Chapter 1: Strategic Management: Creating Competitive Advantages

Romantic view of leadership
situations in which the leader is the key force determining the organization’s success – or lack thereof.
External control view of leadership
situations in which external forces – where the leader has limited influence – determine the organization’s success.
Strategic Management
the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantage.
Strategy
the ideas, decisions, and actions that enable a firm to succeed.
Competitive Advantage
a firm’s resources and capabilities that enable it to overcome the competitive forces in its industry(ies).
Operational Effectiveness
performing similar activities better than rivals
Stakeholders
individuals, groups, and organizations who have a stake in the success of the organization, including owners (shareholders in a publicly help corporation), employees, customers, suppliers, and the comity at large.
Effectiveness
tailoring actions to the needs of an organization rather than wasting effort, or “doing the right thing.”
Efficiency
performing actions at a low cost relative to a benchmark, or “doing things right.”
Ambidexterity
the challenge managers face of both aligning resources to take advantage of existing product markets as well as proactively exploring new opportunities.
Strategic Management Process
strategy analysis, strategy formulation, and strategy implementation
Intended Strategy
strategy in which organizational decisions are determined only by analysis.
Realized Strategy
strategy in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences.
Strategy Analysis
study of firms’ external and internal environment and their fit with organizational vision and goals.
Strategy Formulation
decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage.
Strategy Implementation
actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership.
Corporate Governance
the relationship among various participants in determining the direction and performance of corporations. The primary participants are
1. shareholders
2. management (led by the chief executive officer)
3. board of directors
Stakeholder Management
a firm’s strategy for recognizing and responding to the interests of all its salient stakeholders.
Social Responsibility
the expectation that businesses or individuals will strive to improve the overall welfare of society
Triple Bottom Line
assessment of a firm’s financial, social, and environmental performance.
Hierarchy of Goals
organizational goals ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those are more specific and measurable
Hierarchy of Goals (Pyramid)
Vision
Mission Statement
Strategic Objectives
Vision
organizational goal(s) that evoke(s) powerful and compelling mental images.
Mission Statement
a set of organizational goals that include both the purpose of the organization, its scope of operations, and the basis of its competitive advantage.
Strategic Objectives
a set of organizational goals that are used to operationalize the mission statement and that are specific and cover a well-defined time frame.