Chapter 1: The Foundations of Strategic Management

Strategic management
the ongoing process companies use to form a vision, analyze their external environment and their internal organization, and select one or more strategies to use to create value for customers, and other stakeholders, especially shareholders
Vision
two components: a mission that describes the firm’s DNA and the “picture” of the firm as it hopes to exist in a future time period
Strategy
an action plan designed to move an organization toward achievement of its vision
Mission
the firm’s core intent and the business in which it intends to compete
External environment
a set of conditions outside the firm that affect the firm’s performance
Internal organization
a set of conditions (such as strengths, resources, and capabilities) inside the firm the affect the choice and use of strategies
Strengths
resources and capabilities that allow the firm to complete important tasks
Resources
the tangible and intangible assets held by the firm
Capabilities
the result when a firm integrates several different resources in a way that allows it to effectively and efficiently complete a task or a series of tasks
Core competencies
capabilities the firm emphasizes and performs especially well while pursuing its vision
Distinctive competencies
core competencies that differ from those held by competitors
Competitive advantage
exists when a firm’s core competencies or its distinctive competencies allow it to create value for customers exceeding the value competitors create for them
Strategy implementation
the set actions firm take to use a strategy after it has been selected
Opportunities
conditions in the firm’s external environment that may the firm reach its vision
Threats
conditions in the firm’s external environment that may prevent the firm from reaching its vision
Stakeholders
individuals and groups who have an interest in a firm’s performance and the ability to influence its actions
Strategic leader
the individuals practicing strategic leadership
Organizational culture
the set of values and beliefs that are shared throughout the firm