Prelim: Key terms in Strategic

• “anything that a firm does especially well compared to rival firms.”

  Competitive advantage
• When a firm can do something that rival firms cannot do, or owns something that rival firms

  desire, that can represent a ______________

  competitive advantage
• Pursuit of competitive advantage leads to organizational success or failure.
• Normally, a firm can sustain a competitive advantage for only a certain period due to rival firms imitating and undermining that advantage.
• A firm must strive to achieve

  sustained competitive advantage
• A firm must strive to achieve sustained competitive advantage

  (1) by continually adapting to changes in external trends and events and internal

  capabilities, competencies, and resources; and

  (2) by effectively formulating, implementing, and evaluating strategies that capitalize

  upon those factors.
• are the individuals who are most responsible for the success or failure of an organization

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

  Strategists
• They track

  • industry and competitive trends,

  • develop forecasting models and scenario analyses,

  • evaluate corporate and divisional performance,

  • spot emerging market opportunities,

  • identify business threats, and

  • develop creative action plans.

  Strategists
• is often considered the first step in strategic planning,

  preceding even development of a mission statement.

  Vision statement
• are “enduring statements of purpose that distinguish one business from other similar firms.

  Mission statements
• identifies the scope of a firm’s operations in product and market terms.”

  Mission statements
• It addresses the basic question that faces all strategists: “What is our business?”

  Mission statements
• broadly charts the future direction of an organization.

  mission statement
• is a constant reminder to its employees of why the organization exists

  and what the founders envisioned when they put their fame and fortune at risk to breathe life into their dreams.

  mission statement
• is a resource or capacity the organization can use effectively to achieve its objectives.

  Strengths
• is a limitation, fault, or defect in the organization that will prevent it from achieving its objectives.

  Weakness
• is any favorable situation in the organization's environment.

  Opportunity
• are generated by factors external to the organization, it reduces market opportunities or lead to lower profitability.

  Threats
• usually include specific improvements in the organization's competitive position, technology leadership, profitability, return on investment, employee relations and productivity, and corporate image.

  Long term objectives
• are the means by which long-term objectives will be achieved.

  Strategies
• are short-term milestones that organizations must achieve to reach long-term objectives.

  Annual objectives
• are the means by which annual objectives will be achieved.

  Policies
• include guidelines, rules, and procedures established to support efforts to achieve stated objectives.

  Policies
• This model does not guarantee success, but it does represent a clear and practical approach for formulating, implementing, and evaluating strategies.

  Strategic Management Model