Approaches in identifying Policies and Strategies

1. Policy/Strategy Profile – involves a systematic way of examination whereby the company

policies and strategies are being examined by the officers and the employees themselves with
the help of an external consultant.

2. Gap Analysis – examination of the company policies and strategies that focuses whether the set
goal or objectives has been achieved. If not, the company will determine what company policies
are missing and what is wrong with the strategies that they have which resulted to a failure of
the set goals.

3. Competitive Strategy Analysis – this is the analysis of the competitive forces inside the business
and searching for alternative options that may be applied. This is used to compare how the
policies and strategies of the company have been doing against the other competitors in the
market of industry. This involves a detailed analysis of the factors (external and internal) that
affects the competitiveness of the business.

Four Generic approaches according to Richard Whittington:

1. Classical Approach – The main goal here is profitability therefore it follows the pattern of
analyzing, planning, commanding, and directing to achieve those specified goals.

2. Evolutionary – this approach is about keeping cost and expenses low with open options
keeping the belief that no matter what methods or strategies managers would adopt it will
only be the best performers who will survive.

3. Processual – this is the capability of making mistakes of both organization and the market
that the managers are able to formulate strategies to gain competitive advantage and taking
the world as how it is.

4. Systemic – the approach is to stay close to the ground and keep going with the flow of the
power and culture of the locals. This approach is about the capability of the organizations to
plan and acts effectively depending on their environment.

Developing Policy and Strategy

1. Top-bottom Approach – the policies and strategies are coming from the top management
being passed to the rank and file to be performed.

2. Bottom-Top Approach – the policies and strategies comes from the rank and file wherein
the top management develops a concrete policies and strategy.
 3. Top-bottom-top – the top management is the one to create policies an strategies to be
consulted in the lower ranks which is the turned back to the top management for
refinements. This is done to minimize the resistance of the employees when the policies and
strategies have been implemented.

Strategic Decision

Wheelen and Hunger have described the factors for a decision to be considered strategic as
follows:

a. Rare – the strategic decisions must be unique

b. Consequential – it must be resourceful and gain commitments from people
c. Directive – should set leads for decisions and actions for the future use

Modalities in Strategic Decisions

Approaches or modes of strategic decision making according to Mintzberg:

 Entrepreneurial Mode – in this mode the strategy lies on only one individual particularly the
owners own vision for the company. Its main focus is the continuous growth of the company
therefore it considers creating strategies to take advantages of the opportunities and treat
problems as a secondary matter.

 Adopted Mode – also known as muddling through in contrast with the first one, this mode
actually focuses on creating solutions to problems rather than looking for new opportunities.
This strategy helps to maintain the objectives of the company and can gradually move the
company forward.

 Planning Mode – this mode considers the problem reactively opportunities proactively. This
includes a systematic gathering of appropriate information for situation analysis which means
that the company is generating possible alternatives and choosing rational appropriate
strategies.

 Logical Mode – this mode is considered as the combination of the three other modes. The
company have the top management has the clear idea of the company mission and objectives
hence when it comes to the formulation and creation of strategies the company chooses to be
interactive with the problems and uses the knowledge they have learned from it to
incrementally improve the business rather than creating global strategies.
Strategic decision making process

Creating strategic decision undergoes a lot of process considering all the direct and indirect
factors that is relevant to the strategic objectives of the company. The diagram developed by wheelen
and hunger shows the strategic decision making process. According to them the steps are as follows;

Step 1: Evaluate current performance when it comes to return on investment,profitability and

so forth then the mission objectives, strategies and policies.

Step 2: Review corporate governance referring to the board of directors and top management

Step 3: Scan and assess external environment to determine the strategic factors that pose
opportunities and treats.

Step 4: Scan and assess the internal corporate environment to determine the strategic factors
that are strengths and weakness.

Step 5: Analyze strategic (SWOT) factors to pin point problem and the review and revise the
corporate missions and objectives as necessary.

Step 6: Generate evaluate and select the best alternative strategy in the light of the analysis
conducted in step 5.

Step 7: Implement selected strategies via program, budgets and procedures

Step 8: Evaluate and implement strategies via feedback system and the control of activities to
ensure their minimum deviation from plants.

Roles of the board directors

 The board of directors are not directly or indirectly involved in the operation of business hence
they are directly or indirectly involved in the strategy making.
 The board of directors shall be indirectly involved in the implementation and monitoring of the
business policy and strategy in the manner of oversight duty. Hence some of the board of
directors is directly involved in the operation of the business as an acting top management of
the business.
 The board of directors can be compared as an advisorship or mentoring.
 The board of directors also occupies the top management such as the president, vice president
etc., provided that their number will be insufficient to dominate the entire board of directors to
allow checks and balance.
 The board of directors involvement ensure that the company will have profit and return on
investment in the form of dividends
 Low Degree of involvement in strategic management High
(Passive) (Active)
Phantom Rubber Stamp Minimal Nominal Active Catalyst
Review Review Participation
Never knows Permits Formally Involved to a Approves Takes the
what to do, if officers to reviews certain degree questions, and leading
anything; no make all selected issues in the makes final establishing
degree of decisions; it that officers performance decisions, and modifying
involvement votes as the bring to or review of mission, the mission,
officers attention selected key strategy, objectives,
recommend on decisions, policies, and strategy and
action issues indicators, or objectives. Has policies. It has
programs active board a very active
management committee. strategy
Perform fiscal committee.
and
management
audits

Specific roles of the board of directors

 Monitor – keeping an eye in the development of the corporation inside and outside. Telling the
management all the developments that they might have overlooked.

 Evaluate and influence- examining management proposals, decisions and actions was able to
agree among it, They can also give advice and offer their suggestions and outline alternatives.

 Initiate and determine- the active board can only be the one to take on this task. Delineate as
the corporation mission and specify strategic options for it management.