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Organizations, like all living systems, can survive only to the extent that they maintain harmony with their external environment. This includes being sensitive to the evolving needs and perceptions of customers, understanding changes occurring in technologies, knowing what the competition is doing and knowing the legal, social and political climates. Most organizations eventually die because they fail to maintain a responsive attitude towards their environment.



1. Strategic and Business Planning

  • Strategic planning

    Strategic planning looks outward to establish the context in which the organization or business unit will operate with respect to its defined mission, and to set the vision for a desired future state.

  • Business planning

    Business planning looks inward to organize available resources in pursuit of the vision. Both levels of planning rely on definitive objectives and quantitative measures of performance to guide and monitor progress.

2. Three Key Strategic Questions

  • Where is the organization now?

  • If no changes are made, where will the organization be in one, two, five or ten years? Are the answers acceptable?

  • If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved?

3. Composition of Strategic Management

  • Strategic Management is Composed of

    • Environmental scanning

    • Strategy formulation

    • Strategy implementation

    • Evaluation and control

4. Basic Elements of the Strategic Management Process


5. Strategic Management Model


6. Environmental Variables

  • Societal Environment PEST

    • Composed of general Economical forces in environment (Political -– Social - Technological

  • Task Environment

    • Groups in environment that directly affect or are affected by the organization’s operations
      (Often called industry)

  • Structure

    • The way an Organization is organized in terms of communication, authority, and workflow

  • Organization Culture

    • Collection of beliefs, expectations, and values learned and shared by members and transmitted from one generation of employees to another

  • Resources

    • An asset, competency, process, skill, or knowledge controlled by the corporation




7. Definition of Strategy Formulation

  • Strategy Formulation

    • The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of the organization strengths and weaknesses

  • Composed of

    • Vision/ Mission

    • Objectives

    • Strategies

    • Policies

8. Definition of Vision

  • The vision provides a description of what the organization will evolve into in the future. It states what the organization wants to become & where it wants to go.

  • There is one universal rule of planning: You will never be greater than the vision that guides you.

9. Definition of Mission

  • The purpose or reason for the organization’s existence and

  • What it must do to justify its existence

    • Products & Service offered & Areas of specialization

    • Nature & location of business's marketing territory

    • Clientele served & Stakeholders & How we will satisfy them

    • Core Values: Ethical, Professional, Social

It may be narrow or broad in scope

Narrow                                      Broad

Railroad                                      Transportation
Insurance                                    Financial Services


10. What Should be in a Mission Statement?

10.1 The Purpose Statement

  • The purpose statement clearly states what your organization seeks to accomplish:

  • Why does your organization exist?

  • What is the ultimate result of your work?

  • Purpose statements usually include two phrases:

    • an infinitive that indicates a change in status, such as to increase, to decrease, to prevent, to eliminate

    • an identification of the problem or condition to be changed

10.2 The Business Statement

  • This statement outlines the business your organization chooses in order to pursue its purpose.

  • Specifically, you must answer, "What activity are we going to do to accomplish our purpose?"

  • Business statements often include the verb "to provide" or link a purpose statement with the words "by" or "through."

  • A cautionary note: If the word "and" is in your purpose or business statement, ask yourselves, "Are we really committed to both ideas connected by the word" and, "or have we simply not been able to accept that one idea is more important?"

10.3 Statement of Values

  • Organization's Core Values, Believes & Behavioral Standards. There are three groups of values: ethical values, Professional values, Public & society values

  • Ethical values:

    Integrity, Honesty & Impartiality etc.

  • Professional values:

    Maximizing stakeholders value added, Innovation, Quality, Flexibility & Responsiveness, Partnership, Continuous Improvement etc.

  • Public & Society Values:

    responsibilities towards our society, environment, Social & Legal Responsibilities

11. Definition of Objectives

  • The end results of planned activity. They state WHAT is to be accomplished by WHEN. They should be quantified, if possible.

11.1 Areas in Which to Set Objectives

  • Profitability

  • Contributions to employees

  • Efficiency

  • Contributions to society

  • Shareholder wealth

  • Market leadership

  • Growth

  • Technological leadership

  • Utilization of resources

  • Survival

  • Reputation

  • Personal needs of management

11.2 Objectives should be

  • Relevant

  • Able to provide balance

  • Practical

  • Able to provide contingency

  • Challenging

  • Ranked in order of importance

  • Measurable

  • Clearly stated

  • Schedulable

  • Realistically stated

  • Flexible

  • Innovative

  • Timely

  • Limited in number

  • Show growth

  • Cost effective

12. Making Goal Setting Effective

  1. Managers should understand the purposes of goals.

  2. Goals should be properly stated.

    1. They should be specific.

    2. They should be concise.

    3. They should be time-related.

  3. Goals should be horizontally and vertically consistent.

  4. Managers must accept and be committed to the goals.

  5. The goal-setting process should be integrated with the reward system, but it should also have a diagnostic component.

14. Definition of Strategy Implementation

  • The process of putting strategies and policies into action through the development of

    • Programs

    • Budgets

    • Procedures

15. Main Elements of Strategic Audit

  1. Current Situation

    1. Performance

    2. Strategic Posture

  2. Corporate Governance

    1. Board of Directors

    2. Top Management

  3. External Environment

    1. Societal

    2. Task (Industry)

    3. Opportunities and Threats (EFAS)

  4. Internal Environment

    1. Structureb. Culture

    2. Resources (Mkt, Fin, R&D, Etc.)

    3. Strengths and Weaknesses (IFAS)

  5. Analysis of Strategic Factors

    1. SWOT Analysis (SFAS)

    2. Review Mission and Objectives

  6. Strategic Alternatives and Recommendations

    1. Alternatives

    2. Recommended Strategy

  7. Implementation

    1. Programs

    2. Budgets

    3. Procedures

  8. Evaluation and Control

    1. Adequate Information System

    2. Adequate Control Measures