NAME:

SECTION:

HOSPITALITY, TOURISM and BUSINESS ADMINISTRATION

2nd Semester
A.Y. 2024-2025

Course: Strategic Management

Course Code: STRMGT

Course Description:
The course aims to provide students with a more in-depth knowledge of various strategic
management theories and their applications in general as well as within organizations in tourism
and hospitality sector. Both micro perspectives and macro perspectives of strategic management
will be treated during the course.
This course introduces the key concepts, tools, and principles of strategy formulation and
competitive analysis. It is concerned with managerial decisions and actions that affect the
performance and survival of business enterprises. The course is focused on the information,
analyses, organizational processes, and skills and business judgment managers must use to
devise strategies, position their businesses, define firm boundaries and maximize long-term
profits in the face of uncertainty and competition.

Coverage: Prelim WEEK 1

Topic/s: The Nature of Strategic Management
• Strategy
• Features, Nature and Characteristics of Strategy
• Strategic Management Process, Formulation, Implementation, Evaluation
• Benefits of Strategic Management
TOPIC 1: Strategic Management

The Greek term "Strategos," is where the word "strategy" originates. The word "strategy"
is now used in business to refer to the plan a company has in place for achieving its ultimate
goals. Most companies have a number of options for attaining their goals. Strategy is focused
with determining which option should be used to achieve the organization's overall goals. In a
nutshell, strategy is the process of getting from "where we are" to "where we want to be."

A strategy is an activity taken by management to achieve one or more of the organization's

goals. Strategy is also regarded as "a broad direction established for the firm and its numerous
aspects to obtain a specific future outcome." The extensive strategic planning process develops
strategy.

A strategy is all about integrating organizational operations and leveraging and distributing
limited organizational resources to fulfill stated goals. When developing a strategy, keep in mind
that choices are not made in a vacuum and that every action being taken by a corporation is likely
to elicit a response from those concerned, whether rivals, customers, workers, or suppliers.

Understanding objectives, the unpredictable nature of events, and the need to assess the
expected or actual behaviors of others are further characteristics of strategy. A firm's strategy
serves as a roadmap for decision making, outlining its aims and targets, company procedures,
and strategies for meeting them. It also defines the core operations, the kind of business entity
it wants to be, and the level of engagement it intends to have with its shareholders, clients, and
the broader community.

Strategy is a Comprehensive long-term plan. It tries to answer three main questions:

1. What is the present position of the firm?
2. What should be the future position of the firm?
3. What should be done to attain the future position?

Features of Strategy

Strategy is important to business organizations because it incorporates the following

crucial features:

1. Since predicting the future is uncertain, strategy is important. The businesses must be prepared
to cope with the unexpected occurrences that make up the commercial environment even without
precise forecasting

2. Instead of emphasizing on daily business operations, strategy considers long; term trends,
such as the potential that new technologies may result in innovative goods, manufacturing
techniques, or markets in the future.
3. The formulation of strategy includes taking into account the potential consumer and
competition. If the business understands how to implement workforce-related initiatives, it will
be easier to predict employee behavior.

Nature and Characteristics of Strategies

The natures and characteristics of strategies to really be considered are as follows:

1. Dedicated to achieving goals (Goal-Oriented). Strategies are formulated in order to

attain the organization's goals. To design strategies, the firm must first understand the objectives
to be accomplished as well as the principles that ought to be implemented.

2. Considering the possibilities (Future Oriented). A strategy is a long-term objective. It is

intended to boost the organization's strategic standing Management evaluates the organization's
current position and attempts to achieve the organization's long - term direction through strategic
plan. The strategy gives answers to specific questions about:

a. The current business's profitability.

b. Sustainability of current operations.
c. Future expansion into many industries.
d. The effectiveness of the company's existing procedures.
e. Long-term expansion and advancement of the firm.
3. Centralized, Holistic, and Interconnected. A strategy is more than just a plan. It is a
cohesive, complete, and comprehensive strategy. It is cohesive because it brings all the pieces of
the business altogether. It is comprehensive since it includes all of the firm's primary elements.
It is interconnected because all of the plan's components are suitable with one another and work
well together.

4. Alternative Strategies. Organizations must develop various strategies. It is nos enough to

develop one or two approaches. Smaller firms may succeed using one or two strategies since
their operations are simpler. Larger companies, on the other hand, must develop various methods
for development and survival It may be divided into four major categories: Strategy for Consistent
Growth, Development Strategy, Retrenchment Strategy, Strategy for Combination

5. Concerns the environment. Both internal and external environments influence strategy
design and execution. The internal environment is related to the firm's goal and objectives, labor
management relations, and the technology utilized as well as physical, financial, and human
resources. The external environment includes customers, competition, channels, intermediaries,
policy decisions, and other sociological, economical, and governmental aspects.

6. Resource allocation. Appropriate resource management is required for effective strategy

implementation. To achieve objectives, proper resource allocation is essential to carry out the
various operations. The resources are roughly classified into three categories:
Physical Resources:
• Machinery and Equipment
• Building and Office Space
• Company Vehicles
• Storage Facilities
Financial Resources:
• Cash
• Venture Capital
• Grants and Loans
• Stocks and Investments
Human Resources:
• Blue-collar employees (manufacturing laborers)
• White-collar employees (office workers)
7. Across the Board Applicability. Strategy is relevant to all situations. It is suitable to both
commercial and non-commercial organizations. This is due to the fact that every company must
develop plans for development and survival. The existence of strategies keeps organizations on
the right path.

8. Periodic Review. Strategies must be examined on a regular basis. Such an assessment is

essential to change plans in response to shifting company demands. To acquire a competitive
advantage over its competitors, strategies must be reviewed on a regular basis.

9. Applicable to all Business Functional Domains. All business functional domains can
benefit from strategies. Production, marketing, finance, human resource management, and other
functional areas are included. Strategies help in the planning, organization, directing, and control
of operations across, all management functions of the firm.

STRATEGIC MANAGEMENT

Strategic management is concerned with the identification and formulation of strategies

that leaders might employ in order to enhance organization's performance and gain a competitive
edge for their firm. If an organization's profitability exceeds the average profitability of all
enterprises in its industry, it is considered to have a competitive advantage.

Strategic management may also be described as a set of decisions and actions taken
by a manager that determine the outcome of the firm's performance. To make sound judgments,
the manager needs to have a solid understanding and comprehension of the overall and
competitive organizational setting. They should undertake a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats), which means they should maximize the use of
company's strengths, reduce organizational weaknesses, capitalize on emerging opportunities
from the business environment, and avoid ignoring threats.
 Strategic management is nothing more than preparing for both anticipated and
unpredictable scenarios. It is useful to both small and large firms since even the smallest
organizations encounter rivalry and may achieve a long-term competitive advantage by
developing and implementing effective strategies. It is a method through which strategists create
goals and work toward them. It is concerned with making and carrying out decisions on an
organization's future path. It assists us in determining the direction in which an organization is
heading.

Strategic management is an ongoing procedure that analyzes and regulates the

business and industries in which an organization operates; assesses its rivals and defines
objectives and plans to fulfill all existing and possible competition in the market; and then
reassesses strategies on a regular basis to identify how they were applied and whether they are
effective or if they need to be changed.

Strategic Management provides the employees with a clearer context, allowing them to
better grasp how their function integrates with the overall organizational strategy and how it is
connected to other members of an organization. It is simply the skill of managing personnel in a
way that enhances their potential to achieve corporate objectives. As they can closely link to each
organizational work, the personnel become more dependable, more devoted, and more content.
With the help of strategic management, they can comprehend the impact of environmental
changes on the business and the likely response own jobs and appropriately deal with them. of
the organization. As a result, personnel can assess the impact of such changes on their own jobs
and approximately deal with them.

TOPIC 2: STRATEGIC MANAGEMENT PROCESS

Strategic management is an interactive process. In other words, in trying to operationalize the

strategic management model, managers or strategists have to make sure that they must begin
the process by determining the vision of the organization. The mission of the organization must
also be clarified. Then, the organizational goals are defined and set by the managers or
strategists. Operationalizing the strategic management model involves a series of steps that are
continuous and ever changing with the dynamics of the environment. A change in one of the
elements can affect the other elements in the strategic management model. Thus, the strategy
formulation, implementation, evaluation, and control must be done on a continual basis and not
a one-time approach.
Strategic management consists of three key components

Strategy formulation is the process of determining the optimal course of action to achieve
organizational objectives and, ultimately, organizational mission. Organization develops
Strategy corporate, company, and functional plans after undertaking an analysis of internal and
Formulation
external environment.

Strategy implementation entails making the strategy operate as planned or bringing the
organization's selected plan into practice. Implementing strategy include creating the
Strategy organizations’ culture, allocating resources, building decision-making processes, and
Implementation human resources management.

The final phase in the strategy management process is strategy assessment/evaluation.

Appraising internal and external elements at the core of strategic capabilities, monitoring
Strategy performance, and implementing preventive / corrective measures are the primary strategy
Evaluation evaluation tasks. Evaluation ensures that the organizational strategy and its execution are
in line with the organization's goals.

I. Strategy Formulation
The following steps are involved in strategy formulation:

Framing Mission Analysis of the Analysis of the Analysis of the

and Objectives Internal External External
Environment Environment Environment

e strategy
management
Framing Mission Analysis of the
and Objectives process is
Internal
strategy
Environment
assessment/eval
uation.
Defining the firm's goal and objectives comes first in the process of formulating
Appraisinga
strategy. The organization's mission outlines its guiding principles and goals. The purposes or
internal and
outcomes that the organization strives to accomplish are the objectives. The mission and goals
external
must be clearly expressed. After establishing of objectives or goals, management must conduct
elements
an internal environment assessment. Prior to creating objectives, an internal environment at the
assessment may be undertaken. The internal environment includes the organization'score of strategic
personnel,
capabilities,
monitoring
performance,
and
machinery, processes, procedures, and other resources. A thorough examination of the
organization's internal environment exposes its strengths and weaknesses.

The organization must execute an external environment analysis. The external

environment includes legislation, industry, buyers, technological advancement, and other
environmental elements that influence the company. A thorough examination of the external
environment provides possibilities (opportunities) and risks (threats). Additionally, the
management does "gap analysis" To do this, management must evaluate and study its current
performance level and the projected future level of perfor-mance. A comparative of this form
would disclose the magnitude of the difference that exists between the organization's current
performance and its future prospects. If there is a significant gap, management must devise
appropriate solutions.

After doing a SWOT analysis and a gap analysis, management must develop
alternative plans to achieve the firm's goals. Alternative methods must be developed since certain
initiatives may be placed on hold while others are implemented. It is important to take note that
not all of the alternate solutions can be implemented by the company. With that, the company
must be careful in selecting the best alternatives. Depending on the scenario, the business must
choose the optimal approach. Before deciding on the optimal plan, the company should do a cost-
benefit analysis of the alternatives. The method that provides the greatest advantages at the
lowest cost would be chosen.

II. Strategy Implementation

Each functional department, such as production, marketing, finance, and people, has
its own strategy. Following the formulation of strategies, the next stage is their
implementation. The following aspects are included in the strategy's implementation:

1. Formulation of plans, programs, and projects

Plans, programs, and initiatives must be developed. Strategy alone does not result in
action. For example, if a growth plan is developed, numerous sorts of expansion plans
must be established. An expansion plan would include increasing product production rate
and/or developing and manufacturing new items. Expansion plans result in several types
of programs. A program is a large plan that incorporates goals, regulations, methods, and
other elements needed to put a plan into action. For example, there may be a Research
and Development program to create a new product. Programs result in the creation of a
project, which is a specialized program with a set time schedule and cost.
2. Project Implementation
e
CONCEPTION PHASE During this stage, ideas for future projects typically generated.

DEFINITION PHASE The preliminary assessment of the project is conducted in this phase.

PLANNING AND ORGANIZING This stage determines the specifics of the product’s execution, such as contract awarding, order
placement, and so on.
PHASE

This stage determines the specifics of the product’s execution, such as contract awarding, order
IMPLEMENTATION PHASE placement, and so on.

This phase is concerned with dismantling of the project infrastructure and the handover of
CLEAN-UP PHASE the plant to the operational employees.

3. Procedural Implementation

Before adopting plans, the organization must be informed of the regulations of the
governing bodies. The following regulatory aspects must be evaluated:

a. International technology regulation

b. Procedures for international collaboration
c. Capital issue policies
d. Foreign trade rules

4. Resource Allocation

It is concerned with the allocation and dedication of material, economic, and human
factors to diverse tasks in order to meet the organization's objectives. The strategy must
assign resources to the various divisions, departments, and so on. The resources must be
distributed based on the priority of operations in each unit or division. It entails allocating
labor, machinery, equipment, funds, and other assets to each task.

5. Structural Implementation The framework under which the organization functions is

referred to as its organizational structure. For the implementation of strategy, many
organizational structures can be used.

a. An entrepreneurial (line) structure that is appropriate for a small owner-manager firm.

b. A functional structure that is appropriate for a multi-department organization.
c. A matrix structure that is appropriate for multi-project/product organization.

6. Functional Implementation
It is in charge of carrying out the functional plans and policies. Strategies must offer
direction to functional managers on the plans and policies to be implemented in order for
them to be executed successfully. Plans and policies must be developed and implemented
across all functional units, including production, marketing, finance, and employees.
7. Behavioral Implementation
It focuses on characteristics of strategy execution that have a significance on
strategists' conduct when executing plans. It addresses themes such as management,
company culture, corporate politics and power, self-worth, ethical behavior, and community
involvement.

III. Strategy Evaluation

The part of the strategic management process in which managers attempt to ensure
that the strategic decision is correctly executed and meets the firm's objectives is known as
strategy evaluation. It consists of the following components.
1. Standard Formulation Strategists must define performance criteria and risk
levels for goals, strategies, and action plan. Quantity, quality, cost, and time may all be
specified as standards. The standards must be specific and reasonable to the workforce.
2. Performance Evaluation This stage deals with the assessment of actual
performance. The management may require performance reviews from staff for this purpose.
Actual performance may term of time and cost. be assessed as well as qualitatively. The actual
performance must also be measured in
3. Actual Performance Comparison Actual performance must be compared to the
criteria. The actual performance comparison is necessary to determine any discrepancy. must
be objectively compared to the planned objectives or benchmarks. Such a comparison is
necessary to determine any discrepancy.
4. Finding out deviations Managers may identify discrepancies after comparison.
For example, if a certain brand’s sales objectives were 1000 units for specific time and sales
figures were only 9000 units for that period, the variances are 1000 units.
5. Analyzing deviations The variance must be communicated to upper
management. The causes of deviations are investigated by higher authorities. Supervisors or
higher authorities may undertake appropriate consultations with functional personnel for this
reason. For example, a 1000-unit variance might be the result of inadequate advertising,
incorrect pricing, or poor distribution, among other factors. The precise reason or causes of
the divergence must be determined.
6. Taking corrective measures After the identification of the sources of variances,
managers must take corrective actions to remedy the deviations. There may be times when
goals and objectives must be redefined, or strategies, rules, and criteria may be reframed. To
achieve the goals, corrective actions must be implemented at the appropriate time.