BASIC CONCEPTS IN

BUSINESS POLICY AND

STRATEGY
by:
Misan E. Valdeviezo
Ruby M. Topis
Jazel K. Medel
What is Strategic Management?
a set of management decisions and actions that
determines the long-run performance of a
corporation. It includes environmental scanning,
strategy formulation, strategy implementation and
evaluation and control to achieve the objectives
of an organization.

The study of strategic management emphasizes

the monitoring and evaluating of external
opportunities and threats in light of a
corporation’s strengths and weaknesses.
What is Strategic Management?
 As per Fred R. David, strategic management is
an art and science of formulating, implementing
and evaluating cross functional decisions that
enable an organization to achieve its objectives.

As per Channon, strategic management is

defined as that set of decisions and actions that
result in formulating of strategy an its
implementation to achieve the objectives of the
corporation.
What is Strategic Management?
• Most important part is developing strategic plans
• Plans must remain current as changes occur inside and
outside the company
• Involves many levels of management
• Top level formally develops basic plans
• Different departments may be asked to develop plans
for their own areas
• A solid plan guarantees that plans are coordinated and
are supported by everyone in the company
What is Strategic Management?
 Strategic Management includes all the
decisions and actions set by the
managers and provides a gauge on the
performance of a particular organization.
Strategic Management Process
• Strategy Analysis
• Formulation
• Developing the strategic plan
• Implementation
• Putting the formulated plan to work
• Evaluation
• Continuously evaluating and updating the strategic
plan
Formulating Strategy
Developing the grand- and business-level
strategies to be used by the company
• Company’s strengths/weaknesses and
threats/opportunities shape the strategies
• First step is to understand the current position of
the company
• Identify mission, identify past and present strategies,
diagnose the company’s past and present performance,
set objectives for the company’s operation
Formulating Strategy
• Identify the mission statement
• Outlines why the company exists
• Describes the company’s basic products and/or
services and defines markets and sources of
revenue
• Designed to accomplish several goals and
ensures a common purpose within the company
Identifying Past and Present Strategies
• Companies need to understand and
appreciate their corporate history
• Strategic managers should ask
• Has past strategy been developed?
• If not, can past history of the company be analyzed to
identify the strategy that has evolved?
• If yes, has the strategy been recorded in writing?
Diagnosing Past and Present
Performance
• A corporate planner must decide if past
strategies worked and if strategic changes
are needed by asking:
• How is the company currently performing?
• How has it performed during the past few
years?
• Is the performance trend moving up or down?
Setting Goals
• Concise statements that provide direction
employees and set standards for achieving
the company’s strategic plan
• Established in many areas (see handout)
• Goals must be reevaluated as the
environment and opportunities change
• Multiple goals are used to reflect the
desired performance
Policies, Procedures, and Rules
• Policies are broad general guides to action
that establish boundaries within which
employees must operate
• “answering all written customer complaints in
writing within 10 days”
Policies, Procedures, and Rules
• Procedures are detailed series of related
steps/tasks written to implement a policy
• Define methods through which policies are achieved
• “the customer service representative must note the
complaint of Form 622 and forward the yellow copy of
the form…”
• Rules detail specific and definite corporate
actions that employees must follow
• Leave little doubt about what is to be done
• “no smoking in the conference room”
Implementing Strategy
• Action stage of strategic management
• Managers determine and implement the
most appropriate company structure,
motivate employees, develop short-range
goals, and establish functional strategies
• Strategy must fit with current company
policies
• Or conflicting policies must be changed
Evaluating and Controlling the Strategic
Plan
• Process of continuously monitoring the
company’s progress toward its long-range goals
and mission
• Managers should ask:
• Does the grand strategy need revising?
• Where are problems likely to occur?
• Basic strategy evaluation strategies:
• Review external and internal factors that are the bases
for current strategies
• Measure performance
• Take corrective action
SWOT Analysis
•Strengths, Weaknesses, Opportunities,
Threats
• Process that allows companies to evaluate
overall health
• Internal (SW) – Can Control
• External (OT) – Can’t Control
• Most important result of a SWOT analysis is the ability to
draw conclusions about the attractiveness of the
company’s situation and the need for strategic action
SWOT Analysis for Santa
Evaluating and Controlling the Strategic
Plan
• Emphasis is making the company’s
managers aware of the problems that are
likely to occur and of the actions to take if
they do arise
• Plan ahead and avoid disaster
• Strategic planning and evaluation should
be done on a predetermined schedule and
as frequently as necessary, determined by
internal and environmental factors