Strategy Notes - Strategy 1 Chapter 1 What is Strategy and...

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Strategy 1. Chapter 1: What is Strategy and the Strategic Management Process? a. Strategy and the Strategic Management Process i. Defining Strategy 1. A firm’s strategy is defined as its theory about how to gain  competitive advantages.   2. All theories of how to gain competitive advantages is based ona  set of assumptions and hypotheses about the way competition in  the industry is likely to evolve, and how that evolution can be  exploited to earn a profit. 3. A firm’s strategy is almost always a theory: it’s a firm’s best bet  about how competition is going to evolve, and how that evolution  can be exploited for competitive advantage. ii. The Strategic Management Process 1. The strategic management process is a sequential set of analyses  and choices that can increase the likelihood  that a firm will  choose a good strategy; that is, a strategy that generates  competitive advantages. 2. Mission Objectives  External/Internal Analyses  Strategic  Choice Strategy Implementation Competitive Advantage 3. A Firm’s Mission a. A firm’s mission is its long-term purpose.   b. Missions define both what a firm aspires to be in the long  run  and what it wants to avid in the meantime.   c. Despite the caveats, research has identified some firms  whose sense of purpose and mission permeates all that 
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they do. Some of these visionary firms, or firms whose mission is central to all they do…. d. Sometimes a mission can hurt a firm’s performance…For example, sometimes a firm’s mission will be very inwardly focused and feind only with reference to the personal values and priorities of its founders or top managers, independent of whether those values and priorities are consistent with the economic realities facing a firm. 4. Objectives a. Whereas a firm’s mission is a broad statement of its purpose and values, its objectives are specific measureable targets a firm ca use to evaluate the extent to which it is realizing its mission b. High-quality objectives are tightly connected to elements of a firm’s mission and are relatively easy to measure and track over time. Low-quality objectives either do not exist or are not connected to elements of a firm’s mission, are not quantitative, or are difficult to measure or difficult to track over time. 5. External and Internal Analysis a. By conducting an external analysis, a firm identifies the crticial threats and opportunities in its competitive environment. It also examines how competition in this environment is likely to evolve and what implications that evolution has for the threats and opportunities a firm is facing.
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