Chapter 3 – Strategic Management Process

Question 1

What is the strategic management process?

Answer 1

The set of activities the firm managers undertake in order to try to put their firms in the best possible position to compete successfully in the marketplace

Question 2

What are the activities that make up the strategic management process?

Answer 2

• Firm Vision & Mission
• Strategic Analysis
• Develop Strategic Objectives
• Implement Strategies
• Measure & Evaluate Performance

Question 3

What is a vision statement?

Answer 3

• An expression of what a business founders want that business to accomplish. Usually very broad
• Why do we exist?

Question 4

What is a mission statement?

Answer 4

• How the firm will try to make its vision a reality. More specific.
• Not exactly a strategy but focuses on describing the products a firm plan to offer or the target markets it plans to serve.
• How do we do that?

Question 5

What is a strategic analysis?

Answer 5

An analysis of a firms external and internal environment that serves to give managers a clear picture of what they have to work with and what needs to be addressed when developing a plan for the firm’s success

Question 6

What are the 3 levels of strategies?

Answer 6

• Corporate level strategies
• Business level strategies
• Market level strategies

Question 7

What are corporate level strategies?

Answer 7

• Broadest strategies that apply to the entire company
• Sets the target for the rest of the strategies
• Vision & Mission Statements

Question 8

What are business level strategies?

Answer 8

• Identifying competitive advantage

- Managers look at how the company can best meet the target set by the corporate level

Question 9

What are market level strategies?

Answer 9

• Growth strategies

- Decisions about how the company will work inside the market

Question 10

What are strategic objectives?

Answer 10

• The big picture goals for the company describing what the company will do to try to fulfill its mission. Usually some sort of performance goal.
• What will we do?

Question 11

What are the 3 types of grand strategies?

Answer 11

• Growth Strategy
• Stability Strategy
• Defensive Strategy

Question 12

What is a growth strategy?

Answer 12

Involves developing plans to increase the size of the firm in terms of revenue, market share or geographic reach

Question 13

What is a stability strategy?

Answer 13

A strategy for a company to maintain its current income, market share or geographic reach

Question 14

What is a defensive strategy?

Answer 14

A company that is struggling may decide to shrink its operations to reduce costs in order to survive

Question 15

What does SMART in SMART GOALS stand for?

Answer 15

• Specific
• Measurable
• Achievable
• Relevant
• Time-Bound

Question 16

What is involved in the process of implementing strategies?

Answer 16

A combination of deciding what needs to be done, figuring out how to do it, assigning roles to people and providing them the resources to complete their tasks, and overseeing the work to make sure it gets done correctly and in a timely manner

Question 17

What is a short-term strategic plan?

Answer 17

Can be done in less than a year

Question 18

What is a long-term strategic plan?

Answer 18

Can’t be down in less than a year

Question 19

What are the steps in the planning cycle?

Answer 19

1. Set goals
2. Design plan
3. Implement plan
4. Review results

Question 20

What are the levels of strategic planning?

Answer 20

• Strategic
• Tactical
• Operational

Question 21

What is strategic planning?

Answer 21

• Why?
• High-level planning performed by company executives in order to set the overall direction of the company
• Connects the company’s actions back to its vison & mission statements

Question 22

What is tactical planning?

Answer 22

• What?
• Mid-level planning performed by division managers that consists of broad ideas of what the company should do to pursue its mission

Question 23

What is operational planning?

Answer 23

• How?
• Lays the front-line activities each employee will do to advance the tactical plans
• Daily activities required for the company to function

Question 24

What is the process involved when implementing a plan?

Answer 24

The execution of a strategy by assigning tasks for people to carry out to accomplish the companies’ strategic goals

Question 25

Where does implementation happen?

Answer 25

The bottom of the strategic and organizational hierarchy, in the actions of operational employees who carry out planned tasks that add value to the company’s product

Question 26

What is evaluation?

Answer 26

Involves setting a performance standard, measuring the results achieved, and comparing the results to the standard

Question 27

What is benchmarking?

Answer 27

A process in which the performance standard is based on another firm’s superior performance

Question 28

What happens if firm performance meets or exceeds their objectives?

Answer 28

The manager reports the success to middle and upper-level managers. The company CEO may develop more ambitious objectives based on that success, and the strategy cycle starts over.

Question 29

What happens if firm performance fails to meet objectives?

Answer 29

The operational manager must develop new actions to try to meet the objectives or report to higher-level managers that the objectives cannot be met. In this case, a new round of operational planning begins, or upper managers examine their strategic plan to see if they need to make adjustments.

Question 30

The strategy process is always ___

Answer 30

circular

Question 31

Performance feedback becomes part of the ____

Answer 31

Strategic analysis of the firm’s capabilities and resources, and firm leadership uses the information to help develop better strategies for firm success.

Question 32

What are stretch goals?

Answer 32

A high-effort and high-risk goal, intentionally set above normal standards to attract exponential rewards, opportunities, and experience. Stretch goals are not expected to be achieved one hundred percent