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Key Terms in Strategic Management

Strat Man

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Rochelle Farnacio
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7 views

Key Terms in Strategic Management

Strat Man

Uploaded by

Rochelle Farnacio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Key Terms in Strategic Management

Competitive Advantage

- Any activity a firm does especially well compared to activities done by rival firms
- Any resource a firm possesses that rival firms desire

A firm must strive to achieve sustained competitive advantage

Strategists

- Individuals most responsible for the success or failure of an organization


- Help an organization gather, analyze, and organize information

Vision and Mission Statements

- A vision statement answer the question “what do we want to become?”.


- A mission state answers the questions “what is our business?”.

External Opportunities and Threats

- Economic, social, cultural, demographic, environmental, political, legal, governmental,


technological, and competitive trends and events that could significantly benefit or harm an
organization.

Internal strengths and internal weaknesses

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


- Determined relative to competitors.

Some Opportunities and Threats

Consumers’ expectation for green operations and products is rising 8 percent annually in western
Europe.

Internet marketing is growing 11 percent annually in the US.

Commodity food prices rose 6 percent the prior year.

Oil and gas prices declined 18 percent in the last twelve months.

Computer hacker problems are increasing 14 percent annually.

Long-Term Objectives

- Specific results that an organization seeks to achieve in pursuing its basic mission.
- Long-term means more than one year.
- Should be challenging, measurable, consistent, reasonable and clear.

Strategies

- 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
SWOT Analysis

Annual Objectives

- Short term milestone that organizations must achieve to reach long term objectives.
- Should be measurable, quantitative, challenging, realistic, consistent, and prioritized.
- Should be established at the corporate, divisional and functional levels in large organizations.

Policies

- The means by which annual objectives will be achieve

Strategic management allows an organization to be more proactive than 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.

Benefits to a Firm That Does Strategic Planning

Deeper/
Improved Greater
Understanding Commitment The Result
Enhanced
a. of others a. to achieve All managers
Communication
views objectives and Employees
a. Dialogue on a Mission to
b. of what the b. to implement
b. Participation help the firm
firm is strategies
succeed.
doing/planning c. to work hard
and why

Financial Benefits

Organizations using strategic management concepts shows significant improvement in sales, profitability,
and productivity compared to firms without systematic planning activities.

High-performing firms tend to do systematic planning to prepare for future fluctuations in their external
and internal environments.

Nonfinancial Benefits

Enhanced awareness of external threats


Improved understanding of competitors strategies

Increased employee productivity

Reduced resistance to change

Clearer understanding of performance-reward relationship

Why Some Firms Do No Strategic Planning

- No formal training in strategic management


- No understanding of or appreciation for the benefits of planning
- No monetary rewards for doing planning
- No punishment for not planning
- Too busy ‘firefighting’ (resolving internal crises) to plan ahead
- View planning as a waste of time, since no product/service is made
- Laziness; effective planning takes time and effort; time is money
- Content with current success; failure to realize that success today is no guarantee for success
tomorrow
- Overconfidence
- Prior bad experience with strategic planning done sometime/somewhere\

Pitfalls in Strategic Planning

- Using strategic planning to gain control over decisions and resources


- Doing strategic planning only to satisfy accreditation or regulatory requirements
- Too hastily moving from mission development to strategy formulation
- Not communicating the plan to employees, who continue working in the dark
- Top managers making many intuitive decisions that conflict with the formal plan
- Top managers not actively supporting the strategic planning process
- Not using plans as a standard for measuring performance
- Delegating planning to a planner rather than involving all managers
- Not involving key employees in all phases of planning
- Not creating a collaborative climate supportive of change
- Viewing planning as unnecessary or unimportant
- Viewing planning activities as silos compromised of independent parts
- Becoming so engrossed in current problems that insufficient or no planning is done

Comparing Business and Military Strategy

A fundamental difference between the two is that business strategy is formulated, implemented, and
evaluated with an assumption of competition, whereas military strategy is based on assumption of
conflict

Strategic Management Model

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