MGT 036: STRATEGIC

MANAGEMENT
 In the world of business, the set of rules that guides the decisions and
actions of the members of the organization is generally called business policies.
These policies may be informal or in writing coming in the form of operational
manual, personnel handbook, and memoranda composed or issued from time to
time and as the need arise. They may also come in the form of minutes of the
meetings and documentation of other forms of formal discussions including
workshops and year end activities. The written documents generally comprise
the rules and procedures in the conduct of the business and how employees of
the organization should act from day-to-day.
With globalization trends along with the
challenges and opportunities posed by
information and communication
technology particularly the use of
computers and popularization of the so-
called e-Commerce/e-Business, the notion
of being more concerned with internal
operational policies and procedures has
alarmed business executives that that they
are more concerned nowadays with being
externally-oriented and specifically
concerned with strategic management
concepts.
The use of variety has made the world
virtually smaller or borderless so to speak.
With a number of establishments
increasing by leaps and bounds as well as
customers’ taste and preferences
continuing to change, concerned, concern
for being more creative and innovative as
well as adopting strategic management
principles and concept is now being
adopted by business organizations – or
type of organization for that matter – if
only to survive and stay competitive in the
sector or industry where it belongs.
Given the system of doing business these days along with a variety of
intervening factors including of a number of stakeholder groups never
thought to be relevant decades ago, embracing the theories and
principles behind strategic management is not only an option but a
necessity.
Concepts of
The basic theory of the term management
which evolve around the idea of planning,
organizing, staffing, coordinating and
controlling and evaluating still holds true. Within
the context of a plan or the process of planning
are a variety of plans taking the form of budget,
policy, strategy, rules, guides, procedures, etc.
Common to these variants of plans is that all of
them are done ahead of time and that terms
serves as a guideposts or perimeters within
which decisions have to be based upon.
Among the believers of the schools of thought
of management, in particular the concept of
business policy, the view is that rules or
policies must be observed or followed.
Business policies are really meant to be
observed or followed simply because as a
matter of practice and tradition, rules and
policies of the business are traditionally
done by the top management and doing
otherwise would be risky or will do more
harm than good for subordinates. Hence,
business policies are considered marching
orders from the middle management to
implement and rank and file personnel
have to do actions. Policies are usually set
forth by the top management and hence
must be adhered to.
In context, business policy generally refers to a
set of rules that guides the conduct of the
business in pursuit of profit and other
objectives of the business organization.
Business policies come in many types or forms
designed to achieved end-results. These
policies are developed in coherence with the
duties and responsibilities of the various
functional units (e.g., human resource,
sales/marketing, production, and the like).
Business policies are usually expressed in
broad direction and sometimes made specific
to serve as guidelines or rules for decision-
making and execution of organizational
activities.
Business policy is also looked upon as general management orientation
traditionally viewed as largely inward-looking as well as more biased with guiding
how personnel in the organization would act or what to follow for as long as one is
a part or employee of the organization. It provides the fundamental framework of
plans and also provides middle managers a basis for decision-making. The more
policies are clearly understood, the more harmonious a work place becomes.
Concepts of
Wright, Kroll and Parnell (1996) defined strategy as essentially referring to top
management’s plan to attain outcomes consistent with the organization’s mission
and goals. These authors regard strategy in three vantage points namely:
FORMULATION IMPLEMENTATION CONTROL

STRATEGIC
STRATEGY

STRATEGY
a) strategy formulation or developing the strategy,
b) strategy implementation (putting the strategy into action), and
c) strategic control (modifying either the strategy or its implementation to
ensure that the desired outcomes are attained).
A strategy can be intended or realized. Intended strategy refers to the original
strategy that management plans and intends to implement. Realized strategy refers
to the actual and eventual strategy that management actually implements.
Thompson and Strickland (1999) characterized strategy at the operational level
referring to it as a set of competitive moves and business approached that
management is employing to run the company. Among others, strategy is
managements’ “game plan” to achieve the following:
 Attract and please customers
 Stake out a market position
 Conduct operations
 Compete successfully
A. Clearer sense of strategic vision for the firm
B. Sharper focus on what is strategically important
C. Improved understanding of a rapidly changing environment
 Strategy vs Tactics

Other than business policy and strategy as common terminologies often

mentioned in the world of strategic management, the term tactics and its role in
concretizing the intents and purposes of business policy and strategy is equally
important. Tactics are more operational and done in context with or as a support
activity or operation to achieve a strategy.
 Differences

between

Strategy and Tactics

Bases of Policies and Strategies

A. Legal Mandate – This refers to the formulating policies on the basis of the
provisions of the charter or legal basis for the creation of existence of the business
organization including the applicable provision and policies or pronouncement of
the government and its statutory or regulatory bodies.
B. Vision and Mission Statement – This essentially refers to the leadership bias as
well as sense of direction and mission for which the organization was conceived or
established.
C. Specific objectives – These are the corporate objectives purposely developed for
the organization and for its members or employees at large to pursue.
D. Programs and policies – These are specific programs and policies set forth by the
organization’s policy makers in pursuit of the short and long-term goals given
certain considerations at hand.
APPROACHES TO IDENTIFY POLICIES AND STRATEGIES

A. Policy/Strategy Profile – This approach involves a systematic examination of

present company policy/strategy – implicit and explicit. This is a sort of self-
examination, audit and introspection.
B. Gap Analysis – In this approach, the stimulus is an examination of whether an end
that has been established is likely to achieved.
C. Competitive Strategy Analysis– This involves a thorough analysis of the
competitive forces operating in a firm’s environment and searching for an
alternative option.
Richard Whittington (2001) theorized that strategy comes in four generic
approaches that differ fundamentally along two dimension: the outcomes of the
strategy and the process which it is made.
• Classical Approach (analyze plan and command)
• Evolutionary (Keep your cost low and your options open)
• Processual (stay close to the ground and go with the flow)
• Systemic (play by the local rules)
Developing Policy and Strategy
• Top-bottom Approach. In this approach, initiatives in developing policies and
strategies come from the top management with rank and file tasked to
implementing or following the policies and strategies.
• Bottom-top Approach. In this approach, policy and strategy initiatives emanate
from the bottom or rank-and-file from which top management develops concrete
policies and strategies for lower ranked employees to observe and follow.
• Top-bottom-top. In this approach, policy and strategy initiatives are taken by the
top management then filtered down to lower ranked personnel for consultations
then returned back to the top management for refinements.
Strategic Decision are made contrary to the to existing policies, norms, and
practices all in the name of strategic reasons or considerations. It is usually take
into account a lot external factors and deal with the long run future of the entire
organization.

• Rare. Strategic decisions are unusual and typically have no precedent to follow.
• Consequential. Strategic decisions should commit substantial resources and
demand a great deal of commitment from people at all levels.
• Directive. Strategic decisions set precedents for lesser decisions and future
actions throughout the organization.
Modalities in Strategic Decision
• Entrepreneurial Mode. In this mode, strategy is made by one powerful individual
and the focus is on opportunities; problems are secondary.
• Adaptive Mode. Sometimes referred to as “muddling through” this mode is
characterized by reactive solutions to existing problems, rather than proactive
search of new opportunities.
• Planning Mode. This decision-making mode involves the systematic gathering of
appropriate information for solution analysis, the generation of feasible alternative
strategies, and the rational selection of the most appropriate strategy.
• Logical mode. It can be viewed as synthesis of planning, adaptive, and, to a lesser
extent, the entrepreneurial modes.