MABASA, RUEL LOPEZ JR.

MBA 121 (CORPORATE PLANNING)

SATURDAY (9:00 am – 2:00 pm)

CHAPTER 1
The nature of strategic management

1. Distinguish between long-range planning and strategic planning.

Long-range planning is usually considered to assume present knowledge about future conditions. It
looks to make certain the plan's exact results over the period of its implementation.

Strategic planning, however, assumes that your organization must be quick to respond to a dynamic,
changing environment, which may require changes in the future. Strategic planning, then, points out the
importance of making decisions that will ensure your organization's ability to successfully respond to
changes in the environment.

2. Compare a company’s strategic plan with a football team’s game plan.

Just like in football or any other sports a game plan is needed same as to a company it also has a
game plan in the form of strategic planning. Both business firms and football teams are similar in the
sense that both are using a “plan” to win over either the opponent ( in sports ) or future problems ( in
businesses ). Every “plan” should have its strategy in order for it to be executed accordingly and reach
the goal of the plan. Football teams trains hard to master the strategy same as to a company to prepare
themselves with the plan’s execution.

3. Describe the three activities that comprise strategy evaluation.

Thee three activities of Strategy Implementation are

(1) Reviewing external and internal factors that are the bases for current strategies
(2) Measuring performance and
(3) Taking corrective actions.

4. How important do you feel “being adept at adapting” is for business firms? Explain.

Very important in the sense that it gives you ( the manager) and the company a competitive
advantage. Being able to adapt FAST to the changing needs of the business enables you to adjust
early and accordingly over your competitors. In application, a competitive advantage enables a
company to have an advantage over competitors that is gained by offering consumers greater value,
either by means of lower prices or by providing greater benefits and service that justifies higher prices
given that competition was high or market problems arises.

5. Compare the opossum and turtle to the woolly mammoth and Saber-toothed tiger in terms of being
adept at adapting. What can we learn from opossum and turtle?

In a very simple sense, those who are adept at adapting are those who survives and those who are not
adept at adapting are more likely to perish and extinct. The opossum and turtle basically survived due
to their great way of adapting to a vast changing environment which were failed to do by the woolly
mammoth and Saber-toothed tiger. In relation to business, managements should be very vigilant at
every change that comes. They should properly analyze the changes and decide whether to adjust or
not. Being adaptable in business helps it survive.

6. As cited in the chapter, Edward Deming, a famous businessman, once said, “In God we trust. All others
bring data.” What did Deming mean in terms of developing a strategic plan?

The strategic-management process can be described as a logical, systematic approach for making
major business decisions in an organization. Edward Deming projects that the accumulation of correct
and verified data should be the basis of a judgment together with intuition will bring business owners to
a proper decision regardless of the uncertainty of the situation.
7. What strategies do you believe save newspaper companies from extinction?

 Be adaptive to change
- In a fast changing society, they should first identify outlets (other than traditional printing) that
are used in current time to be their new medium in producing their stories/ advertisements.
 Learn the transition
- If proper outlets are identified ( ex. Social media/network ). They should be able to transition
their entire system from the traditional to the modern way. It could only be successfully achieved
if they will study the entire transitioning process.

8. Distinguish between the concepts of vision and mission.

Vision statement answers the question “What do we want to become?” while Mission statement
answers the question “What is our business?”

9. Your university has fierce competitors. List three external opportunities and three external threats that
face your university.

3 EXTERNAL OPPORTUNITIES:

1. Top notch (local and international) educational institution’s curriculum will be pattered/applied to our
university’s system.

2. The university’s educational competitiveness will boosts its image paving way for more external
recognition hence will uplift the school’s education quality.

3. In connection to #2, number of competitive students will choose to apply in our University. Due to the
university’s intensified image in quality education.

3 EXTERNAL THREATS:

1. Competition among other Universities/Colleges.

2. Number of SHS graduates might choose to work than proceed to college.

3. The campaign of the Government for free education in state universities and colleges.

10. List three internal strengths and three internal weaknesses that characterize your university.

3 INTERNAL STRENGTHS:

1. Low tuition fee compared to other private educational institutions.

2. State of the art facilities.

3. Unique moral trademark inculcated to the students.

3 INTERNAL WEAKNESSES:

1. Non-sectarian but deemed by many outsiders as a sectarian school.

2. Processing of students’ documents are quite slow.

3. Enrollment system needs massive improvement.

 CHAPTER 2
The business mission and vision

1. What are some different names for “mission statement” and where will you likely find a firm’s mission
statement?
A mission statement is sometimes called a creed statement, a statement of purpose, a statement of
philosophy, a statement of beliefs, a statement of business principles, or a statement “defining our
business.” A good place to look for a company’s mission statement is on the firm’s website or its
annual report, but many organizations also have the statement engraved and publically visible at its
stores or facilities.
2. If your company does not have a vision or mission statement, describe a good process for developing
these documents.

Select several articles and/or web sites about these statements and ask all managers to read these as
background information. Then, managers should prepare a vision or mission statement for the
organization. A facilitator or committee should then merge these statements into a single document
and distribute the draft statements to all managers. A request for modifications, additions, and
deletions is needed next, along with a meeting to revise the document.

3. Explain how developing a mission statement can help resolve divergent views among managers in a
firm.

The question “What is our business?” can create controversy. Raising the question often reveals
different opinions/views/beliefs among strategists in the organization. Individuals who have worked
together for a long time may realize that they are in fundamental disagreement. Negotiation,
compromise, and eventual agreement on important issues is needed in forming or revising a mission
statement. Then, managers can “be on the same page” and focus on more specific strategy formulation
activities.
4. Drucker says the most important time to seriously reexamine the firm’s vision/mission is when the firm
is very successful. Why is this?

The most important time to ask seriously “What do we want to become?” and “What is our business?” is
when a company has been successful. Success obsoletes the very behavior that achieved it, and
creates new realities and different problems. A very successful firm is the target of rival firms who try to
imitate, duplicate, reverse engineer their products, and take market share from the leading firms.

5. Explain why a mission statement should not include monetary amounts, numbers, percentage, ratios,
goals or objectives.

A mission statement is broad in scope for three reasons. First, it allows for the generation and
consideration of a range of feasible alternative objectives and strategies without unduly stifling
management creativity. Excess specificity would limit the potential of creative growth for the
organization. Second, a mission statement needs to be broad to reconcile differences among, and
appeal to, an organization’s diverse stakeholders. Thus, a mission statement should be reconciliatory.
Third, it is simply premature in the mission statement to reveal goals and objectives, which should be
determined after the internal and external assessment, as illustrated in the comprehensive strategic
planning model.

6. Discuss the meaning of the following statement: “Good mission statements identify the utility of a firm’s
products to its customers.”
A good mission statement reflects the anticipations of customers. Organizations should identify
customers’ needs and then provide a product or service to fulfill those needs. For example, AT&T’s
mission statement focuses on communication rather than on telephones; Exxon-Mobil’s mission
statement focuses on energy rather than on oil or gas; Union Pacific’s mission statement focuses on
transportation rather than on railroads; and Universal Studio’s mission statement focuses on
entertainment rather than on movies.
7. Distinguish between the “self-concept” and the “philosophy” components in a mission statement. Give an
example of each for your university.

The self-concept component of a mission statement describes a firm’s distinctive competence or major
competitive advantage. The philosophy component of a mission statement refers to the basic beliefs,
values, aspirations, and ethical priorities of the firm.
Self-Concept: AIUB offers different courses with high computer literacy
Philosophy: AIUB believes a statement that where leader is created

8. When someone or some company is “on a mission” to achieve something, many times they cannot be
stopped. List three things in prioritized order that you are “on a mission” to achieve in life.

1) To complete MBA.
2) To take a nice job.
3) To manage my anger.

9. Compare and contrast vision statements with mission statements in terms of composition and importance.
Many organizations develop both a mission statement and a vision statement. Whereas the mission
statement answers the question, “What is our business?” the vision statement answers the question, “What
do we want to become?” Both statements are essential for firm success. The vision is one sentence,
whereas the mission is several sentences, and includes nine components.

10. Do local service stations need to have written vision and mission statements? Why or why not?
Less formality and detail characterize strategic management in small businesses such as a local service
station. However, local service stations are not immune to competitive pressures, changes in technology,
changes in demographic factors, and resistance to change. Therefore, it is recommended that even the
smallest organization develop written vision and mission statements to enhance efforts to secure bank
financing and to develop good supplier, customer, and employee relationships.
 CHAPTER 3
The external assessment

1. Describe the “process of performing an external audit” in an organization doing strategic planning for
the first time.

To perform an external audit, the company should get as many managers and employees involved as
possible. This fosters understanding and commitment throughout the organization.

In general, the process is conducted in three steps:

1. Gathering of competitive intelligence and information concerning:

 Economic forces
 Social, cultural, demographic, and natural environment forces
 Political, governmental, and legal forces
 Technological forces
 Competitive forces

2. Assimilating and evaluating intelligence/information for opportunities and

threats. Managers should meet to rank and prioritize these factors with the following
guidelines:

 Importance to achieving long-term and annual objectives

 Measurable
 Applicable to competing firms
 Hierarchical within the organization

3. Distributing and communicating the final list of the most important external factors
throughout the organization.

2. The global recession forced thousands of firms into bankruptcy. Does this fact alone confirms
that “external factors are more important than internal factors” in strategic planning? Discuss.

Not necessarily. It depends on the company, its industry, and the quality of its management, as well as
the particular internal and external factors that affect a business. External factors are as important as
internal factors in strategic planning. I believe that one does not supersede the other.

3. Why do you think production/operations managers often are not directly involved in strategy-
formulation activities? Why can this be a major organizational weakness?

Perhaps they are left out because production/operations are considered by organizations to be more
execution, transaction, and implementation functions. Organizations see them as carrying out the
strategy and really having no need to be involved in actually forming it.

This can be a major weakness in an organization. Production/operations activities represent the

greatest share of an organization’s assets: materials and inventory, facilities and plants, equipment and
machinery, and often a large workforce. Without production/operations managers’ input into strategy
formulation, the organization runs the risk of implementing strategies that aren’t cost effective and
counter-productive.

4. Do you feel the advantages of a low value of the dollar offset the disadvantages for (1) a firm
that derives a 60 percent of its revenues from foreign countries and (2) a firm that derives 10 percent of
its revenues from foreign countries? Justify your opinion.

A low valued dollar can cause a significant increase in exports to foreign countries. Imports slow down
and prices of foreign competitors go up, creating a more ideal competitive environment for the U.S.
company.
 A company with 60 percent of its revenues coming from foreign countries would be able to offset the
slowdown in demand/revenues at home in the U.S. and spread its risk across more than one
economy/market. A company with only 10 percent would be much more affected by the U.S. economy
and exposed to greater risk.

5. The lingering global recession has greatly slowed the migration of people from (1) region to region
across the United States, from (2) city to suburb worldwide, and from (3) country to country across the
globe. What are the strategic implications of these trends for companies?

The trend in slowed migration of people will give key opportunities for the companies in formulation their
strategic planning such as: where to focus their marketing efforts and where to locate new facilities.

6. Define and explain value chain analysis (VCA).

VCA is the process used to determine the costs associated with an organization’s activities from
purchasing raw materials to manufacturing products to marketing those products.

The process is designed to identify areas of low-cost advantage or disadvantage anywhere along the
chain, and enables an organization to identify its own strengths and weaknesses, especially compared to
competitors’ VCA.

7. Governments worldwide are turning to “protectionism” to cope with economic recession, imposing tariffs
and subsidies on foreign goods and restrictions/incentives on their own firms to keep jobs at home. What
are the strategic implications of this trend for international commerce?

This protectionism method serves as a major constraint and will make it harder for global economic
growth to recover from global recession. With this condition, It is expected for the Global Trade to decline.

8. Compare and contrast the duties and responsibilities of a CIO with a CTO in a large firm.

CTO tend to be focused on day-to-day operations, while CIOs are outward-facing and more concerned
with strategy and leadership. Some IT directors, in fact, report to CIOs, especially those working for large,
multi-national organizations at a country or regional level who sit beneath a global peer. Not all
organizations will have a CIO: smaller businesses use the job title IT director for their head of technology.
Indeed, when it comes to technology executives, the picture concerning job titles is often far from clear.

9. What are the three basic objectives of a competitive intelligence program?

The three basic missions of a CI program are (1) to provide a general understanding of an industry and its
competitors, (2) to identify areas in which competitors are vulnerable and to assesses the impact strategic
actions would have on competitors, and (3) to identify potential moves that a competitor might make that would
endanger a firm’s position in the market.

10. Distinguish between market commonality and resource similarity. Apply these concepts to two rival
firms that you are familiar with.

Market commonality can be defined as the number and significance of markets that a firm competes in
with rivals while Resource similarity is the extent to which the type and amount of a firm’s internal
resources are comparable to a rival.

JOLLIBEE McDONALDS
 Both offer fast food
 They almost have similar promos and freebies
 Both are competitive firms in the PH industry
 CHAPTER 4
Internal assessment

1. List three firms you are familiar with and give a distinctive competence for each firm.

 Jollibee – Transformed foreign cuisines into something relatable to a Filipino taste bud.
Affordable and relatable to majority of its local market.
 Coffee bean and Tea leaf – Provides dishes other than the usual pastry products offered by the
usual coffee stores.
 SHELL – Never ran out of promos and giveaways compared to its competitors.

2. Give some key reasons why prioritizing strengths and weaknesses is essential.

To know one’s strength would enable someone/something to focus and maximize on things they know
they are good at. To know one’s weakness would someone/something to assess and improve on the
weak areas with the hope of transforming it to strength.

3. Why may it be easier in performing an internal assessment to develop a list of 80

strengths/weaknesses than to decide on the top 20 to use formulating strategies?

The more basis (more strengths and weaknesses) the better and more accurate the decision making
would be. It will be easier to locate internal problems by looking at a bigger scale rather than limiting
those areas of concern.

4. Think of an organization you are very familiar with. List three resources of that entity that are
empirical indicators.

Amazon
-Superior logistics and distribution systems (Amazon Prime shipping)
-Strength of brand/synonymous with online shopping
-Pushes the limits of technology and can scale more easily than competitors

5. Explain benchmarking.

A management technique associated with value chain analysis, whereby a firm compares itself on a
wide variety of performance- related criteria against the best firms in the industry, thus establishing
standards of excellence" (Glossary 627) Allows firms to see where there are areas of improvement, as
well as, excellence, and core competencies

6. If you and a partner were going to visit a foreign country where you have never been before, how
much planning would you do ahead of time? What benefit would you expect that planning to provide?

We would plan maybe 2-3 months before we fly to that country. 2-3 months is neither too early nor too
late to gather “current” and “timely” information with regards to the country we’ll visit. The biggest
benefit of planning is the ease of experience. A planned trip, in a usual set-up gives a smooth sailing
experience since all pros and cons are considered and treated even before it happens.

7. Even though planning is considered the foundation of management, why do you think it is commonly
the task that managers neglect most?

Perhaps because managers tend to focus on the current situations their companies are facing that they
forgot to assess the future of their company. Managers tend to fix current and timely issues within the
company and they feel that fixing these problems would be enough to fix the company as a whole even
without properly planning the future agendas.

8. Are you more organized than the person sitting beside you in class? If not, what problems could that
present in terms of your performance and rank in the class? How analogous is this situation to rival
companies?

Perhaps not. Being naturally lazy I must say that people around me ( even though I believe I am more
intellectually competent) tend to overshadow me in terms of class performance for they are
hardworking and always ready for any tasks. Just like in companies, it doesn’t matter if your assets are
more competent compared to rival companies if the top management will not maximize their potential
and will not provide proper planning method to transform these potential onto a profitable advantage to
the company.
9. List the three ways that financial ratios should be compare/utilized. Which of the three comparisons
do you feel is most important? Why?

 Decide how each ratio changed over time

 Decide how each ratio compares to industry norms
 Decide how each ratio compares with key competitors

Although all important, I think that comparing each ratio to key competitors is most important because if
a company cannot thrive in comparison to their competition, then they will essentially fail. You can be
doing well financially for your company, but if your competitors are doing better, then you're not doing
as well as you thought you were.

10. Illustrate how value chain activities can become core competencies and eventually distinctive
competencies. Give an example for an organization you are familiar with.

Within those positive value activities, the firm identifies one or more activities that put the firm at an
advantage. Through continued nurturing of those activities, a major competitive advantage arises that
sets the firm apart from its competitors. This competitive advantage becomes a distinctive competence.
For example, innovation could be considered a distinctive advantage for Amazon. In focusing on areas
such as improvements in distribution and logistics, they identified an advantage over competitors.
 CHAPTER 5
Strategies in action

1. In order of importance, list six “characteristics of objectives”.

 Understandable
 Measurable
 Obtainable
 Realistic
 Quantitative
 Congruent across department

2. In order of importance, list six “benefits of objectives”.

 Provide basis for consistent decision making

 Allow synergy
 Aid in allocation of resources
 Establish priorities
 Reduce uncertainty
 Aid in evaluation by serving as standards

3. Give recent example of related diversification.

Related diversification

In related diversification, companies have a strategic fit with the new venture. To make this strategy
work, you capitalize on the strengths or competitive advantage you’ve already established.

Richard Branson, famous for his company Virgin, has more than 300 companies that carry the Virgin
name: Virgin Atlantic, Virgin Mobile, and Virgin Galactic — his most recent venture into space travel —
are just a few examples. This related diversification strategy works because all the companies share
the brand, marketing, public relations, and corporate knowledge.

4. Give recent example of unrelated diversification.

Unrelated diversification

Unrelated diversification has nothing to do with leveraging your current business strengths or
weaknesses. It’s more about not putting all your eggs in one basket. For example, an investor
diversifies his financial portfolio to protect against losses. Many entrepreneurs execute this strategy
unknowingly by becoming involved in multiple, unrelated businesses. Unrelated diversification is the
most risky of all the market level strategies.

An IT consulting company decided to take over a failing sandwich shop because he always wanted to
be in the restaurant business. Clearly, these two businesses are unrelated. But by accident, the
business owner is executing a diversification strategy. He’s now in the IT industry and the dining
industry.
5. If a company has $1 million to spend on a new strategy and is considering market development
versus product development, what determining factors would be most important to consider?

It will depend on the goal of the Company, if they want to enter new markets they would use a
marketing strategy if they want to introduce a new or enhance product to the current market they would
use a product development strategy.

Factors to consider on which intensive strategy to use are:

a) Target market/Consumer- they are the end user of our products. It is only important to consider if our
target market is saturated. We also have to assess if our product is already in its matured state that
there is a need to attract our current customer to try new and improved products and services.

b) Capital/ Resources—is your capital sufficient to support expansion? Is your resources sufficient
enough to develop new product?

c) Competitors/Industry- depending on the current trend in your industry, there is a need for market
development if the industry is rapidly becoming global.

There is a need for product development if the trend in your industry competes and characterized by
rapid technological developments.

6. What conditions, externally and internally, would be desired/necessary for a firm to diversify?

EXTERNAL:

1. Openness for innovations

2. Accept trends and apply it

3. Hiring potential assets that aren’t necessarily in line with the business.

INTERNAL:

1. Branding capability

2. Financial freedom

3. Right business model

7. Do you think hostile takeovers are unethical? Why or why not?

It can best be argued that hostile takeovers are ethical. Usually, only weak companies face hostile takeovers,
and, typically, shareholders and customers of the company benefit from the new organization. Most
employees and managers benefit, too, but some employees and top managers usually lose their jobs when
the takeover is consummated. From this angle, some of you may argue that hostile takeovers are unethical.

8. What are the major advantages and disadvantages of diversification?

Several disadvantages of diversification are (1) it is risky, (2) it is costly, (3) it requires excellent management
skills, and (4) it requires an elaborate control system. Some of the advantages of diversification are (1) it
allows a firm to spread risks and resources in more than one area, (2) it allows a firm to pursue special
opportunities in diverse areas, and (3) it allows a firm to balance counter seasonal sales yearly.

9. There is a growing trend of increased collaboration among competitors. List the benefits and
drawbacks of this practice.

BENEFITS:

 It would reduce the cost of engaging to a new business venture.

 They would be able to learn from partners ( new skills, new inventions etc..)
 It would reduce the risk of failure.
DRAWBACKS:

 Information that are shared might be used against each other.

 Collaborations can sometimes end up as a chaotic competition if not maintained well.

10. List four major benefits of forming joint venture to achieve desired objectives.

 LOW COST
 LOW RISK OF FAILURE
 COLLABORATIVE EFFORT
 DIVERSE IDEAS
 CHAPTER 6
Strategy and analysis choice

1. Many multidivisional firms do not report revenues or profits by division or segment in their Form 10k
or Annual Report. What are the pros and con of this management practice? Discuss.

Many multidivisional firms do not report revenues or profits by division or segment in their Annual
report. It has both advantages and disadvantages. Some of the pros are as follows:

 The competitors will not know about the investments and profitability of the divisions which will
make them difficult to penetrate to the most profitable divisions
 It saves time for the organization to just publish overall financials rather than divisionwise
financials
 Some companies prefer different ways of accounting

2. Define halo error. How can halo error inhibit selecting the best strategies to pursue?

Halo error is a mistake or bias that can occur in evaluating an individual's performance where they are
consistently rated based on the evaluator's overall impression, rather than on their actual performance
in various categories. In strategy-formulation, halo error restrain strategist to choose the best strategies
because the strategist tend to decide based on single factor and usually based on impression.

3. How would profit and nonprofit organizations differ in their applications of the strategy-formulation
framework?

The strategy-formulation framework is conceptually identical for both profit and nonprofit organizations,
although the nature of variables would differ for each type of organization.

4. For a firm that you know well, give an example So Strategy, showing how an internal strength can be
matched with an external opportunity to formulate a strategy.

JOLLIBEE

Strenghts: Great advertisements, Has a huge market, Promising potential in international market.

Opportunities: Massive expansion all over the Globe.

S-O STRATEGY: Expand to foreign market; Grow in the local market.

5. For a firm that you know well, give an example WT Strategy, showing how internal weakness can

be matched with an external threat to formulate a strategy.

JOLLIBEE

Weaknesses : Poor labor practice in terms of regularization of employees.

Threats: Emerging foreign competitors that offers promising employment status.

W-T STRATEGY: Improve employment system.

6. List three limitations of the SWOT matrix and analysis.

1. SWOT does not show how to achieve a competitive advantage.

2. SWOT is a static assessment in time.
3. SWOT may lead the firm to overemphasize a single internal or external factor in formulating
strategies.

7. How would application of the strategy-formulation framework differ from a small to a large
organization?

The strategy-formulation framework is conceptually identical for both small and large organizations.
However, in large organizations, there are more variables to analyze and forecast. This makes the
strategy-formulation process more complex.
8. How would you develop a set of objectives for your school or business?

As business owner, it’s important that you take the time to set goals and review your business as a
whole.

Having clear, well-defined goals can:

 help your business grow

 achieve your objectives
 improve teamwork and collaboration
 Help everyone understand the direction your business is heading in.

9 What do you think is the appropriate role of a board of directors in strategic management? Why?

Board members should review strategy formulation, implementation, and evaluation reports. As
described in the paper, board members are, more and more, being held personally liable for failed
strategies in organizations. Board members should provide input, advice, suggestions, and
comments about strategic-management activities.

10. Explain why cultural factors should be an important consideration in analyzing and choosing
among alternative strategies.

Cultural factors are an integral part of everyday life in organizations. An organization’s unique
culture represents the heart of work. Thus, in choosing among alternative strategies for an
organization, consideration should be given to the different levels of support that proposed
strategies would receive from existing cultural products. Consideration should also be given to
whether cultural changes could be achieved readily.