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Terms in this set (37)
the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company's objectives
Identify the nine critical tasks of strategic management and describe in detail.
1) formulate the company's mission, including broad statements about its purpose, philosophy, and goals
2) conduct an analysis that reflects the company's internal conditions and capabilities
3) assess the company's external environment (including both the competitive and the general contextual factors
4) analyze the company's options by matching its' resources with the external environment
5) identify the most desirable options by evaluating each option in light of the company's mission
6) select a set of long-term objectives and grand strategies that will achieve the most desirable options
7) develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies
8) implement the strategies choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward systems is emphasized
9) evaluate the success of the strategic process as an input for future decision-making
what are the three tiers of strategic management?
Discuss the corporate level of strategic management and the responsibilities at this tier.
the corporate level is composed principally of a board of directors, and the chief executive and administrative officers. They are responsible for the firm's financial performance and for the achievement of non-financial goals, such as enhancing the firm's image and fulfilling its social responsibilities. to a large extent attitudes at the corporate level reflect the concerns of stockholders and society at large. they also set objectives and formulate strategies that span the activities and functional areas of these businesses
Discuss the business level of strategic management and the responsibilities at this tier.
the business level is composed principally of business and corporate managers. these managers must translate the statements of direction and intent generated at the corporate level into concrete objectives and strategies for individual business divisions, or SBU's. Business-level strategic mangers determine how the firm will compete in this selected product-market arena. they strive to identify/secure the most promising market segment within that arena.
Discuss the functional level of strategic management and the responsibilities at this tier.
the functional level is composed principally of managers of product, geographic, and functional areas. they develop annual objectives and short-term strategies in areas like production, operations, research/development, etc...
however, their principal responsibility is to implement or execute the firm's strategic plans
large-scale, future oriented plans for interacting with the competitive environment to achieve company objectives...a strategy is a company's game plan
under the control of a single individual and they produce a limited number of products or services
What are the key components of a mission statement and describe in detail
the mission of a company is the unique purpose that sets it apart from other companies of its type and identifies the scope of its operations. social responsibility is a critical consideration for a company's strategic decision-makers because the mission statement must express how the company intends to contribute to the societies that sustain it
Define mission statement. Describe the importance of developing an explicit mission statement.
the mission statement describes the company's product, market and technological areas of emphasis in a way that reflects the values and priorities of the strategic decision-makers. it is important for it to be explicit because it is a message designed to be inclusive of the expectations of all stakeholders for the company's performance over the long run. the executives and board who prepare the statement attempt to provide a unifying purpose for the company
Describe the issues with agency (5) theory as applied to corporations and ways to deal with those issues (4)
1) executives pursue growth in company size rather than in earnings
2) executives attempt to diversify their corporate risk
3) executives avoid risk
4) managers act to optimize their personal payoffs
5) executives act to protect their status
1) an agents responsibilities should be defined in a contract and include elements like bonus incentives that help align executives' and owners interests. 2) owners should pay executives a premium for their service 3) executives should receive backloaded compensation (executives are paid a handsome premium for superior future performance) 4) teams of executives across different units of a corporation should be created to help focus performance measures on organizational rather than personal goals
What are the three different generic strategies for corporations that Porter describes? What does each mean?
1) The Cost Leadership Strategy = (Increasing profits by reducing costs, while charging industry-average prices.
Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you've reduced costs.)
2) The Differentiation Strategy = Differentiation involves making your products or services different from and more attractive than those of your competitors.
3) The Focus Strategy = Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market
Identify and describe the different factors comprising the remote environment. (5)
1) social = what effects will changes in social values and attitudes have on the firm's development?
2) ecological = what natural or pollution-caused disasters threaten the firm's employees, customers, or facilities?
3) political = what changes in government policy can be expected?
4) technological = what pertinent new products or services are likely to become technically feasible in the foreseeable future?
5) economic = concerns the nature and direction of the economy in which a firm operates
Explain the five force model of industry analysis as described by Porter. Give an example of each force.
the five forces shape competition in an industry. this framework helps strategic managers to link remote factors to their effects on a firm's operating environment
1) entry barriers
2) supplier power (suppliers can exert bargaining power on participants in an industry by raising prices or reducing the quality of purchased goods or services)
3) buyer power (customers can force down prices, demand higher quality or more service, and play competitors off against each other)
4) substitute availability
5) competitive rivalry
Discuss the key issues in the operating environment (5)
1) competitive position = what strategic moves are expected by existing rivals (inside/outside USA)?
2) customer profiles and market changes = what will our customer regard as needed value?
3) supplier relationships = what is the likelihood of major cost increases because of dwindling supplies of a needed natural resource?
4) creditors = what lines of credit are available to help finance our growth?
5) labor market = are potential employees with desired skills and abilities available in the geographic areas in which our facilities are located?
Briefly describe the approaches companies can use to determine their overall corporate social responsibility approach and the key principles of social responsibility and social initiatives. Give an example of how they might work for a corporation.
the stakeholder approach is an approach that companies can use to determine their overall CSR approach because it includes not only stockholders and employees but also outsiders affected by the firm's actions. such outsiders commonly include customers, suppliers, governments, unions, competitors, local communities, and the general public. each of these groups have justifiable reasons for expecting/demanding that the firm satisfy their claims in a responsible manner
Briefly describe the key principles of social responsibility and social initiatives. Give an example of how they might work for a corporation.
-economic responsibilities (the most basic social responsibilities of business; requires managers to maximize profit)
-legal responsibilities (reflect the firm's obligations to comply with the laws that regulate business activities)
-ethical responsibilities (reflects the company's notion of right and proper business behavior)
-discretionary responsibilities (those that are voluntarily assumed by a business organization which include public relations activities, good citizenship, and full corporate social responsibility. managers attempt to enhance the image of their companies, products and services by supporting worthy causes)
Describe the four levels of the globalization of companies
1) the first level, which entails export-import activity, has minimal effect on the existing management orientation or on existing product lines
2) the second level, which can involve foreign licensing and technology transfer, requires little change in management or operation
3) the third level is characterized by direct investment in overseas operations, including manufacturing plants (this level requires large capital outlays and the development of global management skills
4) last level is characterized by a substantial increase in foreign investment with foreign assets comprising a significant portion of total assets...at this level the firm begins to emerge as a global enterprise with global approaches to production, sales, finance and control
What are the reasons for companies going global? Discuss.
1) through globalization, U.S. firms often can reap benefits from industries and technologies developed abroad. even a small service firm that possesses a distinct competitive advantage can capitalize on large overseas operations
2) global development makes sense as a competitive weapon. direct penetration of foreign markets can drain vital cash flows from a foreign competitor's domestic operations. the resulting lost opportunities, reduced income, and limited production can impair the competitor's ability to invade US markets
What are the reasons against companies going global? Discuss.
1) globals face multiple political, economic, legal, social, and cultural environments as well as various rates of changes within each of them
2) interactions between the national and foreign environments are complex, because of national sovereignty issues and widely differing economic/social conditions
3) geographic separation, cultural, and national differences, and variations in business practices tend to make communication and control efforts between headquarters and the overseas affiliates difficult
4) globals face extreme competition, because of differences in industry structures within countries
5) globals are restricted in their selection of competitive strategies by various regional blocs and economic integration
results that an organization seeks over a multi-year period
broad, precedent-setting decisions that guide or substitute for repetitive or time-sensitive managerial decision-making
concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making adjustments....seeks to guide action on behalf of the generic and grand strategies as they are taking place and when the end results are still several years away
the statement of a company's philosophy (usually accompanies or appears within the mission statement) it reflects or specifies the basic beliefs, values, aspirations and philosophical priorities to which strategic decision-makers are committed in managing the comany
expresses the aspirations of the executive leadership. presents the firm's strategic intent that focuses the energies and resources of the company on achieving a desirable future (however the mission and vision statements are often combined into one statement)
board of directors
the strategic managers at the highest level who are responsible for decisions that affect the entire firm, commit the firm and its resources for the longest periods, and declare a firms sense of values. they are responsible for overseeing the creation and accomplishment of the company mission
whenever owners or managers delegate decision-making authority to others, an agency relationship exists between the 2 parties
corporate social responsibility (CSR)
the idea that businesses have a duty to serve society in general as well as the financial interest of stockholders
what is a sustainable business?
one that takes a long-term approach to minimizing its negative impacts on the ecology, the society, and the economy
five principles of successful collaborative social initiatives
1) identify a long-term durable mission
2) contribute ''what we do''
3) contribute specialized services to a large-scale undertaking
4) weigh governments influence
5) assemble and value the total package of benefits
refers to the moral principles that reflect society's beliefs about the actions of an individual or a group that are right and wrong
a host of external factors influence a firm's choice of direction, action and its organizational structure and internal processes; it can be divided into 3 interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment
the general conditions for competition that influence all businesses that provide similar products and services
economies of scale
refer to the savings that companies within an industry achieve due to increased volume (simply put, when the volume of production increases, the long-range average cost of a unit produced will decline)
a collection of firms that offer similar products or services
what is the operating environment also called?
the competitive/task environment
refers to the strategy of pursuing opportunities anywhere in the world that enable a firm to optimize its business functions in the countries in which it operates
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