Key Terms in Strategic Management

Key Terms in Strategic Management Competitive Advantage * Anything that a firm does especially well compared to rival firms. * A firm must strive to achieve competitive advantage by: 1) Continually adapting to changes in external trends and events and internal capabilities, competencies and resources. 2) Effectively formulating, implementing and evaluating strategies that capitalize on those factors. Strategists * Usually found in high levels of management (CEO) * Help organization gather, analyze, and organize information * Track industry and competitive trends * Develop forecasting model Evaluate corporate and divisional performance Vision and Mission Vision * Answers the question “What do we want to become” Example: “Happiest customers and employees” – Globe Telecom Mission * A mission statement identifies the scope of a firm’s operations in product and market terms. It answers the question “What is our business? ”. Example: “Transform the lives of people, businesses and communities through innovative solutions” – Globe Telecom External Opportunities and Threats * Largely beyond the control of a single organization. * Significantly benefit or harm the organization in the future. A basic principle of Strategic Management is that firms should formulate strategies that take advantage of external opportunities and to avoid or reduce the impact of external threats. * Identify, monitor and evaluate the external opportunities and threats. * Environmental Scanning * Is the process of conducting research and gathering and assimilating external information. Internal Strengths and Weaknesses *

Organization’s controllable activities that are performed especially well or poorly. * Strengths and weaknesses are determined relative to competitors and relative to the firm’s objectives. Organizations strive to pursue strategies that capitalize on strengths and improve weaknesses * Typically located in functional areas of the firm * Management * Marketing * Finance / Accounting * Production / Operations * Research and Development * Management Information Systems * Based on functional analysis of activities in the firm’s: * Production/operations * Research and development * Computer information systems Long Term Objectives Objectives * Specific results that an organizations seeks to achieve in pursuing its basic mission. Long Term * Means more than a year * Essential for ensuring the firm’s success Provide direction * Aid in evaluation * Create synergy * Reveal priorities * Focus coordination * Provide basis for planning, organizing, motivating and controlling Strategies * Are the means by which long term objectives will be achieved. * Business strategies may include: * Geographic expansion, diversification * Acquisition * Product development, market penetration * Retrenchment, divestiture * Liquidation, joint venture * Strategies are potential actions that require top management decisions and large amounts of the firm’s resources. Annual Objectives * Short-term milestones necessary to achieve long-term objectives. Represent the basis for allocating resources * Established at corporate, divisional, and functional levels * Stated in terms of accomplishments for: * management * marketing * finance/accounting * production/operations * research and development * information systems accomplishments Policies * Important in strategy implementation as the means by which annual objectives will be achieved * Guide to decision making and address repetitive situations * Established at corporate, divisional, or functional levels * Allow consistency & coordination within and between organizational departments

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