Firm Strategy and Strategic Management

In the field of management, a firm strategy is a comprehensive plan to achieve its goals in the face of these conditions. Strategy defines how a firm will achieve long-term success. Strategy is defined as “the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the

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What Is Strategic Management?

Once there were two company presidents who competed in the same industry. These two presidents decided to go on a camping trip to discuss a possible merger. They hiked deep into the woods. Suddenly, they came upon a grizzly bear that rose up on its hind legs and snarled. Instantly, the first president took

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Stages of Strategic Management

The strategic-management process consists of three stages: strategy formulation, strategy implementation, and strategy evaluation. Strategy formulation includes developing a vision and a mission, identifying an organization’s external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue. Strategy-formulation issues include deciding what new businesses

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Integrating Intuition and Analysis

Edward Deming once said, “In God we trust. All others bring data.” The strategic-management process can be described as an objective, logical, systematic approach for making major decisions in an organization. It attempts to organize qualitative and quantitative information in a way that allows effective decisions to be made under conditions of uncertainty. Yet

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Key terms in Strategic Management

Before we further discuss strategic management, we should define nine key terms: competitive advantage, strategists, vision and mission statements, external opportunities and threats, inter­nal strengths and weaknesses, long-term objectives, strategies, annual objectives, and policies. 1. Competitive Advantage Strategic management is all about gaining and maintaining competitive advantage. this term can be defined as any

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The Strategic-Management Model

The strategic-management process can best be studied and applied using a model. Every model represents some kind of process. the framework illustrated in Figure 1-1 is a widely accepted, comprehensive model of the strategic-management process.14 this model does not guarantee success, but it does represent a clear and practical approach for formulating, implementing, and

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Benefits of Engaging in Strategic Management

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. Small business owners, chief executive officers, presidents, and managers of many for-profit and nonprofit organizations have

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Why Some Firms Do No Strategic Planning

Some firms do no strategic planning, and some firms do strategic planning but receive no support from managers and employees. Ten reasons (excuses) often given for poor or no strategic plan­ning in a firm are as follows: No formal training in strategic management No understanding of or appreciation for the benefits of planning No

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Pitfalls in Strategic Planning

Strategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory. It does not provide a ready-to-use prescription for success; instead, it takes the organization through a journey and offers a framework for addressing questions and solving problems. Being aware of potential pitfalls and being prepared to address them

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Comparing Business and Military Strategy

A strong military heritage underlies the study of strategic management. terms such as objec­tives, mission, strengths, and weaknesses were first formulated to address problems on the bat­tlefield. according to Webster’s New World Dictionary, strategy is “the science of planning and directing large-scale military operations, of maneuvering forces into the most advantageous position prior to

Vision Statements: What Do We Want to Become?

It is especially important for managers and executives in any organization to agree on the basic vision that the firm strives to achieve in the long term. A vision statement should answer the basic question, “What do we want to become?” A clear vision provides the foundation for developing a comprehensive mission statement. Many

Mission Statements: What Is Our Business?

Current thought on mission statements is based largely on guidelines set forth in the mid-1970s by Peter Drucker, who is often called “the father of modern management” for his pioneering studies at General motors and for his 22 books and hundreds of articles. Drucker believes that asking the question “What is our business?” is

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The Process of Developing Vision and Mission Statements

As indicated in the strategic-management model, clear vision and mission statements are needed before alternative strategies can be formulated and implemented. As many managers as possible should be involved in the process of developing these statements because, through involvement, people become committed to an organization. A widely used approach to developing a vision and

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The Importance (Benefits) of Vision and Mission Statements

The importance (benefits) of vision and mission statements to effective strategic management is well documented in the literature, although research results are mixed. As indicated in Academic Research Capsule 2-1, there is a positive relationship between mission statements and measures of financial performance. In actual practice, wide variations exist in the nature, composition, and

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Characteristics of a Mission Statement

A mission statement is a declaration of attitude and outlook. It usually is broad in scope for at least two major reasons. First, a good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity. Excess specificity would limit the potential of

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Components of a Mission Statement

Mission statements can and do vary in length, content, format, and specificity. Most practitioners and academicians of strategic management feel that an effective statement should include the nine mission statement components given here. Because a mission statement is often the most visible and public part of the strategic-management process, it is important that it

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Evaluating and Writing Mission Statements

There is no one best mission statement for a particular organization, so when it comes to evalu­ating mission statements, good judgment is required. Ideally, the statement will provide more than simply inclusion of a single word such as products or employees regarding a respective component. Why? Because the statement should motivate stakeholders to action,

The Purpose and Nature of an External Audit

The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm as well as threats that should be avoided. As the term finite suggests, the external audit is not aimed at developing an exhaustive list of every possible factor that could influence the business; rather, it

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Ten External Forces That Affect Organizations

1. Economic Forces Economic factors have a direct impact on the potential attractiveness of various strategies. For example, high underemployment (minimum wage-type employment) in the United States bodes well for discount firms such as Dollar Tree, T.J. Maxx, Walmart, and Subway, but hurts thousands of traditional-priced retailers in many industries. Although the Dow Jones

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Porter’s Five-Forces Model

Former chair and CEO of PepsiCo Wayne Calloway said, “Nothing focuses the mind better than the constant sight of a competitor that wants to wipe you off the map.” As illustrated in Figure 3-3, Porter’s Five-Forces Model of competitive analysis is a widely used approach for developing strategies in many industries. The intensity of

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