Chapter 6 Notes.docx - Chapter 6 Notes Strategic Management...

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Chapter 6 NotesStrategic ManagementChapter 6 Notes: Strategic Management6.1 What Is Effective Strategy?Strategic Positioning & Its PrinciplesMichael Porter:“is the single most important strategist working today, and maybe of all time.”Strategic positioning: attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.o“It means,” says Porter, “performing different activities from rivals, or performing similar activities in different ways.”oThree key principles underlie strategic positioning1.Strategy is the Creation of a Unique & Valuable PositionoFew needs, many customersStrategic position can be derived from serving the few needs of many customersExample: Jiffy LubeoBroad needs, few customersA strategic positon may be based on serving the broad needs of just a few customersExample: Wealth managementoBroad needs, many customersStrategy may be oriented toward serving the broad needs of many customersExample: Movie theater2.Strategy Requires Trade-offs in CompetingoSome strategies are incompatible. Thus, a company has to choose not only what strategy to follow but what strategy not to follow.3.Strategy Involves Creating a “Fit” among Activitieso“Fit” has to do with the ways a company’s activities interact and reinforce one another6.2 The Strategic-Management ProcessThe Five Steps of the Strategic-Management ProcessThe strategic management process has five steps, plus a feedback loop.1.Establish the Mission & the VisionoEstablishing the company’s mission statement and vision statement2.Asses the Current RealityoCurrent reality assessment: or organizational assessment—to look at where the organization stands and see what is working and what could be different as to maximize efficiency and effectiveness in achieving the organization’s mission.oSWOT analysis, forecasting, benchmarking, and Porter’s model for industry analysis3.Formulate the Grand StrategyoGrand strategy: which, after the assessment of the current reality, explains how the organization’smission is to be accomplished. Three common grand strategies are growth, stability, and defensive.oStrategy formulation: is the process of choosing among different strategies and altering them to best fit the organization’s needs.4.Implement the StrategyoStrategy Implementation: putting strategic plans into effectoStrategic planning isn’t effective unless it can be translated into lower-level plans.5.Maintain Strategic Control: The Feedback Loop
Chapter 6 NotesStrategic ManagementoStrategic control: consists of monitoring the execution of strategy and making adjustments, if necessary.6.3 Establishing the Mission & the VisionCharacteristics of a Good Mission StatementThe missionis the organizations purpose or reason for being; it is expressed in a mission statement.

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