The global economic recession has created a business world today that is determining internal strengths and weaknesses,

nd weaknesses, establishing long-

quite different and more complex than it was. term objectives, generating alternative strategies, and choosing
particular strategies to pursue.
Thousands of businesses have vanished, and consumers have become Strategy-formulation issues include deciding
extremely price sensitive and oftentimes reluctant purchasers of products • what new businesses to enter,
and services. • what businesses to abandon,
• how to allocate resources,
What is strategy? • whether to expand operations or diversify,
-Strategy is a rational set of time-sequenced actions aimed at gaining a • whether to enter international markets,
sustainable advantage over competition and improving position with • whether to merge or form a joint venture,
customers. • and how to avoid a hostile takeover.
-Strategy is the framework managing the “how” choices which determine • Because no organization has unlimited resources, strategists must
the future nature and direction of the organization. decide which alternative strategies will benefit the firm most.

Strategic management can be defined as the art and science of formulating, 2. Strategy implementation requires a firm to establish annual
implementing, and evaluating cross-functional decisions that enable an objectives, devise policies, motivate employees, and allocate
organization to achieve its objectives. resources so that formulated strategies can be executed.

Strategic management focuses on integrating management, marketing, Strategy implementation includes:

finance/accounting, production/operations, research and development, and -developing a strategy-supportive culture,
information systems to achieve organizational success. -creating an effective organizational structure,
-redirecting marketing efforts,
The term strategic management is used synonymously with the term -preparing budgets,
strategic planning. -developing and utilizing information systems,
-and linking employee compensation to organizational performance.
STRATEGIC PLANNING was widely believed to be the answer for all
problems. A strategic plan is, in essence, a company’s game plan. Just as a 3. Strategy Evaluation is the final stage in strategic management.
football team needs a good game plan to have a chance for success, a Managers desperately need to know when particular strategies are
company must have a good strategic plan to compete successfully. not working well; strategy evaluation is the primary means for
obtaining this information.
The purpose of strategic management is to exploit and create new and Three fundamental strategy-evaluation activities are
different opportunities for tomorrow; long-range planning, in contrast, tries • (1) reviewing external and internal factors that are the bases for
to optimize for tomorrow the trends of today. current strategies,
• (2) measuring performance, and
STAGES OF STRATEGIC MANAGEMENT • (3) taking corrective actions. Strategy evaluation is needed because
The strategic-management process consists of three stages: strategy success today is no guarantee of success tomorrow! Success always
formulation, strategy implementation, and strategy evaluation. creates new and different problems; complacent organizations
experience demise.
1. Strategy formulation includes developing a vision and mission,
identifying an organization’s external opportunities and threats, Adapting to Change
 weaknesses are determined relative to competitors and may be determined
-The strategic-management process is based on the belief that organizations relative to a firm’s own objectives.
should continually monitor internal and external events and trends so that
timely changes can be made as needed. The rate and magnitude of changes Long-Term Objectives can be defined as specific results that an organization
that affect organizations are increasing dramatically as evidenced how the seeks to achieve in pursuing its basic mission. Long-term means more than
global economic recession has caught so many firms by surprise. one year. Objectives should be challenging, measurable, consistent,
reasonable, and clear.
-Firms, like organisms, must be “adept at adapting” or they will not survive.
The need to adapt to change leads organizations to key strategic- Strategies are the means by which long-term objectives will be achieved.
management questions, such as Business strategies may include geographic expansion, diversification,
“What kind of business should we become?” “Are we in the right field(s)?” acquisition, product development, market penetration, retrenchment,
“Should we reshape our business?” “What new competitors are entering divestiture, liquidation, and joint ventures.
our “Are new technologies being developed that could put us out of
business?” Annual Objectives are short-term milestones that organizations must
achieve to reach long term objectives. Like long-term objectives, annual
Key Terms in Strategic Management objectives should be measurable, quantitative, challenging, realistic,
Competitive Advantage Strategic management is all about gaining and consistent, and prioritized.
maintaining competitive advantage. This term can be defined as “anything
that a firm does especially well compared to rival firms.” Policies are the means by which annual objectives will be achieved. Policies
include guidelines, rules, and procedures established to support efforts to
Strategists are the individuals who are most responsible for the success or achieve stated objectives. Policies are guides to decision making and
failure of an organization. Strategists help an organization gather, analyze, address repetitive or recurring situations.
and organize information.
These are three important questions to answer in developing a strategic
Vision and Mission Statements Many organizations today develop a vision plan:
statement that answers the question “What do we want to become?” Where are we now?
Developing a vision statement is often considered the first step in strategic Where do we want to go?
planning, preceding even development of a mission statement. Mission How are we going to get there?
statements are “enduring statements of purpose that distinguish one Benefits of Strategic Management
business from other similar firms.
Strategic management allows an organization to be more proactive than
External Opportunities and Threats refer to economic, social, cultural, reactive in shaping its own future; it allows an organization to initiate and
demographic, environmental, political, legal, governmental, technological, influence (rather than just respond to) activities—and thus to exert control
and competitive trends and events that could significantly benefit or harm over its own destiny.
an organization in the future. Opportunities and threats are largely beyond
the control of a single organization—thus the word external.

Internal Strengths and Weaknesses are an organization’s controllable

activities that are performed especially well or poorly. Strengths and
Seventeen Guidelines for the Strategic-Planning our business?” A clear mission statement is essential for effectively
Process to Be Effective establishing objectives and formulating strategies.

1. It should be a people process more than a paper process. Vision Statement Examples
2. It should be a learning process for all managers and employees. - Dell’s vision is to create a company culture where environmental
3. It should be words supported by numbers rather than numbers supported excellence is second nature.
by words. - The vision of First Reliance Bank is to be recognized as the largest and most
4. It should be simple and nonroutine. profitable bank in South Carolina.
5. It should vary assignments, team memberships, meeting formats, and - Samsonite’s vision is to provide innovative solutions for the traveling
even the planning calendar. world.
6. It should challenge the assumptions underlying the current corporate - Procter & Gamble’s vision is to be, and be recognized as, the best
strategy. consumer products company in the world.
7. It should welcome bad news.
8. It should welcome open-mindness and a spirit of inquiry and learning. Mission Statement Examples
9. It should not be a bureaucratic mechanism. - Dell’s mission is to be the most successful computer company in the world
at delivering the best customer experience in markets we serve. In doing
10. It should not become ritualistic, stilted, or orchestrated. so, Dell will meet customer expectations of highest quality; leading
11. It should not be too formal, predictable, or rigid. technology; competitive pricing; individual and company accountability;
12. It should not contain jargon or arcane planning language. best-in-class service and support; flexible customization capability;
13. It should not be a formal system for control. superior corporate citizenship; financial stability.
14. It should not disregard qualitative information. - Procter & Gamble will provide branded products and services of superior
15. It should not be controlled by “technicians.” quality and value that improve the lives of the world’s consumers. As a
16. Do not pursue too many strategies at once. result, consumers will reward us with industry leadership in sales, profit,
17. Continually strengthen the “good ethics is good business” policy. and value creation, allowing our people, our shareholders, and the
communities in which we live and work to prosper.
Vision and Mission Process of Developing a Vision and Mission
The Business Vision and Mission
- A widely used approach to developing a vision and mission statement is
A vision statement should answer the basic question, “What do we want to - first to select several articles about these statements and ask all managers
become?” A clear vision provides the foundation for developing a to read these as background information.
comprehensive mission statement. - Then ask managers themselves to prepare a vision and mission statement
Many organizations have both a vision and mission statement, but the vision for the organization. A facilitator, or committee of top managers, should
statement should be established first and foremost. The vision statement then merge these statements into a single document and distribute the
should be short, preferably one sentence. draft statements to all managers.
- A request for modifications, additions, and deletions is needed next, along
“What is our business?” is synonymous with asking the question “What is with a meeting to revise the document. To the extent that all managers
our mission?” have input into and support the final documents, organizations can more
An enduring statement of purpose that distinguishes one organization from easily obtain managers’ support for other strategy formulation,
other similar enterprises, the mission statement is a declaration of an implementation, and evaluation activities.
organization’s “reason for being.” It answers the pivotal question “What is
The Importance of Vision and Mission
The importance (benefits) of vision and mission statements to effective • Broad in scope; do not include monetary amounts, numbers, percentages,
strategic management. ratios, or objectives
• Less than 250 words in length
1. Achieve clarity of purpose among all managers and employees. • Inspiring
2. Provide a basis for all other strategic planning activities, including the • Identify the utility of a firm’s products
internal and external assessment, establishing objectives, developing • Reveal that the firm is socially responsible
strategies, choosing among alternative strategies, devising policies, • Reveal that the firm is environmentally responsible
establishing organizational structure, allocating resources, and evaluating • Include nine components
performance. • Reconciliatory
3. Provide direction. • Enduring
4. Provide a focal point for all stakeholders of the firm.
5. Resolve divergent views among managers.
6. Promote a sense of shared expectations among all managers and
employees.
7. Project a sense of worth and intent to all stakeholders.
8. Project an organized, motivated organization worthy of support.
9. Achieve higher organizational performance.
10. Achieve synergy among all managers and employees.

Mission Statement Components

1. Customers—Who are the firm’s customers?

2. Products or services—What are the firm’s major products or services?
3. Markets—Geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to
growth and financial soundness?
6. Philosophy—What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7. Self-concept—What is the firm’s distinctive competence or major
competitive advantage?
8. Concern for public image—Is the firm responsive to social, community,
and environmental concerns?
9. Concern for employees—Are employees a valuable asset of the firm

Characteristics of a Mission Statement

LESSON 2: E-Commerce: Mechanisms, Platforms, and Tools •Search and Navigation: These tools help buyers find the products or
Electronic Commerce (EC) Activities and Processes services they are looking for on the e-marketplace.
•Payment and Shipping: These services ensure that transactions are secure
Electronic commerce, also known as e-commerce, refers to the buying and and that products are shipped to buyers in a timely manner.
selling of goods and services over the internet. •Customer Service: This provides support to buyers and sellers, ensuring a
The major electronic commerce activities and processes include: smooth and efficient transaction process.
• Online Shopping: This involves customers browsing through a website,
selecting products, and making payments online. Benefits and Limitations of EAuctions
• Online Payment: This involves the use of secure payment gateways to E-auctions are online auctions that allow buyers to bid on products or
process credit card or other payment transactions. services in real-time. The benefits of e-auctions include
• Order Processing: This involves the processing of orders, including order Increased Competition: E-auctions allow multiple buyers to bid on the same
confirmation, shipping, and delivery. product or service, increasing competition and driving down prices.
• Customer Service: This involves providing customer support through •Transparency: E-auctions provide a transparent bidding process, allowing
various channels such as email, phone, or live chat. buyers to see the current highest bid and make informed decisions.
• Marketing and Advertising: This involves promoting products and services •Convenience: E-auctions can be accessed from anywhere with an internet
through various online channels such as social media, email marketing, and connection, making it easy for buyers to participate in auctions.
search engine optimization
However, there are also limitations to e-auctions, including:
The mechanisms that support these activities include: •Limited Control: Buyers have limited control over the bidding process, as
•Websites: These are the primary platform for e-commerce activities, they cannot see the bids of other participants.
providing a virtual storefront for customers to browse and purchase •Risk of Fraud: E-auctions can be vulnerable to fraud, as buyers may not be
products. able to verify the authenticity of the products or services they are bidding
•Payment Gateways: These secure systems process online payments, on.
ensuring that transactions are safe and secure. •Technical Issues: Technical issues such as slow internet connections or
•Shipping and Delivery: These services ensure that products are shipped to website downtime can disrupt the bidding process and lead to lost bids.
customers in a timely and efficient manner.
•Customer Relationship Management (CRM): This system helps businesses Bartering and Negotiating Online
manage customer interactions, including order processing, customer Bartering and negotiating online involve the exchange of goods or services
service, and marketing without the use of money. This can be done through various online
platforms, including:
E-Marketplaces and their Components •Online Marketplaces: These platforms allow buyers and sellers to
An e-marketplace is an online platform that connects buyers and sellers to negotiate prices and terms of sale for products or services.
facilitate the exchange of goods and services. •Social Media: Buyers and sellers can connect through social media
The components of an e-marketplace include: platforms to negotiate prices and terms of sale for products or services.
•Buyers: These are individuals or businesses that purchase products or •Online Forums: Buyers and sellers can connect through online forums to
services from the e-marketplace. negotiate prices and terms of sale for products or services.
•Sellers: These are individuals or businesses that list their products or
services for sale on the e-marketplace.
•Product Listings: These are the descriptions of products or services that
sellers list on the e-marketplace.
Virtual Communities
Virtual communities are online groups of people who share common
interests, hobbies, or goals. These communities can be found on various
online platforms, including:
•Social Media: Virtual communities can be formed through social media
platforms such as Facebook, Twitter, and LinkedIn.
•Forums: Virtual communities can be formed through online forums where
members can discuss common interests and share information.
•Blogs: Virtual communities can be formed through blogs where members
can share their thoughts and ideas on a particular topic.

Virtual communities provide a platform for members to connect with each

other, share information, and support each other in achieving their goals