Strategic Management: Principles, Processes, and Ethics

Comprehensive vocabulary flashcards covering strategic management concepts, vision and mission analysis, military strategic origins, corporate strategy types, ethics, social responsibility, and strategy formulation models.

Vision Statement

A statement that describes what the organization wants to become in the future, answers the question 'What do we want to become?', provides the foundation for the mission statement, and is preferably one sentence in length.

Mission Statement

A declaration of an organization's 'reason for being' that answers the pivotal question 'What is our business?', identifying why the firm exists, what business it is in, and whom it serves.

Declaration of Attitude

A characteristic of a mission statement denoting that it should be broad, flexible, and reconciliatory to accommodate diverse stakeholder claims and feasible strategic choices without restricting managerial creativity.

Stakeholders

Individuals or groups who have a special stake, claim, or significant interest in a company, capable of affecting or being affected by organizational decisions.

Self-Concept

A core component of a mission statement that specifies the firm's distinctive competence or primary competitive advantage.

Strategos

The Greek root of the word strategy, composed of 'stratos' (army) and 'ago' (leading, guiding, moving, or general), signifying an army being led by a general.

Friction (Clausewitz)

The physical impediments, obstacles, and unpredictable problems that interfere with military actions, making even the simplest actions difficult in practice.

Fog (Clausewitz)

The uncertainty and commander's lack of clear information that characterizes a dynamic and unpredictable operational environment.

Strategy of Indirect Approach

A military approach utilized by Napoleon Bonaparte when possessing superior manpower and maneuvering room to envelop the opponent and cut off lines of communication with their bases.

Strategy of Central Position

A military maneuver used by Napoleon Bonaparte when facing an enemy that outnumbers his forces, involving splitting the enemy forces into separate parts to defeat them individually.

Helicopter View

A broad, top-level perspective that enables an organization to observe the market from above and monitor the actions and positions of industry competitors and players.

Forward Integration

A vertical integration strategy in which a company gains control over distribution or selling by moving closer to the end customers.

Backward Integration

A vertical integration strategy wherein an enterprise takes control over the supply chain or production of raw inputs by moving toward suppliers.

Horizontal Integration

An integration strategy that entails acquiring, gaining control of, or combining with direct competitors operating at the same stage of the supply chain.

Market Penetration

An intensive strategy that targets increasing market share by promoting existing products within existing markets.

Market Development

An intensive strategy that involves introducing existing products into entirely new geographical markets or customer segments.

Product Development

An intensive strategy centered on introducing modified, upgraded, or brand-new products to existing customer bases or markets.

Related Diversification

A growth strategy where an organization expands by entering a new business, product line, or service that has a direct connection to its existing operations.

Unrelated Diversification

A diversification strategy wherein an enterprise enters a new market or industry that shares little or no operational or commercial link with its current business.

Retrenchment

A defensive strategy where an organization fortifies basic distinctive competencies through cost, asset, and operational reductions to reverse declining sales and profits.

Divestiture

A defensive strategy involving the sale or liquidation of a division, business unit, or portion of an organization to raise capital or refocus operations.

Liquidation

A defensive strategy in which all organizational assets are systematically sold for their tangible value and operations permanently cease.

Low-Cost Strategy

A generic competitive strategy that seeks to outperform rivals by providing goods or services at a lower production and operational cost.

Best-Value Strategy

A generic strategy aimed at offering buyers a compelling balance of high product quality/features alongside competitive, reasonable pricing.

Business Ethics

The moral principles, values, and policies governing proper conduct, decision-making, and organizational practices regarding potentially controversial subjects.

Seven Principles of Admirable Business Ethics

Foundational ethical guidelines consisting of: 1. Be trustworthy, 2. Be open-minded, 3. Honor commitments and obligations, 4. Do not misrepresent or mislead in print materials, 5. Be visibly a responsible community citizen, 6. Utilize accounting practices to eliminate questionable activities, and 7. Follow the Golden Rule.

Whistle-Blowing

The formal reporting or disclosing of illegal, unethical, or wrongful activities within an organization by an employee.

Bribery

The illegal offering, giving, receiving, or soliciting of items of value to influence the actions or decisions of an official or person in a legal or public duty.

Workplace Romance

An intimate personal relationship formed between two consenting employees within an organization.

Social Policy

A firm's philosophy and structured managerial approach toward its responsibilities to stakeholders such as employees, consumers, environmentalists, minorities, and local communities.

Environmental Sustainability

The practice of designing and deploying strategies that conserve natural resources, control industrial pollution, and minimize ecological degradation.

Fiduciary Responsibilities

The legal, financial, and ethical obligation of managers or directors to act exclusively in the best interests of another party, such as stockholders.

Where Strategy Fits in 'Planning'

A planning framework where Mission and Vision reside at the top, Strategy represents the middle layer describing how the firm realizes them, and Goals and Objectives sit at the base as measurable success indicators.

Strategizing in P-O-L-C

The organizational alignment displaying Strategy Formulation under the Planning dimension, while Strategy Implementation is executed across the Organizing, Leading, and Controlling dimensions.

Strategy Formulation

The initial strategic management stage centered on answering 'What should we do?', which involves developing vision and mission statements, conducting SWOT analysis, and establishing long-term goals.

Strategy Implementation

The action phase of strategic management answering 'How do we do it?', involving policy establishment, resource allocation, and organizational motivation across divisions.

Strategy Evaluation

The final phase of the strategic-management process focused on assessing internal and external factors, measuring actual performance against benchmarks, and taking corrective actions.

Sustainable Competitive Advantage

A competitive superiority over market rivals that a firm can maintain across prolonged periods because competitors cannot easily duplicate or imitate its capabilities.

Intended Strategy

The original plan of action deliberately conceived and formulated by top leadership, usually emerging from bargaining, negotiation, and compromise.

Realized Business Strategy Framework

A model showing that realized strategy is formed by deliberate strategy elements combined with emergent strategy elements, minus abandoned strategy elements; Henry Mintzberg notes only $10\%-30\%$ of intended strategy is typically realized.

Emergent Strategy Elements

Unplanned, proactive or reactive tactical adjustments formulated by management in direct response to unforeseen environmental shifts and market dynamics.

Abandoned Strategy Elements

Planned activities or strategic initiatives that are discarded during execution because they cease to be viable, profitable, or practical in a shifting environment.

Value Chain Analysis

An internal diagnostic framework that dissects an organization into its discrete operational activities (such as manufacturing and marketing) to identify competitive strengths and value creation.

VRIO Analysis

An internal analytical methodology evaluating resources and capabilities according to their Value, Rarity, Inimitability, and Organization to determine competitive advantage.

PESTEL Analysis

An external macro-environmental audit examining Political, Economic, Sociocultural, Technological, Environmental, and Legal forces affecting an enterprise.

Social License to Operate

The continuous approval and social acceptance granted by stakeholders and broader society that enables an organization to conduct business legitimacy.

Industrial Organizational (I/O) Model

A theoretical model asserting that external industry environment forces exert the dominant influence on firm strategy, directly determining $20\%$ of corporate profitability.

Resource-Based Model

A perspective proposing that internal unique resources and management capabilities dominate strategic action, directly driving $36\%$ of firm profitability.

Core Competencies

Organizational capabilities that are valuable, rare, costly to imitate, and non-substitutable, which serve as the foundation of sustainable competitive advantage.

Above-Average Returns (AAR)

Financial profits generated from revenue that exceed the industry average for investments bearing similar levels of market risk.

Customer Value Proposition

A business statement that clarifies to target buyers why they should purchase a product by defining what makes the offering distinctive, beneficial, and superior to rivals.

Capital Market

A financial system channeling funds between investors and institutional borrowers using securities such as stocks, long-term bonds, and short-term debt notes.

Product Market

The commercial exchange arena where completed goods and services are bought and sold, comprising customers, suppliers, labor unions, and host communities.