STRAT. MAN. Flashcards by Mary Masayon

considered the capstone course of all management and business
subjects.

Strategic Management

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Refers to a management’s continuous rational process of defining the
long-term direction of a company after critically evaluating the
different competing forces surrounding and within it to gain
competitive advantage.

Strategic Management

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performs several functions such as planning, organizing, staffing, directing and controlling with equal importance.

Manager

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sets and defines the overall direction of a company. the leadership style and practices of managers at this level show how strategic management is applied in a business.

Top-level Management

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define their plans and directions according to the overall direction of the top-level management.

Middle- and Lower-level Management

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the forerunner of strategic management. refers to the process of defining the long-term goals of a company as determined by the members of the top-level management.

Business Policy

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defined strategic management as a set of managerial decisions and actions that:
1. Determines the long-run performance of a company
2. Includes environmental scanning, strategy formulations, strategy implementation, and evaluation and control
3. Emphasizes the monitoring and evaluation of external opportunities and threats in light of a company’s strengths and weaknesses

Strategic Management: Wheelen and Hunger (2010)

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defined strategic management as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable a company to achieve its objectives.

Strategic Management: David (2013)

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this stage refers to the development of long-term goals and objectives of a company after conducting a thorough analysis of the various forces comprising its environment.

Strategy Formulation

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this is the stage wherein different strategic plans are put into action and are aligned with defined business programs, procedures, and budgets.

Strategy Implementation

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this is the last stage of strategic management wherein the operating performance of a company is monitored and evaluated, and remedial action is made.

Strategy Evaluation and Control

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during this early phase, top-level managers simply require different departments and functional areas to prepare budgets and targets based on information generated within the company.
a simple one-year period analysis should be conducted.

Short-Term Financial Planning Phase

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the top-level management merely extends the time period of the planning process from 1 year to 5 years.
information and data used in setting projections by various functional units and departments are still coming from within the company.

Medium-Term Planning Phase

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for ex: the system becomes highly political as units compete for bigger budgets, and more meetings are spent for project justifications, the planning process is assigned to selected staff to devise a strategic plan for the company.

consultant assist in the development of the 5-year plan.

planning process is done by the top-level management who prepare strategic plans with little participation and inputs from the lower levels.

Strategic Planning Phase

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for strategic plans to be effective, the various inputs and participation from different levels of management, units, and departments should be considered.

planning has to be decentralized.

information from within and outside the company is collected and used in formulating strategies, plans, objectives, and goals.

Strategic Management Phase

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to facilitate the study of the subject and hasten the preparation and review of strategic plans.

Strategic Management Model

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the forerunner of the core stages of the strategic management process.

otherwise known as environmental scanning.

involves the gathering of relevant and reliable information and a thorough evaluation of the different forces comprising the external and internal environments of a company, including the analysis of the company itself.

Strategy Analysis

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is the critical surveillance and evaluation of events happening in the external environment that may influence the current position and future plans of a company.

this involves identifying key forces existing in the environment that may change or affect the future of a company.

Environmental Scanning

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is the process of process of tracking the environmental trends or sequence of events determined during an environmental scanning.

Environmental Monitoring

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this tool attempts to detect a pattern and uses it to predict future events.

Trend Analysis

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is a systematic process of collecting, analyzing, and interpreting information about business competitors.

it is intended mainly to monitor the probable moves of competitors.

it is entirely different from business espionage, which is an unethical practice.

Competitive Intelligence

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company includes physical resources, wildlife, and climate. These elements are inherent and beyond control of a company.

Physical or natural environment

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the societal environment of a company consists of political or legal, economic, socio-cultural, and technological factors.

Societal Environment

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the political system, tax laws, government programs and priorities, and other variables, under the political or legal segment directly affect a business, or the industry where it operates.

Political or Legal Segment

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the growth or the recession of the economy, which is manifested by key economic indicators such as interest rates, inflation rates, and unemployment levels, affects all types of businesses. strategic managers must seriously consider the nature of operation of a company and its related economic variable that has significant influence when scanning and monitoring the economic segment.

Economic Segment

refers to the customs, traditions, values, beliefs, and lifestyles in a society for a period of time. the impact of this segment varies among businesses across industries.

Sociocultural Segment

this segment can make a product obsolete overnight and, at the same time, provide opportunities for creating new products in a short period of time. the accelerated pace of changes and advancements in technology and communication has tremendously affected almost all types of businesses across industries.

Technological Segment

this segment refers to the observable characteristics of a population including age distribution, sex, race, ethnicity, religion, and income.

Demographic Segment

businesses are operating across geographic borders, and almost all products are present worldwide. the variables included in this segment are the global trade liberalization, trade agreements among regional blocks, and emerging economies like those of China and India.

Global Segment

stands for sociocultural, technological, economic, environmental and political forces.

STEEP Analysis

stands for political, economic, sociocultural, technological, environmental, and legal forces. this tool is intended to determine the trends happening in the industry to which a company belongs.

PESTEL Analysis

the immediate external environment of a company. it is an environment where a company operates, which has an immediate effect on its operation, and where it interacts and faces its direct competitors.

Industry Environment

to determine sustainability issues that will reduce the impact of physical or natural resources on a business.

Physical Environment

to determine the strategic forces that can influence the growth, future, and direction of a company or an industry.

Societal Environment

to determine the level of competition and the forces that drive competition in the industry for a business to position itself accordingly.

Industry Environment

the buyers of goods or services produced or rendered by a company. the company realizes profit from its transactions with its customers.

Customers

refer to persons or companies that provide the required materials, parts, or services to a business. they play crucial role in the production of goods and services, and they can adversely affect the production process by delaying the delivery of raw materials and services or by providing defective materials or inefficient services.

Suppliers

refers to banks, financial institutions, and financial intermediaries, engaged in lending money to a borrower, usually for a fee in the form of interest

Creditors

are the workers of a company who are highly responsible for the production of goods or delivery of services to the consumers. they help ensure the quality and quantity of products or services provided to customers.

Employees

refers to the system or institution that handles the affairs of a particular country. can be a democracy, autocracy, republic, monarchy, or dictatorship.

Government

are forces existing in the industry environment that produce, sell, or render products or services which are similar to those of a company.

Competitors

produce and sell similar products or services.

Direct Competitors

produce and sell substitute products.

Indirect Competitors

is the scanning of various forces that drive competition. it involves knowing where a company is at the present and where it wants to be in the future.

Industry Environment Analysis

is a group of company offering similar or closely related products or services that satisfy the same needs of consumers.

Industry

is characterized by slow growth, high prices, innovative efforts, and poor distribution channels.

Embryonic Industry (New Industry)

this industry is characterize by growing customer demand, falling prices because of the economies of scale, new competitors entering the market, developed infrastructure facilities, improved distribution channels.

Growth Industry

demand and growth begin to slow down, where competition is intense, companies have excess production, and prices are cut down to attract customers.

Shakeout Industry

is characterized by a saturated market, slow growth, and limited demand. companies at this stage tend to consolidate to reduce intense rivalry and allow a higher profitability level.

Mature Industry

characterized mainly by negative growth.

Decline Industry

there are many small- and medium-sized local firms competing for small shares in the market.

Fragmented Industry

is characterized by the dominance of a few large companies.

Consolidated Industry

this force is the strongest among the competitive forces. companies usually watch the moves of their major competitors or rivals closely.

Rivalry among Competing Companies

refer to the new competitors joining an industry. they will bring new products, services, and capacities to an industry that can erode the profits of established companies and gain market share if the barriers to the entry are considerably weak.

Threats of New Entrants

a buyer has a strong and magnified bargaining power in an industry.

Bargaining Power of Buyers

in the absence of the desired product and if the switching costs are low, customers look for substitute products. a product is considered a substitute when it is not considered the leader in the market but can satisfy the same needs of the consumers.

Threats of Substitute Products

suppliers have the ability to influence an industry in several instances such as increasing the prices of the goods and services or lowering their quality. they have lesser influence if they do not have the ability to integrate forward.

Bargaining Power of Suppliers

refers to the ability to assume the function of a distributor.

Forward Integration

is an unhealthy competition in which the closest competitors or rivals engage in long price wars. they employ aggressive strategies and tactics, and sometimes destructive ones, which are not favorable to an industry’s performance and profitability.

Cutthroat Rivalry

competitors are strongly battling for a higher market share, but they do not adopt destructive tactics.

Fierce or Strong Rivalry

industry members earn acceptable profit levels while engaging in a healthy and lively competition.

Moderate or Normal Rivalry

when most companies in an industry are relatively well-satisfied with their sales growth and market shares.

Weak Rivalry

identifies a company’s internal strategic factors, such as its strengths and weaknesses, to enable it to exploit opportunities, and avoid threats of the external environment.

Internal Environment Analysis

refers to the environment within a company. Its variables are within the control of the top management within a short-run period.

Internal Environment

refers to the beliefs, values, practices, and expectations of every member of a company on how the company conducts itself. it is a company’s way of doing things and defines corporate identity.

Corporate Culture

defines how tasks are to be performed, how resources should be utilized, and how resources should be utilized, and relationships among employees should be defined.

Organizational Structure

Resources are assets owned or controlled by a company. They can be tangible or intangible assets.

Business Resources

refers to a company's resources and its capability to obtain benefits from them and to overcome competitive forces.

Competitive Advantage

capability to exploit its resources at different functional levels to achieve competitive advantage.

Core Competency

refers to the ability of a company to exploit its strategic resources.

Capability

is the integration or coordination of cross-functional capabilities.

Competency

when its core competency is superior over that of its rivals.

Distinctive Competency

is an analytical tool used to evaluate the company's resources to gain competitive advantage. stands for value, rareness, imitability, and organization.

VRIO framework

is derived from the Greek word strategos, which means generalship. originally defined as ‘the art of planning and directing larger military movements and the operations of war.

Strategy

the determination of the basic long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals.

Strategy: Alfred D. Chandler

a unified, comprehensive, integrated plan... designed to ensure that the basic objectives of the enterprise are achieved.

Strategy: William F. Glueck

a specific pattern of decisions and actions that managers take to achieve superior organizational performance.

Strategy: Hill and Jones

the pattern of actions and business approaches managers employ to please customers, build an attractive market position, and achieve organizational objectives; a company’s actual strategy is partly planned and partly reactive to hanging circumstances.

Strategy: Thompson and Strickland

its purpose is to exploit and create new and different opportunities for tomorrow.

Strategic Management

using available knowledge to document the intended direction of a business and the actionable steps to reach its goals.

Formulation

establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed.

Implementation

reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions.

Evaluation and Control

is particularly useful for making decisions in situations of great uncertainty or little precedent.

Intuition

is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business and to couple it with analysis.

Strategic Management Process

“In today’s business environment, more than in any preceding era, the only constant is change. Successful organizations effectively manage change, continuously adapting their bureaucracies, strategies, systems, products, and cultures to survive the shocks and prosper from the forces that decimate the competition.”

Adapting to Change: Waterman

anything that a firm does especially well compared to rival firms.

Competitive Advantage

the individuals who are most responsible for the success or failure of an organization.

Strategists

a vision statement answers the question “What do we want to become?” while a mission statement addresses the basic question that faces all strategists: “What is our business?”

Vision and Mission Statement

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.

External Opportunities and Threats

the organization’s controllable activities that are performed especially well or poorly.

Internal Strengths and Weaknesses

objectives are the specific results that an organization seeks to achieve in pursuing in basic mission.

Long-term Objectives

the means by which long-term objectives will be achieved.

Strategies

the short-term milestones that organizations must achieve to reach long-term objectives.

Annual Objectives

the means by which annual objectives will be achieved.

Policies

when businesses use strategic management, they see better sales, profitability, and productivity.

Financial Benefits