Module 1 Strategic Management Model PDF

6A STRATEGIC MANAGEMENT MODEL LEARNING OBJECTIVES After completing this module, you are expected to: i. define strategic management; ii. identify each of the components of the strategic management process and its corresponding...

6A STRATEGIC MANAGEMENT MODEL LEARNING OBJECTIVES After completing this module, you are expected to: i. define strategic management; ii. identify each of the components of the strategic management process and its corresponding outcome; iii. identify the strategic management model; iv. differentiate strategic analysis from strategic decision-making, and strategic intelligence from strategic thinking; v. explain the meaning of strategic planning; vi. formulate a sample company vision, mission statement, and company goals and objectives; and vii. compare organization climate and organizational culture. Module 1 A Strategic Management Model LEARNING ACTIVITIES Individual Activity ASSESSMENT/EVALUATION I. Synchronous Test with time limit. Long test link will be provided through our group chat. This is a synchronous test with a time limit. II. Asynchronous Learning See: Individual Activity Below ASSIGNMENT Individual Assignments: 1. Define organizational vision using an example. 2. Why is the mission statement important to an organization? 3. Are organizational goals and objectives similar? In what way/s are they different? 4. What values/value system do you want an organization to demonstrate? Explain your answer. Strategic Guides: 1. Study the biography of Howard Schultz, CEO of Starbucks. Include his childhood, if there is something significant, his interests, his educational attainment, professional and career orientation, and other facts that might have contributed o the success he is enjoying now. 2. Study the beginnings of Starbucks, the challenges it encountered through the years, and its journey toward success. 3. From the management, result-driven, practical, and inspirational strategies implemented by Schultz at Starbucks, which struck you as something worth imitating? Explain your answer. Strategic Management Defined Strategic management is a continuous process of strategy creation. It involves strategic processes like strategic analysis and decision-making, strategy formulation and implementation, and strategy control with the primary objectives of achieving and maintaining better alignment of corporate policies, priorities, and success. Strategic analysis consists of a systematic evaluation of variables currently existing in the external and internal environments while strategic decision-making is deliberately bringing together the right resources for the right markets at the right time. Strategy formulation is designing strategies on the business and corporate levels. Strategy implementation is employing these crafted strategies to achieve organizational set goals and objectives while strategic control is the application of an appropriate monitoring and feedback system. Defined as the science of creating, executing, and evaluating cross-functional decisions to enable an organization to achieve its goals and objectives, the components of the strategic management process have to be effective. As shown in Figure 1.1, output may materialize when each of the components of the strategic management process is appropriately executed. Figure 1.1 The Strategic Management Process If strategic analysis is accurately conducted, organizations can develop strategic intelligence. Like an antenna, strategic intelligence is the capability of an organization to possess relevant and related knowledge, abilities, foresight, and systems thinking, such that it is able to assess its own strengths and vulnerabilities, the pressing challenges confronting the organization, as well as the trends and opportunities existing in the environment. If strategic decision-making is correctly effected, organizations can acquire the capability of thinking strategically. Strategic thinking is the cognitive process of competently and analytically weighing factors and arriving at critical decisions in the context of the current milieu of which an organization is part. If strategy formulation is uniquely designed and effectively communicated, organizations have greater possibilities of attaining organizational competitiveness. Organizational competitiveness pertains to the ability of any business/company to utilize its resources optimally and sustainable for maximum performance and productivity. If strategy implementation is efficiently employed, organizations can achieve comparative advantage. Comparative advantage refers to the ability of an organization to produce a particular good or service at lower marginal and opportunity costs than its competitors. If strategic control is productively monitored, organizations can realize strategic performance. Strategic performance is the accomplishment of a high level of productivity that is characterized by efficiency in the context of lean and quantifiable management. Thus, the strategic management model is illustrated as follows:  Figure 1.2 A Strategic Management Model The strategic management model (Figure 1.2) shows the relationships between and among the input, process, and output. The input in this model includes organizational variables like management and employees, financial resources, facilities and equipment, infrastructures, and processes. The strategic management process consists strategic analysis, strategic decision-making, strategy formulation, strategy implementation, and strategic control. When these specific processes are executed and managed creatively, distinctly, and strategically, the organization can ultimately achieve organizational success. In particular, the output is exhibited in the strategic intelligence acquired, strategic thinking mode developed, organizational competitiveness, comparative advantage, and strategic performance attained by the organization. Strategic Planning Oftentimes, the word strategic planning is more popular than strategic management. Essentially, these two words are the same. In terms of purpose, both strategic management and strategic planning have the same goals and objectives, that is, to devise a strategic mode of preparing, addressing, and steering organizations to where they want to go. Particularly, both undertakings endeavor to understand the strategic position of organizations-their set goals, preferred choices, and deliberate and calculated strategies. Furthermore, both strategic management and strategic planning use the same processes to attain their goals. On the other hand, strategic management differs from strategic planning, in that the former is tackled in the context of an academic environment where it is approached and treated theoretically while the latter is the buzzword in the business world. Practitioners and organizations conduct strategic planning yearly or as often as they feel the need to do so. Secondly, strategic management generally presents all the possible strategic approaches and techniques that organizations can avail of. It is conducted with a view of the individuality and distinctiveness of the organization, its current condition, specific needs, and desired outcomes. In this way, we can say that strategic management is the springboard of strategic planning. Strategic management is a generic approach while strategic planning is a distinct and focused approach that is unique to the specific organization. Strategic planning is defined as a continuous, repetitive, and competitive process of setting the goals and objectives that an organization aims to attain, defining the means to achieve them, and assessing the best way to realize them in the context of the prevailing environment while measuring performance through set standards, and periodically but continuously conducting reassessments. Strategic planning exhibits the following properties: 1. It generates the blueprint of what the organization intends to accomplish. 2. The strategic plan presents the grand scheme of the organization and outlines all the set activities, ranging from the organizational to the departmental level. It formalizes all plans with respect to type and extent. 3. It is the process of developing a strategic fit between the organization's goals and capabilities in the context of changing opportunities. 4. It is a process that involves carefully defined steps. As stated in the definition, strategic planning is structured, in that it begins with reviewing the environment, setting goals, adopting and monitoring strategies, and continuously redesigning them as the needs arise. 5. It is proactive, in that it is written in the context of anticipated future realities. Strategic planning does not make future decisions. Instead, plans are made in anticipation of future changes and developments. 6. It is a philosophy because it evolves a dynamic way of conducting and managing an organization. Strategic planning involves a unique a way of thinking and doing things. It is an intellectual exercise that embraces a belief that convinces organizations of their worth and importance. In other words, values are integrated within the philosophy of an evolving organizational culture. 7. It links the organizational plan with functional and operational plans. Strategic planning speaks of two types of planning: (a) the organizational grand plan; and (b) the departmental tactical plans. 8. It is intricately interwoven within the defined managerial functions of organizing, directing, staffing, and controlling. Although strategic planning is a strictly formal and separate function of management, it is subtly intertwined in all the other functions and responsibilities of a manager. In other words, no manager can fully accomplish his/her responsibilities effectively if strategic planning is disregarded or overlooked. 9. It necessitates the leadership and support of top management and, at the same time, employee participation and commitment. Successful implementation of strategic planning is largely dependent on responsibility, support, and sustained leadership coupled with acceptance and involvement of employees. There should be synergistic interrelationships between departments and intra-relationships within departments. Types of Strategic Plans There are two principal types of plans: 1.Medium/long-range plan - prepared in the context of the coming three to five, ten or more years. It describes the major factors or forces that affect the organization's long-term objectives, strategies, and resources required. 2.Annual/yearly plan - short-term; briefly describes the organization's present situation, its goals and objectives, strategies, monitoring mechanisms, and the budget for the year ahead. Whether the plan is long-range or annual, it can be strategic when the organization formulates its action plans and takes advantage of opportunities in the constantly changing environment while maintaining a tactical alignment between the organization's goals, capabilities, and opportunities. The steps involved in strategic planning are iterative, cyclic, and integrative. They include: 1. making a situation audit to ascertain where the organization is today; 2. stating the respective goals and objectives of the organization, the values and value systems it espouses, its business definition, and its corresponding strategy statements to determine where it wants to go; 3. describing appropriate strategies to be carried out in order to help direct the organization to where it wants to be; 4. identifying and then choosing the soundest strategy to determine the best way for the organization to be where it wants to be and to achieve its goals; 5. monitoring the implementation of strategies to measure performances; and  6. conducting periodic and continuous reassessments in order to implement improvements and suggested changes. The steps in strategic planning will be tackled in detail in the next chapters. Initially, an organization conducts an environmental scanning to determine where it is today. Then, with respect to the organization's vision, mission, goals, and objectives, as well as its value system, appropriate strategies are identified to help direct the organization to where it wants to go. There can be more than one strategy of choice. Once the studied strategies are enumerated, the best strategy that will significantly bring about the achievement of desired outcomes is specified for implementation. Associated to the process of implementing the strategy/strategies, the monitoring system has to be set in place. Periodic assessments then follow to determine whether the chosen strategies were worthwhile and effective. Need for Strategic Planning Why is there a need for strategic planning? The reality of dynamism, complexity, and hypercompetition characterizes today's environment. To survive, organizations need to plan carefully their strategic approaches. Therefore, strategic plans have to be prepared purposefully for effective and efficient implementation, thus, leading to the attainment of their set objectives. The benefits of designing and putting into effect a strategic plan cannot be overemphasized. Strengths and Limitations of Strategic Planning Strategic planning defines an organization's vision, mission, and set objectives. It provides organizations the opportunity to assess the environment and specify strategies to achieve their goals. Strategic planning helps organizations to stay focused. It makes things happen. Furthermore, strategic planning helps reduce the chances of committing mistakes, thus, increasing the organization's efficiency. Strategic planning helps in the more efficient allocation of organizational resources, better collaboration among cross-departmental employees and functional units, and communication between managers/supervisors of all levels. Lastly, when cautiously, clearly, and proactively undertaken, strategic planning provides leverage and competitive advantage to the organization. While strategic planning has its advantages, it also has its limitations. Although conducted yearly or even more often, the strategic plans prepared in some instances are good only "in paper." Some organizations fail to follow faithfully their prepared strategic plans. If in cases these strategic plans are followed religiously, some organizations may not be flexible enough to make the needed adjustments and realignments due to inevitable or forthcoming external or internal challenges. Similarly, conducting strategic planning sessions may entail costs that can be expensive to organizations. Organizational Vision To help organizations achieve strategic direction, they need to articulate and have a commonality in vision, mission, and goals. The interrelationships between and among these three variables are essential in the organizations' thrust of achieving competitiveness. The organizational vision is an inspirational statement of what the organization hopes to achieve at some point in the future. It is the image of what an organization desires to achieve. It is short and succinct, but it carries an extraordinary force that will stir, motivate, and inspire employees to work and refocus toward its desired optimal future state. Having a strong sense of vision can move the organization to be what it wants to be. Like an unseen force, the organizational vision binds the company and its employees together. An example of a vision statement is: "An educational institution ablaze with the Spirit of Excellence." This is the vision statement of the educational institution, College of the Holy Spirit Manila. The statement energizes the administrators, faculty, students, and staff. It brings singleness in their desire and coherence in their efforts. Although difficult and in fact, not measurable, the organizational vision is an effective mode of binding everyone to a company’s ultimate goal. Mission Statement  The mission statement differs from the organizational vision. The mission statement defines the current purpose of an organization; it answers what the organization does, for whom it is done, and how it does what it does. The mission statement of the College of the Holy Spirit Manila is as follows: "We build, through Christian and holistic formation, new generations of responsible citizens who are agents of transformation." Here, what the organization does is "to build"; it does this "for new generations of responsible citizens"; and how it does what it does is "through Christian and holistic formation." Mission statements are likewise short and easy to remember. It gives employees a better perspective on how their tasks contribute to the attainment of organizational goals. Oftentimes, vision statements are more enduring compared to mission statements. Mission statements are expected to change in the context of shifting economic realities or unexpected circumstances like challenges, threats, and even opportunities. Organizational Goals and Objectives To operationalize the mission statement, organizational goals and objectives are defined. All organizations have set goals. These are referred to as organizational goals. Organizational goals are pursued to make the specified strategies succeed. They vary and are essentially dependent on their respective purpose and direction. One of the implied basic goals of any organization is to use economic resources efficiently and effectively such that survival, if not profit, is at least secured, thus, ensuring the continuity of the organization. Goals are macro, encompassing in perspective, and prospective in nature. In fact goals represent the overall vision of an organization. By their very nature, goals have the following properties: 1. Goals provide organizations focus and direction. They neatly converge toward the purpose of any firm, thus streamlining all unnecessary and redundant considerations. 2. Goals move to organizations action. Because goals have to be attained, organizations are motivated to function and perform toward their vision. 3. Goals develop in organizations the trait of persistence. Thus, organizations continue to persevere until they achieve their desired success. Nevertheless, for goals to be attained, they have to be supported by objectives. Objectives are different from goals; in that they are micro and specific in perspective. They should possess the following characteristics:  1. Objectives need to be clearly defined and formulated, carefully chosen, specific, and definite. 2. Objectives may be immediate or short-term. 3. They need to need be prioritized into a hierarchy of objectives. 4. Objectives need to be realistic and attainable. They need to be flexible, consistent, and strategic. 5. Objectives need to be measurable over time. The relationship between goals and objectives can be concretely illustrated as follows: Organizations have overall goals referred to as the organizational goal. To support and achieve this grand goal, objectives are enumerated. These mentioned objectives are actually the goals of the respective departments or business units that will likewise have their own objectives. Because of these interrelationships, objectives need to be consistently aligned and be within the framework of the given goal. Strategic objectives are, in general externally focused. According to Peter Drucker (2008), objectives fall into eight major classifications: 1. Market standing (e.g., desired share of the current and new markets); 2. Innovation (e.g., development of new goods, services, and of skills and methods required to supply them); 3. Human resources (e.g., selection and development of employees); 4. Financial resources (e.g., identification of sources of capital and their uses); 5. Physical resources (e.g., equipment and facilities and their uses); 6. Productivity (e.g., efficient use of the resources relative to output); 7. Social responsibility (e.g., awareness and responsiveness to the effects on the community of the stakeholders); and 8. Profit requirements (e.g., achievement of measurable financial well-being and growth). Values and Value System Organizations are guided by values, which vary from one organization to another. Values are inherent roots of motivation within an individual, an organization, a community, or a nation. They are by nature, ingrained and thus, are more stable and enduring. They are both intellectual and behavioral, serving as bases for the organization's actions and way of thinking. Values are generally exhibited in two different ways, namely, beliefs and attitudes. More particularly, beliefs are cognitive manifestations while attitudes are characteristically behavioral. They are fundamental and intricately integrated in the particular organization's value system. Take note that the values projected by organizations are largely dependent on any or all of the following: the stockholders, the Board of Directors, and the top management. Strictly speaking, the values of an organization are not synonymous to its value system. The value system is characteristically broader in scope; aside from values, it includes other variables such as the organization's dreams, aspirations, interests, expectations, philosophies, as well as leadership and management styles and ethical practices. Moreover, the value system indicates the hierarchy of values ranked by organizations. Because values are distinct, they differ from one organization to another. This explains why one organization may be perceived as socially and community-active, while another is business-oriented. Hence, the importance of these value qualities and value systems for organizations cannot be underestimated. Organizational Climate and Culture The concepts of organizational climate and culture are interrelated, interdependent, and sequential. They are interrelated, in that organizational climate is often defined as the regular and repetitive patterns of attitudes and behavior exhibited by employees of an organization. It is a measure of the health of an organization. It manifests whether its employees are happy, hardworking, and motivated, or otherwise; whether good interpersonal relationships exist between and among different levels of management; and whether the work environment is acceptable and conducive to productivity. Organizational climate is easier to assess and change. It lends to flexibility. It precedes and somehow contributes to the solidification of the culture of an organization. On the other hand, organizational culture has been variously defined (Hofstede 1980a; Schein 1990). Organizational culture denotes a wide range of social phenomena, including an organization's customary dress, language, behavior, beliefs, values, symbols of status and authority, myths, ceremonies and rituals, and modes of deference and subversion; all of which help to define an organization's character and norms (Scott et al. 2003). Culture, in the sense that it is used here, can be understood as an idealized system (Schein 1999) because a system focuses on types of meanings represented by values, formal rules, knowledge, beliefs, and expressive forms (Pettigrew 1990; Parker 1992; Patrick 2010). The conceptual aspect perceives organizational culture as a system of knowledge and common values which can be exhibited and evaluated similarly by people even with different backgrounds and at different levels within the organization. Thus, organizational culture is more solid, stable, and long-term because it presents the organization's culture from its inception to where it is, showing how the culture of an organization evolved through the years. Unique, the organizational culture is largely and generally influenced by the leadership of the top management. In summary, vision projects the image that an organization wants to attain. It is reinforced by the mission statement that specifies how the organization intends to actualize this vision. Thus, goals and objectives are clearly enumerated. Furthermore, any organization has its own value system that inevitably becomes part of its organizational culture. END OF MODULE 1 A Strategic Management Model