LESSON 1: THE CONCEPT OF STRATEGY FORMULATION 3.

Functional Level Strategy - more localized and shorter-horizon

strategies
STRATEGY FORMULATION - "achieving organizational purpose" which
comes after the firm has conducted an environmental scan.  address how each functional area and unit will carry out its
functional activities in order to be efficient and productive with
 the process of deciding on the appropriate course of action for resources.
achieving organizational objectives.
Functional strategies are short-term operations carried out by each
 the managers develop corporate, business, and functional functional unit of a corporation in order to accomplish the broader, longer-
plans that are all vital for the well-being of the organization or term corporate and business objectives.
company.
 are distinguished from corporate and business level strategies
In the formulation phase of strategic management, three components or by three essential characteristics: (GSP)
levels of strategy development must be addressed, each with a different
focus. a) Greater specificity;

1. Corporate Level Strategy - concerned with big decisions concerning b) Shorter time horizon; and
the scope and direction of the entire organization in this area of strategy.
c) Primary involvement of operating managers.
 we analyze what changes should be made to our growth aim
and strategy for attaining it, as well as the areas of business we
are in and how they interact.
LESSON 2: BUSINESS VISION AND MISSION
3 aspects of company strategy: (DirPorPar)
A company's organizational purpose is defined by its vision and mission
a) Directional or Growth Strategy: (What should be our growth goal, statements. They constitute a "hierarchy of goals" when combined with
ranging from retrenchment to stability to varied degrees of expansion, and objectives.
how can we get there?)

b) Portfolio Strategy: (What should our line-of-business portfolio look like,

which implies rethinking how much concentration or diversity we should
have)

c) Parenting Strategy: (How do we allocate resources and manage skills

and activities throughout the portfolio - where do we place specific
emphasis, and how well do our different lines of business integrate?)

CORPORATE LEVEL STRATEGY INITIATIVES:

a) Taking the steps necessary to develop positions in several businesses

and achieve the proper level and type of diversification. Making judgments
about how many, what types, and which specific lines of business the company should be
in is an important part of corporate strategy.
After examining the external and internal environment, a clear vision aids
b) Taking steps to improve the company's overall performance by in the development of a mission statement, which in turn aids in the
diversifying its businesses. creation of strong objectives. Though the firm's vision, mission, and
objectives all represent its "strategic intent," each has its own unique
c) Trying to figure out how to turn important cross strategic fits into features and plays a vital part in strategic management.
competitive advantages. (such as transferring and sharing related technologies, procurement
clout, operating facilities, distribution routes, and/or customers.)

d) Establishing priorities in terms of investment.

VISION
“A mental representation of a feasible and desirable future condition of
2. Business Level Strategy (Competitive Strategy) - deciding how the
the organization” is how vision is defined (Bennis and Nanus).
organization will compete inside each LOB or Strategic Business Unit
 "a powerfully descriptive depiction of what a company aspires
(SBU).
to be in the future."
 the focus of the second part of a firm's strategy is on how to
compete successfully in each of the business lines that the  Top management's objectives for the company's direction and
company has chosen to pursue. emphasis are represented through vision.

 The main focus is on how to strengthen and improve the  A well-articulated vision shapes an organization's identity,
company's competitive position in each of its business areas. motivates managers, and positions the company for the future.

 Building unusually strong or distinctive competencies or  “A vision articulates a picture of a realistic, credible, and
competitive advantage. appealing future for the organization, one that is better in some
crucial respects than what currently exists.”
examples of distinguishing talents : better manufacturing technologies
and expertise, superior sales and distribution capabilities, and better  not only acts as a backdrop for the formulation of a firm's
customer service and convenience . purpose and strategy, but it also encourages personnel to
achieve it.
  A well-conceived vision, according to Collins and Porras, has Widely Used Approach in Developing Vision and Mission Statement
two essential components:
1. Select a few articles related to the statements and assign them to all
1. Core Ideology - founded on its enduring ideals (“what we stand for and
managers as background reading.
why we exist”), which are unaffected by environmental changes.
2. Envisioned Future - made up of a long-term objective (what we want to 2. Request that managers draft a vision and purpose statement for the
be, achieve, and create) that necessitates major change and advancement. company. These should then be merged by a facilitator or a committee of
top executives.

Example of a Vision Statement 3. Write statements into a single document and send them to everyone
The vision of Procter & Gamble is to be and be known as the top managers.
consumer goods firm in the world.
4. A request for changes, additions, and deletions is required next, as well
as includes a meeting to discuss the document's revisions.
MISSION
A declaration of an organization's reason for existing. The process of crafting a mission statement should foster an emotional
 an enduring statement of purpose that separates one connection and sense of purpose between the firm and its personnel. An
organization from others with similar missions. emotional link is formed when a person personally identifies with a
company's core beliefs and actions, transforming intellectual agreement
 provides a solution to the crucial question, "What is our and strategy commitment into a sense of mission.
business?" For efficiently creating objectives and formulating
strategies, a clear mission statement is required. Five (5) Benefits of Having a Clear Vision and Mission Statement

1. Ensure that all management and staff are on the same page.
Characteristics of a Mission Statement
2. Give instructions.
 Does not include monetary quantities, numbers, percentages,
ratios, or objectives; broad in scope 3. Create a focal point for all of the company's stakeholders.

 Does not exceed 250 words 4. Resolve differences of opinion among management.

5. Encourage all managers and staff to have a sense of shared

 Serves as an inspiration for the members of the organization
expectations.
(inspiring)

Goals and Objectives

 Identifies what the products of the business or organization are
for
Goals - desired outcomes
 Reveals the social responsibilities played by the organization. Objectives - particular actions and measurable procedures that must be
taken to accomplish a goal.

To be successful, goals and objectives must work together. You run the
danger of not achieving your aims if you set goals without specific
objectives.

DISTINCTIONS BETWEEN GOALS AND OBJECTIVES:

Alignment and Order:

Goals - set to achieve an organization's or individual's mission.

Objectives - created to achieve goals.

As a result, goals take precedence over objectives.

Scope: Goals - broad intentions that are frequently impossible to measure

in quantifiable units and are broader than objectives, which are stated in
terms of specific actions.

Specificity:

Goals - broad assertions of what should be accomplished.

 don't identify the tasks that must be completed in order to

achieve them.

Objectives - precise acts done within a specific timeline.

Tangibility:

Objectives - specified in terms of quantifiable targets

Goals - intangible and non-measurable.

Timeframe: External Audit - to come up with a short list of opportunities and threats
that a company should be aware of.
Goals - set to be achieved over a lengthy period of time
 does not try to produce an exhaustive list of every possible
Objectives - set for a shorter period of time. aspect that could influence the firm; rather, it aims to identify
essential variables that provide actionable solutions, as the
A goal is frequently broken down into various objectives that are term finite suggests.
stretched out over several time frames.
Firms should be able to respond to the elements either
Language: offensively or defensively by devising strategies that take
advantage of external possibilities or mitigate the impact of
The language used to describe goals is more conceptual prospective threats.

The language used to describe objectives is more creative. FIVE MAIN CATEGORIES OF KEY EXTERNAL AUDIT:
(EcoDemPoliComTech)

1. Economic Forces;
LESSON 3: STRATEGY ANALYSIS AND CHOICE
2. Demographic, Social Cultural and Environmental Forces;
A large portion of strategy analysis and selection is making subjective
judgments based on empirical facts. 3. Political, Legal and Governmental Forces;

"Strategic management is not a box of tricks or a bundle of techniques. It 4. Competitive Forces; and
is analytical thinking and commitment of resources to action. But
quantification alone is not planning. Some of the most important issues in 5. Technological Forces
strategic management cannot be quantified at all."

The goal of strategy analysis and selection is to identify various courses

of action that will best enable the company to achieve its mission and 4. Consider and Discuss in a series of meetings the alternative strategies
goals. proposed by participants;

The firm's current strategies, objectives, and mission, as well as 5. Put into writing the proposed strategies; and
information from external and internal audits, serve as a foundation for
developing and analyzing viable alternative strategies. 6. Rank the strategies

Generating and selecting strategies involve the following process:

1. Create a manageable list of the most appealing alternative techniques;

2. Determine the advantages, disadvantages, trade-offs, costs, and

benefits of the strategies identified;

3. Identify and evaluate alternative strategies.

Internal Audit: determines the organization's standing within its industry

in strategic management.

 This process, which typically includes of at least one, if not a

mix of, various analytical techniques, is critical for establishing
and maintaining a sustainable competitive edge.

The internal audit may include:

o GAP Analysis - sort of internal audit that measures the

difference between the current state of the company and
the desired state. This could be as a result of poor
customer service, sales, or production.

Organizational leaders - will set strategic objectives to

close the gap.

o SWOT Analysis

o Cultural Analysis - an analysis which assesses the

organization's current culture and identifies which areas
need to change in order to best support strategic goals.

o Diversity Audit: comprehensive examination of an

organization's hiring processes in relation to the diversity
of its workforce. The audit is conducted by either an
internal team or an external contractor.