strategy is king,
Leadership and hard work are all very well and luck is mighty useful, but it
is a strategy that makes or breaks a firm.” Luck and circumstance can
explain why some companies are blessed with initial, short-lived success.
But only a well-crafted, well executed, constantly evolving strategy can
explain why an elite set of companies somehow manages to rise to the
top and stay there, year after year, pleasing their customers,
shareholders, and other stakeholders alike in the process. Companies
such as Apple, Samsung, Disney, Emirates Airlines, Microsoft, Alphabet
(formerly Google), and southwest Airlines come to mind.
Note: Students should have a clear idea of why the tasks of crafting and
executing strategy are core management functions and why excellent
execution of an excellent strategy is the most reliable recipe for turning a
company into a standout performer over the long term.
b. Lesson Proper
Now, let’s understand what is meant by a company’s strategy.
A company’s strategy is the set of actions that its managers take to

outperform the company’s competitors and achieve superior profitability. The
objective of a well-crafted strategy is not merely temporary competitive success
and profits in the short run, but rather the sort of lasting success that can support
growth and secure commitment to a coherent array of well-considered choices
about how to compete. These include choices about:
1.2.1. How to create products or services that attract and please

customers;
1.2.2. How to position the company in the industry;
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1.2.3. How to develop and deploy resources to build valuable

competitive capabilities.
1.2.4. How each functional piece of the business (R&D, supply chain
activities, production, sales and marketing, distribution, finance,
and human resources) will be operated; and
1.2.5. How to achieve the company’s performance targets.
1.3. Let’s take a look at the relationship between a Company’s Strategy

and Business Model.
1.3.1. Closely related to the concept of strategy is the concept of a

company’s business model.
● Company’s strategy sets forth an approach to offering
superior value.
● A company’s business model is management’s blueprint
for delivering a valuable product or service to customers in
a manner that will yield an attractive profit.
● The two elements of a company’s business model are (1)
its customer value proposition and (2) its profit formula.
● The heart and soul of any strategy is the actions and
moves in the marketplace that managers are taking to
gain a competitive edge over rivals.
● Five of the most frequently used and dependable strategic
approaches to setting a company apart from rivals and
winning a sustainable competitive advantage are;
1. a low-cost provider strategy-achieving a cost-based
advantage over rivals.
2. a broad differentiation strategy-seeking to
differentiate the company’s product or service from rivals’
in ways that will appeal to a broad spectrum of buyers.
3. a focused low-cost strategy- concentrating on a
narrow buyer segment (or market niche) and
outcompeting rivals by having lower costs than rivals and
thus being able to serve niche members at a lower price.
4. a focused differentiation strategy-concentrating on a
narrow buyer segment and outcompeting rivals by offering
customized attributes that meet their tastes and
requirements better than rival’s products.
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5. a best-cost provider strategy-giving customers more

value by satisfying buyers’ expectations on key
quality/features/performance/service attributes, while
beating their price expectations.
1.4. Evaluating Company’s External Environment
1.4.1. Thinking strategically about a company’s industry and

competitive environment entails using some well-validated
concepts and analytical tools to get clear answers to seven
questions:
● Do macro-environmental factors and industry

characteristics offer sellers opportunities for growth and
attractive profits?
● What kinds of competitive forces are industry members

facing, and how strong is each force?
● What forces are driving industry change, and what impact

will these have on competitive intensity and industry
profitability?
● What market positions do industry rivals occupy-who is

strongly positioned and who is not?
● What strategic moves are rivals likely to make next?
● What are the key factors of competitive success?
● Does the industry outlook offer good prospects for

profitability?
Analysis-based answers to these questions are prerequisites for
a strategy offering a good fit with the external situation.
1.4.2. Let’s look at how environmental scanning works!

Organizations exist to survive. Given their vision and mission
statements and set goals and objectives, it is for the
organizations to conduct themselves clearly, deliberately, and
strategically.
Below are the creative and cutting-edge strategies:
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● Environmental scanning- the study and interpretation of the

forces existing in the external and internal environments.
● Conducting environmental scanning- both easy and
difficult.
According to Aguilar (1967), there are four ways of
environmental scanning:
● Undirected viewing- an individual is exposed to information

with no specific informational need in mind.
● Conditioned viewing- individual directs viewing of
information to specific facts and data to be able to assess
their general impact on the organization.
● Informal search- individual actively looks for information to
increase knowledge of a particular issue.
● Formal search- the effort exerted by the individual is
deliberate and planned.
1.4.3. Next, let’s see how the external environment works!

The external environment today is highly complex. Nations
possess different levels of growth and development. At the
same time, it also presents varying forces that influence
organizational direction and strategic decision-making.
Social Forces
● Changing social structures
● Aging population/demand for health services
● Sophisticated lifestyles of people
● Cross-cultural diversity
Political Forces
● Political independence/changing governments
● Terrorism/suicide bombings
● Chemical and nuclear threats
● Global alliances
Economic Forces
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● Globalization
● Competitors and suppliers
● Fall of financially stable organizations
● Increasing oil prices
● Economic trade agreements
● Emerging markets
● Rise of China
Technological Forces
● Communication technology
● Computer-integrated business
● E-banking
● E-learning
● Digital medicine
● E-security
Environmental Forces
● Climate change/use of biodegradable materials
● Environmental waste management
● Preservation of rainforest and marine life
1.5. Challenges in the Internal Environment

While the external environment plays an essential role in the survival and
competitiveness of an organization, the internal environment presents a more direct
impact on how organizations should conduct themselves towards success.
In fact, there are variables considered as essential if one has to conduct

their organization successfully;
1.5.1. Government;
1.5.2. Culture;
1.5.3. Stakeholders;
1.5.4. Competitors;
1.5.5. Suppliers;
1.5.6. Customers; and
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1.5.7. Community.
Exercise 1
1. Explain why it is important for a company to have a viable business model
that outlines the company’s customer value proposition and its profit
formula.
2. Discuss the core concept of achieving a sustainable competitive advantage

of an organization.
Exercise 2
1. Discuss a winning strategy of an internal and external company
2. Explain why a company needs a creative, distinctive strategy that sets it
apart from rivals
Exercise 3
II. Evaluation/Assessment
Identify the tests of a winning strategy. Three questions can be used to
distinguish a winning strategy:
1. How well does the strategy fit the company’s situation?
2. Is the strategy helping the company achieve a sustainable
competitive advantage?
3. Is the strategy producing good company performance?
Rubrics/Criteria:
Content 5
Organization of thoughts 3
Grammar & neatness 2
Total 10
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MODULE 3
Title : Strategy Formulation
Period : 4 hours
I. Objectives :
1. discuss why it is critical for a company managers to have clear strategic
vision of where a company needs to head and why;
2. explain the importance of setting both strategic and financial objectives;
and
3. recognize what a company must do to achieve operating excellence and to
execute its strategy proficiently.
II. Subject Matter
1. Topics
1.1. Business strategies
1.2. Corporate strategies

Companies, Inc.
3. Materials
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3.1. paper
3.2. Worksheet Exercises
4. Values Focus
Crafting and executing company strategies, value special attention to
management's direction-settings and responsibilities
III.Learning Procedures and Strategies

Because of the volatility of the environment, business survival has become

more challenging than ever, it has also shaped the demand for an honest
review of functional activities. Presented are the value chain analysis and
different types of business strategies.
1. Value chain analysis- a general term that refers to a sequence of
interlinked undertakings that an organization operating in a specific
industry engages in.
2. Supply chain analysis- a broad continuum of specific activities
employed by a company.
3. Supply management- a popular term used for purchasing which
was formerly termed as procurement.
4. Inventory management- its role includes all purchased materials
and goods, partially completed materials and component parts, and
finished goods.
3.1. Business strategies.
Business strategy is primarily concerned with building competitive
advantage in a single business unit of a diversified company or
strengthening the market position of a non-diversified single business
company.
1. Growth strategies-a mode adopted by an organization to achieve
its main objectives of increasing in volume and turnover.
2. Competitive strategies- essentially long-term action plans
prepared with the end goal of directing how an organization will
survive and compete.
3. Life cycle strategies refer to the lifespan that a
commodity/service undergoes from its introduction stage to its
growth, maturity, and decline stages.
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4. Stability strategies- adopted by the firms that are risk averse,

usually by the small scale with its performance and is satisfied with
the performance and won’t make any changes in its business
operation.
5. Retrenchment strategies- it is used by corporations to reduce the
diversity or the overall size of the operations of the company.
3.2. Corporate strategies.

Corporate strategy is orchestrated by the CEO and other senior
executives and establishes an overall game plan for managing a set
of businesses in a diversified, multi-business company.
Michael Porter espoused the following corporate strategies:
1. The Boston consulting group model- a share paradigm started
to make its impact on corporate strategy in the early 1970’s.
2. The generic electric model- used to assess the strength of a
strategic business unit of an organization.
3. Global strategies- in particular, companies treat or consider the
world as a whole, one market and one source of supply with slight
local variations.
3.2. The basis of Strategy: Structure

All organizations have some form of structure, based on the
established pattern of relationships among the individuals, groups and
departments within it. Correspondingly, there are two structures:
1. Vertical structure- structure of authority and
responsibility where clear limits of financial authority
exist; and
2. Horizontal structure-groupings of activities designed to
use the resources towards goal-attainment.
Note that in most organizations, the structure will be illustrated in the
form of a chart.
3.2.1. Functional structure
This is the most common form of structure, it divides the
organization up into its main activities or functions (production,
sales, accounting and so on) in which all similar specialist
activities are grouped together into interdependent departments.
Like other circumstance, functional structure has advantage and
disadvantages;
Advantages of a functional structure
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1. Specialized resources are used efficiently

2. Quality is enhanced by other specialists from the same
functional area
3. Opportunities exist for extensive division of labor.
4. A career structure enables people to advance within their
functional specialist.
5. It fosters communication between specialists and enhances
development skills and knowledge.
Disadvantages of a functional structure
1. Inefficient coordination of functional departments
2. Responsibility for overall outcomes is unclear
3. Interdepartmental conflicts
4. Little creativity and innovation.
5. Difficulties in identifying profitable and unprofitable products.
Divisional structure
It can help overcome the limitations of the holding company
and/or a functional structure, as it contains within its functional
specialists but groups its activities around products or
geographical regions.
Product structure
In this structure, people and resources are grouped according to
an organizations’ products.
Geographical structure
This is where organizations have fewer products, such as IBM,
they may group activities according to the sales area and be
literally closer to the customer.
Matrix structure
This is the result when divisionalization is adapted to include
formal mechanisms in promoting closer inter-divisional
collaboration.
3.3. The levels and formulation of strategy

There is a need in modern times for strategies to achieve agreed
goals and objectives, giving a sense of purpose and direction to the
organization, because of recent technological and social changes
and competition from rival organizations.
3.3.1. Process of strategy
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Strategic management is the organized development of the

resources of functional areas: financial, manufacturing,
marketing, technological and manpower in the pursuit of its
objectives.
A sequence of developing plans that move from general to

specific and intent to action would create several levels of
planning, which could be identified below.
● Mission- every organization will have a purpose for its

continued existence, it also expresses their purpose and
can therefore be a brief statement. Likewise, it also links
with the idea of vision-how managers interpreting the
mission for their colleagues.
● Objectives- it does not only represent the end point of
planning but are the ends towards which management
activities and resource usage is directed. They therefore
provide a sense of direction and a measure of success
achievement.
● Strategies- relating to a broad area of an enterprise’s
operations. Its purpose is to furnish a framework for more
detailed tactical planning and action.
● Tactics- these are the actions carried out to put into effect all
the details of a strategic decision, it also can be seen as
the detailed implementation of a strategy.
● Actions, programs and roles- the operational practices that
will translate the intention of the tactics into action by
individuals and are therefore detailed, short term and
subject to immediate control.
3.3.2. Levels of strategy
● Corporate strategy
● Competitive or business strategy
● Operational or functional strategies
Strategies may come about in different ways which are

described below.
3.3.3. Types of strategy
● Planned intended and deliberate strategy
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● Emergent strategy
● Opportunistic strategy
● Imposed strategy
● Realized and unrealized
3.3.4. Other types of strategic formulation

● Muddling through
● Logical incrementalism
● Crafting
● Adaptive mode
Exercise 1
Consider the following statement and answer the given questions
Peters and Waterman
‘Our favorite candidate for the wrong kind of complex response, of

course, is the matrix organization structure. People aren’t sure to
whom they should report what organization gets paralyze because the
structure does not only make priorities clear, it automatically dilutes
priorities. In effect, it says to people down the line ‘everything is
important: pay equal attention to everything’
1. How convinced are you by the criticism of matrix structures put

forward by Peters and Waterman.
2. Do you think there are some types of situations when this form
of organization would work well?
3. Discuss the importance of setting both strategic and financial
objectives
Exercise 2
1. Create long-term and short-term objectives
2. Present a company’s example of objectives and strategy
formulation.
3. explain why strategic initiatives taken at various organizational
levels must be tightly coordinated to achieve company wide
performance targets.
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Exercise 3
IV. Evaluation/Assessment
1. Using the information in no.2, critique the adequacy and merit of the
following mission, vision statements, listing effective elements and
shortcomings. (Objective number 1)
2. Construct your own strategy and explain the implementation of the
chosen strategy. (Objective number 3)
Rubrics/Criteria:
Content 5
Organization of thought 3
Total 10
MODULE 4
Title : Strategy Implementation
Period : 4 hours
I. Objectives :
1. recognize what managers must do to build an organization capable of
good strategy execution;
2. explain why resource allocation should always be based on strategic
priorities
3. discuss why policies and procedures should be designed to facilitate
good strategy implementation;
4. discuss different types of organizational structure;
5. recognize the role of information and operating systems in enabling
company personnel to carry out their strategic roles proficiently;
6. explain how and why the use of well-designed incentives and rewards
can be management’s single most powerful tool for promoting
operating excellence
7. recognize what constitutes effective managerial leadership in
achieving superior strategy execution.
II. Subject Matter
1. Topics
1.1. Managerial Components of Strategy Execution
1.2. Building an Organization Capable of Good Strategy Execution: Three
Key Actions
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1.3. Allocating Resources to Strategy-Critical Activities

1.4. Instituting Strategy-Supportive Policies and Procedures
1.5. Using Rewards and Incentives to Promote Better Strategy Execution
1.6. Leading the Strategy Execution Process
Parnell, John A. (2014). Strategic Management: theory and practice, 4th edition.
Los Angeles, California: Sage Publications, Ltd

Companies, Inc.
3. Materials
3.1. Handouts
3.2. Worksheet Exercises
4. Values Focus
Plan strategies, commitment to sustainability

Students are instruct to make a functional organizational structure
Managing the implementation and execution of strategy is easily the
most demanding and time-consuming part of the strategic management
process. Good strategy execution entails that managers pay careful
attention to how key internal business processes are performed and see
to it that employees’ efforts are directed toward the accomplishment of
desired operational outcomes.
Executing strategy entails figuring out the specific techniques, actions,

and behaviors that are needed to get things done and deliver results.
The exact items that need to be placed on management’s action agenda
always have to be customized to fit the particulars of a company’s
situation.
Note: Students should be able to understand that in order to achieve

excellence in strategy implementation, it is important to recognize what
the company must do.
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b. Lesson Proper
Now, let’s see the managerial tasks crop up repeatedly in company efforts
to execute strategy:
1. Building an organization with the capabilities, people, and
structure needed to execute the strategy successfully;
2. Allocating ample resources to activities critical to good strategy
execution;
3. Ensuring that policies and procedures facilitate rather than
impede effective strategy execution;
4. Adopting process management programs that drive continuous
improvement in how strategy execution activities are performed
5. Trying rewards and incentives directly to the achievement of
performance objectives;
6. Creating a company culture and work climate conducive
conducive to successful strategy execution; and
7. Exerting the internal leadership needed to propel
implementation forward
4.2. Building an Organization Capable of Good Strategy Execution: Three Key

Actions.
Proficient strategy implementation depends heavily on competent

personnel, better-than-adequate competitive capabilities, and an effective
internal organization. Building a capable organization is thus always a
top priority in strategy execution.
Three types of organization building actions are paramount:
1. Staffing the organization- putting together a strong

management team, and recruiting and retaining employees
with the needed experience, technical skills, and intellectual
capital;
2. Acquiring, developing, and strengthening strategy-supportive

resources and capabilities- accumulating the required
resources, developing proficiencies in performing strategy-
critical value chain activities, and updating them to match
changing market conditions and customer expectations; and
3. Structuring the organization and work effort- organizing value

chain activities and business processes, establishing lines of
authority and reporting relationships, and deciding how much
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decision-making authority to push down to lower-level

managers and frontline employees.
To successfully implement the strategies of the organization, its structure

must support its unique system while the entire machinery of the
company must be aligned to the direction where it wants to go. In fact,
organizational structure refers to the system or mode by which a group of
individuals is able to achieve its desired goals.
4.4.2. Types of organizational structure
● Functional organizational structures- organizations adopt a

specific structural arrangement for a reason.
● Territorial organizational structure-in this system, the target
market is divided into geographical units according to
certain criteria.
● Product organizational structure-coordinated product
information.
● Market-centered organizational structure-describes the
wide range of structural forms that center on a group of
customer needs rather than a region, product line, or
function
● SBU organizational structure-it raises the issue of whether
any marketing functions should be performed at the
corporate staff level.
● Matrix organizational structure-it is efficient for establishing
specialist resources but is best for integrating functions.
4.4.3. Choice of an organizational structure

Some factors which may influence the firm’s decision to adopt
the type of organizational structure appropriate to its needs
includes:
● Size of the firm-indicates the complexity of its organization
● The products- another factor that influences the choice of

an organizational structure
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● The market- characteristics of the market like geographic

dispersion, income class, and buyer behavior need to be
considered in organizing the marketing unit.
● Competition- a firm may find it necessary to organize its
marketing efforts following the requirements of competition.
● Philosophy of management- a final factor that affects the
structure of an organization is the management philosophy
prevailing in the company.
4.4.4. Evaluation of an organizational structure

A number of criteria may be used in evaluating organizational
structure. These criteria include the ability of the organizational
structure to facilitate control, draw coordination among the
employees, provide information, compute for the costs involved,
and adopt a culture of flexibility.
● Facilitating control
● Coordination
● Providing information
● Cost of the system
● Flexibility
4.4.5. Organizational components

Organization is an entity composed of people that is
structured and managed in such a way that it is able to
achieve its set goals and objectives.
4. Management refers to the administrative supervision of
an organization which includes leadership, the
organization’s vision-mission, goals, and objectives to
attain organizational success.
5. Employees
The people who work, support, and earn profits for the
organization. Generally, management expects employees to
experience and graduate through three levels of relationships;
● Employee satisfaction
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● Employee involvement
● Employee commitment
6. Facilities and equipment

Another important component of the organizational
environment is the facilities and equipment. On the other
hand, organizations with sufficient capitalization use the most
sophisticated and the latest machinery and technology which
includes:
● Management of building and site maintenance;
● Management of machinery;
● Management of facilities and
● Application of technology.
7. Financial resources
It determines the direction the organization will take and
affects its capability to realize its set business goals and
objectives.
8. Organizational policies
The organizational milieu and company policies, which
are the lifeblood of an organization. They put the
organizational structure and system in place.
4.3. Allocating Resources to Strategy-Critical Activities

Early in the process of implementing a new or different strategy, top
management must determine what funding is needed to execute new
strategic initiatives, to bolster value-creating processes, and to
strengthen the company’s capabilities and competencies.
This includes:
● Careful screening of requests for more people and new

facilities and equipment
● Approving those that hold promise for making a
contribution to strategy execution and turning down those
that do not.
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4.3.1. A company’s ability to marshal the resources needed to support

new strategic initiatives has a major impact on the strategy
execution process. Too little funding slows progress and impedes
the efforts of organizational units to execute their pieces of the
strategic plan proficiently.
4.3.2. A change in strategy nearly always calls for budget reallocations
and resource shifting. Previously important units having a lesser
role in the new strategy may need downsizing. Units that now
have a bigger strategic role need more people, new equipment,
additional facilities, and above-average increases in their
operating budgets.
Strategy implementers have to exercise their power to put enough
resources behind new strategic initiatives to make things happen,
and they have to make the tough decisions to kill projects and
activities that are no longer justified.
4.4. Instituting Strategy-Supportive Policies and Procedures
A company’s policies and procedures can either assist or become a
barrier to good strategy execution. Anytime a company makes changes to
its business strategy, managers are well advised to carefully review
existing policies and procedures, and revise or discard those that are out
of sync.
Well-conceived policies and operating procedures act to facilitate

organizational change and good strategy execution on three ways:
1. Policies and procedures help enforce needed consistency in how
particular strategy-critical activities are performed.
Standardization and strict conformity are sometimes desirable

components of good strategy execution
2. Policies and procedures support change programs by providing top-

down guidance regarding how certain things now need to be done.
Asking people to alter established habits and procedures always

upsets the internal order of things. It is normal for pockets of
resistance to develop and for people to exhibit some degree of stress
and anxiety about how the changes will affect them.
3. Well-conceived policies and procedures promote a work climate that

facilitates good strategy execution.
Page | 24
Managers can use the policy-changing process as a powerful lever

for changing the corporate culture in ways that produce a stronger fit
with the new strategy.
4.5. Using Rewards and Incentives to Promote Better Strategy Execution

To create a strategy-supportive system of rewards and incentives, a company
must emphasize rewarding people for accomplishing results related to creating
value for customers, not for just dutifully performing assigned tasks.
Focusing jobholders’ attention and energy on what to achieve as opposed to

what to do makes the work environment results-oriented. It is flawed
management to tie incentives and rewards to satisfactory performance of
duties and activities instead of desired business outcomes and company
achievements.
4.5.1. Motivation and Rewards System

It is important for both organization units and individuals to be properly
aligned with strategic priorities and enthusiastically committed to
executing strategy. To get employees’ sustained, energetic commitment,
management has to be resourceful in designing and using motivational
incentives-both monetary and nonmonetary. The more a manager
understands what motivates subordinates and is able to use appropriate
motivational incentives, the greater will be employees’ commitment to
good day-out- strategy execution and achievement of performance
targets.
4.5.2. Guidelines for Designing Monetary Incentives System

Guidelines for creating incentives compensation systems that link
employee behavior to organizational objectives includes:
1. Make the performance payoff a major, not a minor, piece of the total
compensation package- The payoff for high-performing individuals
and teams must be meaningfully greater than the payoff for average
performers, and the payoff for average performers meaningfully
bigger than for below-average performers.
2. Have incentives that extend to all managers and all workers, not just
top management-Lower-level managers and employees are just as
likely as senior executives to be motivated by the possibility of
lucrative rewards.
Page | 25
3. Administer the reward system with scrupulous objectivity and

fairness- If performance standards are set unrealistically high or if
individual/group performance evaluations are not accurate and well
documented, dissatisfaction with the system will overcome any
positive benefits.
4. Tie incentives to performance outcomes directly linked to good

strategy execution and financial performance- Incentives should never
be paid just because people are thought to be “doing a good job” or
because they “work hard”. An argument can be presented that
exceptions should be made in giving rewards to people who have
come up short because of circumstances beyond their control.
5. Make sure the performance targets that each individual or team is

expected to achieve involve outcomes that the individual or team can
personally affect-The role of incentives is to enhance individual
commitment and channel behavior in beneficial directions.
6. Keep the time between achieving the target performance outcome

and the payment of the reward as short as possible-Weekly or
monthly payments for good performance work much better than
annual payments for employees in most job categories. Annual bonus
payouts work best for higher-level managers and for situations in
which target outcome relates to overall company profitability or stock
price performance.
Once the incentives are designed, they have to be communicated

and explained. Everybody needs to understand how their incentives
compensation is calculated and how individual/group performance
targets contribute to organizational performance targets.
4.5.3. Non MOnetary Rewards
Financial incentives generally head the list of motivating tools for trying to
gain hearted employee commitment to good strategy execution and
operating excellence. But most successful companies also make
extensive use of nonmonetary incentives
Some of the most important nonmonetary approaches used to enhance
motivation are listed here:
1. Provide attractive perks and fringe benefits- The various options
include full coverage of health insurance premiums; college tuition
reimbursement; paid vacation time; onsite child care; onsite fitness
centers; telecommuting; and compressed workweeks (four 10-hour
days instead of five 8-hour days).
Page | 26
2. Adopt promotion-from-within policies- This practice helps bind

workers to their employers and employers to their workers, plus it is
an incentive for good performance.
3. Act on suggestions from employees-Research indicates that the

moves of many companies to push decision making down the line
and empower employees increase employee motivation and
satisfaction, as well as boost productivity.
4. Create a work atmosphere in which there is genuine sincerity,

caring, and mutual respect among workers and between
management and employees- A “family” work environment in which
people are on a first-name basis and there is strong camaraderie to
promote teamwork and cross-unit collaboration.
5. Share information with employees about financial performance,

strategy, operational measures, market conditions, and competitors’
action- Broad disclosure and prompt communication send the
message that managers trust their workers.
6. Have attractive office spaces and facilities- A workplace environment

with appealing features and amenities usually has decidedly positive
effects on employee morale and productivity.
4.6. Leading the Strategy Execution Process

For an enterprise to execute its strategy in truly proficient fashion and approach
operating excellence, top executives have to take the lead in the
implementation/execution process and personality drive the pace of progress.
Leading the drive for good strategy execution and operating excellence calls for
three actions on the part of the manager:
1. Staying on top of what is happening and closely monitoring progress;
2. Putting constructive pressure on the organization to execute the
strategy well and achieve operational excellence; and
3. Initiating corrective actions to improve strategy execution and
achieve the target performance results.
4.6.1. Staying on top how well things are going
One of the best ways for executives to stay on top of strategy execution
is by regularly visiting the field and talking with different people at many
different levels. A technique often labeled managing by walking around
(MBWA).
4.6.2. Putting constructive pressure on organizational units to achieve good
results and operating excellence
Page | 27
Managers have to be out front in mobilizing the effort for good strategy
execution and operating excellence. Part of the leadership requirement
here entails fostering a results-oriented work climate in which
performance standards are high and a spirit of achievement is pervasive.
Successfully leading the effort to foster a result-oriented, high-
performance culture generally entails such leadership actions and
managerial practices as:
1. Treating employees with dignity and respect;
2. Encouraging employees to use initiative and creatively in
performing their work;
3. Setting stretch objectives and clearly communicating an
expectation that company personnel are to give their best
in achieving performance targets;
4. Focusing attention on continuous improvement;
5. Using the full range motivational techniques and
compensation incentives to reward high performance;
and
6. Celebrating individual, group, and company successes.
While leadership efforts instill a spirit of high achievement into the

culture usually accentuate the positive, there are negative reinforcers
too. Low-performing workers and people who reject results-oriented
cultural emphasis have to be weeded out or at least moved to out-of-the
–way positions. Average performers have to be candidly counseled that
they have limited career potential unless they show more progress in the
form of additional effort, better skills, and improved ability to deliver good
results. In addition, managers whose units consistently perform poorly
have to be replaced.
Exercise 1
Discuss the following:
1. Organizational structure.
2. What are some of the factors that may influence a company’s decision to
adopt a type of organizational structure?
Exercise 2
1. Illustrate your own territorial organizational structure.
2. What are the criteria used in evaluating organizational structures? Give the
importance of each criterion
Exercises 3
4. Evaluation/Assessment
Page | 28
Company strategies can’t be implemented or executed well without a number of

information systems to carry on business operations. Using your online
resources, search for recent articles that discuss how a company has used real-
time information systems and control systems to aid the cause of good strategy
execution. (Objective 5)
Rubrics/Criteria:
Content 5
Total 10
MODULE 5
Title : Strategic Leadership: Managing the Strategy Process
Period : 4 hours
I. Objectives:
1. explain the role of strategic leaders and what they do;
2. outline how you can become a strategic leader; and
3. evaluate top-down strategic planning, scenario planning, and strategy as
planned emergence.
II. Subject Matter
1. Topics
1.1. Strategic leadership
1.2. The strategic management process
Frank T.R. (2019). Strategic Management, 4rth edition. New York: McGraw-
Hill Education

3. Materials
3.2. Handouts
Page | 29
3.3. Worksheets
4. Values Focus
Plan strategies, commitment to sustainability

Before we begin, let’s learn from some leaders.
“Leadership is a potent combination of strategy and character. But if you

must be without one, be without the strategy (Norman Schwarzkopf).”
“Strategic management is not a box of tricks or a bundle of techniques. It

is analytical thinking and commitment of resources to action. But
quantification alone is not planning. Some of the most important issues in
strategic management cannot be quantified at all (Peter Drucker).”
Note: Students should be able to understand the strategic leader’s

principles.
b. Lesson Proper
5.1. Executives whose vision and decisions enable their organizations to

achieve competitive advantage and demonstrate strategic leadership.
1. Strategic leadership-pertains to executives’ use of power and
influence to direct the activities of others when pursuing an
organization’s goals.
2. Power- defined as the strategic leader’s ability to influence the
behavior of other organizational members to do things, including
things they would not do otherwise.
Strategic leaders can draw on position power and are vested in their
authority.
5.1.1. What do strategic leaders do that makes some more effective than
others?
1. In a study of more than 350 CEO’s, strategy scholars
found that they spend, on average, 67 percent of their
time in meetings, 13 percent working alone, 7 percent on
email, 6 percent on phone calls, 5 percent on business
meals, and 2 percent on public events such as ribbon-
cutting for a newly opened company.
2. Other studies have also found that most managers prefer
oral communication: CEOs spend most of their time
Page | 30
interacting-talking , soothing, selling, listening, and

nodding-with a wide array of parties inside and outside
the organization.
3. Surprisingly, given the advances in information
technology, CEOs today spend most of their time in face-
to-face meetings. They consider personal meetings as
most effective in getting their message across and
obtaining the information they need.
5.1.2. How do you become a strategic leader?

Is becoming an ethical and effective leader innate? Can it be
learned?
1. According to the upper-echelons theory, organizational

outcomes including strategic choices and performance
levels reflect the values of the top management team.
2. Theory states that strategic leaders interpret situations

through the lens of their unique perspectives, shaped by
personal circumstances, values, and experiences. Their
leadership actions reflect characteristics of age,
education, and career experiences, filtered through
personal interpretations of the situations they face.
4. In the bestseller Good to Great, Jim Collins found

consistent patterns of leadership among the top
companies he explored called “Level-5 leadership
pyramid''.
According to the Level-5 leadership pyramid, effective strategic leaders go
through a natural progression of five levels. Each level builds upon the previous
one; the individual can move on to the next level of leadership only when the
current level has been mastered.
1. Level 1-Makes productive contributions through
motivation, talent, knowledge, and skills.
2. Level 2-Uses high level of individual capability to work
effectively with others in order to achieve team
objectives.
3. Level 3- efficient and effective in organizing resources to
accomplish stated goals and objectives.
4. Level 4- Presents compelling vision and mission to guide
groups toward superior performance.
5. Level 5- Builds enduring greatness through a combination
of willpower and humility
5.2. The Strategic Management Process.
Page | 31
An effective strategic management process lays the foundation for

sustainable competitive advantage. Strategic leaders design a process to
formulate and implement strategy. IN the previous section, we gained
insight into the corporate, business, and functional levels of strategy.
Here we turn to the process or method by which strategic leaders formulate

and implement strategy. When setting the strategy process, strategic
leaders rely on three approaches:
● Strategic planning
● Scenario planning
● Strategy as planned emergence
This order also reflects how these approaches were developed. The first
two are relatively formal, top-down planning approaches. The third
approach begins with a strategic plan but offers a less formal and less
stylized approach. Each approach has its strengths and weaknesses,
depending on the circumstances under which it is employed.
5.2.1. Top-down strategic planning, derived from military strategy, is a

rational process through which executives attempt to program
future success. In this approach, all strategic intelligence and
decision-making responsibilities are concentrated in the office of
the CEO. The CEO then, much like a military general, leads the
company strategically through competitive battles.
Below are the traditional top-down strategic planning process:

● Analysis
● Formulation
● Implementation
Strategic planners provide detailed analyses of internal and
external data and apply it to all quantifiable areas such as:
● Price
● Costs
● Margins
● Market demand
● Head count and
Page | 32
● Production runs.
5.2.2. Scenario planning strategy- it asks those “what if” questions.
Similar to top-down strategic planning, scenario planning also
starts with a top-down approach to the strategy process.
● In the formulation stage of scenario planning, management
teams develop different plans to address possible future
scenarios.
● In the implementation stage, managers execute the
dominant strategic plan, the option that top managers
decide most closely matches the current reality.
5.2.3. Strategy as planned emergence: Top-Down and Bottom-Up
According to this more holistic model, the strategy process also
begins with a top-down strategic plan based on analysis of
external and internal environments. Top –level executives
design the following strategies:
● Intended strategy- the outcome of a rational and

structured, top-down strategic plan.
● Realized strategy- generally formulated through a
combination of its top-down strategic intentions and
bottom-up emergent strategy.
● Emergent strategy- describes any unplanned strategic
initiative bubbling up from deep within the organization.
● Strategic initiative- any activity a firm pursues to explore
and develop new products and processes, new markets, or
new ventures.
● Autonomous actions- strategic initiatives undertaken by
lower-level employees on their own volition and often in
response to unexpected situations.
Exercise 1
Answer the following questions:
1. Describe Sheryl Sandberg’’s strategic leadership. Which qualities
stand out to you, and why? Is she an effective strategy leader? Why or
why not?
2. Explain the role of strategic leaders and what they do
Page | 33
Exercise 2
1. Outline how you can become a strategic leader
Exercises 3
Evaluation/Assessment
What are the main issues Sandberg brings to the fore in her TED talk, titled
“Why We Have Too Few Women Leaders’? (You can view the 15-minute talk
here: http: http://bit.ly/1czSD6n). How can your awareness of these issues help
you to be a more effective strategic leader? (Objectives 1 to 3)
Rubrics/Criteria:
Content 5
Total 10
MODULE 6
Title: Evaluating a Company’s Resources, Capabilities, and Competitiveness
Period : 4 hours
I. Objectives
1. assess how well a company’s strategy is working;
2. explain why a company’s resources and capabilities are centrally important
in giving the company a competitive edge over rivals;
3. grasp how a company’s value chain activities can affect the company’s
cost structure and customer value proposition; and
4. evaluate a company’s competitive strength relative to key rivals; and
5. discuss how a comprehensive evaluation of a company’s external and
internal situations can assist managers in making critical decisions about
their next strategic moves.
II. Subject Matter
1. Topics
1.1. Identifying Competitively Important Resources and Capabilities
Page | 34
1.2. Determine the Competitive Power of a Company’s Resources and

Capabilities
1.3. The Importance of Dynamic Capabilities in Sustaining Competitive
Advantage
1.4. Benchmarking: A tool for Assessing Whether a Company’s Value Chain
Activities are Competitive
1.5. Company Value Chains
Gamble, John E; Margaret A; Thompson Jr, Arthur A. (2019). Essentials of
Strategic Management: The Quest for Competitive Advantage, 6th edition.
New York, NY: McGraw-Hill Education.
Frank T.R. (2019). Strategic Management, 4th edition. New York, NY:
McGraw-Hill Education.

3. Materials
3.2. Handouts
3.3. Worksheets
4. Values Focus
Reflect the culture of the organization which gives identity and sets the
company apart from its competitors. These values serve as a guiding light for
the employees.

This module discusses the techniques of evaluating a company’s internal

situation, including its collection of resources and capabilities, its cost
structure and customer value proposition, and its competitive strength
versus that of its rivals.
How well is the company’s strategy working?
The two best indicators of how well a company’s strategy is working are:
● Whether the company is recording gains in financial strength and
profitability;
● Whether the company’s competitive strength and market standing are
improving.
Page | 35
Persistent short-falls in meeting company financial performance targets and

weak performance relative to rivals are reliable warning signs that the
company suffers from poor strategy making, less-than-competent strategy
execution, or both. Other indicator of how well a company’s strategy is
working include:
● Trends in the company’s sales and earnings growth.
● Trends in the company’s stock price.
● The company’s overall financial strength.
● The company’s customer retention rate.
● The rate at which new customers are acquired.
● Changes in the company’s image and reputation with customers.
● Evidence of improvement in internal processes such as defect rate,
order fulfillment, delivery times, days of inventory, and employee
productivity.
The stronger the company’s current overall performance, the less

likely the need for radical changes in strategy. The weaker a
company’s financial performance and market standing, the more its
current strategy must be questioned.
6.1. Identifying competitively important resources and capabilities.
A company’s resources are competitive assets that are owned or controlled by

the company and may either be tangible resources such as plants, distribution
centers, manufacturing equipment, patents, information systems, and capital
reserves or creditworthiness, or intangible assets such as a well-known brand
or a result-oriented organizational culture.
A capability is the capacity of a firm to completely perform some internal

activity.
A capability may also be referred to as a competence. Capabilities or

competencies also vary in form, quality, and competitive importance, with
some being more competitively valuable than others.
Organizational capabilities are developed and enabled through the

deployment of a company’s resources or some combination of its resources.
6.2. Determining the competitive power of a company’s resources and

capabilities.
What is mostly telling about a company’s aggregation of resources and

capabilities is how powerful they are in the marketplace. The competitive
Page | 36
power of a resource or capability is measured by how many of four tests for

sustainable competitive advantage can pass.
The tests are often referred to as the VRIN tests for sustainable competitive
advantage-an acronym for valuable, rare, inimitable, and non substitutable.
1. Is the resource or capability competitively valuable?

All companies possess a collection of resources and capabilities-some
have the potential to contribute to a competitive advantage, while
others may not.
2. Is the resources or capability rare-is it something rivals lack?
Resources and capabilities that are common among firms and widely
available cannot be a source of competitive advantage.
3. Is the resource or capability inimitable or hard to copy?

The more difficult and more expensive it is to imitate a company’s
resource or capability, the more likely that it can also provide a
sustainable competitive advantage.
4. Is the resource or capability non substitutable? Or is it vulnerable to the

threat of substitution from different types of resources and capabilities?
Resources that are competitively valuable, rare, and costly to imitate
may lose much of their ability to offer competitive advantage if rivals
possess equivalent substitute resources.
Very few firms have resources and capabilities that can pass all
four tests, but those that do enjoy a sustainable competitive
advantage with far greater profit potential.
6.3. The importance of dynamic capabilities in sustaining competitive advantage.
Resources and capabilities must be continually strengthened and nurtured

to sustain their competitive power and, at times, may need to be
broadened and deepened to allow the company to position itself to pursue
emerging market opportunities.
1. Organizational resources and capabilities that grow stale can impair
competitiveness unless they are refreshed, modified, or even phased
out and replaced in response to ongoing market changes and shifts in
company strategy
2. Management’s organization-building challenge has two elements:
1. Attending to ongoing recalibration of existing capabilities
and resources; and
Page | 37
2. Casting a watchful eye for opportunities to develop totally

new capabilities for delivering better customer value
and/or outcompeting rivals
A company requires a dynamically evolving portfolio of resources and
capabilities in order to sustain its competitiveness and position itself to
pursue future market opportunities.
6.4. Company Value Chains.
Every company’s business consists of a collection of activities undertaken in

the course of designing, producing, and marketing, delivering, and
supporting its product or service.
All of the various activities that a company performs internally combine to

form a value chain, so called because the underlying intent of a company’s
activities is to do things that ultimately create value for buyers.
6.4.1. Primary Activities:

● Supply chain management- activities, costs, and assets
associated with purchasing fuel, energy, raw materials,
parts and components, merchandise, and consumable
items from vendors; receiving, storing, and disseminating
inputs from suppliers; inspection; and inventory
management.
● Operations- activities, costs, and assets associated
converting inputs into final product from (production,
assembly, packaging, equipment maintenance, facilities,
operations, quality assurance, and environmental
protection).
● Distribution- activities, costs, and assets dealing with
physically distributing the product to buyers (finished goods
warehousing, order processing, order picking and packing,
shipping, delivery vehicle operations, establishing and
maintaining a network of dealers and distributors).
● Sales and marketing- activities, costs, and assets related to
sales force efforts, advertising and promotion, market
research and planning, and dealer/distributor support.
● Service- activities, costs, and assets associated with
providing assistance to buyers, such as installation, spare
parts delivery, maintenance and repair, technical
assistance, buyer inquiries, and complaints.
Page | 38
6.4.2. Support Activities

● Product R&D, technology, and systems development-
activities, costs, and assets relating to product R&D,
process design improvement, and equipment design,
computer software development, telecommunications
systems.
● Human resources management- activities, costs, and assets
associated with the recruitment, hiring, training,
development, and compensation of all types of personnel;
labor relations activities; and development of knowledge-
based skills and core competencies.
● General administration-activities, costs, and assets relating
to general management, accounting and finance, legal and
regulatory affairs, safety and security, management
information systems, forming strategic alliances and
collaborating with strategic partners, and other “overhead”
functions.
6.5. Benchmarking: A tool for assessing whether a company’s value chain

activities are competitive.
Benchmarking entails comparing how companies perform various chain

activities-how materials are purchased, how inventories are managed, how
products are assembled, how customer orders are filled and shipped, and
how maintenance is performed-and then making cross-company
comparisons of the costs and effectiveness of these activities.
The objectives of benchmarking are to identify the best practices in

performing an activity and to emulate those best practices when they are
possessed by others.
A best practice is a method of performing an activity or business process

that consistently delivers superior results compared to other approaches. To
qualify as a legitimate best practice, the method must have been employed
by at least one enterprise and shown to be consistently more effective in;
1. lowering costs;
2. improving quality or performance;
3. shortening time requirements;
4. enhancing safety; and
5. achieving some other highly positive operating outcomes.
Page | 39
The tough part of benchmarking is not whether to do it, but rather how to
gain access to information about other companies’ practices and costs.
Sometimes benchmarking can be accomplished by these following:
1. collecting information from published reports, trade groups,

and industry research firms; and
2. by talking to knowledgeable industry analyst customers, and
suppliers.
Sometimes field trips to the facilities of competing or non competing
companies can be arranged to observe how things are done, compare
practices and processes, and perhaps exchange data on productivity and
other cost components.
Exercise 1
In analyzing a company’s own particular competitive circumstances and its
competitive position vis-à-vis key rivals, answer the following key questions;
1. How important are the company's resources and capabilities in contributing to
a competitive advantage?
2. Discuss the distinction of the company’s resources and capability.
Exercise 2
1. Explain the major function of a company’s value chain.
2. Figure out how benchmarking works, considering that it is a potent tool for
learning which companies are best at performing particular activities using
their techniques.
Exercise 3
Assess the statement “Companies that lack a standalone resource that is
competitively powerful may nonetheless develop a competitive advantage
through resource bundles that enable the superior performance of important
cross-functional capabilities." (Objectives 2)
Rubrics/Criteria:
Content 5
Page | 40
Total 10
MODULE 7
Title : Strengthening a Company’s Competitive Position: Strategic Moves,

Timing, and Scope of Operations
Period : 4 hours
I. Objectives:
1. discuss whether and when to pursue offensive or defensive strategic
moves to improve a company’s market position;
2. recognize when being a first mover or a fast follower or a late mover can
lead to competitive advantage;
3. identify the strategic benefits and risks of expanding a company’s
horizontal scope through mergers and acquisitions;
4. enumerate the advantages and disadvantages of extending a company’s
scope of operations via vertical integration;
5. discuss the conditions that favor farming out certain value chain activities
to outside parties; and
6. explain how strategic alliances and collaborative partnerships can bolster a
company’s collection of resources and capabilities.
II. Subject Matter
1. Topics
1.1. Launching strategic offensives to improve a company’s market position
1.2. Using Defensive Strategies to Protect a Company’s Market Position and
Competitive Advantage
1.3. Timing a Company’s Offensive and Defensive Strategic Moves
Page | 41
1.4. Strengthening a Company’s Market Position via its Scope of Operation

1.5. Vertical Integration Strategies
1.6. Outsourcing Strategies: Narrowing the Scope of Operations
Gamble, John E; Margaret A; Thompson Jr, Arthur A. (2019). Essentials of
Strategic Management: The Quest for Competitive Advantage, 6th edition.
New York, NY: McGraw-Hill Education.
Frank T.R. (2019). Strategic Management, 4th edition. New York, NY:
McGraw-Hill Education.

3. Materials
3.2. Handouts
3.3. Worksheets
4. Values Focus
Offer growth in revenues and profits by discovering or inventing new industry
segments that create altogether new demand.

Strategic offensives are called for when a company spots opportunities to

gain profitable market share at the expense of rivals or when a company has
no choice but to try to whittle away at a strong rival’s competitive advantage.
Companies such as Samsung, Amazon, Autonation, and Google play

hardball, aggressively pursuing competitive advantage and trying to reap the
benefits a competitive edge offers-a leading market share, excellent profit
margins, and rapid growth.
b. Lesson Proper
This module presents the pros and cons of each of these measures that
round out a company’s overall strategy.
7.1. Launching Strategic Offensives to improve a company’s market position

Generally, strategic offensives should be grounded in a company’s competitive
assets and strong points and should be aimed at exploiting competitor
Page | 42
weaknesses
Ignoring the need to tie a strategic offensive to a company’s competitive

strengths are like going to war with a popgun-the prospects for success are dim.
For instance, it is foolish for a company with relatively high costs to employ a
price-cutting offensive
Here are the principal offensive strategy options:

1. Offering an equally good or better product at a lower price;
2. Leapfrogging competitors by being the first to market with
next-generation technology or products;
3. Pursuing continuous product innovation to draw sales and market
share away from less innovative rivals;
4. Pursuing disruptive product innovation to create new markets; and
5. Adopting and improving on the good ideas of other companies
These two factors give rise to the five competitive strategy options:
1. A low-cost provider strategy-striving to achieve lower overall costs

than rivals and appealing to a broad spectrum of customers, usually
by underpricing rivals;
2. A focused low-cost strategy-concentrating on a narrow buyer
segment (or market niche) and outcompeting rivals by having lower
costs than rivals and thus being able to serve niche members at a
lower price;
3. A focused differentiation strategy- concentrating on a narrow buyer
segment (or market niche) and outcompeting rivals by offering niche
members customized attributes that meet their tastes and
requirements better than rivals’ product; and
4. A best-cost provider strategy-giving customers more value for the
money by satisfying buyers’ expectations on key
quality/features/performance/service attributes while beating their
price expectations
7.1.2. Choosing which rivals to attack

Offensive-minded firms need to analyze which of their rivals to
challenge as well as how to mount that challenge. The best targets for
offensive attacks are;
1. Market leaders that are vulnerable-offensive attacks make good
sense when a company that leads in terms of size and market
share is not a true leader in terms of serving the market well;
2. Runner-up firms with weaknesses in areas where the challenger
is strong- they are especially attractive targets when a
challenger’s resource strengths and competitive capabilities are
well suited to exploiting their weaknesses;
Page | 43
3. Struggling enterprises that are on the verge of going under-

challenging a hard-pressed rival in ways that further sap its
financial strength and competitive position can hasten its exit
from the market; and
4. Small local and regional firms with limited capabilities-because
small firms typically have limited expertise and resources, a
challenger with broader capabilities is well positioned to raid
their biggest and best customers.
7.1.3. Blue ocean strategy- A special kind of offensive
A blue ocean strategy seeks to gain a dramatic and durable

competitive advantage by abandoning efforts to beat out competitors
in existing markets and, instead, inventing a new industry or
distinctive market segment that renders existing competitors largely
irrelevant and allows a company to create and capture altogether
new demand.
7.2. Using Defensive Strategies to Protect a Company’s Market Position and

Competitive Advantage.
In a competitive market, all firms are subject to offensive challenges from

rivals. The purposes of defensive strategies are to lower the risk of being
attacked, weaken the impact of any attack that occurs, and influence
challengers to aim their efforts at other rivals.
7.2.1. Blocking the avenues open to challengers

The most frequently employed approach to defending a company’s
present position involves actions to restrict a competitive attack by a
challenger.
7.2.2. Signaling challengers that retaliation is likely

The goal of signaling challengers that strong retaliation is likely in the
event of an attack is either to dissuade challengers from attacking or
to divert them to less threatening options.
7.3. Timing a Company’s Offensive and Defensive Strategic Moves
7.3.1. When to make a strategic move is often as crucial as what move to

make. Timing is especially important when first-mover advantages or
disadvantages exist. Under certain conditions, being first to initiate a
strategic move can have a high payoff in the form of a competitive
advantage that later movers cannot dislodge.
Page | 44
7.3.2. Moving first is no guarantee of success, however, since first movers

also face some significant disadvantages.
Indeed, there are circumstances in which it is more advantageous to be a

fast follower or even a late mover. Because the timing of strategic moves
can be consequential, it is important for company strategists to be aware
of the nature of first-mover advantages and disadvantages and the
conditions of favoring each type of move.
7.4. Strengthening a company’s market position via its scope of operations.
Apart from consideration of offensive and defensive competitive moves and their
timing, another set of managerial decisions can affect the strength of a
company’s market position.
These decision concerns:

1. Scope of the firm- the breadth of a company’s activities and the
extent of its market reach.
Ex. Ralph Lauren Corporation designs, markets, and distributes fashionable apparel
and other merchandise to more than 13, 000 major department
stores and specialty retailers around the world, plus it also operates
over 200 Ralph Lauren retail stores, 270-plus factory stores, and 10
e-commerce sites. Scope decisions also concern which segments of
the market to serve-decision that can include geographic market
segments as well as product and service segments.
2. Horizontal scope-which is the range of product and service
segments that it serves, can be expanded through new-business
development or mergers and acquisitions of other companies in the
marketplace.
2. Vertical scope is the extent to which it engages in the various
activities that make up the industry’s entire value chain system-
from raw material or component production all the way to retailing
and after-sales service.
7.5. Vertical Integration Strategies
Vertical integration extends a firm’s competitive and operating scope within

the same industry. It involves expanding the firm’s range of value chain activities
backward into sources of supply and/or forward end users.
Thus, a manufacturer invests in facilities to produce certain component

parts that it formerly purchased from outside suppliers or if it opens its own chain of
Page | 45
retail stores to market its products to consumers, it is engaging in vertical

integration.
7.5.1. The advantages of a vertical integration strategy

The two best reasons for investing company resources in vertical
integration are to strengthen the firm’s competitive position and/or to
boost its profitability.
Vertical integration has no real payoff unless it produces sufficient cost

savings to justify the extra investment, adds materially to the
company's technological and competitive strengths, and/or helps
differentiate the company’s product offering.
7.5.2. The disadvantages of a vertical integration strategy

Vertical integration has some substantial drawbacks beyond the
potential for channel conflict. The most serious drawbacks to vertical
integration include:
1. Vertical integration increases a firm’s capital investment
in the industry;
2. Integrating into more industry value chain segments
increases business risk if industry growth and profitability
sour;
3. Vertically integrated companies are often slow to embrace
technological advances or more-efficient production
methods when they are saddled with older technology or
facilities;
3. Integrating backward potentially results in less flexibility
in accommodating shifting buyer preferences when a
new product design does not include parts and
components;
4. Vertical integration poses all kinds of capacity matching
problems. In motor vehicle manufacturing, for example,
the most efficient scale of operation for making axles is
different from the most economic volume for radiators
and different yet again for both engines and
transmissions.
7.6. Outsourcing Strategies: Narrowing the Scope of Operations.
Outsourcing forgoes attempts to perform certain value chain activities

internally and instead farms them out to outside specialists and strategic allies.
Outsourcing makes strategic sense whenever:
1. An activity can be performed better or more cheaply by

an outside specialist.
Page | 46
2. The activity is not crucial to the firm’s ability to achieve

competitive advantage and will not hollow out its
capabilities, core competencies, or technical know-how.
3. It improves organizational flexibility and speeds time to
market.
4. It reduces the company’s risk exposure to changing
technology and/or buyer preferences.
5. It allows a company to concentrate on its core business,
leverage its key resources and core competencies, and
do even better what it already does best.
7.6.1. The Big Risk of an Outsourcing Strategy.

The biggest danger of outsourcing is that a company will farm out the
wrong types of activities and thereby hollow out its own capabilities. In
such cases, a company loses touch with the very activities and
expertise that over the long run determine its success.
7.7. Strategic Alliance and Partnerships.

Companies in all types of industries have elected to form strategic alliances
and partnerships to complement their accumulation of resources and
capabilities and strengthen their competitiveness in domestic and
international markets.
7.7.1. Failed Strategic Alliances and Cooperative Partnerships.

Most alliances with an objective of technology sharing or providing
market access turn out to be temporary, fulfilling their purpose after a
few years because the benefits of mutual learning have occurred.
Alliances are more likely to be long lasting when:
b. They involve collaboration with partners that do not compete directly

c. A trusting relationship has been established; and
d. Both parties conclude that continued collaboration is in their mutual
interest, perhaps because new opportunities for learning are
merging.
A surprisingly large number of alliances never live up to expectations,

with estimates that as many as 60 to 70 percent of alliances fail each
year. The high “divorce rate” among strategic allies has several
causes, the most common of which are:
1. Diverging objectives and priorities;
2. An inability to work well together;
3. Changing conditions that make the purpose of the alliance
obsolete;
4. The emergence of more attractive technological paths; and
Page | 47
5. Marketplace rivalry between one or more allies.
Experience indicates that alliances stand a reasonable chance

of helping a company reduce competitive disadvantage, but
very rarely have they proved a strategic option for gaining a
durable competitive edge over rivals.
Exercise 1
1. Perform an internet search to read Kaiser Permanente “Concepts &
Connections. Describe how Kaiser Permanente has made vertical integration
a central part of its strategy.
2. What value chain segments has Kaiser Permanente chosen to enter and
perform internally?
3. How has vertical integration aided the company in building competitive
advantage? Has vertical integration strengthened its market position? Explain
why or why not.
Exercise 2
Perform an internet search, and answer the following:
1. Identify at least two companies in different industries that have entered into
outsourcing agreements with firms with specialized services.
2. 2. In addition, describe what value chain activities the companies have
chosen to outsource. Do any of these outsourcing agreements seem likely to
threaten any of the companies’ competitive capabilities?
Exercise 3
Given the questions above, has the company you chose relied more on offensive or
defensive strategies to achieve their rank in the industry? Discuss your answer.
(Objectives 1)
Rubrics/Criteria:
Content 5
Total 10
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PWC of Davao Course: CBMC 002 Strategic Management

II. Subject Matter

Perreault, W., Cannon, J. & McCarthy J. (2015). Essentials of Marketing:

III. Learning Procedures and Strategies

1.1 Activity 1. “Hands-on”

1.1.1 Students begin this activity by listing at least 25 words that

1.2 Activity 2. Chain Gang

1.2.1 Students work individually;

Title Strategic Management

II. COURSE OBJECTIVES

III. COURSE OUTLINE

● Online setting policy/settings

2 2.2. Challenges in the External Environment 4

6 Module 5: Strategic Control and Monitoring

IV. Types of Assessment

Quizzes, Written Technical Reports, Oral Presentation of Reports (40%); Written

Title : Strategy, Business Model and Competitive Advantage

II. Subject Matter

Perreault, W., Cannon, J. & McCarthy J. (2015). Essentials of Marketing:

III. Learning Procedures and Strategies

Before we begin, let’s understand the concept of strategy:

According to The Economist, a leading publication on business,

Now, let’s understand what is meant by a company’s strategy.

A company’s strategy is the set of actions that its managers take to

1.2.1. How to create products or services that attract and please

1.2.2. How to position the company in the industry;

1.2.3. How to develop and deploy resources to build valuable

1.2.5. How to achieve the company’s performance targets.

1.3. Let’s take a look at the relationship between a Company’s Strategy

1.3.1. Closely related to the concept of strategy is the concept of a

5. a best-cost provider strategy-giving customers more

1.4. Evaluating Company’s External Environment

1.4.1. Thinking strategically about a company’s industry and

● Do macro-environmental factors and industry

● What kinds of competitive forces are industry members

● What forces are driving industry change, and what impact

● What market positions do industry rivals occupy-who is

● What strategic moves are rivals likely to make next?

● What are the key factors of competitive success?

● Does the industry outlook offer good prospects for

1.4.2. Let’s look at how environmental scanning works!

Below are the creative and cutting-edge strategies:

● Environmental scanning- the study and interpretation of the

● Undirected viewing- an individual is exposed to information

1.4.3. Next, let’s see how the external environment works!

● Aging population/demand for health services

● Sophisticated lifestyles of people

● Chemical and nuclear threats

● Competitors and suppliers

● Fall of financially stable organizations

● Increasing oil prices

● Economic trade agreements

● Environmental waste management

● Preservation of rainforest and marine life

1.5. Challenges in the Internal Environment

In fact, there are variables considered as essential if one has to conduct

2. Discuss the core concept of achieving a sustainable competitive advantage

Title : Strategy Formulation

II. Subject Matter

Perreault, W., Cannon, J. & McCarthy J. (2015). Essentials of Marketing:

III.Learning Procedures and Strategies

Because of the volatility of the environment, business survival has become