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Strategic Management The art and science of formulating, implementing,

and evaluating cross-functional decisions that enable
an organization to achieve objectives.
Strategy Formulation The process of developing a vision and a mission,
identifying external opportunities and threats,
determining internal strengths and weaknesses,
establishing long-term objectives, generating
alternative strategies, and choosing particular
strategies to pursue.
Strategy Implementation The process of establishing annual objectives,
devising policies, motivating employees, and
allocating resources so that formulated strategies can
be executed.
Strategy Evaluation The process of reviewing external and internal
factors that are the bases for current strategies,
measuring performance, and taking corrective
actions.
Competitive Advantage Any activity a firm does especially well compared to
activities done by rival firms, or any resource a firm
possesses that rival firms desire.
Strategists The individuals most responsible for the success or
failure of an organization.
External Opportunities and Threats Economic, social, cultural, demographic,
environmental, political, legal, governmental,
technological, and competitive trends and events that
could significantly benefit or harm an organization in
the future.
Internal Strengths and Weaknesses An organization’s controllable activities that are
performed especially well or poorly.
Long-Term Objectives Specific results that an organization seeks to achieve
in pursuing its basic mission in more than 1 year.
Strategies Actions taken to accomplish long-term objectives in
2-5 years.
Managing by Subjectives Do your own thing, the best way you know how.
Built on the idea that there is no general plan for
which way to go and what to do; just do the best you
can to accomplish what you think should be done.
Managing by Hope Based on the fact that the future is laden with great
uncertainty and that if we try and do not succeed,
then we hope our second (or third) attempt will
succeed.
Vertical Integration A strategy that allows a firm to gain control over
distributors and suppliers. Forward integration refers
to gaining control over distributors and resellers,
while backward integration refers to gaining control
over suppliers.
Horizontal Integration A strategy that refers to gaining ownership and/or
control over competitors.
Market Penetration A strategy that involves presenting products or
services in present markets through greater
marketing efforts.
Market Development A strategy that involves introducing present products
or services into new geographic areas.
Product Development A strategy that involves improving or modifying
present products or services.
Related Diversification A strategy that strives to capitalize on value chain
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strategic fits among the businesses.
Unrelated Diversification A strategy that favors capitalizing on a portfolio of
businesses that are capable of delivering excellent
financial performance in their respective industries.
Retrenchment A strategy that occurs when an organization regroups
through cost and asset reduction to reverse declining
sales and profits.
Divestiture A strategy that involves selling a division or part of
an organization.
Liquidation A strategy that involves selling all of a company's
assets, in parts, for their tangible worth. It is
associated with bankruptcy.
Low-Cost Strategy A strategy that offers products or services to a wide
range of customers at the lowest price available on
the market.
Best-Value Strategy A strategy that aims to offer a wide group of
customers products or services that meet their tastes
and requirements better than rivals' products do.
Differentiation A strategy that aims to produce products and services
considered unique to the industry and directed at
consumers who are relatively price insensitive.
Low-Cost Focus Strategy A strategy that offers products or services to a small
range (niche group) of customers at the lowest price
available on the market.
Best-Value Focus Strategy A strategy that aims to offer a niche group of
customers products or services that meet their tastes
and requirements better than rivals' products do.
Cooperation among Competitors Collaboration between competitors where both firms
contribute something distinctive, such as technology,
distribution, basic research, or manufacturing
capacity.
Joint Venture and Partnering A strategy that occurs when two or more companies
form a temporary partnership or consortium for the
purpose of capitalizing on some opportunity.
Merger A strategy where two organizations of about equal
size unite to form one enterprise.
Acquisition A strategy where a large organization purchases
(acquires) a smaller firm or vice versa.
Private-Equity Acquisitions A strategy where firms are acquiring and taking
private a wide variety of companies almost daily in
the business world.
Vision What Do We Want to Become? A clear vision
provides the foundation for developing a
comprehensive mission statement.
Mission What Is Our Business? A clear mission statement is
essential for effectively establishing objectives and
formulating strategies.
Key Internal Forces Internal forces within an organization that include
marketing, finance, accounting, management,
management information systems, and production
and operations.
Internal Audit The process of gathering, assimilating, and
prioritizing information about the firm’s internal
operations to reveal its most important strengths and
weaknesses.
Resource-Based View A perspective that integrates strategy and culture by
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focusing on the firm's internal resources and
capabilities.
Management The process of planning, organizing, motivating,
staffing, and controlling.
Planning The process by which a person determines whether
to attempt a task, works out the most effective way of
reaching desired objectives, and prepares to
overcome unexpected difficulties with adequate
resources.
Organizing The process of achieving coordinated effort by
defining task and authority relationships.
Motivating The process of influencing people to accomplish
specific objectives.
Staffing The process of managing human resources, including
activities such as recruiting, interviewing, selecting,
training, and evaluating employees.
Controlling The process of ensuring that actual operations
conform to planned operations.
Marketing The process of defining, anticipating, creating, and
fulfilling customers' needs and wants for products
and services.
Customer Analysis The examination and evaluation of consumer needs,
desires, and wants.
Selling The process of promoting and selling products and
services.
Product and Service Planning The process of planning and developing products and
services.
Pricing The process of determining the price of a product or
service.
Distribution The process of getting products or services to
customers.
Marketing Research The systematic gathering, recording, and analyzing
of data about problems relating to the marketing of
goods and services.
Cost/Benefit Analysis The assessment of the costs, benefits, and risks
associated with marketing decisions.

What is strategic management?

Strategic management is the art and science of formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve objectives.

What are the three stages of the strategic management process?

The three stages of the strategic management process are strategy formulation, strategy implementation, and
strategy evaluation.

Why is it important to integrate analysis and intuition in strategic management?

It is important to integrate analysis and intuition in strategic management because analysis provides data and
information, while intuition provides insights and creativity.

Can you give examples of key terms in strategic management?

Examples of key terms in strategic management include competitive advantage, external opportunities and
threats, internal strengths and weaknesses, long-term objectives, and strategies.
What is the comprehensive strategic-management model?
The comprehensive strategic-management model is a framework that illustrates the strategic management
process, including strategy formulation, implementation, and evaluation.

What are the benefits of engaging in strategic management?

The benefits of engaging in strategic management include improved performance, competitive advantage,
adaptability to change, and alignment of organizational activities.

Why do some firms not engage in strategic planning?

Some firms do not engage in strategic planning due to lack of awareness, resource constraints, resistance to
change, or a belief that it is unnecessary.

What are the pitfalls in actually doing strategic planning?

The pitfalls in actually doing strategic planning include inadequate analysis, lack of commitment, poor
implementation, and failure to adapt to changing circumstances.

What is the connection between business and military strategy?

The connection between business and military strategy lies in the principles of competition, resource allocation,
and achieving objectives in a dynamic environment.

What is competitive advantage?

Competitive advantage refers to any activity a firm does especially well compared to rival firms, or any resource
a firm possesses that rival firms desire.

What is strategic management?

✗ - The process of analyzing market trends and competition.
✗ - The process of managing day-to-day operations of an organization.
✗ - The process of setting goals and objectives for an organization.
✓ - The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an
organization to achieve objectives.

What are the three stages of the strategic management process?

✗ - Market analysis, product development, and customer acquisition.
✗ - Budgeting, hiring, and training.
✗ - Goal setting, resource allocation, and performance measurement.
✓ - Strategy formulation, strategy implementation, and strategy evaluation.

Why is it important to integrate analysis and intuition in strategic management?

✓ - Analysis provides data and insights, while intuition allows for creative and innovative decision-making.
✗ - Analysis and intuition are separate and should not be integrated.
✗ - Intuition is more important than analysis in strategic management.
✗ - Analysis and intuition are not relevant in strategic management.

What are some key terms in strategic management?

✓ - Vision, mission, objectives, strategies.
✗ - Marketing, finance, production, operations.
✗ - Analysis, intuition, creativity, innovation.
✗ - Budgeting, hiring, training, performance measurement.

What is the comprehensive strategic-management model?

✓ - A model that includes strategy formulation, strategy implementation, and strategy evaluation.
✗ - A model that prioritizes operational efficiency and cost reduction.
✗ - A model that focuses on marketing and sales strategies.
✗ - A model that emphasizes financial planning and budgeting.

What are the benefits of engaging in strategic management?

✓ - Improved organizational performance, adaptability to change, and competitive advantage.
✗ - Increased employee productivity, reduced resistance to change, and improved understanding of competitors'
strategies.
✗ - Significant improvement in sales, profitability, and productivity compared to firms without systematic
planning activities.
✗ - Enhanced awareness of external threats, improved understanding of performance-reward relationships, and
clear performance standards.

Why do some firms not engage in strategic planning?

✗ - Lack of marketing, finance, production, and operations capabilities.
✗ - Lack of analysis and intuition, lack of creativity and innovation, or lack of key terms.
✗ - Lack of vision and mission, lack of objectives, or lack of strategies.
✓ - Lack of awareness, lack of resources, or resistance to change.

What are the pitfalls in actually doing strategic planning?

✗ - Failure to integrate analysis and intuition, lack of creativity and innovation, and poor understanding of
competitors' strategies.
✓ - Failure to involve key stakeholders, lack of commitment from top management, and inadequate
implementation.
✗ - Failure to establish a vision and mission, lack of strategic objectives, and poor strategy formulation.
✗ - Failure to set clear goals and objectives, lack of financial resources, and poor market analysis.

What is the connection between business and military strategy?

✗ - Business strategy is more important than military strategy.
✗ - Military strategy is more important than business strategy.
✗ - There is no connection between business and military strategy.
✓ - Both involve making decisions and taking actions to achieve objectives in a competitive environment.

What is competitive advantage?

✗ - The ability to offer lower prices than competitors.
✓ - Any activity a firm does especially well compared to activities done by rival firms, or any resource a firm
possesses that rival firms desire.
✗ - The ability to dominate the market and eliminate competition.
✗ - The ability to outperform competitors in terms of sales and profitability.