Our Lady of the Pillar College – San Manuel, Inc.

District 3, San Manuel, Isabela

COLLEGE OF ACCOUNTANCY

STRATEGY IMPLEMENTATION
Strategic Management
MGT – 04

STRATEGY
It comes from the Greek word “strategos”, which means “the art of the general”.

A strategy is not realized all the time, 100% of its intentions. The conditions in the environment may affect an intended goal
or objective to strategy. Employees may lack the needed commitment to make the strategy work. The entire organization may
resist the change at the last minute. The list goes on and on.

LEVELS OF STRATEGY
1. Corporate Strategy. It comprises of decisions that give the organization what industry it will be and not be in and
how it will allocate specific resources. Since it concerns the whole corporation, it usually fulfills the mission and
vision of the company. It generally analyzes the whole system on the basis of participation of the different business
units. The corporate strategies establish the framework by which all other strategies are formulated and
implemented.

Below are the considerations to be followed in corporate level strategy.

a. Scope. It means identifying the overall goals of the corporation and the types of business in which the
companies should get in.
b. Access to Competition. It means identifying and defining where the company should be accessible.
c. Management of Relationships. The strategies should be shared and coordinated to all employees.
d. Management Practices. A company should decide how the employees are to be governed in the
achievement of corporate objectives.

2. Business Strategy. It is a set of decisions that provides ways on how the organization competes in the industry it
chooses to be in and eventually sustains a competitive advantage. These are basically positioning strategies, making
the companies secure a foothold in the market. It also positions the brand and enables brand awareness to the
customers. It also instills loyalty on the brand.

3. Functional Strategy. It comprises of the decisions in the different functions of the organization that support the
business strategy. These functions include marketing, production, finance, research and development and human
resources. These are operational strategies wherein they translate the strategies in the corporate and business levels
to departmental or functional units. They are transformed into specific processes, human and other resources.

FUNCTIONAL STRATEGIES IN MARKETING

Marketing is the process of creating and satisfying consumer needs and wants through products and services. It encompasses
a wide range of basic functions, all of which provide customer satisfaction.

1. Customer Analysis. To be able to define the target market, it is important to analyze the personalities, economic
status, gender and other demographical aspects to come up with strategies that would be essential in setting up
overall company goals, objectives as well as its mission and vision statements. The gathering of pertinent
information seems tedious but a successful organization always monitors the market and studies the buying patterns
of people, both existing and potential customers.

2. Selling of Products and Services. In here, it is not just selling the product or service. It also includes other tasks that
will help in selling the product. Tasks like advertising and promotion are crucial especially if there are new products.
It is also necessary to maintain the power of the brands in the minds of the consumers. It does not end in the actual
purchase of the product or availment of a service. After sales transactions involve the feedback from customers and
how the product or service can be improved through the comments and suggestions of customers.

3. Product or Service Planning. The most popular and most effective option is test marketing. It predicts future sales
of new products and services and eliminates the possibility of heavy losses or possible product failure. It also
includes brand positioning and packaging. These are relevant on maintaining superior brand power by positioning
the product or service; making the consumers to remember the brand. Planning provides the development of
features, styles and quality of the product. It also determines options on products or brands that should be phased out
and which products should be diversified.

4. Pricing. There are major considerations with regard to pricing such as:
a. Capacity of the consumers to buy.
b. Price of raw materials in producing the product.

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 5. Distribution. This includes locations of retails sales, sales territories and channels, transportation carriers,
wholesaling and retailing. Some manufacturers or producers would prefer intermediaries rather than distributing the
product directly to consumers.

6. Opportunity Analysis. It is equivalent to cost-benefit analysis. Companies obviously determine whether benefits
outweigh the costs.

FUNCTIONAL STRATEGIES IN FINANCE

1. Investment Decision. It is also called capital budgeting. It involves the allocation of resources including capital to
projects, products or services, and assets. This is an efficient placement of capital to various means.

2. Financing Decision. It examines and finds the best capital structure for the organization. It determines how the firm
can raise capital such as selling of assets, issuing stock or obtaining a debt facility.

3. Dividend Decision. It concerns the right period or time frame by which the organization will issue a percentage of
income to stockholders through dividends. It also determines the issuance of stocks and the earnings retained to the
firm.

FUNCTIONAL STRATEGIES IN PRODUCTION

1. Process. It includes various activities such as the use of facilities, production flow analysis and physical distribution
system.

2. Capacity. It concerns with the determination of optimal output levels for the firm without going over or under
production. To achieve this, the company makes a forecast and schedule production operations.

3. Inventory. There is a need to manage the level of raw material, work in process and finished goods inventory. This
also summarizes the size, quantity and period of orders.

4. Quality. It denotes the quality goods and services. This includes testing, quality assurance and cost control.

IMPLEMENTING STRATEGIES AND E-COMMERCE

E-commerce has essentially changed the way business is conducted. There is a constant restructuring of business processes to
enable companies to attract more customers via the worldwide web.

The internet has actually eased up entry barriers for new companies because they do not need high capital to invest in sales
forces. The internet has become a tool in making business and transacting with companies.

One advantage of the internet is the ease of customers to compare prices. It is relatively easy for customers to collect
information about products and services without having to go to the stores.

1. Product Bunch Strategy. It gives the buyers the chance not to compare prices individually but on a whole package.

2. Introduction of Niche Product Strategy. Through the direct access available in the internet, companies can identify
target consumers and this introduces products and services that will cater to their needs.

3. Customer-centered Strategy. It enables a company to pull out information from consumers to improve the
company’s performance.
4. Expansion into Related Product Lines Strategy. This helps companies to share activities such as promotion and
distribution. This can lower costs which is advantageous to consumers.

The internet enables consumers to compare prices, products and services of suppliers. On the part of the suppliers, there is an
intensive price war. To overcome it, some suppliers request buyers to enter a code before they can collect prices.

Two strategies are available:

1. Price Lining. It refers to the practice of offering the same products at price points depending on consumer needs.

2. Smart Pricing. It refers to the practice of changing various prices from one market to another depending on the
conditions of the market.

CASE ANALYSIS #1
Jaime Zobel de Ayala and the Ayala Corporation
Read the short article. Additional data can be found at the internet. Answer the questions after reading the article.

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Jaime Zobel de Ayala is the president and chairman of the Ayala Corporation. The said $1.2 billion company is the holding
organization for the following: Ayala Malls, Avida, Alveo, Ayala Land, Ayala BusinessScapes, Ayala Hotels, Makati
Development Corporation, Ayala Property Management, Bank of the Philippine Islands, Globe Telecoms, Manila Water
Company (Maynilad), Integrated Microelectronics, Inc., Azalea Technology Investments, Inc., Ayala Automotives Holdings,
Inc. (Honda Cars Makati and Isuzu Automotive Dealership, Inc.), Ayala International Pte, Ltd., Integreon Managed
Solutions, Inc., Ayala Foundation, Inc., and eTelecare.

Aside from his membership in the board of the Ayala Group of Companies. He is a member of other international
organizations: JP Morgan International Advisory Council, the Mitsubishi Corporation International Advisory Committee, the
Toshiba International Advisory Group, the Asia Society and the Asia Business Council.

As an alumnus of Harvard University, he is a member of the Harvard University Asia Center Advisory Committee, Harvard
Business School Asia Advisory Committee and the Board of Trustees of the Asian Institute of Management.

Jaime studied at Harvard University where he earned his BA in Economics (Cum Laude) in 1981 and his MBA in 1987.

Ayala planted the seeds of fruitful hard work and discipline coupled with sound management principles as early as 1834.

In this kind of industry, perseverance and determination helped in the pioneering of real estate development and banking in
the country.

As a huge contributor in building the Philippine economy, Ayala fostered financial strength, high product quality and
professionalism.

QUESTIONS FOR ANALYSIS

1. What are the qualities of Jaime Zobel de Ayala which made him to pioneer in urban development through real estate?

2. Trace the various industries that Ayala ventured into through the internet. Trace the financial strength, high product
quality and professionalism he has inculcated in these businesses. Comment on these.

CASE ANALYSIS #2
The Success of Procter & Gamble
Read the short article and research on the successful products of Procter & Gamble. Analyze the strategies particularly those
that have become number 1 in their respective industries like Tide and Pampers. Compare the brands with their stiffest
rivals.

Procter & Gamble (P&G) has proven to the world that its innovation, courage and determination to succeed make the
organization as one of the most bankable and most successful multinational companies in the world. It has the ability to
survive in the midst of crisis and turmoil. It has the capability to make a turnaround when things go wrong whether it is a
serious financial crisis or an economic recession.

Today, P&G continues to market Pampers disposable diapers, Tide laundry detergent and Pantene hair care products. P&G
products are household names to millions of people in over 130 countries.

P&G houses 250 brands worldwide in six categories: laundry and cleaning (detergents), paper goods (toilet paper), food
beverages (coffee and snacks), feminine care (sanitary towels) and healthcare (toothpaste and medicine).

To maintain its global standing, P&G takes the challenge of monitoring its patrons. It lays its fingers and takes the pulse of
consumers all over the world to find out its consumer needs. The success of monitoring consumer behavior is translated into
P&G’s research and development to come up with new products that meet consumer demand. In this instance, P&G does not
waste time and procrastinate. P&G does it quickly. It can really spell the difference.

Once P&G recognizes the new products to be marketed, it works with its supply chain. It communicates to its retailers
worldwide. It recognizes all types of retailers: street stalls, groceries, hypermarkets, among other, all with different sizes.

To be able to do this and for products to reach customers in the most efficient and effective manner, P&G has to understand
costs. The product should be delivered at a least cost without sacrificing quality. P&G also has to protect its highly reputable
image.

In this instance, P&G takes advantage of the digital world, the fast-paced revolutionary breakthroughs in the web. P&G
continues to study options that would minimize costs such as using online consumer research to lessen costs of direct travel
and reach to get consumer opinions. P&G uses technology to channel the products fast and on time, thus, avoiding
deterioration or damage.

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Not to be outdone are its employees. The heart of any organization is the people who realize the concepts and ideas into
actual products. The employees are continuously provided with tools, equipment and raining to keep abreast with the fast-
paced environment. In addition, the employees are recognized also for their contribution in innovations. Their ideas keep
P&G alive. Their efforts are rewarded and their contributions are appreciated.

There is a constant improvement in cost and speed. P&G also has a strategy for growth. It focuses on its core businesses.
Also, it maintains its strongest retail customers and to win and dominate in the most important countries.

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