Mapili, Pamela April M.

3rd yr, BS-ACCOUNTANCY

BUSINESS POLICY AND STRATEGY

DISCUSS : STRATEGIC MANAGEMENT PROCESS by explaining extensively the

following:
1. Situational Analysis
When the company identifies its vision and mission it must assess its
current situation in the market. This includes evaluating an organizations external
and internal environments and analyzing its competitors.

During an external environment analysis managers look into the key external forces:
macro & micro environments and competition. PEST or PESTEL frameworks represent
all the macro environment factors that influence the organization in the global
environment. Micro environment affects the company in its industry. It is analyzed
using Porters 5 Forces Framework.

Competition is another uncontrollable external force that influences the

company. A good example of this was when Apple released its IPod and shook the
mp3 players industry, including its leading performer Sony. Firms assess their
competitors using competitors profile matrix and benchmarking to evaluate their
strengths, weaknesses and level of performance.

Internal analysis includes the assessment of the companys resources, core

competencies and activities. An organization holds both tangible resources: capital,
land, equipment, and intangible resources: culture, brand equity, knowledge, patents,
copyrights and trademarks. A firms core competencies may be superior skills in
customer relationship or efficient supply chain management. When analyzing the
companys activities managers look into the value chain and the whole production
process.

As a result, situation analysis identifies strengths, weaknesses, opportunities

and threats for the organization and reveals a clear picture of companys situation in
the market.

2. Strategy Formulation
Strategy formulation is the process by which an organization chooses
the most appropriate courses of action to achieve its defined goals. This process is
essential to an organizations success, because it provides a framework for the
actions that will lead to the anticipated results. Strategic plans should be
communicated to all employees so that they are aware of the organizations
objectives, mission, and purpose. Strategy formulation forces an organization to
carefully look at the changing environment and to be possible changes that may
occur. A strategic plan also enables an organization to evaluate its resources, allocate
budgets, andd determine the most effective plan for maximizing ROI (return on
investment).

OPERATIONAL STRATEGY refers to the methods companies use to reach their

objectives. By developing operational strategies, a company can examine and
implement effective and efficient systems for using resources, personnel and the
work process.
 COMPETITIVE STRATEGY is defined as the long term plan of a particular
company in order to gaincompetitive advantage over its competitors in the industry.
It is aimed at creating defensive position in an industry and generating a superior ROI
(Return on Investment).

CORPORATE STRATEGY is the direction an organization takes with the

objective of achieving business success in the long term. Recent approaches have
focused on the need for companies to adapt to and anticipate changes in the
business environment, i.e. a flexible strategy.

3. Strategy Implementation
Strategic implementation put simply is the process that puts plans and
strategies into action to reach goals. A strategic plan is a written document that lays
out the plans of the business to reach goals, but will sit forgotten without strategic
implementation. The implementation makes the companys plans happen.

4. Evaluation and Control

The final stage in strategic management is strategy evaluation and
Control. All strategies are subject to future modification because internal and external
factors are constantly changing. In the strategy evaluation and control process
managers determine whether the chosen strategy is achieving the organizations
objectives. The fundamental strategy evaluation and control activities are: reviewing
internal and external factors that are the bases for current strategies, measuring
performance, and taking corrective actions

EXPLAIN : Planning phases in Strategic Management

Phase 1- Planning Financial Aspects
This is the phase wherein financial data is planned usually for the
whole year. Basically,there is no strategic management in this phase.

Phase 2- Forecasting
This is the phase wherein the long term plans are formulated. It usually takes
three to five years

Phase 3- External Planning

This is the phase where formulation for the company on a five year
period are made. This phase is usually the task of the top management.
Lower management only takes place here on the implementation period.

Phase 4- Strategic Management

This is the phase where the strategies that are formulated will be
worthless if the the employees are not committed. This is the phase where
strategic plans in detailed take place. Usually, it is the detailed phase of phase
 3. This phase provides possible scenarios and accompanying contingent
measures.

POINT OUT THE ROLE OF INFORMATION TECHNOLOGY IN STRATEGIC MANAGEMENT

Information technology reduces the need for physical and official places and
makes it possible to carry out organizational activities remotely. Using Internet, it is
possible to establish communication with a large number of providers of raw
materials and half-made products all over the world, choose the best price offered
and then sign a contract. Networks also have an important role to play in the
outsourcing of an organization. An organizational activity is said to have been
devolved when it can create the highest value in the value chain and carry out those
activities for which it has sufficient core competency. In consequence, the products
and services which are offered, are not produced by a particular organization, but is
produced by a collection of interconnected organizations.

Information technology can create competitive advantage for an organization

and improve its competitive position in the market Organizations can achieve
sustainable competitive advantage using information technology in an appropriate
way to answer business requirements. Organizations have to know how to apply this
technology in their own organizational processes and activities. This awareness is
vital to the organizational success. Evidences indicate that implementation of
successful business strategies using information technology has led to the
improvement of organizational efficiency and effectiveness

IT has changed the structures and organizational processes. This

technology has caused organizations to become small, decreased the number of
staffs and organizational level, extended inside and outside organizational
communication and also decreased communication costs The difference among
organizations in profitability and optimum performance is more due to the difference
in managerial skills rather than a difference at the level of information technology.
Managers, who are able to organize and manage separate activities better than
others by the use of information technology through an appropriate proportion and
relation, will experience a higher level of profitability and amore optimum
performance