Katherine m. Aguilar

8/22/2019 Katherine m. Aguilar

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Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Cloud computing or cloud technology refers to the use of

computing hardware and software to deliver service whenever and

wherever you need it. It may also be called hosting services. The

cloud basically is defined as a set of hardware, services, networks,

and interfaces that combine to deliver various aspects of computing as

a service.(Gartner).

Cloud computing offers its benefits through three types of

service or delivery models namely infrastructure-as-a-service (IaaS),

platform-as-a-service (PaaS) and software-as-a-Service (SaaS). It also

delivers its service through four deployment models namely, public

cloud, private cloud, community cloud and hybrid cloud (NIST).

In a 2011 study of the information technology (IT) research and

advisory firm Gartner, cloud computing tops the Asian and global

technology priority list.

Despite the global economic crunch, cloud technology spending

is forecast to reach $207 billion by 2016. Gartner also said in their


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statement, current global spending on cloud is expected to increase

from last years $91 billion to $109 billion this year.

What makes Cloud Computing particularly interesting from a

research perspective is mainly due to its promises of Growth and

opportunities to the enterprises particularly in the software Industry.

As Crosby(1988) defined Growth is something for which most

companies, large or small, strive. Small firms want to get big and big

firms want to get bigger.

Most of the organizations want to grow for prosperity, and not

just only to survive. There are many components to measure said

growth; thus: profit, net profit, revenue, sales figures, number of

employees, physical expansions, among others. The same are the

most common indicators of growth.

It is not always true that such growth depends on an

organizations size; nevertheless, superior performance of small firms

can lead to a proportionate growth that can be high. There are many

alternative ways to achieve growth such as joint ventures or alliances,

licensing of own new technology, and approaching a new market or

new product development, to mention a few (Dan et al., 1985 and

Crosby, 1988).


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To achieve the aforementioned growth, one needs a strategy as

maintained by Joel Ross and Michael Kami: Without a strategy, an

organization is like a ship without a rudder, going around in circles. Its

like a tramp; it has no place to go (David, 2011, p. 35). Strategic

management can be defined in various ways. According to David

(2011), Strategic management is the art and science of formulating,

implementing, and evaluating cross functional decisions that enable an

organization to achieve its objectives. As this definition implies,

strategic management focuses on integrating management, marketing,

finance/accounting, production/operations, research and development,

and information systems to achieve organizational success (David

2011).

The present study deals primarily with the operations of

Commerce One Business Solution, Inc. To be sure, this undertaking

conforms to the standards prescribed by the University of Perpetual

Help System Dalta (UPHSD) and is anchored on the components of the

Strategy Formulation Stage of the Comprehensive Strategic-

ManagementModel of Fred David.

Several evaluation tools will be used to ascertain the most

recommended strategy that will be presented in the later part of this

thesis; thus: External Factors Evaluation (EFE) Matrix, Internal Factors


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Evaluation (IFE) Matrix, Strengths-Weaknesses-Opportunities-Threats

(SWOT) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix

(GSM) and the Quantitative Strategic Planning Matrix (QSPM).

Background Information

Commerce One Business Solution, Inc. was established to

support and further expand the presence of Exacts ERP and e-

Business Software, as well as Orisofts Human Capital Management

System, which Exact Philippines started in 1998. Exacts global

restructuring opened an opportunity that led to the companys

formation, with the majority and key members of Exacts local core team

making a unified commitment and founding Commerce One Business

Solution, Inc. (Commerce One, 2012).

As a provider of business solutions, Commerce One offers a

wide array of products and services to suit the clients needs. These

are: EXACT Globe Enterprise, EXACT Synergy Enterprise, EXACT

Event Manager, EXACT Macola ES, Orisoft Technology; HRMWIN,

PAYWIN, TMSWIN and Payroll Outsourcing Services.

The Company in study has no existing Vision and Mission.

Hence, the researcher formulated the companys Vision and Mission


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with the assistance of its General Manager and employees since these

are integral part of creating a business strategy. In fact, David (2011),

asserts that Mission and Vision are viewed as two different concepts.

Mission describes what the organization is now. It emphasizes the

current situation and goals. A business Mission is the foundation for

priorities, strategies, plans, and work assignments. It is the starting

point for the design of managerial jobs and, above all, such affords

design of managerial structures (David, 2011). Vision is used to

describe what the company would like to become in the future.

Wheelen and Hunger (2006) believes that Vision puts into words not

only what the company is for the moment, but what it wants to become.

In the other words, it has been referred to as managements strategic

vision of the firms future.

Cognizant of the foregoing; the following was adopted:

Vision

To become the leader in the software industry in the Philippines

and around the world.

Mission

To deliver value-added business solutions and services tailor-fit

to client's requirements in the Philippines. Focusing on Small and

Medium enterprises to give them a competitive edge by offering


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innovative and practical solutions available in the market and will

continue to maintain expertise in this field by having highly-competent

Consultants.

The stakeholders are composed of: top Management, staffs,

customers, and suppliers. The business is stationed in the Central

Business District of Makati City which is known the financial capital of

the country.

The organizational structure of Commerce One is very simple. It

consists of the top management, finance and administrative,

consultancy and support, and marketing. All the directives come from

the General Manager who is the designated Sales Consultant and

handles recruitment for new employees. Meanwhile, the Support and

Consultancy Department takes charge of Pre-Sales Activities, Product

Implementation, and Post Sales Support. They likewise handle IT,

Research, and Development concerns that are responsible for other

products' customization. The researcher is under the Support and

Consultancy Department as A Senior Support/Consultant. Finance and

Admin handles Accounting and Administrative works, including billing

and collections. On the other hand, the Marketing Department is

responsible in lead generation and other marketing activities.


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Commerce One was incorporated in the Philippines on March

28, 2011 as an exclusive partner of Exact Software of the Netherlands,

a foreign software solution provider thereat in Delft. Exact has been

listed in the New York Stock Exchange (NYSE), Euronext Amsterdam,

since June 1999. It offers business software to entrepreneurial

businesses in a wide variety of industries such as Exact Synergywhich

brings people, information, and business processes together; Exact

Globe Next which streamlines and automates business processes;

Exact Online, an online business software; and other products. Other

services offered are: Support, Consultancy, Training and Education,

Custom Made software, and Business Process Assessment. After a

quarter of a century of providing global solutions, it has already 100,000

customers with 48 branches worldwide as of December 2012.

In 2011, due to Global organizational restructuring, some of its

branches including the Philippines, were constrained to cease

operations. To continue rendering services to existing local customers,

Exact Head Office offered Partnership to the affected Management and

employees; thus, Commerce One was born. To date, Commerce One

has more than 30 active clients nationwide in different industries like

Construction, Pharmaceutical, Trading, Logistics, and Manufacturing.

Most of the same was handed over by the aforesaid Partner. In 2011-
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2012, the Return of Investment was 2.09, with a Liquidity ratio of 1.14,

considered as Very Promising for the first year of its operations.

Though ones business is doing good, the growth and stability of

a company is very essential. In a world with compressed business

cycles, new technology, international competition, and very fast

information availability, running a business is ever more difficult and

challenging. To remain competitive, companies, without the luxury of

time to think, must react quickly to outside influences or else be left

behind. Here, a good strategic plan is very vital.

Statement of the Problem

This study aimed to formulate strategies for Commerce One

Business Solution, Inc that will help them achieve their vision in the

area of Applications or Product Development.

Specifically it has:

1. Identified and eliminated the major weaknesses of the

organization

2. Identified and defended the status against major threats to the

organization


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3. Identified the major opportunities that the organization is

currently facing

4. Identified and preserved increase the major strengths of the

organization

Hypothesis

There is no strategy that will provide software solutions vendors

strategies that will help them achieve their vision according to:

1.1 Product Development

1.2 Market Penetration

Scope and Delimitations of the study

This study involved the formulation of the best strategy for the

Case company using strategic management matrices of Fred David

which started in the companys environmental scanning were it focuses

on its Internal and External environment. Internal analysis covers the

current situation of the company, Vision, Mission and objectives while

External Analysis covers the technological and competitive environment

in the software industry. However the result cannot be applied to all


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kinds of organization it only offers a theoretical knowledge for any

company who wants to adapt strategic management well. The

organization should formulate the best strategy based on its current

situation.

Definition of Terms

The following terms are given their operational definitions

according to the content of the study.

EXACT Globe Enterprise is a traditional back office ERP solution

focusing on automating administrative processes. Financial accounting,

as well as logistics systems and processes, are directly linked to

account management, human resources, manufacturing, among others.

EXACT Globe is available in more than 40 languages and supports

more than 40 legislations wherein the same is seamlessly integrated

with EXACT Synergy.

EXACT Synergy Enterprise is a fully-integrated, browser-based front

office solution that works in conjunction with traditional ERP

applications. It offers a platform for online communication and


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collaboration through which it facilitates sharing information among all

resources in and around an organization. It focuses on automating

value creation and delivery processes and covers solution areas such

as HRM and CRM as well as document, workflow, and project

management.

EXACT Event Manager: with EXACT Event Manager, one can define

events and actions that one would like to take in response. EXACT

Event Manager becomes an early warning system and a first line of

defense against a rapidly-changing business environment inherent in

todays global economy. By being pro-active, one can improve

efficiency and response time, minimize errors, and provide key

decision-makers with immediate real-time information.

EXACT Macola ES: next to EXACT Globe, Commerce One offers

various additional local ERP back office solutions. This includes

manufacturing-oriented products such as EXACTMacola. This product

works in conjunction with EXACT Synergy.

Orisoft Technology: in 2008, EXACT acquired all shares of Orisoft

Technology, a key Asian HRM software company based in Kuala

Lumpur, Malaysia.


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The addition of EXACTOrisoft HCM Suite further expanded Commerce

Ones product offerings that are centered on three main modules:

HRMWIN: is a human resource management system which assists

users in managing human resources optimally and with greater

effectiveness and efficiency. It contains various functions and features

which meet the essential requirements of Human Resource

Management.

HRMWIN available functionalities are: Manpower

Planning, Recruitment, Employee Profile, Leave, Training,

Claims, Performance Appraisal, Career Succession Planning,

Industrial Relations, Report Writer, Transportation Route, Hostel,

Locker, Exit Procedures, Benefits, Business Alerts, Organization

Chart, Medical Record, Security, Correspondence, and

Employee Self-Service Workflow

PAYWIN is a payroll system that allows multiple databases of

information to be accessed by more than one user simultaneously. It

assists users in handling the entire payroll function, ranging from

capturing employees information to calculation of salaries. It is

embedded with standard reports such as government reports, pay slips,


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bank listings, and many more that meet payroll static requirements. In

addition, it provides flexibility to print reports for other management

purposes.

TMSWIN manages employee attendance records through a system

which covers employee clock-in and clock-out times using a time-

recording terminal. It integrates Orisofts Payroll System with electronic

Time Clocking Devices. The software generates standard reports

pertaining to daily attendance, monthly attendance, daily exception,

overtime, irregularities in clocking, late attendance, absenteeism,

working less than a particular number of hours in a day, summary for

overtime, total work hours, and location (department) analysis.

Payroll Outsourcing Services: one of the products or applications that

Case Company is offering.

Cloud Computing. This refers to the pay per use model using the

internet model .

Mission statement. The Case Company Mission Statement To deliver

value-added business solutions and services tailor-fit to client's

requirements in the Philippines. Focusing on Small and Medium


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enterprises to give them a competitive edge by offering innovative and

practical solutions available in the market and will continue to maintain

expertise in this field by having highly-competent Consultants.

Strength. This refers to the factors that are internal to the organization,

particularly referring to something valuable or useful assets or qualities

that must be enhanced by people managing the organization.

Strategist. This refers to the individuals who are most responsible for

the success or failure of an organization.

Strategy Formulation. This refers to the development of a vision and

mission, identifying an organizations external opportunities and threats,

determining internal strengths and weaknesses, establishing long term

objectives, generating alternative strategies and choosing particular

strategies.

Strategic Management. This refers to the art and science of

formulating, implementing, and evaluating cross-functional decisions

that enable organization to achieve its objectives


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Strategy. This refers to a carefully devised plan of action to achieve a

certain goal or objective of the company.

Threats. This refers to the factors that are external to the organization,

particularly referring to something bad or unpleasant, or dangerous to

the organization that must be minimized or eliminated by people

managing the organization.

Weaknesses. This refers to the factors that are internal to the

organization, particularly referring to the weak points or frustrations,

experienced by the members of the organization disguised in the form

of technical problems that must be improved or changed by people

managing the organization.

of the organization.

Vision Statement. This refers to the aspirational description of what an

organization would like to achieve or accomplish in the short-term or

long-term future. It is intended to serve as a clear guide for choosing

current and future courses of action.
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Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter deals with the summary of the readings on related

literatures and abstract of related studies which have significant bearing

in the present study.

Related Literature (Foreign)

Cloud Computing According to the United States National

Institute of Standards and Technology (NIST), Cloud Computing is a

model for enabling ubiquitous, convenient, on-demand network access

to a shared pool of configurable computing resources (for example,

networks, servers, storage, applications, and services) that can be

rapidly provisioned and released with minimal management effort or

service provider interaction. This cloud model is composed of five

essential characteristics, three service models,

Essential Characteristics:

On-demand self-service - A consumer can unilaterally provision

computing capabilities, such as server time and network storage, as
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needed automatically without requiring human interaction with each

services provider.

Broad network access - Capabilities are available over the

network and accessed through standard mechanisms that promote use

by heterogeneous thin or thick client platforms (for example, mobile

phones, laptops, and PDAs).

Resource pooling - The providers computing resources are

pooled to serve multiple consumers using a multi-tenant model, with

different physical and virtual resources dynamically assigned and

reassigned according to consumer demand. There is a sense of

location independence in that the customer generally has no control or

knowledge over the exact location of the provided resources but may be

able to specify location at a higher level of abstraction (for example,

country, state, or datacenter). Examples of resources include storage,

processing, memory, network bandwidth, and virtual machines.

Rapid elasticity - Capabilities can be rapidly and elastically

provisioned, in some cases automatically, to quickly scale out and

rapidly released to quickly scale in. To the consumer, the capabilities


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available for provisioning often appear to be unlimited and can be

purchased in any quantity at any time.

Measured Service. - Cloud systems automatically control and

optimize resource use by leveraging a metering capability at some level

of abstraction appropriate to the type of service (for example, storage,

processing, bandwidth, and active user accounts). Resource usage

can be monitored, controlled, and reported providing transparency for

both the provider and consumer of the utilized service.

Service Models:

Cloud Software as a Service (SaaS). - the capability provided to

the consumer is to use the providers applications running on a cloud

infrastructure. The applications are accessible from various client

devices through a thin client interface such as a web browser (for

example, web-based email). The consumer does not manage or control

the underlying cloud infrastructure including network, servers, operating

systems, storage, or even individual application capabilities, with the

possible exception of limited user-specific application configuration

settings.

Cloud Platform as a Service (PaaS). - the capability provided to

the consumer is to deploy onto the cloud infrastructure consumer-


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created or acquired applications created using programming languages

and tools supported by the provider. The consumer does not manage

or control the underlying cloud infrastructure including network, servers,

operating systems, or storage, but has control over the deployed

applications and possibly application hosting environment

configurations. Cloud Infrastructure as a Service (IaaS). the capability

provided to the consumer is to provision processing, storage, networks,

and other fundamental computing resources where the consumer is

able to deploy and run arbitrary software, which can include operating

systems and applications. The consumer does not manage or control

the underlying cloud infrastructure but has control over operating

systems, storage, deployed applications, and possibly limited control of

select networking components (for example, host firewalls).

Deployment Models:

Private cloud. - the cloud infrastructure is operated solely for an

organization. It may be managed by the organization or a third party

and may exist on premise or off premise.

Community cloud. - the cloud infrastructure is shared by several

organizations and supports a specific community that has shared

concerns (e.g., mission, security requirements, policy, and compliance


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considerations). It may be managed by the organizations or a third party

and may exist on premise or off premise.

Public cloud. - The cloud infrastructure is made available to the

general public or a large industry group and is owned by an

organization selling cloud services.

Hybrid cloud. - The cloud infrastructure is a composition of two or

more clouds (private, community, or public) that remain unique entities

but are bound together by standardized or proprietary technology that

enables data and application portability (for example, cloud bursting for

load-balancing between clouds).

Cloud Computing Challenges

Furth (2010), cited Leavitt (2011) the new paradigm of cloud

computing provides a number of benefits and advantages over the

previous computing paradigms and many organizations are adopting it.

However there are still a number of challenges, which are currently

addressed by the researchers and practitioners in the field. They are

briefly presented below.

Performance - The major issue in performance can be for some

intensive transaction-oriented and other data-intensive applications, in


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which cloud computing may lack adequate performance. Also, users

who are at a long distance from cloud providers may experience high

latency and delays.

Security and Privacy - Companies are still concerned about

security when using cloud computing. Customers are worried about the

vulnerability to attacks, when information and critical IT resources are

outside the firewall. The solution for security assumes that that cloud

computing providers follow standard security practices.

Control - Some IT departments are concerned because cloud

computing providers have a full control of the platforms. Cloud

computing providers typically do not design platforms for specific

companies and their business practices.

Bandwidth Costs - With cloud computing companies can save

money on hardware and software; however they could incur higher

network bandwidth charges. Bandwidth cost may be low for smaller

Internet-based applications, which are not data intensive, but could

significantly grow for data-intensive applications.

Reliability - Cloud computing still does not always offer round-

the-clock reliability. There were cases where cloud computing services

suffered a few-hours outages.


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In the future, we can expect more cloud computing providers,

richer services, established standards and best practices. In the

research arena, HP labs, Intel, and Yahoo have launched the

distributed Cloud Research Test Bad, with facilities in Asia, Europe, and

North America, with the objective to develop innovations including cloud

computing specific chips.

Six principles for successful Cloud adoption

Global non-profit IT association ISACA has issued Guiding

Principles for Cloud Computing Adoption and Use, a useful guide

featuring six key Cloud Computing principles to ensure, or at least

improve the chances of, successful adoption.

The Enablement Principle - Plan for Cloud Computing as a

strategic enabler, rather than as an outsourcing arrangement or

technical platform. To plan strategically for Cloud adoption and use,

enterprises need to: (1) Treat Cloud Computing adoption and use as a

strategic business decision. (2) Make informed decisions, considering

both business and operational needs and the benefits that can be

provided by Cloud Computing. (3) Communicate Cloud Computing

arrangements and agreements to internal parties to ensure proper

alignment and consistent oversight. (4) Periodically review
http://www.isaca.org/http://www.isaca.org/


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organizational strategies and the contribution of IT to ensure that Cloud

initiatives maximize value delivery, risk management and resource

utilization.

The Cost/Benefit Principle- Evaluate the benefits of Cloud

acquisition based on a full understanding of the costs of Cloud

compared with the costs of other technology platform business

solutions. To properly evaluate the costs and benefits of Cloud

Computing, enterprises need to: (1) Clearly document expected

benefits in terms of rapid resource provisioning, scalability, capacity,

continuity and the cost reductions that the Cloud services offer. (2)

Define the true life-cycle cost of IT services provided internally or

through a provider to have a basis for comparing expected and received

value. (3) Balance cost with functionality, resilience, resource utilization

and business value. (4) Look beyond cost savings by considering the

full benefits of what Cloud services and support can provide. (5)

Periodically evaluate performance against expectations

The Enterprise Risk Principle - Take an enterprise risk

management (ERM) perspective to manage the adoption and use of

cloud. To understand the risk implications of Cloud Computing,

enterprises need to: (1) Consider the privacy implications of co-mingling

data within the virtualized computing environment. (2) Evaluate privacy


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requirements and legal restrictions, considering client needs as well as

provider restrictions and capabilities. (3) Determine the accountability

addressed in SLAs, the ability to monitor performance and available

remedies.

The Capability Principle - Integrate the full extent of capabilities

that Cloud providers offer with internal resources to provide a

comprehensive technical support and delivery solution. To leverage

both internal and Cloud provider resources effectively, enterprises need

to: (1) Understand the human and technical resource capabilities that

exist in the current infrastructure and how a Cloud strategy will impact

the need for these or other resources. (2) Define the capabilities that a

Cloud provider will make available as well as constraints on these

resources, including periods of unavailability or priority of use. (3)

Consider emergency situations and resource requirements necessary

to determine causes, stabilize the environment, protect sensitive and

private information, and restore service levels. (4) Determine how

policies, practices and processes currently support the use of

technology; how transitioning to a Cloud solution will require policy,

practice and process changes; and the impact these changes will have

on capabilities. (5) Ensure that service providers can demonstrate that

personnel understand information security requirements and


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are capable of discharging their protection responsibilities. (6) Ensure

that internal staff members have the skill and expertise to coordinate

activities with Cloud providers and that they are engaged in Cloud

service acquisition and ongoing management. (7) Ensure that effective

channels of communication are provided with provider management

and key specialists, particularly for problem identification and resolution.

The Accountability Principle - Manage accountabilities by clearly

defining internal and provider responsibilities. To ensure that

responsibilities are clearly understood and individuals and groups can

be held accountable, enterprises need to: (1) Understand how

traditional responsibilities are assigned and implemented within the

existing organizational structure and as a part of policies and practices

to determine how these are addressed within Cloud solutions. (2)

Determine how responsibilities between tenant and provider

organizations for Cloud solutions are assigned and how

communications between accountable individuals and groups will be

facilitated. (3) Ensure that processes and procedures provide a

mechanism to ensure that responsibilities are accepted and

accountabilities are clearly assigned. (4) Maintain within the governance

structure a means of reviewing performance and enforcing

accountabilities. (5) Consider the risk to the enterprise as part of the


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enterprise risk management program, the impact of potential lapses in

assigned responsibilities, or the impact of not being able to assign

accountabilities.

The Trust Principle - Make trust an essential part of Cloud

solutions, building trust into all business processes that depend on

Cloud Computing. To ensure that business processes that depend on

Cloud Computing can be trusted, enterprises need to: (1) Clearly define

confidentiality, integrity and availability requirements for information and

business processes. (2) Understand how reliance on Cloud Computing

solutions may impact trust requirements. (3) Structure the efforts of

security, risk management and assurance professionals within both

tenant and provider organizations to ensure that trust requirements are

known and satisfied. (4) Monitor changes in business use of Cloud

Computing, vulnerabilities associated with Cloud solutions, and

implementations across tenant and supplier environments to ensure

that threats to trust can be identified and resolved. (5) Ensure that

Cloud infrastructure, platform and software service providers

understand the importance of trust and create solutions that can be

trusted. (6) Provide ongoing assurance that information and information

systems can be trusted.


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Related Literature (Local)

Cloud Computing Benefits

According to Microsoft Philippines, Microsoft Cloud Computing

for SMBs Philippines, the benefits of Cloud Computing are apparent.

Here, it has been said that subscribing to software delivered over the

web enables ones business to take advantage of enterprise-class

software without the burden or cost of managing the technology

yourself. There are many benefits to cloud computing, including the

following: (1) cost savings: renting software in the cloud on a pay-

as-you-go basis eases cash flow; (2) lower IT support costs: one

always has to have the latest versions of software without the need for

IT support; (3) mass storage: renting storage is cheaper than buying

extra disk space for PCs; (4) reduced risk: data security is hosting a

companys problem instead of personal ones; (5) access anywhere: get

ones documents over the web from home or just about anywhere else.


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Strategic Management

Related Literature (Foreign)

Definition and Concepts

Strategic management is a set of managerial decisions and

actions that determines the long-term performance of a corporation. It

involves environmental scanning (both external and internal), strategy

formulation (strategic or long range planning), strategy implementation,

and evaluation and control. They emphasize analyzing and evaluating

external opportunities and threats in terms of an organizations

strengths and weaknesses (Wheelen & Hunger 2006).

From the perspective of David (2011), Strategic Management

can be defined in various ways; thus, it is the art and science of

formulating, implementing, and evaluating cross-functional decisions

that enable an organization to achieve its objectives. As this definition

implies, strategic management focuses on integrating management,

marketing, finance/accounting, production/operations, research and

development, and information systems to achieve organizational

success.


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Kaplan and Norton (2004) saw company strategy as an added

value that is planned to be produced to customers and shareholders.

Here, continuous, specific capability improvements and alignments with

customer needs are crucial.

Coulter (2005) defined strategic management as those

organizational decisions and actions, in which organizational members

analyze the current situation, decide on strategies, put those strategies

into action, and evaluate, and modify or change strategies. Strategy

implementation means putting the organizations various strategies into

action. It is putting theory into practice. Strategy evaluation is the

process of examining how the strategy has been implemented as well

as the outcomes of the strategy. The same takes stock of the actual

implementation of the strategy and its effectiveness. Employees should

monitor both the actual implementation of the strategy and the

performance outcomes of strategies that have been implemented. If

these do not measure up to the expectations or strategic goals, then the

strategy itself or the implementation process may have to be modified

or totally changed. The discrepancies identified will inform the

organization what action to take next if need be. Definitely, an

organizations employees play an important role in strategic


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management. Although an organizations top managers have several

important strategic leadership responsibilities in the strategic

management process, managers and employees at other levels

throughout the organization are also important to the process (Coulter,

2005).

Benefits

As per David (2011), the benefits of strategic management is

dispensable for a company to be more pro-active than reactive in

shaping its own future; it makes an organization to initiate and affect

activities so that it can exert control over its own destiny. At present,

the benefits of strategic management begin to be recognized and

realized by more and more people, no matter small business owners,

chief executive officers, or presidents and managers of many for-profit

and non-profit organizations.

The basic benefit of strategic management has helped

organizations formulate sound strategies by using the more systematic,

logical, and rational approach to strategic choice (David 2011).


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Figure 1.Benefits of Strategic Management

Figure 1 above illustrates the benefits of a firm that does

strategic planning. An efficient strategy requires all employees to help

accomplish a mission; thus, the whole process of strategic management

is a good way to motivate all managers and employees to develop

dedication to the company. First of all, it helps them enhance

communication, the employees began to know what the company is

doing, how to achieve the goal so that they involve themselves with the

firm and maintain a greater commitment for it. Here, the managers and

employees become more creative and hard-working when they

gradually understand each other. Finally, the company will succeed

with the effort of the employees (David, 2011).

To be specific, benefits consist of financial benefits and non-

financial benefits. Financial benefits include improvement in sales,

profitability, and productivity. A good strategic management can


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achieve the mission and objectives of the company; hence, the profits

will come naturally (David, 2011). Meanwhile, there are many non-

Financial Benefits; these are: (1) it can improve understanding ofcompetitors strategies. A good SWOT can help us to understand the

difference with competitors, including awareness of threats; and (2) it

allows reducing resistance to change. Here, more and more

opportunities can be exploited in the process; (3) It defines

management problems objectively; (4) it provides a framework for a

company to coordinate and control the activities; (5) it promotes the

communication among employees and managers; and (6) it encourages

strategic thinking, inspiring people think more on the future of a

company (David, 2011).

Figure 2The Strategy-Formulation Analytical Framework


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The Input Stage

The input tools require strategists to quantify subjectivity during

early stages of the strategy-formulation process. Making small

decisions in the input matrices regarding the relative importance of

external and internal factors allows strategists to more effectively

generate and evaluate alternative strategies. Good intuitive judgment is

always needed in determining appropriate weights and ratings (David,

2011).

The Matching Stage

The matching stage of the strategy-formulation framework

consists of five techniques that can be used in any sequence: the

SWOT Matrix, the SPACE Matrix, the BCG Matrix, the IE Matrix, and

the Grand Strategy Matrix. These tools rely upon information derived

from the input stage to match external opportunities and threats with

internal strengths and weaknesses. Matching external and internal

critical success factors is the key to effectively generating feasible

alternative strategies (David, 2011).


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The Decision Stage

Analysis and intuition provide a basis for making strategy-

formulation decisions. The matching techniques just discussed reveal

feasible alternative strategies. Many of these strategies will likely have

been proposed by managers and employees participating in the

strategy analysis and choice activity. Any additional strategies resulting

from the matching analyses could be discussed and added to the list of

feasible alternative options. Participants could rate these strategies on

a 1 to 4 scale so that a prioritized list of the best strategies could be

achieved. Quantitative Strategic Planning Matrix is being used.(David,

2011)

Related Literature (Local)

Strategic Management Process

According to Camatog (2012), citing Cruz (2007), there are five

Inter-related tasks: (1) forming a strategic vision of what the companys

future business make up will be where the organization is headed so

as to provide long-term direction, delineate what kind of enterprise the

company is trying to become, and infuse the organization with a sense

of purposeful action. The vision of a company must ideally be a


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balance between its big, hairy, and audacious long-term goals and its

core values and core purpose which is a companys reason for being;

(2) setting corporate objectiveswhich means converting a companys

vision into performance outcomes for the company to achieve. These

must be specific, measurable, attainable, and time-bound results of

activities; (3) crafting corporate strategies to achieve desired

objectives. These strategies must be based on an analysis of the

different external environments as well as the internal environment of

the corporation, the personal values of the decision-makers of the

corporation, and societal expectations; (4) implementing and executing

the chosen strategies efficiently and effectively. This means that any

change in strategies will also require changes in the companys

structure, systems, staff, skills, styles, and shared values or culture; and

(5) evaluation performance and initiating corrective adjustments in

vision; long term direction; objectives; strategies or implementation in

the light of actual performance, experience, changing conditions, new

ideas, and new opportunities. This requires the installation of a

monitoring and control system.


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Chapter 3

METHOD AND PROCEDURE

This chapter presents the research frameworks, methods used,

sources of data, respondents of the study, research instruments and

techniques.

Research Design

To gain better understanding of the dimensions of the problems,

an Exploratory Research is employed. According to Ghauri (2005),

Exploratory Research exists when the problem is not specific or not

clear at the start of the research. Although the need for a research or

search for knowledge is evident, the actual problem is still to be

discovered in the course of the research. Applying it to this

undertaking, the researcher made observations on the current situation

of the organization and conducted informal interviews with the General

Manager and employees.

The Descriptive Method shall likewise be had to achieve

research objectives. In descriptive researches, the problem is clear and

understood at the start of the research (Ghauri 2005). Data is


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systematically gathered to address this problem indicating a very

focused and very directed research methodology. Three main

methodologies were used for data collection: first, the researcher

undertake a management audit; this covers the companys Internal and

External Environment. Afterwards, the list was classified as: Strengths,

Weaknesses, Opportunities, and Threats based on the Key Result

Areas identified in the Mission of the company. Second, a Management

Survey was distributed to get quantified results to answer the research

questions. Third, Interviews with the General Manager and employees

was done to understand and analyze the results.


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Research Framework

1. Theoretical Framework

Figure 3A Comprehensive Strategic-Management Model

The study focus on the Commerce One Business Solution, Inc.

current situation Utilizing Strategic Management Model of Fred

David(2011) as presented in the Figure 3 above.


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There are 3 stages of strategic Management: (1) strategy

formulation includes developing a vision and mission, identifying an

organizations external opportunities and threats, determining internal

strengths and weaknesses, establishing long term objectives,

generating alternative strategies and choosing particular strategies to

pursue; thus: A Vision is a road map of companys future. A Mission

statement is the purpose of, or reason for, the organizations existence.

A strategies is a comprehensive plan stating how the organization will

achieve its Vision-Mission and goals objectives. They maximize

competitive advantage and minimize competitive disadvantages;

External opportunities and external threats refer to economic, social,

cultural, demographic, environmental, political, legal, governmental,

technological, and competitive trends and events that could significantly

benefit or harm an organization in the future. Internal strengths and

internal weaknesses are an organizations controllable activities that are

performed especially well or poorly. They arise in the management,

marketing, finance/accounting, production/operations, research and

development, and management information systems activities of a

business. (2) strategy implementation requires a firm to establish

annual objectives, devise policies, motivate employees, and allocate

resources so that formulated strategies can be executed. Strategy


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implementation includes developing a strategy-supportive culture,

creating an effective organizational structure, redirecting marketing

efforts, preparing budgets, developing and utilizing information systems,

and linking employee compensation to organizational performance; (3)

strategy evaluation is the final stage in strategic management.

Managers desperately need to know when particular strategies are not

working well. Indeed, strategy evaluation is the primary means for

obtaining this information. All strategies are subject to future

modifications for external and internal factors are constantly changing.

The three fundamental strategy-evaluation activities are: (1) reviewing

external and internal factors that are the bases for current strategies; (2)

measuring performance: and (3) taking corrective actions. This

undertaking will focus on Strategy Formulation.


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Proposed CloudComputingStrategy forCommerce OneBusinessSolution, Inc.

INPUT PROCESS OUTPUT

Analysis of the

capability of the

company

Using the

following

Matrices;

IFE, EFE, IE,SWOT, GRANDand QSPM

From Review ofRelatedLiterature -Cloud Computing: definitions,essentialcharacteristics,

model, services,advantages,disadvantages,adaptation

Basic StrategicManagementModel of FredDavid:EnvironmentalScanning (SWOTanalysis)

Develop VISIONand MISSION

FEEDBACK :Strategy Monitoring and Evaluation

2. Conceptual Framework

Figure 4Research Paradigm.

In the Input stage, it contains the Review of the Related Literature

pertaining to Cloud Computing definitions, essential characteristics,


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model, services, advantages, disadvantages, adaptation. it also includes

the Develop VISION and MISSION and the Basic Strategic

Management Model of Fred David, Environmental Scanning (SWOT

analysis).

In the Process stage is the analysis of the capability of the

company through observation this is then used as a management

survey. The survey was then tabulated and used several matrices to

come up with the best strategy. These matrices are ; External Factors

Evaluation (EFE) Matrix, Internal Factors Evaluation (IFE) Matrix,

Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Internal-

External (IE) Matrix, Grand Strategy Matrix (GSM) and the Quantitative

Strategic Planning Matrix (QSPM).

In the Output stage is the Proposed Cloud computing Strategy

for Commerce One Business Solution, Inc.

Research Instrument

Management Survey Form shown in Appendix A was used in

conducting Management survey to Case Companys Stakeholders . The

responses will identify what are the Strengths, Weaknesses,

Opportunities and Threats affecting the organization. (Direction : Please

check answer in the appropriate column beside each statements.)


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Data Management

Data Population

In this study the researcher used purposive or judgement

sampling technique. Under this scheme, the participants are chosen

based on the judgement of the researcher to be representative of the

population. The researcher selected almost all the members of the

companys stakeholder except for the customers where in the

researcher selected only those customers that contribute 70% to the

total revenue of the company.

Sample Size

Table 3.1 Statistical Population.


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The population used in the survey is composed of the companys

stakeholders; they are: the Board of Directors, which is also the Top

management, Finance and Admin, and personnel. Only one supplier

was included in the survey, which is the Exact partner; here, 100%

output was attained.

Data Collection

The researcher observed the following procedures in collecting

the data:

a. The researcher talked to the Companys Managing Director

concerning the researchers intention;

b. Once approved, the questionnaires were distributed to Top

management and the employees.

c. An e-mail was sent to the supplier and customers with a

request to answer the survey attached to the document.

d. The respondents were given one week in answering the

questionnaires;

e. After one week, data was collected from the respondents;

and


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f. After collection, the questionnaires were checked; data was

then collated, tabulated, and computed.

Statistical Treatment of Data

As per the Research Instrument used and shown in Research

Instrument, the following were used to treat the data described in Data

Management. Note that the survey used was directed to predetermined

participants, and not thru random sampling population. The same

implies that the validity of the data is based on specific and identified

people for the whole strategic model revolves around business

applications controlled by a few and directed individuals (as in the

matter on who would be the top management of organizations).

Furthermore, since this research is exploratory in nature, data

gathered followed a strict flow of logic which must not be confused with

simpler descriptive type of researches.

Regarding Statistical Measurements, for data to be meaningful,

measurements have to be applied in the data. These measurements

create the necessary parameters on how to analyze the data to provide

the needed conclusions and recommendation addressing the problem

of this research.


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There are different levels of measurements used in this

research. The first is the nominal level where numbers are used to

classify objects or observations (Ghauri, 2005). Such are seen in the

observation tables where various items in the surveyed were needed to

be classified between two outcomes. The first is to determine if an

observation is positive or negative anchored on its effect on the

organization. The second is to determine if the observation is internal

or external based on the stakeholders being affected or are

responsible for the effects of the observation. A correlation is then

made between the two sets of observations where something that is (i)

positively internal is a strength; (ii) negatively internal is a weakness; (iii)

positively external is an opportunity; (iv) and negatively external is a

threat. By classifying the observations, the organizations SWOT is

thus determined.

The second level is the ordinal level wherein some numbers

used have specific relationships indicating rank or priorities (Ghauri,

2005). The same are manifest when the classified SWOTs are

measured based on its importance or effect to the organization.

Nevertheless, due to the nature of synthesizing SWOTs into one

strategy, careful consideration must be made when determining

ordinals. A scale from 1 to 4, where 4 indicates the strong side of the


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scale and 1 represents the weak side of the scale was had. Getting the

midpoint indicates that a score of 2.5 indicated the neutral ground of the

scale. Applying it to the thesis, each SWOT is consequently measured

as to whether it promotes something positive (4) or denotes something

negative (1) with respect to its effect on the organization. A strong

strength garnering a score of 4 or above 2.5 indicated that the strength

has a big effect on the organization; that a need to preserve or improve

its capabilities can be a reason for any strategies to be formulated.

Taking into account that weaknesses have a negative effect on the

organization, a rating of 1 or lower than 2.5 indicates the weakness has

a big effect on the organization; that a need to eliminate the weakness

must be a top priority in strategy formulation. The same will hold true

for opportunities and threats. Opportunities with ratings of 4 or above

2.5 means opportunities that must be realized, while threats with scores

of 1 or below 2.5 deals with threats that the organization must be

conscious of and defend against its disastrous effects.

In the survey, however, considering that the participants may not

have the proper training to analyze the scales characteristics, the

survey must be carefully analyzed. The survey provides 5 choices per

observation; namely, highly agree, agree, neutral, disagree, and highly

disagree with options for being not applicable or refuse to answer. For


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the positive observations, such as strengths and opportunities, any

totally agree answer can merit the score of 4 and follows the decreasing

rule of 1 as a totally disagree answer; on the other hand, for the

negative observations, such as weaknesses and threats, any totally

agree answer merits the score of 1 (reverse of strengths and

weaknesses) for the rule of strategic management requires that all

SWOTs must be synthesized and positive observations have a reverse

effect as compared to negative observations.

The third level is the interval level where the number of constant

intervals between numbers are significant (Ghauri 2005). These are

obvious in two aspects of the survey depicted in the IFE and EFE

tables. The first is when each observation is weighted according to its

importance to the general condition of the organization. Ascertaining

the weights can be subjective; thus, an equal weight distribution is often

suggested to the researcher. Still, if there is time and enough data in

the industry, a more sophisticated assignment of weights for each

observation can be made. The second application is when quantifying

the importance of each participant in the survey. Since this is a

strategic management research, it is important to value the source of

information and the status of each survey participant. Using a total sum

of 1.00 or 100%, the participants are weighted where the most


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influential participant should garner the highest weight. The actual

percentages are only significant when the participants are compared to

each other based on the assumed weights. Participant A may be twice

as important as participant B; hence, the weight assigned to participant

A is doubled as compared to participant B. Although the assignment of

weights must be verified as well using other variables, the error in the

measures can be compensated by the reason why the participants are

being weighted. Stated otherwise, the weights can be debatable, but

the aspect of ranking the participants according to their importance is

taken cared of, making the final ratings of each observation valid

(logically speaking).

Another application of the interval level method is when each of

the observations is rated based on the weighted average of each

participant and their individual ratings. Each rating given by each

participant us subjected to the weight assigned to each participant and

a weighted average is computed to get a very objective rating for each

observation. For instance, the rating that will be given to a particular

strength was computed by averaging the ratings given by the

participants of the survey; however, such rating did not use straight

averaging but was even subjected to the weight of each participant.


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The fourth level is the ratio scale level where the measurement

starts from an absolute value (for example, zero) and the distance from

the absolute value indicates significant information regarding the item

being measured (Ghauri, 2005). These are noticeable when adding all

the weights computed for each observation to craft a statistical

conclusion. In the IFE and EFE tables, since the scale used in the

rating is between 1 and 4 (and the measurement does not start with an

absolute value of zero), the midpoint indicates the neutral ground when

assessing an organization. Having a score greater than 2.5 tells one

that the organization is internally stable (or it can manage its strengths

and weaknesses) or externally stable (or it can manage its opportunities

and threats). The same logic appears in the QSPM, another table used

to determine the final strategy of the organization.

Validity and Reliability of Data must also be valid and reliable

before any analysis is done. As a matter of fact, a significant step in

data management is to (i) determine if a particular data is usable; (ii)

disregard or remove useless data; and (iii) determine if the remaining

valid data can still produce an objective and reliable analysis. Various

techniques were employed to determine the validity of the data;

moreover, since the sampling is directed or the participants are

identified, there is a significant probability that the data gathered is valid


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and reliable. Another aspect that needs to be validated is on the

observations made by the researcher; the same truly depicts the true

SWOTs needed to formulate a strategy for the organization. This is

covered when each of the observations are ranked not by the

researcher but by the participants of the research. Such removes

subjectivity/bias and pre-conclusions on the part of the proponent.


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Chapter 4

PRESENTATION, ANALYSIS AND INTERPRETATION

OF DATA

This chapter presents the findings and interpretation of data

collected via the management surveys. The data were presented and

analyzed using Fred David Strategic Management Matrices. The

interpreted data formed the basis of discussions upon which

recommendations and conclusions were drawn and presented in

Chapter 5.

Respondents Assessment of the Instrument using the following

Matrices.

Modified IFE Matrix

Table 4.1 Modified IFE Matrix


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The Internal Factor Evaluation (IFE) Matrix is a strategy-

formulation tool that summarizes and evaluates the major strengths and

weaknesses in the functional areas of a business; in the table 4.1


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above the first column contains the Key Internal Factors identified in the

management audit. This was group to Strength and Weaknesses of the

Case Company. The second column is the weight assigned to each

internal factors. The assigned weight is based on the effect of each

internal factors on organizational performance. The greatest effect was

assigned with the highest weight. It is important that sum of all weights

must equal 1.0. The column for Top Management, Admin and Finance,

Supplier and customers are the major stakeholder of the Case

Company. They are also weight according to their importance to the

Case Company. Scores under each stakeholders columns are

composed of the weight assigned to each stakeholder multiplied to the

scale assigned to each internal factors. For internal factors denoting to

strength the scales are 3, 3.25, 3.5, 3.75, and 4, where 4 indicates the

strong side of the scale and 3 represents the weak side of the scale. On

the other hand, internal factors denoting for Weaknesses the

corresponding scales are 1, 1.25, 1.50, 1.75, and 2 where 2 indicates

the strong side of the scale and 1 represents the weak side of the scale.

This was then tallied and totaled per group. The average weighted

column is the sum total of all stakeholders scores while the weighted

score column is the product of the Average weighted score and the

weight of each variables. Under IFE matrix, regardless of how many


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factors are included, the total weighted score can range from a low of

1.0 to a high of 4.0, with the average score being 2.5. Total weighted

scores well below 2.5 characterize organizations that are weak

internally, whereas scores significantly above 2.5 indicate a strong

internal position. Based on the result of the study, total weighted score

is 2.73. This means that through the use of IFE Matrix and the given

factors identified, the company was interpreted to have a strong

internal position. Though the result represents a strong side is not very

strong because it is near to the average factors this indicates that the

case company needs to strengthen more its internal aspect of the

company.

EFE Matrix

Table 4.2 : Modified EFE


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The External Factor Evaluation (EFE) Matrix allows strategists to

summarize and evaluate economic, social, cultural, demographic,

environmental, political, governmental, legal, technological, and

competitive information. In the table above the first column contains the

Key External Factors identified in the management audit. This was

group to Opportunities and Threats of the Case Company. The

second column is the weight assigned to each external factors. The

assigned weight is based on the effect of each external factors on

organizational performance. The greatest effect was assigned with the

highest weight. It is important that sum of all weights must equal 1.0.

The column for Top Management, Admin and Finance, Supplier and

customers are the major stakeholder of the Case Company. They are

also weight according to their importance to the Case Company.

Scores under each stake holders columns are composed of the weight

assigned to each stakeholder multiplied to the scale assigned to each

internal factors. For external factors denoting to Opportunities the

scales are 3, 3.25, 3.5, 3.75, and 4, where 4 indicates the strong side of

the scale and 3 represents the weak side of the scale. On the other

hand, External factors denoting for Threats, the corresponding scales

are 1, 1.25, 1.50, 1.75, and 2 where 2 indicates the strong side of the

scale and 1 represents the weak side of the scale. This was then tallied


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and totaled per group. The average weighted column is the sum total

of all stakeholders scores while the weighted score column is the

product of the Average weighted score and the weight of each

variables. Under EFE Matrix, the highest possible total weighted score

for an organization is 4.0 and the lowest possible total weighted score is

1.0. The average total weighted score is 2.5. A weighted score of 4.0

indicates that an organization is responding in an outstanding way to

existing opportunities and threats in its industry. In other words, the

firms strategies effectively take advantage of existing opportunities and

minimize the potential adverse effects of external threats. A score of

1.0 indicates that the firms strategies are not capitalizing on

opportunities or avoiding external threats. Based on the result of the

study, total weighted score is 2.74. This means that through the use of

EFE Matrix and the given factors identified, the company was

interpreted to have a strong external position. Though the result

represents a strong side, the Case Company is not very strong because

it is near to the average factors. This only indicates that the case

company needs to strengthen more its external aspect of the company

specially in its competitiveness to other vendors.


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IE Matrix

Figure 5IE Matrix

The IE Matrix is based on two key dimensions: the IFE total

weighted scores on thex-axis and the EFE total weighted scores on the

y-axis. The result scores is based from IFE Matrix and EFE Matrix

discussed above discussions. On the x-axis of the IE Matrix, an IFE

total weighted score of 1.0 to 1.99 which represents a weak internal

position; a score of 2.0 to 2.99 is considered average; and a score of

3.0 to 4.0 is strong. Similarly, on the y-axis, an EFE total weighted

score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is medium;

and a score of 3.0 to 4.0 is high. The IE Matrix is divided into three


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major regions that have different strategy implications. First, the

recommendation for divisions that fall into cells I, II, or IV can be

described as grow and build. Intensive (market penetration, market

development, and product development) or integrative (backward

integration, forward integration, and horizontal integration) strategies

can be most appropriate for these divisions. Second, divisions that fall

into cells III, V, or VII can be managed best with hold and maintain

strategies; market penetration and product development are two

commonly employed strategies for these types of divisions. Third, a

common recommendations for divisions that fall into cells VI, VIII, or IX

is harvest or divest. Successful organizations are able to achieve a

portfolio of businesses positioned in or around cell I in the IE Matrix

(David, 2011).

The result of the study based on IFE weighted score is 2.73

while the EFE weighted score is 2.74. Plotting both scores in the IE

Matrix, Case Company falls under Quadrant V, which manage best

with hold and maintain strategies. The recommended strategies are the

following: (1) Market Penetration and (2) Product Development.


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Table 4.3SWOT Matrix


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The Strengths-Weaknesses-Opportunities-Threats (SWOT)

Matrix is an important matching tool that helps managers develop four

types of strategies: SO (strengths-opportunities) Strategies, WO


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(weaknesses-opportunities) Strategies, ST (strengths-threats)

Strategies, and WT (weaknesses-threats) Strategies.

SO Strategies use a firms internal strengths to take advantage

of external opportunities. All managers would like their organization to

be in a position in which internal strengths can be used to take

advantage of external trends and events. Organizations generally will

pursue WO, ST, or WT strategies to get into a situation in which they

can apply SO strategies. When a firm has major weaknesses, it will

strive to overcome them and make them strengths. When an

organization faces major threats, it will seek to avoid them to

concentrate on opportunities.(David, 2011) In this study the following

are suggested for SO strategies (1) Introduce Internet based product

that can cater to Small and medium enterprises with lower cost (O13,

O14, O15, O16, O 17, S11, S17, S2) (2) Intensify Market Penetration

Strategy (S5, S6,S7,S8,S9, S10, S11, O10, O11,O121) (3) Create

"add-on" to existing product like Purchase Requisition (S6, O9)

WO Strategies aim at improving internal weaknesses by taking

advantage of external opportunities. Sometimes key external

opportunities exist, but a firm has internal weaknesses that prevent it

from exploiting those opportunities. In this study WO suggested

strategies are (1) Increase Marketing efforts to penetrate other market


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specially the Small and Medium enterprises by strengthening web

advertisement (W6, W7, O10, O11, O12) (2) Provide continuous

training in both software and hardware to staff that will contribute in

providing customer satisfaction (W1,W8,W9,W10,W3, W4, O9,

O13,O15).

ST Strategies use a firms strengths to avoid or reduce the

impact of external threats. This does not mean that a strong

organization should always meet threats in the external environment

head-on. Ins this study ST strategies are (1) Invest in new technologies

such as SaaS that promise lower cost (T10, T8, T6, T10, S2, S11) , (2)

Partner with other big players in the industry (T7,T8,T5, S3, S17)

WT Strategies are defensive tactics directed at reducing internal

weakness and avoiding external threats. An organization faced with

numerous external threats and internal weaknesses may indeed be in a

precarious position. In fact, a firm may have to fight for its survival,

merge, retrench, declare bankruptcy, or choose liquidation (David,

2011). Recommended Strategies are (1) Acquire/develop local product

that has lower cost (W5, T10 T4, T3), (2) Strengthen Customer

relationship (T1, T7,T8,T9,T5, W7).

The overall strategies recommended by the SWOT matrix are;

(1) Product Development, (2) Market Penetration and (3) Joint Venture.


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A. Grand Strategy Matrix

Figure 6 Grand Strategy Matrix (David, 2011)

The Grand Strategy Matrix is based on two evaluative

dimensions: competitive position and market (industry) growth.

According to (David, 2011) Any industry whose annual growth in sales

exceeds 5 percent could be considered to have rapid growth.

Appropriate strategies for an organization to consider are listed in

sequential order of attractiveness in each quadrant of the matrix. Firms

located in Quadrant I of the Grand Strategy Matrix are in an excellent

strategic position. For these firms, continued concentration on current


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markets (market penetration and market development) and products

(product development) is an appropriate strategy. It is unwise for a

Quadrant I firm to shift notably from its established competitive

advantages. When a Quadrant I organization has excessive resources,

then backward, forward, or horizontal integration may be effective

strategies. When a Quadrant I firm is too heavily committed to a single

product, then related diversification may reduce the risks associated

with a narrow product line. Quadrant I firms can afford to take

advantage of external opportunities in several areas. They can take

risks aggressively when necessary.

Firms positioned in Quadrant II need to evaluate their present

approach to the marketplace seriously. Although their industry is

growing, they are unable to compete effectively, and they need to

determine why the firms current approach is ineffective and how the

company can best change to improve its competitiveness. Because

Quadrant II firms are in a rapid-market-growth industry, an intensive

strategy (as opposed to integrative or diversification) is usually the first

option that should be considered. However, if the firm is lacking a

distinctive competence or competitive advantage, then horizontal

integration is often a desirable alternative. As a last resort, divestiture or

liquidation should be considered. Divestiture can provide funds needed


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to acquire other businesses or buy back shares of stock. Quadrant III

organizations compete in slow-growth industries and have weak

competitive positions. These firms must make some drastic changes

quickly to avoid further decline and possible liquidation. Extensive cost

and asset reduction (retrenchment) should be pursued first. An

alternative strategy is to shift resources away from the current business

into different areas (diversify). If all else fails, the final options for

Quadrant III businesses are divestiture or liquidation.(David, 2011).

Finally, Quadrant IV businesses have a strong competitive

position but are in a slow growth industry. These firms have the strength

to launch diversified programs into more promising growth areas:

Quadrant IV firms have characteristically high cash-flow levels and

limited internal growth needs and often can pursue related or unrelated

diversification successfully. Quadrant IV firms also may pursue joint

ventures. .(David, 2011)

Case Company has an annual growth in revenues of 13 percent

increase in Financial Year 2012 compared to Financial Year 2011, but

has weak competitive position to compete effectively because of more

big players in the software industry on the other hand local competitors

has better leverage because it offers more flexible software cost

compared to the case company where in the cost is dictates by the


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principal. Case Company is positioned itself in Quadrant II wherein

recommended strategies are product development, market penetration,

market development, horizontal integration, divestiture, and liquidation

are the possible strategies.

Recommended Business Strategies

Table 4.4: Recommended Business Strategies from SWOT, IE and

GSM

The table 4.4 above is a summary of the derived recommended

strategies utilizing the three matrices which are SWOT, IE and GSM.


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Result shows that the top two among all strategies identified are Market

Penetration and Product Development.

Product development is creating new product to the current and

prospective markets while Market Penetration is an extensive strategy

to acquire more clients and /or customers in the market, selling COBSI

products and services in the current market.


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Quantitative Strategic Planning Matrix

Table 4.5 :


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The Quantitative Strategic Planning Matrix (QSPM)is objectively

indicates which alternative strategies are best. It is a tool used that

allows strategists to evaluate alternative strategies objectively, based

on previously identified external and internal critical success factors.

Like other strategy-formulation analytical tools, the QSPM requires

good intuitive judgment.(David, 2011). At the left side of the table is the

list of Case Companys key external opportunities/threats and internal

strengths/weaknesses which was directly taken from the EFE and IFE

Matrix. The second column is the weight where in each key factors are

assigned particular weight according to their importance to the case

company. Strategies columns is derived from the recommended

strategies table 4.5. For the Case Company Strategy Column 1 is

Product Development while strategy column 2 is Market Penetration.

Attractiveness Scores (AS) was assigned to each key external or

internal factor, one at a time, considering the question Does this factor

affect the choice of strategies being made? for the factors answering

YES to the question the researcher assigned the following

Attractiveness Scores ; 1 = not attractive, 2 = somewhat attractive, 3 =

reasonably attractive, and 4 = highly attractive. For the factors that

answering NO to the questions means there has no effect to choice

being made then it was leave blank. The Total Attractiveness Score is


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the product of Weight assigned to each factors by the Attractiveness

scores in each rows. The Total Attractiveness Scores indicate the

relative attractiveness of each alternative strategy, considering only the

impact of the adjacent external or internal critical success factor. The

higher the Total Attractiveness Score, the more attractive the strategic

alternative (David, 2011). Higher scores indicate more attractive

strategies, considering all the relevant external and internal factors that

could affect the strategic decisions. For the group under Strengths the

total score was 1.7362 for Product development while 1.6969 for

Market Penetration. For group under Weaknesses the total score was

0.5655 for Product Development while 0.6897 for Market Penetration.

The total scores for Internal Environment factors are 2.3017 for Product

Development while 2.3866 for Market Penetration. Meanwhile for the

Group under Opportunities the total score was 1.8813 while 1.7642. for

the group under Threats the total scores was 1.1222 and 1.0444. Total

External Environment Scores 3.0036 and 2.8087. Finally the QSPM is

the sum of the scores of Internal and External Environment with

3.0036 for Product Development and 2.8087 for Market Penetration


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Chapter 5

SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

This chapter discusses the summary of findings, conclusions and

recommendations of the study.

The main object of this study was to provide the best

management strategies for the Case Company that can be utilized to

stay competitive and become preferred partner in the software industry.

To accomplish the objective of study, the data gathered were treated,

analyzed and finally interpreted. The particular issues that the study

attempted to work into the following:

Identify and eliminate Major weaknesses of the

organization

Identify and defend against major threats to the

organization

Identify the Major opportunities the organization is

currently facing

Identify and preserve or increase the major strengths of

the organization


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Conclusions

For the basis of the finding, the researcher presents the following

conclusions;

1. IFE : the matrix total average result is 2.74 indicating that

the organization is internally strong

2. EFE : the matrix total average result is 2.73 indicating that

the organization is externally strong

3. SWOT under this matrix upon consolidating all the

suggested strategy, the three strategies are Joint

Venture, Market Penetration, Product Development

4. IE based on the IFE 2.74 and EFE 2.73 this is under the

Quadrant V which suggested Hold and Maintain and

suggest the following strategy; Market Penetration and

Product development.

5. GRAND - the matrix results the recommended strategies

are Market Penetration, Market Development, Product

Development, Horizontal Integration, Divestiture and

Liquidation.


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Strategies from the QSPM Matrix

As a result of QSPM, Product development strategy obtained

the highest score. In table 4.4 of this chapter, market penetration and

product development all got the score of 6, which means that most of

the matrices suggested these two strategies. But only stand out and the

main business strategy that attained highest score in QSPM is Product

development.

Looking into the results of QSPM assessment, there are several

strategies that the company can adopt. On top of it, these strategies

can actually be combined to be able to maximize desired results to be

able to achieve the corporate objectives set. Going into critical

assessment of the companys internal scanning; it is obvious that it has

a lot of improvement that needs to work on particularly to its Marketing.

The brand and product awareness of the consumers will depend on this

aforementioned sector. Thus, it will create greater impact if the

organization will focus on Product Development strategy.

Since the bulk of the work will fall under the consultancy and

support division the management should create a development team

that will focus on the development of the pilot project.


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A second strategy to follow after a successful implementation of

Product Development is Market Penetration.

Recommendations

In view of the findings and conclusions, the researcher offers the

following recommendations;

1. Case Company should embark on a Product Development

program. Foremost in the plans of the company is an adoption of

the Cloud Computing Sy

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Katherine m. Aguilar