STRATEGY

FORMULATION
Objectives:
1. Explain SWOT diagram to examine
business strategy.
2. Explain mission statement, objectives
and strategies
3. Explain the competitive and
cooperative strategies available to
corporations
Strategic
Management
• A set of managerial decisions and actions that help
determine the long-term performance of an
organization. It consists of four basic elements:

∙ Environmental Scanning
∙ Strategy formulation
∙ Strategy implementation
∙ Evaluation and Control
STRATEGY FORMULATION
• developing long-range plans; is the process of investigation, analysis, and decision making
that provides the company with the criteria for attaining a competitive advantage.

Mission Objectives Strategies Policies

Reason for existence What results to Plan to achieve the Broad guidelines for
accomplish by when mission and objectives decision making
 MISSION: Stating Purpose

Mission Vision

∙ is the purpose or reason for the organization’s

existence Described what the Describes what the
organization would like organization would like
∙ announces what the company is providing to society to become. to become.
∙ a well-conceived mission statement defines the
fundamental, unique purpose that sets a company apart
from other firms of its type.

∙ some people like to consider vision and mission as two

different concepts:
A well-crafted mission statement has five common elements:

2. The design must be

simple so that everyone in
1. It must be short so that 3. It has to provide
the company can
every employee can direction to the activities
understand what the
remember the statement. of company employees.
senior leadership team
desires.

4. The statement should

5. The statement should be
enable employees
measurable so that the
knowing exactly what the
company can visibly see
company does and what it
progress.
does not do.
Mission: To serve great tasting food, bringing the joy of eating
to everyone
Vision: To be one of the Top 5 Restaurant Companies in the
World
 OBJECTIVES: Listing
Expected Results

∙ are the end results of a planned activity

∙ the achievement of corporate objectives should
result in the fulfillment of a corporation’s mission.
∙ the term goal is often used interchangeably with the
term objective. Goal is considered as an open-ended
statement of what one wants to accomplish with no
quantification of what is to be achieved and no time
criteria for completion.
 OBJECTIVES: Listing
Expected Results

• “Increased profitability”

• “To increase the firm’s

profitability in 2023 by 10%
over 2022”
STRATEGY: Defining the Competitive
Advantage

• Forms a comprehensive master approach that states how the

business will achieve its mission and objectives
∙ Three types of strategy:
• 1. Corporate strategy – overall direction of company
and management of its business
• 2. Business strategy – competitive and cooperative
strategies
• 3. Functional strategy - maximize resource productivity
 BUSINESS STRATEGY

∙ focuses on improving the competitive position of

a company’s or business unit’s products and
services within the specific industry or market
segment that the company of business unit
serves.
∙ can be competitive (battling against all
competitors for advantage) or cooperative
(working with one or more companies to gain
advantage against other competitors)
 BUSINESS STRATEGY

Competitive Strategies
o Cost leadership – a lower-cost strategy that aims at the
broad mass market
o Differentiation – involves creation of product or service
that aims at the broad mass market
o Cost Focus – a low-cost strategy focuses on a particular
buyer group
o Differentiation focus – concentrates on a particular
buyer group, product line segment, or geographical
market
 BUSINESS STRATEGY

Cooperative Strategies
o Collusion – active cooperation of firms within an
industry to reduce output and raise prices to get
around normal economic law of supply and
demand
• Explicit collusion - is illegal in most countries and
in a number of regional trade associations, such as
the European Union.
• Tacit collusion - there is no direct communication
among competing firms.
Don Macchiatos: Cebu’s 1st 39ers Coffee
 FORMULATION STRATEGY

IS THE APPROACH A FUNCTIONAL EACH BUSINESS UNIT HAS ITS

AREA TAKES TO ACHIEVE OWN SET OF DEPARTMENTS,
CORPORATE AND BUSINESS UNIT EACH WITH ITS OWN
OBJECTIVES AND STRATEGIES BY
FUNCTIONAL STRATEGY.
MAXIMIZING RESOURCE
PRODUCTIVITY
 QUESTION:

WHAT IS THE IMPORTANCE OF

FORMULATION STRATEGY
• Marketing Strategy – deals with pricing, selling, and distributing a
product
o Market development strategy, a company or business unit can
▪ (1) capture a larger share of an existing market for current
products through market saturation and market
penetration; or
▪ (2) develop new uses and/or markets for current products
o Product development strategy, a company or business unit can
▪ (1) develop new products for existing markets; or
▪ (2) develop new products for new markets.

• Financial Strategy - examines the financial implications of corporate

and business-level strategic options and identifies the best financial
course of action.

• Research and Development Strategy – deals with product and

process innovation and improvement. It also deals with the
appropriate mix of different types of R&D
o Technological follower is a company that imitates the products
of competitors.
o Technological Leader is a company that pioneers innovation.
MARKETING STRATEGY
• Marketing Strategy – deals with pricing, selling, and distributing a
product
o Market development strategy, a company or business unit can
▪ (1) capture a larger share of an existing market for current
products through market saturation and market
penetration; or
▪ (2) develop new uses and/or markets for current products
o Product development strategy, a company or business unit can
▪ (1) develop new products for existing markets; or
▪ (2) develop new products for new markets.

• Financial Strategy - examines the financial implications of corporate

and business-level strategic options and identifies the best financial
course of action.

• Research and Development Strategy – deals with product and

process innovation and improvement. It also deals with the
appropriate mix of different types of R&D
o Technological follower is a company that imitates the products
of competitors.
o Technological Leader is a company that pioneers innovation.
FINANCIAL STRATEGY
• Marketing Strategy – deals with pricing, selling, and distributing a
product
o Market development strategy, a company or business unit can
▪ (1) capture a larger share of an existing market for current
products through market saturation and market
penetration; or
▪ (2) develop new uses and/or markets for current products
o Product development strategy, a company or business unit can
▪ (1) develop new products for existing markets; or
▪ (2) develop new products for new markets.

• Financial Strategy - examines the financial implications of corporate

and business-level strategic options and identifies the best financial
course of action.

• Research and Development Strategy – deals with product and

process innovation and improvement. It also deals with the
appropriate mix of different types of R&D
o Technological follower is a company that imitates the products
of competitors.
o Technological Leader is a company that pioneers innovation.
RESEARCH AND DEVELOPMENT STRATEGY
• Operations Strategy - determines how and where a product or
service is to be manufactured, the level of vertical integration in the
production process, the deployment of physical resources, and
relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
• Purchasing Strategy - deals with obtaining the raw materials, parts,
and supplies needed to perform the operations function.
• Logistics Strategy - deals with the flow of products into and out of
the manufacturing process. Three trends related to this strategy are
evident: centralization, outsourcing, and the use of the Internet.
• Human Resource Management Strategy - is a functional strategy
that makes the best use of corporate human assets.
• Information Technology Strategy - is a functional strategy that uses
information systems technology to provide a competitive advantage.
OPERATIONS STRATEGY
• Operations Strategy - determines how and where a product or
service is to be manufactured, the level of vertical integration in the
production process, the deployment of physical resources, and
relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
• Purchasing Strategy - deals with obtaining the raw materials, parts,
and supplies needed to perform the operations function.
• Logistics Strategy - deals with the flow of products into and out of
the manufacturing process. Three trends related to this strategy are
evident: centralization, outsourcing, and the use of the Internet.
• Human Resource Management Strategy - is a functional strategy
that makes the best use of corporate human assets.
• Information Technology Strategy - is a functional strategy that uses
information systems technology to provide a competitive advantage.
OPERATIONS STRATEGY
• Operations Strategy - determines how and where a product or
service is to be manufactured, the level of vertical integration in the
production process, the deployment of physical resources, and
relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
• Purchasing Strategy - deals with obtaining the raw materials, parts,
and supplies needed to perform the operations function.
• Logistics Strategy - deals with the flow of products into and out of
the manufacturing process. Three trends related to this strategy are
evident: centralization, outsourcing, and the use of the Internet.
• Human Resource Management Strategy - is a functional strategy
that makes the best use of corporate human assets.
• Information Technology Strategy - is a functional strategy that uses
information systems technology to provide a competitive advantage.
LOGISTICS STRATEGY
• Operations Strategy - determines how and where a product or
service is to be manufactured, the level of vertical integration in the
production process, the deployment of physical resources, and
relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
• Purchasing Strategy - deals with obtaining the raw materials, parts,
and supplies needed to perform the operations function.
• Logistics Strategy - deals with the flow of products into and out of
the manufacturing process. Three trends related to this strategy are
evident: centralization, outsourcing, and the use of the Internet.
• Human Resource Management Strategy - is a functional strategy
that makes the best use of corporate human assets.
• Information Technology Strategy - is a functional strategy that uses
information systems technology to provide a competitive advantage.
HUMAN RESOURCE STRATEGY
• Operations Strategy - determines how and where a product or
service is to be manufactured, the level of vertical integration in the
production process, the deployment of physical resources, and
relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
• Purchasing Strategy - deals with obtaining the raw materials, parts,
and supplies needed to perform the operations function.
• Logistics Strategy - deals with the flow of products into and out of
the manufacturing process. Three trends related to this strategy are
evident: centralization, outsourcing, and the use of the Internet.
• Human Resource Management Strategy - is a functional strategy
that makes the best use of corporate human assets.
• Information Technology Strategy - is a functional strategy that uses
information systems technology to provide a competitive advantage.