Chapter 2: The Strategy Formulation, Strategy Evaluation Process

Question 1

What are the 5 stages of managerial strategy process?

Answer 1

1. Vision
2. Objectives
3. Crafting a strategy
4. Execution
5. Evaluation and adjustment

Question 2

Stage 1

Answer 2

Vision: Charts firms’ long-term direction

Question 3

Strategic Vision

Answer 3

Describes “where we are going” - the course and direction mgmt has charted and the firm’s future product-customer-market-tech focus

Question 4

Effective vision characteristics

Answer 4

Graphic, directional, focused, flexible, feasible, desirable, easy-to-communicate

Question 5

Common vision shortcomings

Answer 5

Vague/incomplete, not forward-looking, too broad, bland/uninspiring, reliant on superlatives

Question 6

Mission Statement

Answer 6

Conveys firm’s purpose in language specific enough to give the firm its own identity - “who we are, what we do, why we’re here”

Question 7

Core Values

Answer 7

Beliefs, traits, and behavioral norms that firm personnel are expected to display in conducting the firm’s business and pursuing its strategic vision and mission (normally 4-8 values)

Question 8

Stage 2

Answer 8

Objectives: firm’s performance targets - results mgmt wants to achieve

Question 9

2 Good Objective Requirements

Answer 9

• quantifiable/measurable
• contain deadline for achievement

Question 10

Strategic Objectives

Answer 10

Set targets high enough to stretch firm to perform at its full potential and deliver best possible results

Question 11

Strategic Intent

Answer 11

Firm relentlessly pursues an ambitious strategic objective, concentrating full force of resources and competitive actions on achieving that objective

Question 12

2 Types of Objectives

Answer 12

Financial and Strategic

Question 13

Financial Objectives

Answer 13

Relate to financial performance

Question 14

Strategic Objectives

Answer 14

Relate to strengthening market standing, competitive vitality, and future business prospects

Question 15

Balanced Scorecard

Answer 15

Method for combining strategic and financial objectives, tracking their achievement, and giving mgmt a more complete and balanced view of how well an organization is performing

Question 16

Stage 3

Answer 16

Crafting Strategy

Question 17

Complete Strategy Landscape

Answer 17

Considers external environment and internal situation, the business model, competitive positioning, key implementation approaches, resource development and deployment

Question 18

Strategy Making Hierarchy

Answer 18

Corporate <- Business <- Functional-Area <- Organizational

Question 19

Corporate Strategy

Answer 19

Establishes overall game plan for managing a set of businesses in a diversified multi-business company

Question 20

Business Strategy

Answer 20

Strengthening the firm’s market position and building competitive advantage in a single business company or single business unit in a multi-business company

Question 21

Functional-Area Strategy

Answer 21

Concern actions related to particular functions or processes within a business

Question 22

Operating Strategies

Answer 22

Concern the relatively narrow strategic initiatives and approaches for mgmt of key operating units and specific operating activities such as materials purchasing or internet sales

Question 23

Stage 4

Answer 23

Execution

Question 24

Examples of Execution

Answer 24

Staffing, creating company culture and work environment, allocating resources, encourage leadership, ensure policies and procedures are effective, install information and operating systems, push for continuous improvement, tie rewards with performance objectives

Question 25

Stage 5

Answer 25

Evaluation and Adjustment: A firm’s vision, objectives, strategy, and approach to execution are never final; managing strategy is an ongoing process