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The ADDU-DDC Joint MBA Program
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The ADDU-DDC Joint MBA Program
In a region in Spain, there is a village which is
well-known for the uniqueness of the career
choices of its male population: they are either
priests or businessmen.
It is said that one can predict the career choice of
a boy by the choices he makes as a youngster.
When the boy reaches the age of ten, he is givena choice between a fistful of coins or rosary
beads.
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The ADDU-DDC Joint MBA Program
The boy who chooses the fistful of coins, almost
always, becomes a businessman.
The boy who chooses the rosary beads, almostalways, becomes a priest.
The boy who chooses both the fistful of coins andthe rosary beads, almost always,
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The ADDU-DDC Joint MBA Program
becomes a Jesuit!
Welcome to the ADDU-DDC Joint
MBA Program!!!
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The ADDU-DDC Joint MBA Program
THE FUNDAMENTALS OF STRATEGICPLANNING :
A Framework for School
Administrators
An Engagement for the ADDU School of Engineering and
Architecture
Prof. Mike D. Soledad
Prof. Mike Soledad
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Strategy
Has its roots in the military. Literally, the act of the general
The root word is the Greek verb stratego, to plan thedestruction of ones enemies through the effective use of
resources
From which came the word strategos, a general leading anarmy
Prominent throughout history, discussed in such classicsas The Art of War (Sun Zu), The Book of the Five Rings(Miyamoto Musashi), Arthasastra (Kautilya)
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If we know where we are and
something about how we got there,
we might see where we are trending--- and if the outcomes which
lie naturally in our course are
unacceptable, to make timely change.
Abraham Lincoln
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Strategic Planning Process
A systematic step-by-step process by
which an organization charts its course of
action towards a chosen destination.
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Strategic Planning
It is:
Sequential, logical, rational
Long-term in perspective
A guide to short-term decisions
Aims for the best results-to-effort, outcome-to-task, output-to-input
Puts together mutually reinforcing activities toattain synergistic effects
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Why do Strategic Planning?
Essential to discharging management
responsibility
Simulates the futureon paper
Presents a framework for decision-making
Becomes a channel of communication at all
levels of the organization
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Benefits of Strategic Planning
Clearer direction and priorities identificationand understanding of the critical successfactors.
Helps the organization capitalize on
opportunities; leads the organization to actrather than react
More efficient allocation of resources
Ensure acceptance of common goals;increased involvement and commitment of
people Provides a basis for measuring performance
Trains managers to think ahead
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Foundations of Strategic Thinking
1. No organization operates in a vacuum.
2. Organizations are motivated by desired outcomes,adhere to deep-seated values and possess
resources.3. Organizations are human inventions. They are
imperfect.
4. The external environment of an organization isdynamic.
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Foundations of Strategic Thinking
5. 5. There are many ways of killing a cat.
6. 6. The organization has to choose the best way to attain its
objective.
7. 7. The best way to attain organizational objectives is that
which exhibits the best possible goodness-of-fit among
its values, its objectives, what it can do well, what it is
deficient in, what it can exploit, and what it must reduce
to irrelevance or avoid altogether.
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The Best Way
Objectives
WeaknessesThreats
Values
Opportunities
Strengths
Goodness-of-fit
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Foundations of Strategic Thinking
5. 5. There are many ways of killing a cat.
6. 6. The organization has to choose the best way to attain itsobjective.
7. 7. The best way to attain organizational objectives is thatwhich exhibits the best possible goodness-of fit among itsvalues, its objectives, what it can do well, what it is deficientin, what it can exploit, what it must reduce to irrelevance or
avoid altogether.
8. 8. The best way, once implemented, must be periodicallyreviewed and, if deemed necessary, modified or replaced.
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Strategic Planning Process
Where are we now?
Where do we
want to go?
How do weget there?
How do we know
that were getting
There?
Personal Property of Prof. Miguel D. Soledad of UP Mindanao. Do not Copy
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The General Situation Review
Basic Question: How did we get to where we arenow?
History: What are the important
milestones?
Objectives: What was it that brought us
together? What are those we value
most? What is our Vision?Mission?
Performance: What have we attained so far?
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Internal Analysis
What are we good at?
What are we deficient in?
External Analysis
What future developments can we possibly exploit?
What future developments do we have to prepare
against?
The Strategic Audit
S i h Hi h f
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Setting the Hierarchy of
Objectives
Knowing what we know now, are our articulated
Values, Vision and Mission still relevant?
Given our Values, Vision and Mission, what can
we hope to attain in the foreseeable future in
Specific, Measurable, Attainable, Realistic, Time-bound (S.M.A.R.T.) frames?
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Formulating Strategic
Options Given the results of our strategic audit and the
objectives we want to attain, what are the various
options open to us so that we can attain those that
we said we want to attain?
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Implementing
What do we need to put in place in order tocarry out the decision we made?
How should we be structured?
What policies should we articulate and enforce? What projects and programs do we put in place?
If we do all these that we said we need to do, how
much do we need, when?
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Controlling and Monitoring
How do we know whether the things we said we
want attained are attained?
What are the verifiable indicators that we can use
to measure our performance?
What procedures do we put in place so that the
information needed by the decision-maker/s is
given in a timely fashion?
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Strategic Planning Process
GeneralSituationReview
StrategicAudit
Internal AnalysisExternal Scan
ObjectiveSetting
GeneratingStrategicOptions
DecisionMaking
ImplementingPolicies,
Plans,Programs,Projects
and Budgets
MonitoringAnd
Control
Where are we now?
Where dowe wantto go? How do we get there?
How do weknowwere
gettingthere?
Formulation Implementation Evaluation
Personal Property of Prof. Miguel D. Soledad of UP Mindanao. Do not Copy
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The General Situation Review
Basic Question: How did we get to where we arenow?
History: What are the important
milestones?
Objectives: What was it that brought us
together? What are those we value
most? What is our Vision?Mission?
Performance: What have we attained so far?
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The Basic Tool:S.W.O.T Analysis
Strengths - Internal competencies and resources possessedby the organization that enhance its ability toachieve its objectives.
Weaknesses - Internal deficiencies that tend to inhibit theorganizationsability to attain its objective.
Opportunities - External developments that could significantly
benefit the organization.
Threats - External trends and events that are potentiallyharmful to an organizations position.
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Internal Appraisal Process
1. Review by functional area General Management
Human Resources
Marketing Finance
Operations
2. Identify strengths and weaknesses3. Accomplish an Internal Factor Evaluation (IFE)
Matrix
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Academic FunctionalAreas
Instruction
Research
Extension
Administration
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Tools for Internal Appraisal
1. Management Audit Checklists2. Surveys
3. Interviews
4. Financial Ratio Analysis
Tests of profitability, efficiency, liquidity, solvency Horizontal
Vertical
5. MERI Score
6. Variance Analysis7. Profiles
8. Charts
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SW Analysis Worksheet
Functions Historical Performance Indicated Strengths Indicated Weaknesses
General Management
On the brink of disaster in 1992. Turned around in 1993.Profitable. Ratio of income to sales is
increasing
Change of management in 1993. Manager also worker. Low supervision level
No formal papers on ownership. Unclear ownership
Marketing
Turned around via cash only/ domestic only policyLimited market due to cash
only/domestic only policy
Increased customer base from 90 to 210 in 10 yearsCustomer loyalty. Many repeat
customers
Decelerating sales growth from
58.4% to 31.5% pa
Marketing limited to promotion and word of mouth Unfocused marketing effort
Human ResourcesTwo resignations per year High employee turnover
Employees on contract paid on commission Labor is a variable cost
OperationsAsset utilization is decreasing Ratio of sales to assets is dropping
Only two instances of replacements in 11 years
Finance
Ratio of cash and savings to payables is high Liquid
No borrowings Underutilized debt capacity
History of improving profits Ratio of income to equity is dropping
IFE Matrix of Woodlands
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IFE Matrix of WoodlandsCleaning Service
Key Internal Factors Weight Rating Score
Strengths
1. Profitable operations (ROS from 11.2% to 15.6 %) 0.05 3 0.15
2. Loyal customers. Many repeat customers. 0.14 4 0.56
3. Underutilized debt capacity (EM=1.18) 0.04 4 0.16
4. Liquid (CR=3.25:1) 0.15 4 0.6
5. Contractual employees. Variable labor cost 0.07 3 0.21
Weaknesses
1. Low supervision level. 0.09 2 0.18
2. Unclear ownership 0.02 2 0.04
3. Dropping ROE (from 129.5% to 4.5%) 0.04 1 0.04
4. Decelerating sales growth (from 58.4% to 31.5%) 0.13 1 0.13
5. Limited market due to cash/domestic only policy 0.08 1 0.08
6. Dropping asset turnover (from 71.5 to 24.4) 0.04 1 0.04
7. High employee turnover 0.12 2 0.24
8. Unfocused marketing effort 0.03 1 0.03
Total 1 2.46
Since the IFE Score is less than 2.5, the organization is deemed
to be weak.
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Preparing the IFE Matrix
1. List the key internal factors as identified in the internalappraisal. Use a total of 20 internal factors listing internal
strengths first. Be specific by using percentages, ratios and
comparative numbers.
2. Assign a weight that ranges from 0.0 (not important) to 1.0
(all-important) to each other factor indicating the relative
importance of the factor to the organizations success.
Regardless of whether a factor is a strength or a weakness,factors considered to have the greatest effect on
organizational performance should be assigned the highest
weights. The sum of all the weights should be 1.0.
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Preparing the IFE Matrix
3. Assign a rating to each factor according to the following scale:
4. Multiply each factors weight by its corresponding rating to determine
the weighted score for each internal variable.
5. Take the sum of the weighted scores of the various variables to
determine the IFE score for the organization. IFE scores 2.5
indicate a strong internal position.
Description Rating
Major Strength 4
Minor Strength 3
Minor Weakness 2Major Weakness 1
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Exercise
Identify one strength and one
weakness of the SEA
THE FIRM AND STEEP FORCES
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1
2
3
4
5
THE FIRM AND STEEP FORCES
TheFirm
Socio-Cultural Technological
Economic
Ecological
Political
Framework for External
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Framework for ExternalAppraisal
41
Step 1Select Key
EnvironmentalVariables
Step 2Select
KeyInformation
Step 4Prepare a
BroadAssessment
of BasicExternalForces
Step 3Forecast Key
EnvironmentalVariables
Step 5Construct an
ExternalFactor
EvaluationMatrix
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The ADDU-DDC Joint MBA Program 42
Step 1Select Key
EnvironmentalVariables
Step 2Select
KeyInformation
orIndicator
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The ADDU-DDC Joint MBA Program 43
Social Factors
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Technological Factors
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The ADDU-DDC Joint MBA Program 45
Economic Factors
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The ADDU-DDC Joint MBA Program 46
Ecological Factors
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The ADDU-DDC Joint MBA Program 47
Political Factors
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The ADDU-DDC Joint MBA Program 48
Step 1Select Key
EnvironmentalVariables
Step 2Select
KeyInformation
orIndicator
Step 3Forecast Key
EnvironmentalVariables
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The ADDU-DDC Joint MBA Program 49
GDP
(%)
GNP
(%)
Average
2002-06 4.8 5.4
Actual 2007 7.3 7.8
Best Est
2008 4.5 6
Frcst 2009 5.3 6.2
2010 6.2 7.2
2011 5.5 7
2012 5.5 72013 6 7
0
1
2
3
4
5
6
7
8
9
GDP (%)
GNP (%)
Economic Indicators:
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The ADDU-DDC Joint MBA Program 50
P/$ Ex Rt Inflation91-Day
TB
Average
2002-06 51.92 5.3 7.1
Actual 2007 46.2 2.8 3.4
Best Est2008 44 9.8 5
Frcst 2009 45 8.1 7.6
2010 46.5 7.5 7.5
2011 47.5 6.5 6.82012 48.25 5.5 6
2013 49 4.5 4.8
0
10
20
30
40
50
60
P/$ Ex Rt
Inflation
91-Day TB
Economic Indicators:
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The ADDU-DDC Joint MBA Program 51
Fuel
(%) Power (%)
Average
2002-06 20.3 9.6
Actual 2007 5.3 -0.7
Best Est2008 52.5 19
Frcst 2009 22.2 14.4
2010 0.6 3.4
2011 0.4 3
2012 0.3 2.8
2013 0.3 2.7
-10
0
10
20
30
40
50
60
Fuel (%)
Power (%)
Economic Indicators:
Business Outlook and GDP Growth Rate
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Business Outlook and GDP Growth Rate
52
Index %
-30
60
30
0
-2
5
3
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3
GDP
BOIC
BOIN
BOIC= Current quarter business outlook index (Coincident indicator)BOIN= Next quarter outlook index (Leading indicator)
GDP = Actual GDP growth rate
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The ADDU-DDC Joint MBA Program 53
Step 1Select Key
EnvironmentalVariables
Step 2Select
KeyInformation
Step 3Forecast Key
EnvironmentalVariables
Step 4Prepare a
BroadAssessmentof BasicExternalForces
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Socio-Cultural Analysis
Projection
- Continuing lure of overseas jobs
- While the under-30 age group will continue to be the base
of the population pyramid, the growth rate of this age-group will
decelerate
Opportunities Identified
- Offer degree programs intended to produce globally-
employable graduates
- Invest in basic education
Threats Identified- Students that are jobs-oriented rather than knowledge-thirsty
- Dearth of faculty material
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Technological Analysis
Projections- There will be a greater reliance on technology to enhance
productivity. This will be articulated by an increased level of
computerization in the service and the manufacturing sectors and
precision agriculture in the agri-sector
Opportunities Identified
- S&T-led academic institutions
- Technology-driven research
- Vertically-articulated research programs (from basic to
commercial viability)
- All-graduate program institutes
Threats Identified
- iffypolitical support as highly specialized education can be capital
intensive and require huge commitments of public funds
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Economic Analysis
Projections
- The global recession will result in slower growth
- The following will be the growth drivers: BPO, mining, tourism, agriculture
(via higher crop prices)
Opportunities Identified- Overseas market BPO needs
- Inclusion of mining in course offerings
- Engagement in the tourism sector
- Updating course curricula to incorporate precision agriculture technology
Threats Identified- The education business will be highly competitive. Possible price war
- Pressure from employees for more economic benefits
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Ecological Analysis
Projections- There will be a marked preference for the use of green
technology
- The general public will mature from demanding
environmentally-friendly initiatives to ecologically-
responsible activities
Opportunities Identified- Align course offerings towards ecological responsiveness
Threats Identified- Reduced support from donors belonging to the money-laden industrial sector
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Political Analysis
Projections
- Political maturity will be articulated by a
voter preference for development-
oriented public managers Opportunities Identified
- Offer programs on public management
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The ADDU-DDC Joint MBA Program 59
Step 1Select Key
EnvironmentalVariables
Step 2Select
KeyInformationor
Indicator
Step 3Forecast Key
EnvironmentalVariables
Step 4Prepare a
BroadAssessmentof BasicExternalForces
Step 5Construct an
ExternalFactor
EvaluationMatrix
EFE Matrix
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EFE Matrix
Key External Factor Weight Rating Score
Opportunities
1.
2.
3.
4.
...
n.
Threats
1.
2.
3.
4.
...n.
Relativeimportance tosuccessfulperformance Superior = 4
Above
Average = 3Average = 2
Poor = 1
TOTAL 1.00
60
1 2 3 4 5
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Preparing the EFE Matrix
1. List the key external factors as identified in the external appraisal. Use a total of20 external factors. Be specific by using percentages, ratios and comparativenumbers.
2. Assign a weight that ranges from 0.0 (not important) to 1.0 (all important) toeach factor indicating the relative importance of the factor to the organizationssuccess. Regardless of whether a factor is an opportunity or a threat, factors
considered to have the greatest effect on organizational performance should beassigned the highest weights. The sum of all the weights should be 1.0.
3. Assign a rating to each factor indicating the organizations ability to respond toeach key external factor according to the following scale:
Description Rating
Superior 4Above Average 3
Average 2
Poor 1
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Preparing the EFE Matrix
4. Multiply each factors weight by its corresponding rating todetermine the weighted score of the external variable.
5. Take the sum of the weighted scores of the various
variables to determine the EFE score for the organization.EFE scores < 2.5 indicate that the organization may not be
able to effectively exploit opportunities and counter threats.
Conversely, EFE scores > 2.5 indicate that the organization
displays an outstanding ability to effectively respond to itsexternal environment.
External Factor Evaluation Matrix of UP Mindanao Weight Rating Score
O i i
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Opportunities
1. Degree programs intended to produce globally-employable graduates 0.15 2 0.30
2. Involvement in basic education 0.03 1 0.03
3. Upgrading/Course alignment towards becoming a S&T-led academic institution, including
mining 0.10 3 0.30
4. Technology/Ecology-driven research 0.10 3 0.30
5. Vertically-articulated research programs (basic to commercial viability) 0.05 4 0.20
6. All-graduate program institutes 0.02 1 0.02
7. Non-degree programs to fulfill BPO needs 0.03 1 0.03
8. Overseas market 0.05 2 0.10
9. Engagement in the tourism sector 0.05 3 0.1510. Programs on public management 0.08 4 0.32
Threats
1. Students that are job-oriented rather than knowledge-thirsty 0.10 4 0.40
2. Dearth of faculty material 0.09 2 0.18
3. "Iffy" political support. Highly specialized education. Huge commitment of public funds 0.02 2 0.04
4. Education will be highly competitive. Possible price war 0.02 4 0.08
5. Pressure from employees for economic benefits 0.10 2 0.20
6. Reduced support from donors in the money-laden industrial sector 0.01 2 0.02
T O T A L E F E S C O R E 1.00 2.67
Indication: UP Min's ability to respond to anticipated environmental changes is marginally above-average.
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EXERCISE
Identify one opportunity and onethreat to SEA based on what you
know about developments in itsexternal environmental
Setting the Hierarchy of
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Setting the Hierarchy of
Objectives
Knowing what we know now, are our articulated
Values, Vision and Mission still relevant?
Given our Values, Vision and Mission, what can
we hope to attain in the foreseeable future in
Specific, Measurable, Attainable, Realistic, Time-bound (S.M.A.R.T.) frames?
What was it that brought us together?
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What was it that brought us together?What do we commonly desire?
VALUES
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The ADDU-DDC Joint MBA Program68
VISION
MISSION
GOAL
VALUES
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Values
Those that we hold dear in life and are ofgreatest importance to us, so important that
they are beyond compromise.
Emotions, sentiments, abilities, qualitiesconsidered important in everything we do
because they help us do what needs doing get
done better, help us become what we want tobecome faster.
Th Vi i St t t
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The Vision Statement
The statement of the organizations idea of theideal.
Answers the question: If the organization can
be whatever it wants to be, what do I want it tobe?
May be stated separately from the values
statement. May also be stated in such a waythat it subsumes the values statement.
Economic Enterprise
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Economic EnterpriseBureau
ValuesProfessionalism, honesty, efficiency
VisionA model government office leading the way in
community development through professional,
honest, and efficient public service
Vision of the UP School of
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Vision of the UP School ofManagement
The management school of choice in East ASEAN, atpar with the best in this part of the world, the
standard against which other management schoolsin the region may measure themselves.
The Mission Statement
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The Mission Statement
An enduring statement of the organizations raisondetre.
Draws inspiration from the vision statement.
Anchored on an analysis of the organizations
stakeholders, societalelements whose interests
are intertwined with that of the organization.
Answers the question: What must the organization
be, and do, for whom, in order to be what it wants
to be.?
Stakeholder Analysis
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yWorksheet
Example: UP Mindanao
Stakeholder Expectations
(What do our stakeholdersexpect from us?)
Service
Opportunity
(What can we do for ourstakeholders?)
Students Excellent education at
minimum cost
- Provide world-class
instruction
- Motivate them to excel
- Assure them of
academic freedom
Economic Enterprise
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pBureau
StakeholdersCity government
Davao community
Employees
Mission
A corps of professional civil servants managing viableeconomic undertakings; a results-oriented government officedelivering competent, efficient, honest public service to theDavao community; and, a responsible employer who makesemployment a worthwhile and satisfying experience
Mission of the UP School
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of Management
As we pursue our vision, we will:provide our clientele withmanagement education programs
that give them the best value for theirmoney,
become a self-sufficient unit of the
University,ensure a rewarding and fruitfulcareer for our faculty and staff.
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Goals
Measurable end-results thatderive their impetus from themission
Specific, Measurable, Attainable,Realistic, Time-bound (S.M.A.R.T.)target outcomes
Expected achievements within thereasonably foreseeable future
Pointers for Goal Setting
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The ADDU-DDC Joint MBA Program 78
Pointers for Goal Setting
Set a goal for each stakeholder. State goals in quantifiable deliverables
using understandable metrics.
Ensure that goals are factual and based onindicated capabilities.
Set goals that are doable within theplanning period.
Break down goals by time segments(usually, annually).
Stakeholder-Goal
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Stakeholder-GoalMatrix of WCS
Stakeholders Key Result Areas
Historical
Performance Proposed Goal
Clients/customers Customer
satisfaction
.9 visits per month
210 customers
4 visits per month
500 customers
Employees Quality of worklife 2 resignations per
year
1 resignation per
year
Owners Return on Equity From high of 129%to only 4.5% last
year
10% ROE
Community ComDev initiatives None 1 ComDev initiative
per quarter
SOM Goals (2006-10)
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SOM Goals (2006-10)
Increase student population from 98 in 2006 to 502in 2009
Improve the average teaching performance rating
from Very Goodto Excellent
Double publication per capita by 2009
Double average annual resource generation from
P1.0 million to P2.0 million by 2009
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?
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Tools for Strategic
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83
gFormulation
BCG (Portfolio Analysis) Matrix
Strategic Position and Action Evaluation
(SPACE) Matrix
Grand Strategy Matrix
Internal-External (IE) Matrix
SWOT Matrix
Portfolio Analysis Matrix
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84
Portfolio Analysis Matrix
Developed by Bruce Henderson of theBoston Consulting Group as a portfolio
planning model
Based on the observation that businessunits can be classified into four when
viewed as to market growth and relative
market share: stars, cows, dogs andquestion marks
Portfolio Components
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85
Portfolio Components
Cow - large market share, mature industry
- little add-on investment, cash generator
Star - large market share, fast-growth industry
- requires cash support, potential cow
Question Marksmall market share, high-
growth industry
- requires resources, iffy chance Dog - small market share, mature industry
- laps-up cash, liquidation candidate
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Strategic Position and Action
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The ADDU-DDC Joint MBA Program 87
Strategic Position and ActionEvaluation (SPACE) Matrix
A four-quadrant framework that suggeststhe appropriate strategy, whether
aggressive, conservative, defensive or
competitive. Uses the following key determinants of
strategic position as axes: Financial
Strength (FS), Competitive Advantage(CA), Environmental Stability (ES), and
Industry Strength (IS).
87
SPACE M t i f th B k
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The ADDU-DDC Joint MBA Program 88
SPACE Matrix of the Bank
Vector Cordinates: x-axis: -3+(+3.33)=+.33y-axis: -4.33+(+2.25)=-2.08
Conclusion: The bank has a competitive profile
88
FS
CA IS
ES
Grand Strategy Matrix
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The ADDU-DDC Joint MBA Program89
Grand Strategy Matrix
Rapid Market Growth
Slow Market Growth
Weak
Competitive
Position
Strong
Competitive
Position
Market Development
Market Penetration
Product Development
Horizontal Integration
Divestiture
Liquidation
Market Development
Market Penetration
Product Development
Horizontal Integration
Forward Integration
Backward IntegrationConcentric Diversification
Retrenchment
Concentric Diversification
Horizontal DiversificationConglomerate
Diversification
Divestiture
Liquidation
Concentric Diversification
Horizontal Diversification
ConglomerateDiversification
Joint Ventures
Internal External (IE) Matrix
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The ADDU-DDC Joint MBA Program 90
Internal-External (IE) Matrix
90
I II III
IV V VI
VII VIII IX
IFE Score
Strong Average Weak(3.0-4.) (2.0-2.99) (1.0-1.99)
EFEScore
High
(3.0-4.0)
Medium
(2.0-2.99)
Low(1.0-1.99)
(Grow and Build)(I,II,IV)
(Hold and Maintain)
(III,V,VII)
(Harvest or Divest)
(VI,VIII,IX)
SWOT Mat i
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The ADDU-DDC Joint MBA Program 91
SWOT Matrix
Tool for generating strategicoptions, that are generated by
juxtaposing S x O, S x T, W x O,
and W x T. Draws its inputs from the Strategic
Audit. The S & W from the IFEMatrix and the O & T from theEFE Matrix.
SWOT Matrix
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SWOT Matrix
Strengths1.
2.
3.
Weaknesses1.
2.
3.
Opportunities1.
2.
3.
Threats1.
2.
3.
S,O Strategies
Strategies that useStrengths to take
advantage ofOpportunities
W,O StrategiesStrategies that
overcome Weaknessesto take advantage of
Opportunities
S,T Strategies
Strategies that useStrengths to avoid
Threats
W,T Strategies
Strategies thatminimize Weaknesses
to avoid Threats
Goals:
1.
2.
3.
Strengths Weaknesses
Pre-American history not given
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Investment incentives program are in-
place
World-class infrastructures
Strategic location
Pre-American history not given
prominenceplants growing in
historicgate indicative of possible
neglect
Commercial/Shopping Centers left out
from promotional materials TourismDirectory
Lack of/Absence of interpretative
signages especially in the jungle trail
Opportunities
Utilities to become 75% cheaper when
solar and wind power generators become
operationalHigh literacy rate (99.6%) ; ready pool of
HR assets --- 39,000 graduates annually
Proximity to an operational international
airport/accessibility to land-sea-air
transpo
S X O
Emphasize the high return-potential by
highlighting incentives, superior infra and
location plus lower utility cost (s2,s3 x o1)
W X O
Enhance/improve promotional materials
and signages to address a wider market,
including history buffs, vacationer-shoppers and ecological/educational
tourists (w1-3 x o3)
Threats
Absence of signed contract on revenue-
sharing with IPs
Susceptibility to impact of change in
political leadership
Decline in tourist traffic due to continuing
STglobal financial crisis
S X T
Formalize sharing mechanism with IPs to
ensure the long-term partnership with IP
community bolstered by a sense of
ownership over the SBF assets (s2 x t1)
Target the price-sensitive but high-volume
MICE market while continuing to adopt a
rifle-approach to the investor market (e.g.,
computer manufacturers and BPO) (s1-3 x
W X O
Fully utilize all possible claims that can
further highlight SBFs edge over other
possible destinations (w1-3 xt3)
Making the Strategic Decision
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Making the Strategic Decision
Among the various strategic options weformulated, which one/s is/are the best?
Decision-Making Tools
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The ADDU-DDC Joint MBA Program 95
Decision Making Tools
Eyeballingchoosing a strategy basedon educated-guesswork
Simple criteria setchoosing a strategy
based on its goodness-of-fit with a set ofcriteria
Weighted criteria set
Must and Want Analysis
Quantitative Strategic Planning Matrix
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Decision-Making Using a Simple
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Criteria Set
Set-up a criteria set, for example:
Profitability
Stockholder appeal
Alignment with basic objectivesAbility to meet competitive challenge
Assess each alternatives ability to meet the
criteria. The alternative which seems to bestmeet the criteria becomes the chosen alternative
Decision-Making Using a Weighted
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Criteria Set
Assign weights to each criterion.
Rate each option according to each ability to
meet the criterion
Take the product of the weight by the rate toarrive at the score
Take the sum total of the scores
The option with the highest score is the best
option
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Decision-Making Using
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Must-Want Analysis
Set-up two sets of criteria: Musts and Wants
The Mustsset are criteria that an option must
meet in order to be considered
The Wantsset are criteria that are treated as aweighted criteria set
The option with the highest score is the indicated
choice
Develop the Acquire Invest in Expand the
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Develop the
business
market
Acquire
other
companies
Invest in
new
technology
Expand the
product line
Must Criteria
Must not be seen as
directly
confrontational
ok X ok ok
Must be legal ok ok ok ok
Must conform toethically acceptable
practices
ok ok ok ok
Develop the
business
market
Invest in new
technology
Expand the
product line
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market
Want Criteria Weight Rate Score Rate Score Rate Score
Profitability .35 3 1.05 1 .35 2 .7
Appeal to
stockhoders
.30 4 1.2 2 .6 2 .6
Alignment with
objectives
.25 1 .25 3 .75 2 .5
Ability to meetcompetitive
challenge
.10 2 .2 2 .2 4 .4
Total 1.0 2.7 1.9 2.2
Decision-Making Using theQuantitative Strategic Planning
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Q g gMatrix
Use the output of the Strategic Audit (InternalAppraisal and External Environmental Scanning)
to test the attractiveness of the various strategic
options
The option with the highest attractiveness score
is the best choice
The Quantitative Strategic
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The ADDU-DDC Joint MBA Program 104
The Quantitative StrategicPlanning Matrix
Alternative 1(From SWOT Matrix)
Alternative n(From SWOT Matrix)
Key Factors Weight AS TAS AS TAS
Key Internal Factors
Strengths
From IFEStrength 1Strength 2, etc.
Weaknesses
Weakness 1, etc.
Key External Factors
Opportunities
From EFE
Opportunity 1
Opportunity 2, etc.
Threats
Threat 1, etc.
TOTAL 2.00
Preparing the QSPM
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The ADDU-DDC Joint MBA Program 105
Preparing the QSPM
1. List the organizations internal strengthsand weaknesses and externalopportunities and threats.
2.
Assign weights to each internal andexternal critical success factor. Theseweights should be identical to those inthe IFE and the EFE matrices.
3. Examine the strategic options generatedby the SWOT Matrix. Group these intomutually exclusive sets, if possible.
Preparing the QSPM
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The ADDU-DDC Joint MBA Program 106
Preparing the QSPM
4. Determine the Attractiveness Score (AS). TheAS is the numerical value that indicates the
relative attractiveness of each strategy. This is
determined using the following scale:4 - Highly attractive
3 - Reasonably attractive
2 - Somewhat attractive
1 - Questionable attractiveness
If the factor is not relevant to the strategy, do not assign any AS.
Preparing the QSPM
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The ADDU-DDC Joint MBA Program 107
Preparing the QSPM
5. Compute the Total Attractiveness Score(TAS) by multiplying the weights by the
AS.
6. Compute the sum total of the TotalAttractiveness Scores. The alternative
with the highest Total TAS is the most
likely strategic choice.7. Judgmentally confirm the indicated
choice.
QSPM of WCS
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Key Environmental Factor Weight
Develop business
market
Acquire other
companies
Invest in new
technology
Expand the
product line
AS TAS AS TAS AS TAS AS TAS
Strengths1. Profitable operation .05 4 .20 4 .20 2 .10 4 .20
2. Loyal customers .14 3 .42 3 .42 4 .56 4 .56
3. Underutilized debt capacity .04 3 .12 4 .16 4 .16 3 .12
4. Liquid .15 4 .60 3 .45 3 .45 3 .45
5. Contractual employees .07 3 .21 2 .14 1 .07 2 .14
Weaknesses
1. Low supervision .09 1 .09 2 .18 3 .27 2 .18
2. Unclear ownership .02 0 .00 1 .02 0 .00 0 .003. Dropping ROE .04 4 .16 3 .12 3 .12 4 .16
4. Decelerating sales growth .13 4 .52 4 .52 3 .39 4 .52
5. Limited market .08 4 .32 4 .32 2 .16 4 .32
6. Underexploited sales potential .04 3 .12 3 .12 4 .16 3 .12
7. High employee turnover .12 1 .12 3 .36 2 .24 2 .24
8. Lack of marketing focus .03 4 .12 4 .12 2 .06 3 .09
Opportunities1. Economy to grow 8.1% .14 4 .56 3 .42 3 .42 3 .42
2. Loan rate to go down .13 3 .39 4 .52 4 .52 3 .39
3. Expanding business community .15 4 .60 3 .45 2 .30 3 .45
4. Crackdown on unlicensed .13 2 .26 3 .39 2 .26 2 .26
5. Improvement in office automation .12 3 .36 3 .36 4 .48 2 .24
Threats
1. Competitive activity to intensify .20 4 .80 4 .80 4 .80 4 .80
2. Low entry barriers .13 4 .39 3 .39 4 .52 3 .39
Total 2.0 6.49 6.46 6.04 6.05
STRATEGIC STATEMENT OF THE
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UP School of Management
WEAKNESS:
Inability to maximize growth potential due to
limited funding from the university
x
OPPORTUNITY:
Demand for short-term, non-degree courses to
increase
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Implementing
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Implementing
What do we need to put in place in order to carry outthe decision we made?
How should we be structured?
What policies should we articulate and enforce? What projects and programs do we put in place?
If we do all these that we said we need to do, how muchdo we need, when?
Diagnostic Model for StrategyImplementation
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112
ImplementationArticulate long-term objectives and
strategies.
Identify the kind of functional strategies
that are required to operationalizethe
strategy. Identify the organizational
structure, leadership, systems and
culture that are required toinstitutionalize the strategy.
Determine the existing
functional strategies and
organizational structure,
leadership, systems, and
culture.
GAP?REQUIRED ACTUAL
Decide on what methods to use toclose the implementation gap.
Continue presentcourse of action
Formulate plan of action and
implement the choices.
Institute strategic
controls.
YES NO
Controlling and Monitoring
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Controlling and Monitoring
How do we know whether the things we said wewant attained are attained?
What are the verifiable indicators that we can use tomeasure our performance?
What procedures do we put in place so that theinformation needed by the decision-maker/s is given
in a timely fashion?
A Framework for EvaluatingStrategiesE t bli h t d d
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114
StrategiesEstablish standards
Measure actualperformance
Dosignificantdifferences
occur?
Continue presentcourse
Yes
Take corrective action
Compare results vs.expectations (Objectives
and Goals)
No
Suggested Guide Questions onMonitoring
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Monitoring
What information is needed by whom? Why is it needed?
In what form (written? verbal? electronic?)
How will it be presented? When is it needed?
How often is it needed?
Where will it be sourced?
How will it reach the intended recipient?
Point Budget
GANTT Chart of MDP @ Dolefil 1
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116 116
Activity
Point
Person
Budget
/ SpentApr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
1. Review MDP course
and materials. Organize
tentative MDP team
Mike T 0
A 0
2. Meet with Dolefil.
Present proposal
Mike,
Larry
T 5,000
A 5,000
3. Finalize proposal Larry T 0
A 0
4. Produce kits Mike,
Malou
T 5,000
A 6,000
5. Run program Mike,
Malou
T 300,000
A 295,500
6. Graduation Larry,
Mike,
Malou
T 50,000
A 55,000
Total T 360,000
A 361,500
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SWOT-based Strategic Planning Guide
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118
Research Activity Guide Question/s Tool/s Specific Outputs
I. GeneralSituationReview
A. History
B. Present hierarchy ofobjectives
C. Current strategiesD. Highlights of
operations
How did we get towhere we are now?
Interviews
Meetings
Review of reports
Du Pont analysis
Evaluation of V/M
Preliminaryassessment of existingstrats
II. InternalAppraisal
A. General AdminB. Human Resources
C. Marketing
D. Operations
E. Finance
What are weparticularlygood at?
Where are weparticularlydeficient in?
Operations Auditby functional areausing
-audit checklist-surveys
-interviews
-ratio analysis
-variance analysis
-trend analysis
Ordered listing ofstrengths and
weakness
SWOT-based Strategic Planning Guide
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119
Research Activity Guide Question/s Tool/s Specific Outputs
III. ExternalAssessment
A. Socio-culturalB. Technological
C. Economic
D. EcologicaL
E. Political
What events anddevelopments withreasonable likelihoodof occurrence during
the forecasted periodwill:
S.T.E.E.P. Model ofExternal Analysis
enhance ourchances of success
threaten ourchances of success
Ordered listing ofopportunities andthreats
IV. ObjectiveSetting
A. Revisiting the Visionand Mission
B. Goal
Is the existing HO stillrelevant? Whereshould we be goingfrom here?
Values/Vision/MissionExercises
Goal Setting
A set of confirmedand/ or redefined HO
SWOT-based Strategic Planning Guide
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120
Research Activity Guide Question/s Tool/s Specific Outputs
V. Generation ofAlternatives
Knowing what weknow, how should weget to where we wantto go?
SWOT Matrix Set of alternativestrategies as a resultof juxtaposing; SxO,SxT, WxO and WxT
VI. Evaluating theAlternatives
Given the set ofalternative choiceswhich is/ are the beststrategy/ies
Eyeballing
Criteria sets
Must/Want
QSPM
A proposed corestrategy/ies that willbest attain theredefined HO
VII. ImplementingProgram
What functionalpolicies and programsshould we adopt in
order to properlyimplement ourstrategic choice?
Gap analysis
OrganizationalPlanning
Marketing Planning
Operations Planning
Financial Planning
KRAs, policies, plans,programs, projects,budgets, timetables
VIII. Monitoringand ControlSystem
How will we knowwhether we areindeed going to wherewe want to go?
Analysis of infoneeds
KRA/PI identification
Control system
KRA
PIs
Monitoring tools
(e.g., Gantt Chart)
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Developing the Vision, Mission andGoal Statements
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DEVELOP A VALUES SET
Step 1
The Epitaph Exercise
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p p
The things we hold dear are often reflected inthe way we want people to remember us.
One way of identifying our values is by writingour own epitaph, the words we want written on
stone so that people who get to read it will
appreciate the kind of person we are.
Example of an EpitaphExercise
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The ADDU-DDC Joint MBA Program
Exercise
Epitaph of Christy Saavedra:Here lies Christy. Loving wife and mother. Provider
of gifts and good tidings. Whose heart and mind were
always in the right place and whose mouth spoke
with the confidence of babes.
Self-interpretation by Christy:
She values loyalty, honestly-acquired wealth,
integrity, rationality, courage.
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CRAFT A VISION STATEMENTIF YOU CAN BE WHATEVER IT IS YOU
WANT TO BE, WHAT DO YOU WANT TO
BE?
Step 2
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IDENTIFY AND ANALYZEYOUR STAKEHOLDERS
Step 3
Stakeholder AnalysisWorksheet
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Worksheet
StakeholdersExpectations
(What do our stakeholders expect
from us?)
Service Opportunity(What can we do for our
stakeholders?)
Clients/customers Best cleaning service at the most
reasonable cost
Give them service in a manner that
will make them feel that they got the
best value for their money
Workforce A pleasant work environment and a
payscale that gives them
commensurate compensation for the
effort they put in to their work
Help them to develop and grow as
persons and as professionals
Stockholders/owners A satisfactory return on their
investment
Ensure a profitable operation without
necessarily compromising the safety of
their investment in the enterprise
Community To be generous with its resources by
contributing to the general uplift of
the quality of life in the locality
Operate responsibly, making sure that
all actions are acceptable to the
community not only in the letter but
also in the spirit
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The ADDU-DDC Joint MBA Program
SET YOUR GOALS FOR EACHSTAKEHOLDER
Step 5
Stakeholder-GoalMatrix
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Matrix
Stakeholders Key Result AreasHistorical
Performance Proposed Goal
Clients/customers Customer
satisfaction
.9 visits per month
210 customers
4 visits per month
500 customers
Employees Quality of worklife 2 resignations per
year
1 resignation per
year
Owners Return on Equity From high of 129%to only 4.5% last
year
10% ROE
Community ComDev initiatives None 1 ComDev initiative
per quarter
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