Strategic Management
product development
seeking increased sales by improving/modifying present products/services
horizontal integration
seeking ownership or control over competitors
objectives
should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent among organizational units, should also be associated with a timeline
production/operation function
this of a business consists of all those activities that transform inputs into goods and services
Internal Factor Evaluation Matrix
this tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas
mission statement
a declaration of attitude and outlook, usually broad in scope
competitive intelligence
a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals
related diversification
adding new but related products or services
unrelated diversification
adding new, unrelated products or services
strategic management
allows an organization to be more proactive that reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities--and thus to exert control over its own destiny
external factor evaluation (EFE) matrix
allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological and competitive information
Benchmarking
analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals. Determining "best practices"
competitive advantage
anything that a firm does especially well compared to rival firms, when a firm can do something that rival firms cannot do, or owns something that rival firms desire, that can represent what?
internal strengths and weaknesses
are an organization's controllable activities that are preformed 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
strategies
are the means by which long-term objectives will be achieved, may include geographic expansion, diversification, acquisition product development, market penetration, retrenchment, divestiture, liquidation and joint ventures
organizational culture
can be defined as "a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think and feel"
True (research indicates that organizations that use strategic-management concepts are more profitable and successful than those that do not)
T/F: Strategic management often allows firms to reap financial benefits
True (besides helping a firm to avoid financial demise, strategic management offers other tangible benefits such as an enhanced awareness of external threats, an improved understanding of competitions' strategies, increased employee productivity, reduced resistance to change and a clearer understanding of performance-reward relationships)
T/F: strategic management offers firms non-financial benefits as well as financial benefits
mission statement
also called a creed statement, a statement of purpose, a statement of philosophy, a statement of beliefs, a statement of business principles, or a statement "defining our business", it reveals what an organization wants to be and whom it wants to serve
staffing
also called personnel management or human resource management, includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees, as well as managing union relations
open-mindedness
an important guideline for effective strategic management is what? a willingness and eagerness to consider new information, new viewpoints, new ideas and new possibilities is essential, all organizational members must have a spirit of inquiry and learning
breakeven point
can be defined as the quantity of units that a firm must sell in order for its total revenues to equal its total costs
forward integration
gaining ownership or increased control over distributors or retailers
resource-based view (RBV)
proponents of this view contend that organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories: physical resources, human resources, and organizational resources
strategic planning
refers only to strategy formulation
cost/benefit analysis
this involves assessing the costs, benefits, and risks associated with marketing decisions; three steps to perform this are: compute the total costs associated with a decision, estimate the total benefits from that decision, compare the total costs with the total benefits
Porter's Five-Forces Model
this is a widely used approach for developing strategies in many industries; the nature of competiveness in a given industry can be viewed as a composite of five forces: rivalry among competing firms; potential entry of new competitors; potential development of substitute products; bargaining power of suppliers; and bargaining power of consumers
external audit
to perform this, a company first must gather competitive intelligence and information about economic, social, cultural, demographic, environmental, political, governmental, legal and technological trends--this information is found by monitoring various sources of information such as newspapers and magazines
sustained competitive advantage
a firm must strive to achieve this by continually adapting to changes in external trends and events and internal capabilities, competencies, and resources; and by effectively formulating, implementing and evaluating strategies that capitalize upon those factors
distinctive competencies
a firm's strengths that cannot be easily match or imitated by competitors are called what?
military heritage
a strong what underlies the study of strategic management? using such terms as objectives, mission, strengths, and weaknesses were first used on the battlefield
strategy formulation
includes developing a vision and mission, identifying an organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue
selling
includes many marketing activities, such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations
empirical indicators
three characteristics of resources: rare, hard to imitate, or not easily substitutable; enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage
vision statement
what do we want to become?
communication
what is a key to successful strategic management?
retrenchment
when an organization regroups through cost and asset reduction to reverse declining sales and profits. Turnaround or reorganizational strategy. Designed to fortify their basic distinctive competence
intuition
while strategy formulation is often much more of science than an art, besides the facts what do companies often have to rely on in making their strategic decisions?
financial objectives
Associated with growth in revenues, earnings, higher dividends, larger profit margins, greater ROI, higher EPS, rising stock price, cash flow, etc.
objectives
can be defined as specific results that a organization seeks to achieve in pursuing its basic mission, they are essential for organizational success because they state direction; aid in evaluation; create synergy; reveal priorities; focus coordination; and provide a basis for effective planning, organizing and motivating and controlling activities
motivating
can be defined as the process of influencing people to accomplish specific objectives, explains why some people work hard and others do not
marketing
can be describes as the process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services
investment decision
capital budgeting. Allocation/reallocation of resources to projects, products, assets, and divisions of an organization
internal audit
compared to an external audit, the process of performing this provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization
functions of finance/accounting
comprise three decisions the investment decision, the financing decision, and the dividend decision
dividend decision
concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock
nine components of an effective mission statement
customers, products or services, markets, technology, concern for survival, growth and profitability, philosophy, self-concept, concern for public image, and concern for employees
mission statement
declaration of the business' reason for being, asks the question, what is our business?
balanced scorecard
derives its name from the perceived need of firms to "balance" financial measures that are oftentimes used exclusively in strategy evaluation and control with nonfinancial measures such as product quality and customer service
financing decision
determines best capital structure for firm and includes examining ways firm can raise capital
Competitive Profile Matrix (CPM)
identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position
strategic objectives
include larger market share, quicker on-time delivery, shorter design-to market times, etc.
cultural products
include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, heroes, and heroines
controlling
includes all of those activities undertaken to ensure that actual operations conform to planned operations
market development
introducing present products or services into new geographic area
competitive intelligence
is not corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public
empowerment
is the act of strengthening employees' sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and rewarding them for doing so
strategic planning
it is an involved, intricate and complex process that takes an organization into uncharted territory, it does not provide a ready-to-use prescription for success; instead, it takes the organization through a journey and offers a framework for addressing questions and solving problems
mission statement
it should define what the organization is and what the organization aspires to be, be limited enough to exclude some ventures and broad enough to allow for creative growth, distinguish a given organization form all others, serve as a framework for evaluating both current and prospective activities, and be stated in terms sufficiently clear to be widely understood throughout the organization
rivalry among competing firms
one of the five forces of porter's five-forces model; this is usually the most powerful of the five competitive forces, the strategies pursued by one firm can be successful only to the extent that they provide competitive advantage over the strategies pursued by rival firms
internal audit
performing this requires gathering, assimilating, and evaluating information about the firm's operations
vision statement
provides the foundation for developing a comprehensive mission statement, this should be established first and foremost, it should be short, preferably one sentence, and as many managers as possible should have input into developing it
management information systems
receives raw maternal from both the external and internal evaluation of an organization; it gathers data about marketing, finance, production and personnel matters internally and social, cultural, demographic, environmental, economic, political governmental, legal, technological, and competitive factors externally; data is integrated to support managerial decision making
external opportunities and 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
strategic management
refers to strategy formulation, implementation and evaluation
value chain analysis
refers to the process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products
strategy implementation
requires a firm to establish annual objectives, devise policies motivate employees, and allocate resources so that formulated strategies can be executed
internal audit
requires gathering and assimilating information about the firm's management, marketing, finance/accounting, production/operations, research and development (R&D), and management information systems operations
market penetration
seeking Increased market share for present products/services in present markets through greater marketing efforts. Can be used alone or in combo with others
backward integration
seeking increased control or ownership of suppliers. When suppliers are unreliable, costly, can't meet needs.
divestiture
selling a division or part of an organization
corporate, divisional or strategic business unit and functional
strategy formulation, implementation and evaluation activities occur at what three hierarchical levels in a large organization?
strategic manager
the CEO is the most visible one, but any manager who has responsibility for a unit or division, responsible for profit and loss outcomes, or direct authority over a major piece of the business is one of these
Strategic Management
the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
resource-based view (RBV)
the basic premise of this is that the mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage
assumptions
the best present estimates of the impact of major external factors, over which the manger has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results
customer analysis
the examination and evaluation of consumer needs, desires and wants--involves administers customer surveys, analyzing consumer information, evaluating market positioning strategies, developing customer profiles and determining optimal market segmentation strategies
resource similarity
the extent to which the type and amount of a firm's internal resources are comparable to a rivals
strategists
the individuals who are most responsible for the success or failure of an organization, they can have various job titles, such as chief executive officer, president, owner, chair of the board, or entrepreneur
market commonality
the number and significance of markets that a firm competes in with rivals
strategy evaluation
the primary means for obtaining information on whether or not a strategy is working well; you review external and internal factors, measure performance, and take corrective actions
planning
the process by which one determines whether to attempt a task, works out the most effective way of reaching desired objectives and prepares to overcome unexpected difficulties with adequate resources
environmental scanning
the process of conducting research and gathering and assimilating external information, otherwise known as industry analysis
organizing
the purpose of this is to achieve a coordinated effort by defining task and authority relationships, means determining who does what and who reports to whom
external audit
the purpose of this is to develop a finite list of opportunities that could benefit a firm and threats that should be avoided
director of competitive analysis
the responsibilities of this person include planning, collecting date, and analyzing data, facilitating the process of gathering and analyzing data, disseminating intelligence on a timely basis, researching special issues, and recognizing what information is important and who needs to know
competitive intelligence program
the three basic objectives of this are to provide a general understanding of an industry and its competitors; to identify areas in which competitors are vulnerable and to assess the impact strategic actions would have on competitors; and to identify potential moves that a competitor might make that would endanger a firm's position in the market
mission statement
these are "enduring statements of purpose that distinguish one business from other similar firms, it identifies the scope of a firm's operations from other similar firms," it address the basic question that faces all strategists: "what is our business?"
forecasts
these are educated assumptions about future trends and events
annual objectives
these are short term milestones that organizations much achieve to reach long-term objectives
policies
these are the means by which annual objectives will be achieved, include guidelines, rules and procedures established to support efforts to achieve stated objectives, they are guides to decision making and address repetitive or recurring situations
external forces
these can be divided into five broad categories: economic forces; social, cultural, demographic, and natural environment forces; political, governmental, and legal forces; technological forces; and competitive forces
functions of management
these consist of five basic activities: planning, organizing, motivating, staffing, and controlling
research and development
these expenditures are directed at developing new products before competitors do, at improving product quality, or at improving manufacturing processes to reduce costs
strategist
these people help an organization gather, analyze and organize information, they track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance, spot emerging market opportunities, identify business threats and develop creative plans
key external factors
these should be important to achieving long-term and annual objectives; measurable; applicable to all competing firms; and hierarchical in the sense that some will pertain to the overall company and others will be more narrowly focuses on functional or divisional areas
vision statement
this answers the question "what do we want to become?" and is the first step in strategic planning, preceding even development of a mission statement
industrial organization (I/O)
this approach to competitive advantage advocates that external (industry) factors are more important than internal factors in a firm for achieving competitive advantage
Resource-based view (RBV)
this approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage
linear regression
this is based on the assumption that the future will be just like the past
