Business Policy & Strategy - Exam #1, CH. 1-3 Notes and Textbook

Strategic Management

The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Only chicken, not publicly traded, closed on sundays

What is Chickfila's sustainable competitive advantage?

Strategic Planning

The process of formulating an organization's game plan; in a corporate setting, this term may refer to the whole strategic management process.

Long-Range Planning

Deciding on future actions, objectives, and policies with the aim to optimize for tomorrow the trends of today; less effective and comprehensive than strategic planning.

1. Where are we now?

2. Where do we want to go?

3. How are we going to get there?

There are three important questions to answer in preparing a strategic plan:

Strategy Formulation

includes developing a vision or mission, identifying an organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.

1. Reviewing external and internal factors that are the bases for current strategies

2. Measuring Performance

3. Taking corrective actions

What are the 3 Fundamental Strategy Evaluation activities?

Competitive Advantage

Anything a firm does especially well, compared to rival firms. For example, when a firm can do something that rival firms cannot do, or owns something that rival firms desire, that can represent a competitive advantage.

Vision Statement

A one-sentence statement that answers the question, "What do we want to become?"

Mission Statement

An enduring statement of purpose that distinguish one business from other similar firms; a statement that identifies the scope of a firm's operations in product and market terms and addresses the question "What is our business?" A declaration of an organization's "reason for being."

Political, Economic, Sociocultural, Technological, Environmental, Legal

What is PESTEL?

1. Dealing with imperfect information

2. Adapting to changing circumstances

3. Aligning resources to plan

What are the 3 components of Strategy?

Strategies

The means by which long-term objectives are achieved

Igor Ansoff

Known as the "father of strategic management".

1. Market Penetration Strategy

2. Product Development Strategy

3. Market Development Strategy

4. Diversification Strategy

What are the components of the Ansoff Matrix?

Edith Penrose Theory of Growth of the Firm

When managers discover new ways to use the company's existing resources, knowledge, and capabilities, although growth is constrained by how quickly management can effectively organize those resources. Early developer of resource based views of strategy.

Alfred D. Chandler Jr.

Highlighted the relationship between a firm's strategy and its organizational structure.

Kenneth Andrews

Played a key role in defining corporate strategy as a discipline. Integrated internal and external SWOT Analysis.

Competitive differentiation and the path to sustainable profitability are delivered via strategic positioning.

What is Michael Porter's Thesis?

1. Establish a Position

2. Make Trade Offs

3. Create Fit

What is Strategy - Key Takeaways?

1. Clear: reveals the type of industry and what the firm strives to become.

2. Futuristic: reveals what the firm strives to become or accomplish within 5 years.

3. Concise: one sentence in length.

4. Unique: reveals the firm's competitive advantage.

5. Inspiring: motivates the readers to support the firm.

What are the 5 Characteristics of a Vision Statement?

Mission Statement

An enduring statement of purpose that distinguish one business from other similar firms; a statement that identifies the scope of a firm's operations in product and market terms and addresses the question "What is our business?" A declaration of an organization's "reason for being."

1. Customers—Who are the firm's present and potential 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. Distinctive competence—What is the firm's 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?

What are the 9 Components of a Mission Statement?

1. To make sure all employees and managers understand the firm's purpose or reason for being.

2. To provide a basis for prioritization of key internal and external factors used to formulate feasible strategies.

3. To provide a basis for the allocation of resources.

4. To provide a basis for organizing work, departments, activities, and segments around a common purpose

What are the Benefits of a Vision Statement?

(1) Economic forces; (2) social, cultural, demographic, and natural environment forces; (3) political, governmental, and legal forces; (4) technological forces; and (5) competitive forces.

What are External Forces?

1. Actionable

2. Quantitative

3. Comparative

4. Divisional

What are the 4 factors for External Forces (Criteria)?

1. Broader in Scope

2. Less than 250 words

3. Focused on the utility of the organizations products/services

4. Motivational

5. Enduring

6. Forward Looking

A Mission Statement should be:

1. Economic

2. Social, Demographic, Cultural, Environmental

3. Political, Governmental, Legal

4. Technological

5. Competitive

External Forces are sourced from:

Opportunities and Threats

What do External Audits reveal?

"What is our business?" - Peter Drucker

A mission statement should answer the question:

Double in size of the business whilst reducing the environmental footprint and increase positive social impact.

What was Unilever's 10 year plan?

1. Improve health and well being

2. Reducing environmental impact

3. Enhancing Livelihoods

What were the 3 parts of Unilever's 10 year plan?

Mission, Vision

______________ and ___________ are the lense through which businesses' make all of their decisions