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