STRATEGIC MANAGEMENT

Strategic and Total Quality Management

Strategic Management- it aims to develop knowledge, skills and professional orientation of Senior
Managers, Corporate Planners, Program Planners and other relevant professionals who have
direct input in the strategic planning and decision-making process for their respective organization
to enable them to respond effectively.
Total Quality Management- it aims to enable participants to recognize and assess quality
management processes in a hospitality and tourism organization and to evaluate departmental
processes and planning strategies.
STRATEGIC MANAGEMENT
- Can be defined as the art and science of formulating, implementing, and evaluating cross-
functional decisions that enable an organization to achieve its objectives.
- Focus on integrating management, marketing, finance/ accounting, production/ operations,
research and development, and computer information system to achieve organizational success.
Strategic management – used synonymously with term strategic planning
Strategic management used to refer to strategy formulation, implementation, and evaluation.
Strategic Planning- referring only to strategy formulation.

PURPOSE OF STRATEGIC MANAGEMENT

- To exploit and create new different opportunities for tomorrow, long-range planning, in contrast,
tries to optimize for tomorrow the trends of today.

STAGES OF STRATEGIC MANAGEMENT

1, Strategy Formulation
2. Strategy Implementation
3. Strategy Evaluation

Strategy Formulation – Includes developing a vision and mission, identifying an organization’s

external opportunities and threats, determining internal strengths and weaknesses, establishing
long-term objectives, generating alternative strategies and choosing particular strategies to
pursue.
Strategy formulation decision commit an organization to specific products, markets, resources
and technologies over an extended period of time.

Strategies determine long-term competitive advantages. Top managers have the best
perspective to understand fully the ramifications of strategy- formulation decisions; they have
they authority to commit the resources necessary for implementation.
Strategy Implementation-
requires a firm to establish annual objectives, devise policies, motivate employees, and allocate
resources so that formulated strategies can be executed.

Includes developing a strategy-supportive culture, creating an effective organizational structure,

redirecting, marketing efforts preparing budgets, developing and utilizing information system, and
linking employee compensation to organizational performance.

-Often called “action stage” of strategy management.

- Implementing strategy means mobilizing employees and managers to put formulated strategies
into action.
- The most difficult stage in strategic management, requires personal discipline, commitment,
and sacrifice.
- Successful strategy implementation hinges upon managers ability to motivate employees,
which is more an art than a science, strategies formulated but not implemented serve no useful
purpose.
- Strategy- implementation activities affect all employees and managers in an organization.

3. Strategy Evaluation- The final stage in strategic management. Managers desperately need to
know when particular strategies are not working well;
- Strategy evaluation is the primary means for obtaining this information
- All strategies are subject to future modification because internal and external factors are
constantly changing.

3 FUNDAMENTAL EVALUATION ACTIVITIES

1. Reviewing external and internal factors that are the bases of current strategies.
2. Measuring performance and,
3. Correcting corrective action.
 - Strategy evaluation is needed because success today is no guarantee of success tomorrow
- Success always creates new and different problems; complacent organizations experience
demise
- Business expert and icon peter Drucker says the prime task of strategic management is
thinking through the overall mission of a business.

9 KEY TERMS IN STRATEGIC MANAGEMNT

1. Competitive Advantage
2. Strategies
3. Vision and Mission Statements
4. External Opportunities and threats
5. Internal Strengths and weaknesses
6. Long term objectives
7. Strategies
8. Annual objectives
9. Policies
Competitive Advantage- this term can be defined as anything that a firm does specially well
compared to rival firms”.

Strategist- are the individuals who are most responsible for the success or failure of an
organization.

Strategist- have various job title;

1. Chief executive officer
2. President
3. Owner
4. Chair of the board
5. Executive director
6. Chancellor
7. Dean
8. Entrepreneur

Strategists- help an organization gather, analyze, and organize information

-They tract industry and competitive trends, develop forecasting models and scenario analyses,
evaluate corporate and divisional performance, spot emerging market opportunities, identify
business threats, and develop creative action plans.
 Vision and Mission Statements- developing a vision statements are often considered the first step
in strategic planning, preceding even development of a mission statement.

Mission statement- identifies the scope of a firm’s operations in product and market terms.

- Developing a mission statement compels strategies to think about the nature and scope of
present operations and to assess the potential attractiveness of future markets and activities.
- A mission statement broadly charts the future direction of an organization.

- External Opportunities and Threats

-Refer to economic, social, cultural, demographic, environmental, political, legal, governmental

and competitive trends and events that could significantly benefit or harm an organization in
the future.

Opportunities and Threats – are largely beyond the control of a single organization thus the
world external

- The basic principles of strategic management is that firms need to formulate strategies to take
advantage of external opportunities and to avoid or reduce the impact of external threats.

Internal Strengths and Weaknesses- are an organization’s controllable activities that are
performed especially well or poorly.
-identifying and evaluating organizational strengths and weaknesses in the functional areas of a
business is an essential strategic management activity.
- internal factors can be determined in a number of ways including computing ratios, measuring
performance, and comparing to past periods and industry averages.
- various types of survey also can be developed and administered to examine external factors
such as employee, morale, production, efficiency, advertising effectiveness, and customer
loyalty.

Long- Term Objectives-

Objectives- can be defined as specific results than an organization seek to achieve in pursuing
its basic mission.
 Long -Term- means more than one year.

Long- Term Objectives-

-Objectives are essential for organizational success because they state direction; aid in
evaluation; create synergy; reveal priorities; focus coordination; and provide a basis for effective
planning, organizing, motivating and controlling activities.
- Objective should be challenging, measurable, consistent, reasonable, and clear.

Strategies – are the means by which long-term objectives will be achieved.

- Business strategies may include geographic expansion, diversification, acquisition, product
development, market penetration, retrenchment, divestiture, liquidation, and joint ventures.
- Strategies are potential actions that require top management decisions and large amounts of the
firm’s resources.
- Strategies affect an organization’s long-term prosperity typically for at least five years, and thus
are future oriented.
- Strategies have multifunctional or multidivisional consequences and require consideration of both
the external and internal factors facing the firm.

- Policies- are the means by which annual objectives will be achieve. Policies include guidelines
rules and procedures established to support efforts to achieve stated objectives.
- Policies are guide to decision making and address repetitive or recuring situations.
- Policies are the most often stated in terms of management, marketing, finance/ accounting,
production/ operation, research and development and computer information systems activities.
- Policies Like an annual objective, are especially important in strategy implementation because
they outline an organization’s expectations of its employees and manager.

January 29, 2022

TOTAL QUALITY MANAGEMENT

Total Quality Management- was started in 1954 in japan; says, “Total quality management is an
organized structural tool that focuses on continuous quality improvement of product and services
using the continuous feedback system.” Or TQM can be summarized as a management system for
the customer- focused organization that involves continuous improvement of the process

 It uses strategy, data, and effective communication to integrate a quality discipline into the
employee and organization”.
 TQM was develop by William Deming, a management consultant whose work had a great impact
on Japanese manufacturing. While TQM shares much in common with the Six Sigma
improvement process, it is not the same as Six Sigma
 TQM focuses on ensuring that internal guidelines and process standards reduce errors, while Six
sigma looks to reduce defects

What is Six Sigma

 Six Sigma – is a defined and discipline business methodology to increase customer satisfaction
and profitability by streamlining operations, improving quality and eliminating defects in every
organizational wide-process.
1. Practical problem – understand the problem that impacts business performance
2. Statistical problem - identify the problem with data and facts
3. Statistical solution – find out a data driven and reliable solution
4. Practical solution –provide a solution to increase profit, reduce waste
5. Control Plan- create a system to create a long-term solution.
6. Results- measure the benefits of financial success

The Six Sigma

A Business Strategy- using Six Sigma methodology, a business can strategize its plan of action and
drive revenue increase, cost reduction and process improvements in all parts of the organizations.

A Vision- helps the senior management create a vision to provide defect free, positive environment
to the organization.
A Benchmark- helps in improving process metrics achieve stability; we can use six sigma
methodology again to improve the newly stabilized process metrics.
For example: The cycle time of pizza delivery is improved from 60 minutes to 45 minutes in a pizza
delivery process by using six sigma methodology. Once the pizza delivery process stabilized at 45
minutes, we could carry out another Six Sigma project to improve its cycle time from 45 minutes to
30 minutes. Thus, it is a benchmark.

A Goal- organization can keep a stringent goal for themselves and work towards achieving them
during the course of the year. Right use of the methodology often leads these organizations to
achieve these goals.

A statistical Measure- is a data driven methodology. Statistical analysis is used to identify root-
causes of the problem. Additionally, six sigma methodology calculates the process performance
using its own unit known as sigma unit.
 What is Total Quality Management
Total Quality Management (TQM)- is the continual process of detecting and reducing or eliminating
errors in manufacturing, streamlining supply chain management improving the customer experience
and ensuring that employees are up to speed with training. Total quality management aims to hold
all parties involve in the production process accountable for the over all quality of the final product or
service.
 Total quality Management, TQM, is a method by which management and employees can
become involved in the continuous improvement of the production of goods and services. It’s a
combination of quality and Management tools aimed at increasing business and reducing
losses due to wasteful practices.
 Is an ongoing process of detecting and reducing or eliminating error
 It is used to streamline supply chain management, improve customer service, and ensure that
employees are trained.
 The focus is to improved the quality of an organization’s outputs, including goods and services,
through the continual improvement of internal practices.
 Total Quality management aims to hold all parties involved in the production process
accountable for the overall quality of the final product and services.
 Is a structured approach to overall organizational management
 The focus of the process is to improve the quality of an organization’s outputs, including goods
and services, through the continual improvement of internal practices.
 The standards set as part of the TQM approach can reflect both internal priorities and any
industry standards currently in place.

PRIMARY PRINCIPLES OF TOTAL QUALITY MANAGEMENT

TQM is considered is customer focused process that focus consistently improving business
operation. It strives to ensure all associated employees work toward the common goals of
improving product or service quality, as well as improving the procedures that are in place for
production.

Industries Using Total Quality Management

 -While TQM originated in the manufacturing sector, its principle can be applied to a variety of
industries. With a focus on long-term change rather than short-term goals it provides a cohesive
vision for systemic change.

-With this mind, TQM is used in many industries, including, but not limited to, manufacturing,
banking and finance and medicine.

- These techniques can be applied to all departments within an individual organization as well.

- This helps ensure all employees are working toward the goals set forth for the company,
improving function in each area. Involved departments can include administration, marketing,
production and employee training.

WHAT DOES TOTAL QUALITY MANAGEMENT DO?

-TQM oversees all activities and task needed to maintain a desired level of excellence within a
business and its operations

- This include the determination of a quality policy, creating and implementing quality planning and
assurance and quality control and quality improvement measures.

What is an example of TQM in practice?

 Perhaps the most famous example of TQM is Toyota’s implementation of the Kanban system.
 A Kanban is a physical signal that creates a chain reaction, resulting in a specific action.
 Toyota used this idea to implement its just- in- time JIT inventory process.

JUST IN TIME INVENTORY SYSTEM

JIT- is a system of managing inventory that is design to improve efficiency and reduce waste in
a production process, and minimize inventory carrying cost.

Carrying Cost- is how much it costs a company to hold their inventory. This includes expenses
such as how much it cost to rent and run the warehouse where stock is stored, salaries of
employees at the warehouse, shrinkage (Lost of inventory due to theft or damage) and
insurance costs.

What are the principles TQM?

 Various iterations of TQM have been developed, each with its own set of principles. Still, certain core
elements persist.
 These include, among others: Good leadership: a focus on quality; putting customer first; error
correction and improvement as an ongoing process; and job training.

BASIC CONCEPT OF TOTAL QUALITY MANAGEMENT

The management must participate in the quality program. A quality council must be established to
develop a clear vision, set long term goals and direct the program. Quality goals are to be included
in the business plan.

ADVANTAGES AND DISADVANTAGES OF TOTAL QUALITY MANAGEMENT

Advantage- include cost reduction. When applied consistent overtime, TQM can reduce cost
throughout an organization especially in the areas of scrap, rework, filed service and warranty cost
reduction. Customer reduction.

Disadvantage- total quality management is a quality assurance system companies can implement
into their operations. Though the system brings many advantages to the business, several
Disadvantage of total Quality Management also exist. These advantages may include high
implementation cost, unseen benefits early on and resistance to change from employees.

Basic Principles of Total Quality Management

The basic principles for the total quality management philosophy of doing business are to satisfy the
customer, satisfy the customer, satisfy the supplier, and continuously improve the business process.

February 5, 2022

Explain why strategic management Often is called a “Capstone Course”

 Business policy is commonly called a capstone course because student’s major responsibility
in this class is to use all knowledge gained in prior courses to chart the future direction of
different organization.

What aspect of strategy formulation do you think requires the most time? Why?
 Important aspects of strategy formulation include developing a business mission, performing
an external, audit, conducting an internal audit, generating alternative strategies and choosing
among alternative strategies. Performing an external audit generally takes the most time. For
 example, identifying competitors’ strength and weaknesses is an essential aspect of the
external audit. Effective use of the internet can reduce the time required for performing an
external audit.

Why strategy of implementation is often considered to be the most difficult to do something

than to say you’ re going to do it.

Why is it so important to integrate intuition and analysis in strategic management?

Neither intuition nor analysis alone is sufficient for making good strategic decision. Intuition,
based on one’s past experience, judgement, and “gut” feelings, does not include the use of
analytical strategic-management concepts that have been developed and successfully tested
in the business world. To ignore these techniques that are based on historical learning is like
trying to reinvent the wheel.
 However, no analytical tools can capture all aspect of a given organization’s culture and
situation. Nor can analytical tools assimilate all the subjective information that must be
considered in strategic management, such as personalities, emotion, values, beliefs, customs
and ethical factors. Thus, it is very important to integrate intuition and analysis in strategic
management.

Explain the importance of a vision and mission statements

 Reaching agreement on formal vision and mission statements can greatly facilitate the process
of reaching agreement on an organization’s strategies, objectives, and policies. Organizational
success depends on reasonable agreement on these issues, so a clear mission statement is a
most important strategic-management tool.

Discuss relationship among objectives, strategies, and policies

 Long- term objectives and strategies are products of strategy formulation. Short-term (annual)
objectives and policies are products of strategy implementation. Firms should translate long-
term-objectives into annual objectives. Similarly, strategies should be supported with clear
policies.

Why do you think some Chief Executives officers fail to use a strategic management approach to
decision- making.

-Some chief executive officers, strategist, and organization has been successful, to date, without
using strategic-management concepts and techniques. However, success today is no guarantee
for success tomorrow. The business world is becoming global in scope; technology is changing
the nature of competition in all industries.

- strategic management enables organization to recognize and adapt to change more readily;
successfully adapting to change is the key to survival and prosperity. There is no good alternative
approach to strategic management.

What are the aspects in strategic management?

 Strategic analysis strategies analysis is usually concerned with understanding the

organizations strategic position.
 Strategic choice strategic analysis usually creates a foundation for strategic choice. After
strategic analysis has been done, it is now ready to make a strategic choice.
 Strategy implementation.

Discuss the importance of feedback in the strategic- management model

 Note in the strategic- Management model that feedback is critically important. Changes can
occur that impact all strategic- management activities. Feedback allows these changes to be
identified and adjustments to be made. Feedback in the strategic management process
promotes the creation of a climate for two-way communication and, thus, allows esprit de
corps to be achieved in an organization.

How can strategies best ensure that strategies will be effectively implemented?
 Strategies can best assure that strategies formulated will be effectively implemented by
involving as many managers as possible in the strategy formulation process. Also, it is
important to communicate effectively why changes are needed.

List four financial four non-financial benefits of a firm engaging in strategic planning. and

 Business engaging in strategic planning experience the following financial benefits. They show
significant improvement in sales, profitability, and productivity compared to firms without
strategic planning generally exhibit superior long-term financial performance relative to their
industry and seem to make more informed decisions with good anticipation of both short and
long-term consequences. They are also prepared for fluctuations in their external and internal
environments
 What did Peter Drucker believe about decentralization?
 Drucker was a believer in decentralization management. He saw that many leaders try to take
on everything in a demonstration of power or means of maintaining control, under the
assumption that only they can accomplish a task correctly. Drucker believed that managers
should delegate task in order or empower employees.

What is a Business model?

 Business model describes entire procedure of creation, delivery, and capturing of
organizational values in both economic and social aspects. It represents core aspects of the
business which include strategies, organizational structure, purpose, operational processes,
policies, infrastructure, and business practices.

The six basic elements of a business model:

1. Articulate the value proposition- the value created to users by using the product.
2. Identify the market segment- to whom and for what purpose is the product useful; specify
how revenue is generated by the firm.

3. Define the value chain- the sequences of activities and information required to allow a
company to design, produce, market, deliver and support its product or service.
4. Estimate the cost structure and profit potential- using the value chain and value proposition
identified.
5. Describe the proposition of the firm with the value network- link supplier, customers,
complementors and competitors.
6. Formulate the competitive strategy- how will you gain and hold your competitive advantage
over competitors or potential new entrants.

Leadership, Strategy, and Competitive Advantage

 Strategy it its theory about how to gain competitive advantages. A good strategy is a strategy
that actually generates such advantages.
 Strategy that firm’s best bet about how competition is going to evolve and how that evolution
can be exploited for competitive advantage.
 Strategic management is a sequential set of analyses and choices that can increase the
likelihood that a firm will choose a good strategy and strategy that generates competitive
advantages.
 What is the strategic - Management process?
 The strategic-management process is not as cleanly divided and neatly performed in practice
as the strategic management model suggest. Strategists do not go through the process in lock
step fashion.
 Generally, there is give-and-take among hierarchical level of an organization.

What is the meaning of strategic Analysis?

 Is the use of various tools to prepare business strategy by evaluating the opportunities and
challenges faced by the company as it moves forward.
 Typically, strategic analysis involves a review of internal strengths and weaknesses as well as
factors in the external environment that could affect business.

What is the vision and mission statement of a company?

 A mission statement is a complete picture of the present of the company whereas vision
statement is a picture that tells what the company wants to look like in the future.

How to build your company vision?

 Set a time frame. how long is the time period within which you expect to achieve the goal that
you have envisioned.
 Write the first draft. This is deemed by many to be the most difficult part of creating a vision
statement. getting started.
 Get feedback
 Rewrite
 Get feedback on the write
 Share the vision.

What is a vision statement and why is it important?

 Vision statement. mission statement, vision statement helps to describe the organization’s
purpose.
 Vision statements also include the organization values. Vision statements give direction for
employee behavior and helps provide inspiration.
How to write a Vision statement?
 Determine who will help write your vision statement. When starting out, it’s likely you and your
partners will be responsible for writing your company’s vision statement.
 Project your goal for your future. Imagine your company five or ten years down the line…
 Stick to the specifics. A generic vision statement- one that sound like it could apply to any
company- will not be enough to motivate your team.
 Keep it short and simple. While it should be specific, a vision statement shouldn’t be overly
detailed. It should be concise.

What is strategic management strategy?

 Strategic management is the continuous planning, monitoring, analysis and assessment of all
that is necessary for an organization to meet its goals and objectives.

What is the meaning and Important of strategic Analysis?

 It gives a company the ability to understand its environment, and formulate a strategic plan
accordingly.
 Strategic Analysis is paramount in any organization because its provide the context and back
bone upon which the strategy and overall position of the business is formulated.

February 12, 2022

EIGHT KEY ELEMENTS OF TQM

To be successful implementing TQM, an organization must concentrate on the eight key
elements:
 Ethics
 Integrity
 Trust
 Training
 Teamwork
 Leadership
 Recognition
 Communication
 TQM is built on a foundation of ethics, integrity and trust. It fosters openness, fairness and
sincerity and allows involvement by everyone. Organizational ethics establish a business code
of ethics that outlines guidelines that all employees are to adhere to in the performance of their
work.
 Employees need to be trained on interpersonal skills, the ability to work as a team member,
technical know-how, decision making skills, problem solving skills, and so on. Training enables
employees to implement TQM effectively within their departments and also make them
indispensable resources.
  Teamwork- to become successful in business, teamwork is also a key element of TQM, with
the use of teams, the business will receive quicker and better solution to problems. Teams also
provide more permanent improvements in processes in operations.
 Leadership- in TQM requires the manager to provide an inspiring vision, making strategic
direction that are understood by all and to instill values that guide subordinates. For TQM to be
successful in the business, the supervisor must be committed in leading his employees.
 Recognition- is the last and final element in the entire system. It should be provided for both
suggestion and achievements for teams as well as individuals. Employees strive to receive
recognition for themselves and their teams.
 Communication- means a common understanding of ideas between the sender and the
receiver the successful TQM demands communication with and among all the organization
members, suppliers and customer.

What are the key elements of Total Quality

 Management commitment to quality
 Customer satisfaction
 Preventing rather than detecting defects
 Measurement of quality
 Continuous improvement
 Corrective action of root cause
 Training
 Recognition of high quality
 Involvement of employees and
 Benchmarking- the process of measuring products, services, and processes against those of
organization known to be leaders in one or more.

Management’s Commitment to quality

 If an organization is serious about implementing TQM, the lead has to be taken by the top
management with full commitment.
 It must initiate quality improvement programs. The top management should continue all the efforts
and provide the resources to continue quality improvements program. This is provided by collecting,
reporting, and use of quality related cost information.

Customer satisfaction
 TQM is design in such a manner so as to meet the expectation of customer. In the present era,
customer is the king. It must be recognized that customer is the most important person for any
business. The very existence of an organization depends on them. They are the life blood of
business and deserve the most courteous and affectionate treatment.

Preventing rather than defecting defects

 TQM checks the poor quality or services rather than simply to detect and sort out defects.
“Prevention rather than detection” is the main characteristic of TQM. Some of the important
technique of TQM which aim at the prevention of defects rather than the detection of the defects are
statistical process control, continuous process improvement and problem solving and system failure
and analysis etc.

Measurement of quality
 Quality is measurable entity and we must know what current quality levels are i. e. Where we are
or where we stand and respect of the quality and what quality levels we are aspiring for or where
we are going.

Continuous improvement
TQM comprises of a continuous process of improvement covering people, equipment, suppliers,
materials and procedure. It includes every aspect of an operation in an organization. In the Japan
the word” kaizen” is used to describe the continuous process of improvement, In USA, TQM zero
defects and Six-sigma are used to describe such efforts.

Corrective action for root cause-

TQM aims at preventing repetition of problems by identifying the root causes for their occurrence
and developing means and corrective action to solve the problem of the root level. Failure analysis
and problem solving skills are very useful technique in this regard.