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Introduction to


What is Strategic Management?

the ongoing process companies use
to form a vision, analyze their
external environment and their
internal environment, and select one
or more strategies to use to create
value for customers and other
stakeholders, especially shareholders

What is Strategic Management?

The vision contains at least two
componentsa mission that
describes the firms DNA and the
picture of the firm as it hopes to
exist in a future time period.
The mission defines the firms core
intent and the business or businesses
in which it intends to operate.

What is Strategic Management?

A strategy is an action plan designed
to move an organization toward
achievement of its vision.
The external environment is a set of
conditions outside the firm that
affect the firms performance.

What is Strategic Management?

The internal environment is the set of
conditions (such as strengths, resources,
capabilities, and so forth) inside the firm
affecting the choice and use of strategies.
Strengths are resources and capabilities that
allow the firm to complete important tasks
Resources are the tangible and intangible
assets held by the firm.

What is Strategic Management?

Capabilities result when the firm
integrates several different resources
to complete a task or a series of
related tasks.
Core competencies are capabilities
the firm emphasizes and performs
especially well while pursuing its

What is Strategic Management?

Competitive Advantage
when the firms core competencies
allow it to create value for
customers by performing a key
activity better than competitors or
when a distinctive competence
allows it to perform an activity that
creates value for customers that
competitors cant perform

Key Characteristics of Strategic

Strategic management is:
Performance oriented
Ongoing in nature
Dynamic rather than static
Oriented to the present and the future
Concerned with conditions both outside
and inside the firm
Concerned with performing well and
satisfying stakeholders

Strategy Implementation
Strategy implementation is the set of
actions firms take to use a strategy
after it has been selected.

Industrial-Organizational Model
Firms use the I/O model to identify
opportunities and threats.
Opportunities are conditions in the
firms external environment that may
help the firm reach its vision.
Threats are conditions in the firms
external environment that may
prevent the firm from reaching its

Industrial-Organizational Model
Examining conditions in Studying
the firms external environment to
assess their effects on the firm


Determining an attractive industry or segment of an industry

Choosing the strategy called
by the influences of the firms
external environment
Using the firms resources to implement the chosen strategy

Resource Based View of the Firm

While the I/O model focuses on the
external environment the resource
based view of the firm (RBV)
describes what firms do to analyze
their internal environment.
These models are complementary,
one dealing with the external
environment, the other dealing with
the internal environment.

Resource Based View Model


Determining the firms strengths and weaknesses

Determining what the firms
resources allow it to do better than

Choosing the strategy suggested
by the firms competitive
advantages and an industry in which to use the advantages
Using the firms resources, capabilities, and core competencies to implement
the chosen strategy

Individuals and groups who have an
interest in a firms performance and
an ability to influence its actions
Interest in performance coupled with
ability to influence the firm through
their decision to support the firm or
not companies have important
relationships with their stakeholders.

Stakeholders Groups
Individual Shareholders
Institutional Shareholders

Internal Stakeholders

External Stakeholders
Local Communities
Government Agencies
General Society

Strategic Leaders
Individuals who practice strategic
leadership making sure that
decisions are made that will ensure
their firms success.
The Board of Directors
Both are responsible for setting the
organizational culture.


Strategic Leaders
though many different people may be
involved, the final responsibility for
effective use of the strategic
management process rests with the
firms top-level strategic leaders (i.e.,
the chief executive officer and the
top management team). In addition,
it is important to note that the best
strategic leaders as well as all others
throughout the firm also act ethically.

Organizational Culture
Organizational culture is the set of
values and beliefs that are shared
throughout the firm. Values reflect
what is important, while beliefs
speak to how things should be done.
Intangible in nature, culture cant be
touched or seen, but its presence is
felt throughout every organization.

Organizational Culture
Ethics are concerned with the
standards for deciding what is good
or bad, right or wrong as defined by
most members of a particular
society. In an organizational context,
ethics reveal a value system that has
been widely adopted by the firms
employees and that other
stakeholders recognize as an
important driver of decisions and

Summary: Strategic Management