Chapter 1- Basic Concepts of Strategic Management

phases of strategic management

1. Basic financial planning 2. Forecast based planning 3. Externally oriented strategic planning 4. Strategic Management

globalization

Integrated internationalization of markets and corporations.

triggering event

Something that acts as a stimulus for a change in strategy.

strategy formulation

The development of long-range plans for the effective management of the environmental opportunities and threats, in light of the corporate strengths and weaknesses.

Budget

A statement of a corporation's programs in terms of dollars

program

A statement of the actives or steps needed to accomplish a single-use plan. This makes a strategy action oriented.

procedure

A system of sequential steps or techniques that describe in detail how a particular task or job is to be done.

policy

A broad guideline for decision making that links the formulation of a strategy with its implementation. This ensures that employees at all levels make actions and decisions that support the company's mission, objectives, and strategies.

strategy

A comprehensive master plan that states how the corporation will achieve its mission and objectives.

hierarchy of strategy

A grouping of strategy types by level in the organization. Each level supports the next one. Functional str. supports business str. which supports corporate str.

strategy implementation

A process by which strategies and policies are put into action through the development of programs, budgets, and procedures.

evaluation and control

A process in which corporate activities and performance results are monitored so that tactual performance can be compared with desired performance.

strategic management

A set of managerial decisions and action that determines the long run performance of a corporation. Includes environmental scanning, strategy formation, strategy implementation, evaluation and control. Also called Business Policy.

strategic audit

An aid to strategic decision-making process. A check-list of questions that enables a systematic analysis to be made of various corporate functions and activities.

organizational learning theory

An organization adjusts defensively to a changing environment and uses knowledge offensively to improve the fit between itself and its environment. This includes decisions at all levels of the organization. (Complete Theory)

learning organization

An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights.

strategic decision

Deals with the long-run future of an entire organization. It has three characteristics: 1. Rare- they are unusual and have no precedent to follow 2. Consequential- they demand a great commitment of everyone at all levels 3. Directive- they set the precedent for future (lesser) decisions.

Corporate strategy

Describes a company's overall direction in terms of its general attitude toward growth and the management of its various businesses and product lines. Three categories: stability, growth, and retrenchment.

vision

Describes what the organization would like to become in the future. This can be a part of the mission statement.

Business Strategy

Emphasizes improvement of the competitive position of a corporation's products or services in the specific industry or market segment served by that business unit. Two categories: competitive and cooperative strategies.

environmental scanning

Monitoring, evaluating and disseminating of information from the external and internal environments to key people within the corporation.

SWOT analysis

Strengths, Weaknesses (internal factors), Opportunities, Threats (external factors). They system used to scan the environment of a corporation.

functional strategy

The approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity.

strategic decision-making process

The eight step process of making decisions: 1. Evaluate current performance results 2. Review corporate governance 3. Scan an assess the external environment 4. scan and assess the internal corporate environment 5. Analyse strategic (SWOT) factors 6. Generate, evaluate, and select the best alternative strategy. 7. Implement selected strategies via programs, budgets, and procedures. 8. Evaluate implemented strategies via feedback systems and the control of activities to ensure minimum deviation from plans.

performance

The end result of activities. Actual outcomes of the strategic management process.

objective

The end results of planned activities. They are stated as action verbs and tell what is to be accomplished by when and quantified if possible. (A goal is a less detailed action starting with "to".)

strategic factors

The external and internal elements that will determine the future of the corporation. (used in SWOT analysis)

external environment

The factors that make up the Opportunities and Threats outside of an organization.

internal environment

The factors that make up the Strengths and Weaknesses within an organization.

mission

The purpose or reason for the organization's existence. It describes the services or goods provided, the customers served and the technologies used. Describes what the company is now (not what it hopes to become in the future).

environmental sustainability

The use of business practices to reduce a company's impact on the natural, physical environment.

population ecology

Theory that states that once a company occupies a particular niche, it is unable to adapt to changing conditions. It must be replaced by newer, more current companies. (Failed theory)

strategic choice perspective

Theory that states that organizations adapt to changing environments, but they also affect change on their environment. Managers drive this change. (True theory)

institution theory

Theory that states that organizations can and do adapt to changing conditions by imitating other successful organizations. (Partially correct theory)