STRATEGIC MANAGEMENT

(The Strategy Framework)

The major content of this presentation draws from the book of Dr. Felina C. Young. In particular, Young,
Felina C. (2015). Strategic Management Made Simple, Rex Book Store Inc. (RBSI).
Learning Objectives
• Analyze different
performance metrics.
• Explain the importance of
efficiency and productivity
performance.
• Evaluate liquidity measures
 Strategic Control
 Process of monitoring various strategies
of the organization and to determine the
parallelism between the organizational
milieu and of the environement.
 Assist an individual to analyze a company
and its ability to maximize its strengths
and opportunities.
 Strategic control can be categorized from
two different perspectives: according to
purpose and according to process
 Types of Strategic Control
According to Purpose

Presupposition Implementation Strategic Vigilant

Control Control Surveillance Control
Types of Strategic Control
According to Approach
1. Sequential Strategic Control.

Formulate Implement Stategic

Strategies Strategies Control
2. Interactive Strategic Control

Formulate Implement
Strategies Strategies

Strategic
Control
3. Feedback Strategic Control
Financing
Performance

Formulate Implement Monitoring of Market

Strategies Strategies Strategy Performance

Efficiency/Producti
vity Perdormance

People
Performance
Performance Metrics

• Ratio of the results derived from the

resources invested by an organization or by
the formula:

Performance = Results/Resources
Financial Performance

Financial Metrics
Profitability Measures

Liquidity Measures

Gearing (Risk) Measures

Other Investor's Measures

Profitability Measures
Metrics Meaning Formula
Gross Profir Margin A percentage of turnover. A hugh gross proft margin is Operating Profit
desirable. It indicates either that the sales prices are high or
that production costs are low. Financial Cost

Net Profit Margin A percentage of turnover less all expenses. A high net profit Net Profit
margin is desirable. It ibdicates either that the sales prices are X 100
Turnover
high or that all costs are well kept under control.

Return on Capital Shows the net profit generated from ever Php1.00 of assest Net Profit
X 100
Employed (ROCE) employes. Capital employed is total assets less current Capital Employed
liabilities.

Asset Turnover Shows the turnover generated from every Php1.00 of assets Turnover
employed. a high assetturnover is desirable. Capital Employed
Liquidity Measures
Metrics Meaning Formula
Current Ratio Measures the company's ability to meet its short-term libilities Current Assests
as they fall due. A ratio in excess of 1 is desirable.
Current Liabilities
Inventory Holding Period Indicates the average number of days inventory items are Inventory
held. A decrease in the inventory-holding period is desirable. It X 365
Cost of Sales
means that the compnay is able to sell or turn over its stock
keeping unites (SKUs).
Receivables (debtor) Shows the average period it takes a company's customers to Receivables
X 365
Collection Period pay their debts. A decrease in the collection period is Turnover
desirable. It means that the collection of the company's
receivables/credit control is efficient.
Payables (creditor) Shows the average period that it takes a company to pay its Payables
X 365
Period. debts. A decrease in the payment period is desirable. It means Purchases
that the company is able to pay for its purchases.
Gearing (Risk) Measures and Other Investor's Measures
Metrics Meaning Formula
Generating Ratio Shows the long-term debt as a percentage of equity. A low level of Debt
gearing is desirable where the level of risk is minimized in terms of X 100
payment of debts Equity

Interest Cover The operating profit (profit before finance charges and tax) divided Operating Profit
by the finance cost. A decrese in the interest cover is desirable Finance Cost
where operating profit is higher than the finance costs.

Other Investor's Measures

Earnings Per Share Measures the profit attributes to each share; ideally, must show an Profit after tax less preference
dividends
(EPS) increase in earnings per share.
Weighted no. of ordinary shares
in issue.
Dividend Cover An increase in dividend cover means that the company is more able Net Profit
to make dividend payments to shareholders Turnover

Dividend Yield An increase in dividend yield means an increase in returns to Dividend/share

X 100
shareholders Current share price
Efficiency and Productivity Performance
Metrics Meaning Formula
Productivity of The ratio of the output over input; helps determine how a Output
Resources company can maximize its resources to the fullest extent X 100
Input
possible to help achieve higher sales and revenues.
Employee Labor The ratio of the productivity of the entire plant (total number of Total no. of products
Productivity products manufactures) by rhe total number of hours worked manufatured
X 100
by workers for a specific period. Total no. of hours worked
Individual Employee The ratio of the individual's net sales over the number of hours Net Sales
Sales Productivity they worked. X 100
Number of hours worked
Efficiency Ratio Percentage of expenses over revenues. Expenses
X 100
Revenue
Operating Profit Margin A measurement of what proportion of a company's revenues Operating Income
is left after paying for variable costs of production such as X 100
Net Sales
wages, raw materials, and others
Defect Age The number of days since the defect is open and not fixed

Defect/Reject Rate The ratio of the number of defects/rejects over the total Total no. of defects/rejects
number of items product X 100
Total no. of items produced
Defect Resolution The rate of closing the open defects over a period Total no. of defects resolved
X 100
Total effort spent
 Maket Performance
Metrics Meaning Formula
Market Growth Rate The increase in sales, size, or demand observed within a Demand (before) - demand (now)
X 100
consumer group over a specified period. Demand (before)

Market Share The percentage that a company has of the total sales or units Total sales for a product
X 100
(market) for a particular product or service in a given period. Total sales of the market for the
product

Net Marketing A financial measure of marketing profitability Sales revenues X Gross margin % -
Contribution Marketing & Sales Expenses
Marketing Return on Sales A simple marketing profitability metric that allows Net marketing contribution
(ROS) a business to compare performance across the
organization and other companies Sales

Marketing Return on A marketing profitability metric that shows the Net marketing contribution
Investment (ROI) ratio of marketing contribution to marketing and
sales expenses Marketing & Sales expenses

Customer Retention The percentage of customer relationships that, Total customer retained
once established, a business is able to maintain X 100
on a long-term basis Total customers at the start of the year
People Performance
Metrics

• Employee Engagement Index

• Employee Satisfaction Index
• Leadership Index
• Effective Communication Index
• Health Profit Index
• Quality of Life Index
• Motivation Index
 Strategic Management Revisited
Organizational Strategy Formulation
Environment • Business
Strategies
• Corporate
Strategies
External
Environment Strategic
Planning
Strategy
Organization • Vision
Implementation
• Missions
• Goals
Internal
Environment
Strategic Control
Facets of Strategy
Facets
• Strategy Thinking
• Strategy Goal
• Strategy Formulation
• Strategy Implementation
• Strategy Attitude
• Strategy Response