Strategic Management Process

What is Strategy?

"The central integrated, externally oriented concept of how we will achieve our objectives" - Hambrick & Fredrickson

What are Objectives

Specific, measurable targets The things a firm needs to 'do' to achieve its mission should influence other elements in the strategic management process

Strategic Implementation

how strategies are carried out who will do what who reports to whom how does the firm hire, promote, pay, etc.

Competitive Advantage

the ability to create more economic value than competitors

Economic returns of Advantage, Parity and Disadvantage

Advantage = Above normal; exceeding expectations Parity = Normal; meeting expectations Disadvantage = Below normal; failing expectations

Vision Statement

Statement describing what a firm strives to be, at some future time. •It should be specific and motivating. •It reflects the firm's aspirations •It should capture the hearts and minds of stakeholders •More enduring than mission

Mission Statement

Statement(s) which specifies a firm's purpose or "reason for being" and the primary objective toward which the firm's programs & plans should be aimed. •Statement(s) specifying the firm's key constituents and how the firm will serve them. •It must be clear and understood •Discusses what business the firm competes

Strategic Choice

The organization's strategy; the ways an organization will attempt to fulfill its mission and achieve its long-term goals.

Definition of Strategy

a firm's theory about how to gain competitive advantages

Strategic Management Process

a six-step process that encompasses strategic planning, implementation, and evaluation Objectivs -> External & Internal Analysis -> Strategic Choice -> Strategy Implementation -> Competitive Advantage

Temporary and Sustainable Competitive Advantage.

competitive advantage typically results in high profits profits attract competition competition limits the duration of competitive advantage in most cases therefor, most competitive advantage is temporary competitors imitate the advantage or offer something better

Competitive Advantage is the result of

doing something different and/or better than competitors

A strategy is only as good as...

its implementation

Competitive Disadvantage

people may have an aversion to the firm's offering the firm may have a cost disadvantage a firm may have outdated technology/equipment a firm may have a negative reputation

Competitive Parity

the firm's offerings are average people do not have a preference for the firm's offering the firm does not have a cost advantage over others some things that may lead to competitive parity may still be critical to success (e.g., telephones)

Emergent vs. Intended Strategies

the strategic management process leads managers to intended strategies. However, conditions often change or new information becomes available and managers respond and adopt emergent strategies