Chapter 1

the art and science of formulating, implementing, and evaluating crossfunctional decisions that enable an organization to achieve its objectives.

It is the company’s game plan

Stages of Strategic Management

❖What new businesses to enter
❖What businesses to abandon
❖Whether to expand operations or diversify
❖Whether to enter international markets
❖Whether to merge or form a joint venture
❖How to avoid a hostile takeover

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

requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed

often called the action stage

Determining which strategies are not working well

Three fundamental activities of Strategy Evaluation

any activity a firm does especially well compared to activities done by rival firms

any resource a firm possesses that rival firms desire.

brand loyalty and cost leadership

market leadership & economies of scale

diversification & innovation

digital innovation, fintech via Gcash

diversifcaiton & strong distribution network

cost leadership & operational efficiency

e-Commerce & digital ecosystem

innovation & vertical integrationAyala

diversification & reputation

Product differentiation & brand loyalty

cost leadership & logistics

innovation & first-mover advantage – electric vehicle

branding and marketing excellence

scale and global reach (Audi, Porsche, Bentley, Skoda)

Individuals most responsible for the success or failure of an organization

are the individuals most responsible for the success or failure of an organization.

They have various job titles, such as chief executive officer, president, owner, chair of the board, executive director, chancellor, dean, and entrepreneur

“What do we want to become?

“What is our business?”

beyond the control of a single organization

an organization’s controllable activities that are performed especially well or poorly

specific results that an organization seeks to achieve in pursuing its basic mission

the means by which long-term objectives will be achieved

may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures

short-term milestones that organizations must achieve to reach long-term objective

should be established at the corporate, divisional, and functional levels in a large organization

the means by which annual objectives will be achieved

Strategic management allows an organization to be more ____ than _____ in shaping its own future;

It allows an organization to initiate and influence (rather than just respond to) activities—and thus to exert control over its own destiny.

significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities

❖Enhanced awareness of external threats
❖Improved understanding of competitors’ strategies
❖Increased employee productivity
❖Reduced resistance to change
❖Clearer understanding of performance–
reward relationships