WORLD’S #1 QUICK REFERENCE GUIDE
Strategic Management is a process for conducting the entrepreneurial activities of a firm for organizational renewal, growth, and transformation. The major tasks are: (1) set a mission and goals, (2) assess the environment, (3) appraise company capabilities, (4) craft the strategy, (5) implement the strategy, and (6) evaluate and control the strategy. Business Policy is a set of prescribed and discretionary statements, limiting actions of individuals in the firm, as set forth in directives and guides. Mission is the reason for which the firm exists, and what it will do. Basically, it describes the products/services to be ...view middle of the document...
Threat is the probability of a future event and its potentially harmful impact on the firm.
COMPANY MISSION: WHAT IS OUR BUSINESS?
1. 2. 3. 4. 5. 6. Basic product or service Primary markets Principal technology used (if relevant) Customer satisfaction, quality, and societal goals Company philosophy Self-concept (identity)
THE REMOTE (MACRO) ENVIRONMENTAL FACTORS
2. Advances in technology, e.g., fiber optics, gene manipulation. 3. A misfortune befalls a major competitor who then shuts down, liquidates, or goes bankrupt. 4. A competing company is put up for sale at a good price. 5. A chance occurs for you to hire a noted expert that you need. 6. A breakthrough in your product or process (“Research & Development”) that makes possible a gain in market share.
1. 2. 3. 4. 5. 6.
Economic Social-demographic Political-legal Technological Cultural Ecological-natural
TASK (IMMEDIATE, OPERATING) ENVIRONMENTAL FACTORS
1. The task environment comprises all persons, groups, or entities that have an interest in the company. These are called stakeholders. 2. A narrower definition refers to those stakeholders with whom the firm has contact from time to time, as follows: a. Customers b. Suppliers c. Financial institutions d. Competitors e. Trade associations f. Activist groups g. Federal, state, and local government agencies h. Media representatives i. Unions
DEFINING AN INDUSTRY
A threat is an event, as defined by its impact on your company and the probability of its occurrence, that will result in harm to your company. It is an attack on company underpinnings, such as: 1. Support of stakeholder groups 2. Resources: human, financial 3. Customer base 4. Capabilities, such as technology, products, processes, management, and functional 5. Artificial barriers to competition: laws, regulations, patents, and licenses 6. Social changes and customer preferences 4. Potential computer entrants 2. Buyers 1. Rivalry among existing firms
Mission & Vision Evaluation Capabilities Forecast the Environment
1. Products 2. Competitors 3. Structure (number, size, relative strength, market share of competitors, product differentiation) 4. Economic traits 5. Critical success factors 6. Entry barriers
COMPETITIVE ENVIRONMENT: MICHAEL E. PORTER’S 5-FORCE MODEL
Suppliers 5. Potential competitive substitutive products from firms in other industries
Strengths Weaknesses Set Long-Term Objectives
Craft the Strategy Implement the Strategy Evaluate & Control Strategy Fig. 1, The Strategic Management Model
See Figure 2. As Porter says, the nature and intensity of competition in an industry is a composite of five competitive forces: 1. Rivalry among competitors in the industry 2. The bargaining power of buyers 3. The bargaining power of suppliers 4. The potential entry of new competitors 5. The power of firms with substitute products Industry-driving forces increase incentive for the industry to...