BA 316

A business policies are set of rules that guides the decisions and actions of the members of the
organization.
POLICY is viewed as internal matters that guide the operationalization of the business
organization, while STRATEGY is viewed more as an external orientation that the firms
management should practice, to stay competitive in the industry or sector it belongs.
Intended Strategy – refers to the original strategy that management plans and intends to
implement; whereas
Realized Strategy – refers to the actual and eventual strategy that management actually
implements.
Strategic Management - It refers to the entire process of strategic decision-making that relates to
its environment, guides internal activities, and determines the long-term performance of the
organization.
Strategy may come in the form of various types:
DEFENDERS. This type includes companies with a limited product line that focus on improving the
efficiency of their operations.
PROSPECTORS. This type of companies includes firms with fairly broad product lines that focus on
product innovation and market opportunities. They tend to emphasize creativity over efficiency.
ANALYZERS. This type includes business organization that operate in at least two different
product-market areas, one stable and one variable. In the stable areas, efficiency is emphasized.
In the variable areas, innovation is emphasized.
REACTORS. This type includes companies that lack of consistent strategy –structure-culture
relationship. Their (often ineffective) responsive to environmental pressures tend to be
piecemeal strategic changes.
The bases of policies and strategies
Legal Mandate. This refers to formulating policies on the basis of the provisions of the charter or
legal basis. Typically, business policies are based on the provisions of articles of incorporation and
by-laws of the organization.
Vision and Mission Statement. This essentially refers to the leadership bias as well as sense of
direction and mission for which the organization was conceived or established.
Specific Objectives. These are the corporate objectives purposely developed for the organization.
Programs and Policies. These are specific programs and policies set forth by the organizations
policymakers (BOD, Top Mgt) in pursuit of short and long-term goals.
Policy/Strategy Profile. This approach involves a systematic examination of present company
policy strategy-indirect and direct.
Gap Analysis. In this approach, the stimulus is an examination of whether an end that has been
established is likely to be achieved. It means asking what is missing in the existing policy that may
have been missed resulting to non-attainment of objectives.
Competitive Strategy Analysis. This calls for finding the niche or slot where the firm is deemed
competitive.
Entrepreneurial mode. In this mode, strategy is made by one powerful individual and the focus is
on opportunities; problems are secondary. Guided by the “founders vision”, the dominant goal is
growth of the corporation.
Adaptive mode. Sometimes referred to as “ muddling through” this mode is characterized by
reactive solutions to existing problems, rather than proactive search for new opportunities.
Planning mode. This decision making mode involves the systematic gathering of appropriate
information for situation analysis. This includes proactive search for new opportunities and the
reactive solution of existing problems.
Logical mode. An interactive strategy development
(Planning + Adaptive)
STIFF COMPETITION - business organizations edge out or outcompete each other to take control
of the market.
THE TRIGGERING EFFECT - Refer to situation or scenarios that may have cause or resulted to the
actions or initiatives of then of the top management of the firm to consider certain strategic
options to make the firm competitive or to achieve certain strategic objectives.
TRIGGERING EVENTS MAY COME IN TWO FORMS
INTERNAL TRIGGERING EVENTS - are those situation and scenarios intervening or disturbing the
business organization on account of factors internal or inherent to the firm itself and one the the
company can exercise certain level of control.
 New CEO/President – New leadership in any business organization generally results to
some changes.
 Performance gap – exists when performance does not meet expectations.
 Change in ownership –majority of ownership of stockholdings among publicly listed
firms can trigger or may result to a new set of strategy.
 Management team shake up – having a new President or CEO may not trigger a new set
strategies.
 Corporate reorganization/restructuring – to achieve new vision-mission statement or
desired goals.
 New product or services – enhance strategy given the new kind of products or services
offered by the company.
EXTERNAL TRIGGERING EVENTS - are those factors external to the firm or matter where the
business organization itself may not like or want to happen but there is nothing much it can do as
compared to internal triggering event.
A) THE OVERALL ECONOMIC ENVIRONMENT;
B) GOVERNMENT- ITS LEADERSHIP, POLICE, AND REGULATORY FACTION ;
C) THE SOCIOPOLITICAL ENVIRONMENT;
D)THE GEGAL ENVIRONMENT;
E)THE TECHNOLOGICAL ENVIRONMENT;
F) THE GLOBAL/ REGIONAL ENVIRONMENT;
G) MARKET FACTORS (DEMAND AND SUPPLY SITUATION)
H) THE RELIGIOUS ENVIRONMENT AND
I)OCCURRENCES OF CALAMITIES AND NATURAL PHENOMENA
THEORY OF THE FIRM - a microeconomic concept that states that a firm exists and make
decisions to maximize profits.
THE TYPES OF MARKET STRUCTURE
a) Monopoly - it is a market structure characterized by the existence of single seller of a product
which dominates the market.
b) Oligopoly - type of market has more than one producer or seller of product.
c) Monopolistic competition - it exists when many seller offer similar products that are not
perfect substitutes for one another.
d) Perfect competition - it is market structure characterized by many producers or seller and a
homogeneous service.

Brick-and-Mortar Era - where there is an 8 hour conduct of business.

Click and Mortar Era- whose mode of doing business transcends beyond traditional business
hours with business transaction happening round-the-world and round-the-clock or on a
borderless scenario and on a real-time basis.
The Product Life Cycle- Products, like people, have life cycles. The life cycle of a product is broken
into four stages—introduction, growth, maturity, and decline
INTRODUCTION -The introduction phase involves introducing a new product to customers, often
involving significant advertising and marketing campaigns.
GROWTH STAGE - If the product is successful, it then moves to the growth stage. The amount of
time spent in the introduction phase before a company's product experiences strong growth will
vary from between industries and products.
MATURITY STAGE - The maturity stage of the product life cycle is the most profitable, with
declining production and marketing costs and higher competition. Companies may innovate or
expand their market presence, based on customer feedback and demographic research.
Competition is highest during this stage, and sales levels stabilize, with a goal to maintain product
longevity.
DECLINE STAGE - The product's market share may decline due to increased competition and
alternative products. The company may not pursue marketing efforts or retire the product
entirely. If the upgrade is substantial, the company may re-enter the product life cycle.
S-curve Is a living proof that just like humans, there is beginning and end for everything and the
same is true for every product or service in this world.
Experience Curve - The theory of experience curve suggest that as the business organizatios stay
much in the business or the industry, the business organization accumulates a body of knowledge
and experience that enables the firms to do its business better.
Economies of Scale - theory of economies or diseconomies of scale appears similar to the
experience curve.
Best Operating Level - - There is an OPTIMUM LEVEL of operating machines or using resources
that can result to the lowest possible cost of production of a product or service.
Building Competitive Strategies - THEORY BEHIND THE PRODUCT LINE CYCLE-that unless nothing
is being done about the product or service and given the ever-changing market conditions,
competitiveness of the product will be eventually eroded — and hence it must be continually
built up.
OTHER RELEVANT THEORIES INFLUENCING STRATEGIC MANAGEMENT
a) Evolution and revolution theories
b) Industrial organization theory
c) Chamberlin's economic theories
d) Contingency theory
e) Resource-based theory
f) Institution theory
g) Organization learning theory
h) Transaction cost economics