Mgmt Midterm

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Strat Unit Test Review

Chapter One:

Strategic Management Process:

Mission --> Objectives --> Internal & External Analysis --> Strategic Choice --> Strategic Implementation --> Competitive Advantage

Mission: A firms long term purpose. A desire future state: the aspiration of the organization.
- Long term

Mission Statements:

Good ones are: graphic, directional, focused, flexible, feasible, desirable, easy to communicate, challenging.

Bad ones are: vague/incomplete, not forward looking, too broad, bland/ininspiring, not distinctive, too reliant on superlatives.

Objectives: Specific, measurable targets
- The things a firm needs to do to achieve its mission
- should influence other elements in the strategic management process
- Should be SMART: specific, measurable, achievable, realistic, timeline

External Analysis: Porter's 5 Forces, SWOT, PESTEL
Internal Analysis: VRIO

External and Internal analysis aid strategic choice at either a business or corporate level

Levels of Strategy:
Corporate - Business - Functional - Operating

Strategic Implementation:
- how strategies are carried out
- who will do what
- organizational structure and control
- who reports to whom
- how does the firm hire, promote, pay, etc

Competitive Advantage:
- there must be something different about a firm's offering vs. competitor's offerings

Measuring Competitive Advantage:
- Accounting Measures
- Economic Measures

Two Approaches to Strategy:
- Emergent
- Intended

Why strategy: to achieve competitive advantage
- exploiting differences between you and your competitors

Chapter Two:

SWOT: Strengths, Weaknesses, Opportunities, Threats
PESTEL: Political, Economical, Sociocultural, Technological, Environmental, Legal (macro environment)

Why PESTEL?
- wider strategic environment, cross industry scan
- used in forecasting and scenarios
- recent variations (you can choose your preferred version)
- look for key drivers

Industry Analysis: Porter's 5 Forces
1) Threat of New Entrants
2) Power of Buyers
3) Power of Suppliers
4) Threat of Substitute
5) Rivalry
and sometimes 6) Complementors

Step 1: Identify the specific competitive pressures associated with each of the 5 forces
Step 2: Evaluate the strength of each competitive force (High-Low)
Step 3: Determine whether the collective strength of the 5 forces is conducive to earning attractive profits (Is the industry attractive? yes/no)

If threats are high --> expect normal profits
If threats are low --> expect above normal profits

Limitations of Five Forces Model:
- factors are sometimes connected
- underplays dirving forces in general environemnt
- assumes buyers are most important
- ignores HR aspects
- predictive vs. emergent
- does not handle new industries well

Chapter 3:

SWOT: Strengths, Weaknesses, Opportunities, Threats

Resource: productive assets...
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