BUS111 Strategic Management PDF

**BUS111** **STRATEGIC MANAGEMENT** - Is the art and science of formulating, implementing and evaluation cross-functional decisions that enable the organizations to achieve its goal. **BASIC ELEMENTS OF STRATEGIC MANAGEMENT:** - **Environmental scanning** - Comparison of the threats and opp...

**BUS111** **STRATEGIC MANAGEMENT** - Is the art and science of formulating, implementing and evaluation cross-functional decisions that enable the organizations to achieve its goal. **BASIC ELEMENTS OF STRATEGIC MANAGEMENT:** - **Environmental scanning** - Comparison of the threats and opportunities of the organization in the external business environment. - **Strategy formulation** -- Long term plans for the proper management of environmental openings and fears of the business or company - **Strategy implementation** - Is taking action in order to attain the goals of the organization. - **Evaluation and control** - Requires an evaluation of the strategy to ascertain whether the actual outcome matches the expected outcome of the organizational goals. **Mission** - An organization's purpose or the reason for its survival. **Objective** - The outcomes of the planned functions. **STRATEGIES** - Is a broad masterplan expressing how a company will accomplish its mission and objectives, maximizing competitive advantages and minimizing competitive disadvantages. **POLICIES** - a comprehensive guideline for making decisions linking the formation and implementation of a strategy. **STRATEGIC MANAGEMENT MODEL** - it provides basic frame works for understanding how strategic management can be operationalized at the company level. **MAJOR TYPES OF ANALYSIS:** **[External analysis of the environment ]** **[Internal analysis of the organization ]** **[Industrial analysis]** **STRATEGIC MANAGEMENT** - Can increase a company's effectiveness, but owners must first have a procedure designed to meet their needs and their business's unique characteristics. **STRATEGIC MANAGEMENT PROCESS** - A systematic approach used by organizations to achieve their long-term goals and objectives. **STRATEGIC PLANNING** - It serves as a roadmap for achieving the organization\'s long-term goals and adapting to changes in the environment. **DRAWBACKS OF STRATEGIC PLANNING** - **[Difficult and time consuming]** - **[Immediate results are rarely obtained.]** - **[Quite often, limits the organization and executives to the more rational and risk-free options]** **corporate strategy -** is a general direction for the growth of [ ] multiple businesses (conglomerates) as defined in the corporation's vision and mission. **business unit strategy** - determines where and how a company should compete by creating a competitive market advantage to generate sustainable and profitable returns. **Functional-level strategies** - support business unit strategies and are confined within a department with set goals, objectives, and performance metrics. **Conglomerate** - Are composed of several businesses that compete and different industry. **Board of Directors** - On a corporate level, is responsible for setting and implementing the strategic plans and directions of the different companies or business units under its helm. **Strategic synergy** -- produces a result that is bigger than the sum of individual corporate organizations. **Board members and Executives** - Require a certain level of maturity, skills and talent and experience to effectively set the corporation's direction, and determine the resources to acquire, develop and dispose and compete in various industries it sees fit in its overall strategy. **Business unit strategies are implemented to** - **[capture previously untapped market segments;]** - **[penetrate new geographical locations, either locally or globally;]** - **[compete with a market leader; and]** - **[introduce new or improve existing products.]** **Cost leadership** - is building a competitive advantage by having the lowest operational cost among similar companies in the industry. **Positioning** - a business as a low-cost manufacturer or service provider places a severe burden on the firm because of the nonstop search for reducing costs to gain and regain market share. **differentiation strategy** - creates a competitive advantage with products that are unique and superior to a firm's competitors. **FOCUS STRATEGY** - Firms target a specific or narrow segment of the market or select customer groups with a focus or niche strategy. **Stability Strategy** - Companies avoid drastic changes to well-planned and managed long-term strategies (3-5 years). Activities are usually recalibrated or realigned to meet financial objectives and optimize growth. **growth strategy** - is a plan of action that allows a company to achieve a higher level of market share than it currently has. **A business implements growth strategies by**: a**. Market Penetration** --- increasing market share by acquiring new customers through intensive marketing efforts b\. **Market Development ---** introducing products to a new market that is either untapped or dominated by a competitor c**. Product Development** --- introducing new products other than its current product line to an existing market d**. Diversification -** Diversified companies, such as conglomerates and holding companies, may decide to grow their portfolio by moving or expanding to another industry other than the one it currently competes in. e\. **Horizontal Integration** --- acquiring a competitor or a business that complements the firm's business portfolio **The different types of diversification are:** - **Horizontal Diversification** --- providing new and unrelated products that existing customers may also need and benefit from - **Concentric Diversification** --- providing a new product to an existing or completely new market that is technologically like the firm\'s current products - **Conglomerate Diversification** --- used to diversify into completely new markets with unrelated products to reach new customer bases - **Vertical integration strategies** - are the degree to which a company controls the manufacturing of its inputs or suppliers, or the distribution of its outputs or end-products. **Two types of vertical strategy:** - **forward integration** - is a downstream vertical integration strategy where a company owns or controls product distribution in the supply value chain. - **backward integration** - is an upstream vertical integration strategy where a firm buys or takes control of another firm that provides the materials or services required for its finished goods. **Turnaround Strategies** - A business may experience significant declines in financial performance because of external (environmental, failing markets, technological disruptions) or internal factors (inefficient operations, quality issues, culture issues, productivity, or wrong management decisions). **The four types of turnaround strategies are:** - **Revenue-increasing strategies** - Given the firm's resources and understanding of the market, it seeks to achieve higher profits by increasing market share with the acquisition of new customers (market penetration), - **Cost-cutting strategies** - This is feasible if sales are near the break-even point, with high direct labor costs, high fixed expenses, or limited financial resources. - **Asset-reduction strategies**- This strategy is adopted if the business\' current sales are less than a third of its break-even point or close to bankruptcy. - **Downsizing strategies** - This strategy is adopted if the business\' current sales are less than a third of its break-even point or close to bankruptcy. - **Exit Strategies** - An exit strategy is the organization's strategic move to sell company ownership to an investor or to another company. **The two types of exit strategies** - **Divestiture** - is the sale or disposal of assets, product lines, intellectual property rights, or a company subsidiary or division in exchange for cash or securities (stock ownership in the acquiring company). - **Liquidation** - is the painful and unpleasant strategy of shutting down a company's operation by selling its remaining assets and distributing the proceeds to pay off debts during insolvency. **A business may decide to liquidate the company because of:** - **[unforeseen global and economic conditions]** - **[failure to innovate;]** - **[weak or dwindling market demand; ]** - **[weak leadership.]** **Strategic Alliances** - The independent parties enter a mutually advantageous partnership to offer new products and enter or expand into new markets to reach new client segments. **Joint Ventures** - It is a special type of partnership arrangement between two or more independent business entities that intend to undertake a particular project. **Licensing** - This is an agreement where a licensor grants a licensee the right to use or gain access to its intellectual property rights, such as manufacturing process, brand name, trademark, copyright, patent, and technology, in exchange for a fee or royalties subject to specific conditions. **Outsourcing** - It is either the transfer or delegation of a company's noncore business processes to a service provider. BUS3 Finance Corruption Bribery Embezzlement Nepotism Kickbacks State capture Recipient and payers Anti-graft and corruption -- criminalization active and passive bribery Practices act. - Revised penal code Anti -- money laundering act. Government Procurement reform Improvement of business ethics Unified code of conduct for business Code of ethics for the Philippine business The consumer act of the Philippines The food, drug and cosmetics The intellectual property code of the Philippines Risk management Risk assessment Business risk Default risk Liquidity risk Enumerate the 5 common risk identification method - Objective -- based risk - Scenario -- based risk - Taxanomy -- based risk - Common risk - Risk charting Enumerate the elements for the performance of assessment method - Identification, characterization and assessment of threats - Assessment of the vulnerability of critical assets to specific threats - Determination of the risk - Identification of ways to reduce those risk - Prioritization of risk reduction measures based on a strategy Enumerate the risk associated with investment Enumerate the interest of those effected by the activities of the business Enumerate the 2 purposes of the unified code of conduct for business BLAW **Kinds of obligations according to parties** - **Individual obligation** -- one where there is only one obligor and one oblige - **Collective obligation** -- one where there are two or more debtors and/or two or more creditors **Joint obligation** -- one where the whole obligation should be paid proportionately by the different debtor and creditor **Solidary obligation** -- where each one of the debtor is bound to render, and or each one of the creditors has a right to demand from any of the debtors, entire compliance with the prestation. **Kind of solidary** *According to bound* - **Passive solidarity** -- solidarity on the part of the debtor - **Active solidarity** -- solidarity on the part of the creditor - **Mixed solidarity**-- solidarity on the part of the debtor and the creditor *According to source* - **Conventional solidarity** -- where solidarity is agreed upon by the parties - **Real solidarity** -- where solidarity is imposed by the nature of the obligation - **Legal solidarity** -- where solidarity is imposed by the law *According to legal tie* - **Uniform** -- bound by the same stipulation - **Non -- uniform** -- not subject to the same stipulation A solidary creditor may do any act beneficial or useful to the others but he cannot perform any act prejudicial to them. The rule is that the debtor may pay any one of the solidary creditors but when a demand, judicial or extrajudicial, has been made by one of them, payment should be made to him. **Rules incase thing has been lost or prestation a become impossible** - **Loss is without fault and before delay** - **Loss is due to fault on the part of the solidary debtor** - **Loss is without fault but after delay** **Divisible obligation** -- capable of partial fulfillment **Indivisible obligation** -- not capable of partial fulfillment **Kind of division** - **Qualitative division** -- based on quality - **Quantitative division** -- based on quantity - **Ideal or intellectual divis**ion -- only exist on the minds **Kind of indivisible** - **Legal indivisibility --** where a specific provision of law - **Conventional** -- where the will of the parties - **Natural** -- where the nature of the object or prestation does not admit of division *Not to do* **Indivisible obligation** -- fulfilled continuously **Divisible obligation** -- not continuous **Principal obligation** -- one which can stand by itself **Accessory** -- one which is attached to a principal **Penal clause** -- is an accessory undertaking attached to an obligation to assume greater liability in case of breach. **Kinds of penal clause** *As to its origin* - **Legal penal clause** -- provided by law - **Conventional penal clause** -- provided by the stipulation of the parties *As to its purpose* - **Compensational** -- the penalty take the place of damages - **Punitive** -- when the penalty is imposed *As to its effects* - Subsidiary -- when only the penalty can be enforced - Joint -- when both the principal and penal clause can be enforced As a general rule in an obligation with a penal clause, the penalty takes place of the indemnity for damages and the payment if interest in case of non compliance. **When creditor may recover from damages** - When so stipulated by the parties - When obligor refuses to pay penalty - When obligor is guilty of fraud in the fulfillment of the obligation **When penalty may be reduced by the courts** - When there is partial or irregular performance - When the penalty agreed upon is iniquitous or unconscionable