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Management Chapter 6:Strategic Management

Business Plan
A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success.
Strategy
A large-scale action plan that sets the direction for an organization.
Strategic Management
A process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals.
Why Strategic Management & Strategic Planning Are Important?
An organization should adopt strategic management and strategic planning for three reasons: They can provide direction and momentum, encourage new deas and above all develop a sustainable competitive advantage.
Strategic Positioning
Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. “Performing different activities from rivals, or performing similar activities different ways”
The Five Steps of the Strategic-Management Process
Establish the mission and the vision, establish the grand strategy with environmental scanning, formulate the strategic plans, carry out the strategic plans, and maintain strategic control.
Grand Strategy
After an assessment of current organization performance, then explains how the organization’s mission is to be accomplished. Focuses on growth, stability and defensive.
Growth Strategy
is a grand strategy that involves expansion-as in sales revenues, market share, number of employees or number of customers or (for nonprofits) clients served.
The Stability Strategy
is a grand strategy that involves little or no significant change.
The Defensive Strategy
is a grand strategy that involves reduction in the organization’s efforts.
Strategy Formulation
is the process of choosing among different strategies and altering them to best fir the organization’s needs.
Strategic control
consist of monitoring the execution of strategy and making adjustments if necessary. Focus on the following: engage people, keep it simple, stay focused, keep moving.
Competitive intelligence
Means gaining information about one’s competitor’s activities so that you can anticipate their moves and react appropriately.
Environmental Scanning
careful monitoring of an organization’s internal and external environments to detect early signs of opportunities and threats that may influence the firm’s plans.
SWOT Analysis
search for the strengths, weaknesses, opportunities, and threats affecting the organization. Provide a realistic understanding of your organization in relation to its internal and external environments so you can better formulate strategy in pursuit of its mission.
Forecast
Is a vision or projection of the future
Trend Analysis
Hypothetical extension of a past series of events into the future.
Contingency plan
the creation of alternative hypothetical but equally likely future conditions.
Porter’s Five Competitive Forces
business-level strategies originate in five primary competitive forces in the firm environment: threats of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products or services and rivalry among competitors.
Porter’s Four Competitive Strategies
cost leadership, differentiation, cost-focus, and focused-differentiation
Cost leadership strategy
to keep the costs, and hence prices of a product or service below those of competitors and to target a wide market.
Differentiation strategy
is to offer products or services that are of unique and superior value compared with those of competitors but to target a wide market.
Cost-Focus strategy
to keep the costs and hence prices of a product or service below those of competitors and to target a narrow market.
Focused-differentiation Strategy
is to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market.
Single product strategy
a company makes and sells only one product within its market

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