Chapter 1

BASIC CONCEPTS IN BUSINESS POLICY AND STRATEGY

STRATEGIC MANAGEMENT PROCESS

 SITUATION ANALYSIS – This includes environmental scanning. It is also provide the

information necessary to formualte the company’s vision/mission statement. It involves
scanning and evaluating the organization, which also include the internal environment.

 Strategy Formulation- this involves the development of company strategies. Strategy

formulation is composed of three organizational level: operational, competitive, and
corporate.

Level of Strategy

Operational strategies- are short term and are associated with the various operational departments
of the company such as human resources, finance, marketing and production.

Competitive strategies- are those related to the techniques in competing in a certain industry.

Corporate- involved in providing decision for he organization.

 Strategy Impelmentation – this involves the development of procedures, programs and

activities to put the strategies into practice.

 STRATEGY EVALUATION- it includes appraising the company’s performance. All employees

are involved in strategy evaluation. There is always a need to modify strategies because the
environment is constantly changing.

STRATEGIC MANAGEMENT: PLANNING PHASES

 PHASE 1. PLANNING FINANCIAL ASPECTS – this usually the phase when financial data such
as next year’s budget is planned. Usually these data come from the sales people.,

 PHASE 2. FORECASTING- For long term planning, five years plan are made. Since managers
have different project to propose, they have a tendency to outdo each other in terms of
getting a larger share of the funds.

 PHASE 3. EXTERNAL PLANNING- This usually the task of the top management. Members of
top management gather and formulate strategies for the company on a five year period.

 PHASE 4. STRATEGIC MANAGEMENT- the strategies formulated will be worthless without

the commitment of all employees.

GLOBALIZATION

- Has changed the way people do business. As the name implies, globalizations is the
internationalizations of markets an corporations.
 - -to be competitive means a paradigm shift from looking at a global market instead of a local
market.

THE ELECTRONIC AGE

Electronic transaction refers to the various uses of the internet conducting business transactions.

1. The internet has become a force for companies to improve and enhance the way they
transact business.

2. Distribution channels have changed drastically through the years.

3. Customers have more power than ever.

4. 4. Firms are now exploring endless possibilities to inovate.

5. 5. Business pacing is increasing.

6. 6. The internet is putting corporation out of their traditional boundaries.

7. 7. Knowledge is a very important asset.

Organizational Adaption

 Aside from globalization and electronic commerce, a company should always be updated on
what is in store facets of the business environment.

 Population Ecology – explains that when a company is able to take hold of a formidable
position in the industry.

 Institution Theory – focuses on the more obvious and important aspects of the social
structure which include norms, rules and policies which form the basis for social behavior.

 Strategic Choice Perspective – theorizes that an organization not only adapts environment
but also tries to reshape environment.

 Organizational Learning Theory – uses knowledge as an important component for the

company to respond in a changing environment.

2 VIEWS OF ORGANIZATIONAL LEARNING THEORY

 Technical View- focus on the processing and preparation and interpretationof these process
to respond to both external and internal forces in the organizations.

 Social View – experiences of people including people at work and their relevance to
organizational performance.
Review questions:

1. What do you need for a good strategy?

2. How to implement different strategies?
3. How does globalization affect your business?
4. How to improve your strategy for the successful of your business?