Chapter 1 Flashcards
Stages of Strat Mgmt
Strat formulation
Strat implementation
Strat evaluation
Strategic Management
Art & science of
Formulating
Implementing
Evaluating cross functional decisions that enable org to achieve objs
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Strategy mgmt focusses on integerating mgmt
Marketing, fin/accounting, production/operations, R&D & IS
Strat formulation
Developing a vision and mission Indentify ext opportunities & threats Determine internal strength and weaknesses Estb long term objs Generate alt strats Choosing particular strat to persue
Strat formulation
Real world
What new businesses to enter or abandon
How to allocate resources
Whether to expand or diversify (intl markets, merge, joint venture, avoid hostile take overs)
Strat implementation
- Action Stage of strat mgmt
- Requires a firm to establish annual objs, devise policies, motivate employees and allocate resources so that formulated strat can be executed
Strat implementation
Real world
Developing strategy supportive culture Creative effective org structure Redirecting marketing efforts Preparing budgets Developing and utilizing IS linking compensation to emp performance
Why interpersonal skills require in strat implementation
Strat implementation activities affect all employees and managers in an org
Every div must decide on answering questions like
What must we do to implement our part of org strat
How best can we get the job done
Challenge is to stimulate and motivate employees to work with enthusiasm and pride
Strat evaluation
Final stage
1) reviewing ext & int factors that are bedt for current strategies.
2) measuring performance
3) taking corrective actions
Competitive Advantage
Strategic management is all about gaining and maintaining competitive advantage.This
term can be defined as “anything that a firm does especially well compared to rival firms.”
For example, in a global economic recession, simply having ample cash on the firm’s balance sheet can provide a major competitive
advantage. Some cash-rich firms are buying distressed rivals. For example, BHP Billiton,
the world’s largest miner, is seeking to buy rival firms in Australia and South America.
Johnson &
Johnson
Apple has no manufacturing facilities of its own,
and rival Sony has 57 electronics factories.
Less fixed
assets has enabled Apple to remain financially lean with virtually no long-term debt.
The Industrial/Organizational (I/O) and the Resource-Based View (RBV)
Normally, a firm can sustain a competitive advantage for only a certain period due to
rival firms imitating and undermining that advantage.
A firm must strive to achieve sustained competitive advantage by(1) continually adapting to changes in external trends and events and internal capabilities,
competencies, and resources; and by (2) effectively formulating, implementing, and evaluating strategies that capitalize upon those factors.
Daily newspaper
circulation in the United States totals about 55 million copies annually, which is about the
same as it was in 1954.
The three original broadcast
networks captured about 90 percent of the prime-time audience in 1978, but today their
combined market share is less than 50 percent.
Strategists
Strategists are the individuals who are most responsible for the success or failure of an organization. Strategists have various job titles, such as chief executive officer, president, owner,
chair of the board, executive director, chancellor, dean, or entrepreneur.
Strategists 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 action plans.
In the last five years, the position of chief strategy officer (CSO) has
emerged as a new addition to the top management ranks of many organizations, including
Sun Microsystems, Network Associates, Clarus, Lante, Marimba, Sapient, Commerce One, BBDO, Cadbury Schweppes, General Motors, Ellie Mae, Cendant, Charles Schwab, Tyco,
Campbell Soup, Morgan Stanley, and Reed-Elsevier.
Vision and Mission Statements
Many organizations today develop a vision statement that answers the question “What do
we want to become?” Developing a vision statement is often considered the first step
in strategic planning, preceding even development of a mission statement. Many vision
statements are a single sentence. For example, the vision statement of Stokes Eye Clinic in
Florence, South Carolina, is “Our vision is to take care of your vision.”
Mission statements are “enduring statements of purpose that distinguish one business
from other similar firms. A mission statement identifies the scope of a firm’s operations in
product and market terms.
“What is our business?” A clear mission statement describes the values and priorities of an
organization.
External Opportunities and Threats
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.
- Availability of capital can no longer be taken for granted.
- Consumers expect green operations and products.
- Marketing has moving rapidly to the Internet.
- Consumers must see value in all that they consume.
- Global markets offer the highest growth in revenues.
Many companies in many industries face the severe external threat of online sales capturing increasing
market share in their industry.
Other opportunities and threats may include the passage of a law, the introduction of
a new product by a competitor, a national catastrophe, or the declining value of the dollar.
A competitor’s strength could be a threat.
Internal Strengths and Weaknesse
Internal strengths and internal weaknesses are an organization’s 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.
Internal factors can be determined in a number of ways, including computing ratios,
measuring performance, and comparing to past periods and industry averages.
Long-Term Objectives
Objectivescan be defined a
Objectives can be defined as specific results that an organization seeks to achieve in pursuing
its basic mission. Long-term means more than one year. Objectives 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, motivating, and
controlling activities. Objectives should be challenging, measurable, consistent, reasonable,
and clear. In a multidimensional firm, objectives should be established for the overall
company and for each division.
Strategies
Strategies are the means by which long-term objectives will be achieved. Business strategies may include geographic expansion, diversification, acquisition, product development,
market penetration, retrenchment, divestiture, liquidation, and joint ventures.
In addition, strategies affect an organization’s long-term
prosperity, typically for at least five years, and thus are future-oriented.
