CHAPTER 1

STRATEGIC MANAGEMENT MODEL

1) Develop Mission and Vision Statements
2) Perform Internal and External Audit
3) Establish Long-term objectives
4) Generate, Evaluate and Select Strategies
5) Implement Strategies – Management Issues
6) Implement Strategies – Marketing, Finance, Accounting, R&D and MIS issues
7) Measure and Evaluate Performance

WHY STRATEGIC MANAGEMENT IS IMPORTANT?

1) To rationally plan job or business
2) Organizations continually face challenges
3) Systemizes business decisions
4) Educates business managers
5) It is relatively new compared to traditional business practices

CHALLENGES
1) Growth
2) Value
3) Focus
4) Change
5) Future
6) Knowledge
7) Time
 CHAPTER 2

MISSION STATEMENT
1) What the organization wants to be
2) Whom the organization wants to serve

BENEFITS OF VISION STATEMENT

1) Necessary to motivate a workforce
2) Creates a community of interests

MISSION STATEMENT DEVELOPMENT STEPS

1) Have managers read related articles
2) Have managers prepare a vision and mission statement for the organization
3) Merge the documents into one and distribute
4) Gather feedback from managers
5) Meet to revise the final document

BENEFITS OF MISSION STATEMENT

1) Better Financial Results
2) Unanimity of Purpose
3) Resource Allocation
4) Establishment of Culture
5) Focal points for Individuals
6) Establishment of Work Structure
7) Resolution of Divergent Views
8) Achieve Clarity of Purpose
9) Provide a basis for all planning activities
10) Provide Direction

MISSION AND CUSTOMER ORIENTATION

1) Define what organization is
2) Define what it aspires to be
3) Limited to exclude some ventures
4) Broad enough to allow for growth
5) Distinguishes firm from all others
6) Framework for evaluating activities
7) Stated clearly – understood by all
EFFECTIVE MISSION STATEMENT
1) Anticipates Customer Needs
2) Identifies Customer Needs
3) Provides products/services to satisfy needs
4) Identifies the utility of firm’s product to its customers

MISSION STATEMENT COMPONENTS SECPPPMTS

1) Survival, Growth and Profits 6) Philosophy
2) Employees 7) Markets
3) Customers 8) Technology
4) Products or Services 9) Self-Concept
5) Public Image

CHARACTERISTICS OF MISSION STATEMENT

1) Broad in Scope
2) Less than 250 words
3) Inspiring
4) Identify utility of firm’s products
5) Reveal that the firm is socially responsible
6) Include 9 components
 CHAPTER 3

STEPS IN EXTERNAL AUDIT

1) Gather Competitive Intelligence
2) Assimilate Information
3) Evaluate

EXTERNAL FACTORS
1) Long term orientation 3) Applicable to competing firms
2) Measurable 4) Hierarchical

INDUSTRY PROPERTIES
1) Economies of Scale 4) Economy
2) Barriers to Market Entry 5) Level of Competitiveness
3) Product Differentiation

MARKET FORCES IMPACT

1) Products 3) Markets
2) Services 4) Customers

COMPETITIVE FORCES ANALYSIS

Analyze a firm’s
1) Strengths 5) Threats
2) Weaknesses 6) Objectives
3) Capabilities 7) Strategies
4) Opportunities

CHARACTERISTICS OF COMPETITIVE FIRMS

1) Market Share Matters
2) Understanding what business, you are in
3) Broke or not, fix it
4) Innovate or evaporate
5) Acquisition is essential to growth
 6) People make a difference
7) No substitute for quality

SOURCES OF COMPETITIVE INTELLIGENCE

1) Internet 6) Customers 11) Wants ads
2) Employees 7) Creditors 12) Newspaper Articles
3) Managers 8) Consultants 13) Competitors
4) Suppliers 9) Trade Journals
5) Distributors 10) Government Filings

OBJECTIVES OF COMPETITIVE ANALYSIS

1) Provide a general understanding of competitors
2) Identify areas where competitors are vulnerable
3) Identify potential moves of competitors

PORTER’S 5 FORCES
1) Threat of Substitute Products
2) Threat of New Entrants
3) Bargaining power of suppliers
4) Bargaining power of consumers
5) Rivalry among competing firms

REASONS OF HIGH RIVALRY

1) High number of competing firms 6) High barriers to leaving market
2) Similar size of firms competing 7) Low barriers to entering market
3) Similar capability of firms competing 8) High fixed costs
4) Falling demand of products/services 9) Perishable product
5) Falling price of products/services 10) Easy to switch brand

SOURCES OF EXTERNAL UNPUBLISHED INFORMATION

1) Customer Surveys 4) Television Programs
2) Market Research 5) Interviews and Conversations with
3) Speeches at Meetings stakeholders

EFE MATRIC STEPS

1) List key external factors
2) Weight from 0 to 1
 3) Rate effectiveness of current strategies
4) Multiply weight with rating
5) Sum weighted scores

CHAPTER 4

HOW DISTINCTIVE COMPETENCIES WORK

Resources  Distinctive Competencies  Capabilities
Strategies
Competitive Advantage
Superior Profitability

TYPES OF RESOURCES
1) Physical Resources
2) Human Resources
3) Organizational Resources

VALUABLE RESOURCE
1) Rare
2) Hard to Copy
3) Not Easily Substitutable

FUNCTIONS OF MANAGEMENT
1) Planning 4) Staffing
2) Organizing 5) Controlling
3) Motivating

FUNCTIONS OF MARKETING

1) Customer Analysis
2) Selling Products and Services
3) Product and Service Planning
4) Pricing
5) Distribution
6) Market Research
7) Opportunity Analysis
FINANCE FUNCTIONS
1) Investment Decision
2) Financing Decision
3) Dividend Decision

VALUE CHAIN ANALYSIS

Support Activities
1) Firm Infrastructure
2) Human Resource Management
3) Technology Development
4) Procurement

Primary Activities
1) Inbound Logistics
2) Outbound Logistics
3) Service
4) Operations
5) Marketing and Sales

ADVANTAGES OF VCA
1) Easily identify cost increasing activities
2) Activities analysis help provide better value
3) Company may choose to design product or outsource

DISADVANTAGES OF VCA
1) Time Intensive
2) Difficult to identify tasks that can increase value
3) Not easy to gather appropriate information
 CHAPTER 5

MERGERS CAN TAKE PLACE

1) By buying shares 3) By exchanging shares for assets
2) By purchasing assets 4) By exchanging shares for share

ADVANTAGES OF BEING THE FIRST MOVER

1) Set the product as industry standard 4) Gain advantage as the switching cost
2) Gather the customers easily is high
3) Ability to control resources 5) Technology Leadership

DISADVANTAGES OF BEING THE FIRST MOVER

1) New entrants have to invest in marketing costs to inform consumers about product
2) Later entrants do not need to introduce product like first mover
3) Later entrants can learn from mistakes of first mover
4) Inability of first mover to capture market might help later entrants to do so
5) Later entrants can reverse the product to reduce cost

NATURE OF LONG-TERM OBJECTIVES

1) Provide Direction 6) Minimize conflicts
2) Allow synergy 7) Stimulate exertion
3) Assist in evaluation 8) Aid in both allocation of resources
4) Establish priorities and design of job
5) Reduce uncertainty

CHARACTERISTICS OF OBJECTIVES QUCCO

1) Quantitative – Measurable 4) Compatible – Consistent vertically and
2) Understandable – Clear horizontally
3) Challenging – Achievable 5) Obtainable - Realistic

IF NOT MANAGING BY OBJECTIVES

1) Management by Crisis 3) Management by Extrapolation
2) Management by Hope 4) Management by Mystery
INTEGRATION STRATEGIES
1) Forward Integration 3) Horizontal Integration
2) Backward Integration

INTENSIVE STRATEGIES
1) Market Penetration 3) Product Development
2) Market Development

DIVERSIFICATION STRATEGIES
1) Related Diversification 2) Unrelated Diversification

DEFENSIVE STRATEGIES
1) Retrenchment 2) Divestiture 3) Liquidation

PORTER’S 2 GENERIC STRATEGIES

1) Cost Leadership 2) Differentiation
 Low-Cost  Wide Target Market
 Focused Low-Cost  Narrow Target Market

MEANS FOR ACHIEVING STRATEGIES

1) Build from within to grow 3) Buy others to grow
2) Borrow from others to grow

REASONS WHY ACQUISITIONS FAIL

1) Value chain becomes complex 5) Inability to integrate different
2) Taking on too much new debt organizational cultures
3) Inability to achieve synergy 6) Reduced employee morale due to
4) Too much diversification relocation and layoff

BENEFITS OF MERGER
1) Improved capacity utilization 3) Gain economies of scale
2) Reduced Managerial staff 4) Gain new tech
5) Gain market share 8) Reduce tax obligations
6) Enter global markets 9) Eliminate competitors
7) Gain pricing power