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Class:BUS 5480 - Strategic Management
Subject:Business
University:Florida Institute of Technology
Term:Fall 2011
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Company's Strategy Consists of the competitive moves and business approaches that managers are employing to compete successfully, improve performance, and grow the business.
Sustainable Competitive Advantage is achieved when it can meet customer needs more effectively or efficiently than rivals and when the basis for this is durable, despite the best efforts of competitors to match or surpass this advantage.
Competitive Advantage comes from ...comes from an ability to meet customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost.
4 most frequently used and dependable strategic approaches to setting a company apart 1. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals.
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4 most frequently used and dependable strategic approaches to setting a company apart 2. Outcompeting rivals on the basis of differentiating features, such as higher quality, wider product selection, added performance, value-added services, more attractive styling, and technological superiority.
4 most frequently used and dependable strategic approaches to setting a company apart 3. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers in the niche.
4 most frequently used and dependable strategic approaches to setting a company apart 4. Aiming to offer the lowest (best) prices for differentiated goods that at least match the features and performance of higher-priced rivals brands.
How is strategy shaped? A company's strategy is shaped partly by management analysis and choice and partly by the necessity of adapting and learning by doing.
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Deliberate Strategy or Proactive Strategy consists of strategy elements that are both planned and realized as planned
Emergent Strategy or Reactive Strategy consists of new strategy elements that emerge as changing conditions warrant
Business Model sets forth the economic logic for making money in a business, given the company's strategy. It describes two critical elements; (1) the customer value proposition and (2) the profit formula.
The Customer Value Proposition lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value.
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Profit Formula describes the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.
Winning Strategy Test A Winning Strategy must pass three tests:
1. The Fit Test
2. The Competitive Advantage Test
3. The Performance Test
The Fit Test How well does the strategy fit the company's situation?
Must be a good external fit (in sync with the market conditions) and good internal fit (compatible with the company's ability to execute).
The Competitive Advantage Test Can the strategy help the company achieve a sustainable competitive advantage?
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The Performance Test Is the strategy producing good company performance?
What is the cause of a company's performance? How well a company performs if directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
Stages of crafting and executing a company's strategy 1. Developing a strategic vision of the company's long-term direction, a mission that describes the company's purpose, and a set of values to guide the pursuit of the vision and mission.
Stages of crafting and executing a company's strategy 2. Setting objectives and using them as yardsticks for measuring the company's performance and progress.
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Stages of crafting and executing a company's strategy 3. Crafting a strategy to achieve the objectives and move the company along the strategic course that management has charted.
Stages of crafting and executing a company's strategy 4. Executing the chosen strategy efficiently and effectively
Stages of crafting and executing a company's strategy 5. Monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision and mission, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.
Strategic Vision Management's aspirations for the future and delineates management's aspirations for the business, providing a panoramic view of "where we are going" and convincing rationale for why this makes good business sense for the company.
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An effectively communicated vision is a tool for enlisting the commitment of company personnel to actions that move the company forward in the intended direction.
Tips about a Strategic Vision Strategic vision can usually be stated adequately in one to two paragraphs, and managers should be able to explain it to the company personnel and outsiders in 5-10 minutes.
Strategic visions become real only when the vision statement is imprinted in the minds of organization members and then translated into hard objectives and strategies.
Dos an Don'ts of Wording a Vision Statement Do: Be graphic; Be forward-looking and directional; Keep it focused; Have some wiggle room; Be sure the journey is feasible; Indicate why they directional path makes good business sense; Make it memorable

Don'ts: Don't be vague or incomplete; Don't dwell on the present; Don't use overly broad language; Don't state the vision bland or uninspiring terms; Don't be generic; Don't rely on superlatives only; Don't run on and on
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Mission Statement describes the enterprise's current business and purpose
Difference between vision and mission A strategic vision portrays a company's aspirations for its future, whereas a company's mission describes its purpose and its present business.
A well-conceived mission statement conveys a company's purpose in language specific enough to give the company its own identity.
Values A company's values are the beliefs, traits and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.
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Objectives Are an organization's performance targets - specific results management wants to achieve.
Financial objectives relate to the financial performance targets management has established for the organization to acheive.
Strategic Objectives relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
Balanced Scorecard The Balanced Scorecard is a tool that is widely used to help a company achieve its financial objectives by linking them to specific strategic objectives derived from the company's business model.
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Masterful strategies come from doing things differently from competitors where it counts - out-innovating them, being more efficient, being more imaginative, adapting faster - rather than running with the herd.
In most companies, crafting and executing strategy is a collaborative team effort in which every manager has a role fro the area he or she heads. It is flawed thinking to view crafting and executing strategy as something only high-level managers do.
A Company's Strategy-Making Hierarchy Corporate Strategy
Business Strategy (one for each bus. the co. has diversified into)
Functional Area Strategies (within each bus.)
Operating Strategies within Each Business
Strategic Plan A company's strategic plan lays out its future direction and business purpose, performance targets, and strategy.
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Strategic Intent A company exhibits strategic intent when it relentlessly pursues an exceptionally ambitious strategic objective, committing to do whatever it takes to achieve the goals.
A company's vision and mission, objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process.
The Board of Director's Four Roles 1. Critically appraise the company's direction, strategy and business approaches.
The Board of Director's Four Roles 2. Evaluate the caliber of senior executives' strategic leadership skills
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The Board of Director's Four Roles 3. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholder interests - especially those of shareholders.
The Board of Director's Four Roles 4. Oversee the company's financial accounting and financial reporting practices.
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 Company's StrategyConsists of the competitive moves and business approaches that managers are employing to compete successfully, improve performance, and grow the business.
 Sustainable Competitive Advantageis achieved when it can meet customer needs more effectively or efficiently than rivals and when the basis for this is durable, despite the best efforts of competitors to match or surpass this advantage.
 Competitive Advantage comes from...comes from an ability to meet customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost.
 4 most frequently used and dependable strategic approaches to setting a company apart1. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals.
 4 most frequently used and dependable strategic approaches to setting a company apart2. Outcompeting rivals on the basis of differentiating features, such as higher quality, wider product selection, added performance, value-added services, more attractive styling, and technological superiority.
 4 most frequently used and dependable strategic approaches to setting a company apart3. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers in the niche.
 4 most frequently used and dependable strategic approaches to setting a company apart4. Aiming to offer the lowest (best) prices for differentiated goods that at least match the features and performance of higher-priced rivals brands.
 How is strategy shaped?A company's strategy is shaped partly by management analysis and choice and partly by the necessity of adapting and learning by doing.
 Deliberate Strategy or Proactive Strategyconsists of strategy elements that are both planned and realized as planned
 Emergent Strategy or Reactive Strategyconsists of new strategy elements that emerge as changing conditions warrant
 Business Modelsets forth the economic logic for making money in a business, given the company's strategy. It describes two critical elements; (1) the customer value proposition and (2) the profit formula.
 The Customer Value Propositionlays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value.
 Profit Formuladescribes the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.
 Winning Strategy TestA Winning Strategy must pass three tests:
1. The Fit Test
2. The Competitive Advantage Test
3. The Performance Test
 The Fit TestHow well does the strategy fit the company's situation?
Must be a good external fit (in sync with the market conditions) and good internal fit (compatible with the company's ability to execute).
 The Competitive Advantage TestCan the strategy help the company achieve a sustainable competitive advantage?
 The Performance TestIs the strategy producing good company performance?
 What is the cause of a company's performance?How well a company performs if directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
 Stages of crafting and executing a company's strategy1. Developing a strategic vision of the company's long-term direction, a mission that describes the company's purpose, and a set of values to guide the pursuit of the vision and mission.
 Stages of crafting and executing a company's strategy2. Setting objectives and using them as yardsticks for measuring the company's performance and progress.
 Stages of crafting and executing a company's strategy3. Crafting a strategy to achieve the objectives and move the company along the strategic course that management has charted.
 Stages of crafting and executing a company's strategy4. Executing the chosen strategy efficiently and effectively
 Stages of crafting and executing a company's strategy5. Monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision and mission, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.
 Strategic VisionManagement's aspirations for the future and delineates management's aspirations for the business, providing a panoramic view of "where we are going" and convincing rationale for why this makes good business sense for the company.
  An effectively communicated vision is a tool for enlisting the commitment of company personnel to actions that move the company forward in the intended direction.
 Tips about a Strategic VisionStrategic vision can usually be stated adequately in one to two paragraphs, and managers should be able to explain it to the company personnel and outsiders in 5-10 minutes.
  Strategic visions become real only when the vision statement is imprinted in the minds of organization members and then translated into hard objectives and strategies.
 Dos an Don'ts of Wording a Vision StatementDo: Be graphic; Be forward-looking and directional; Keep it focused; Have some wiggle room; Be sure the journey is feasible; Indicate why they directional path makes good business sense; Make it memorable

Don'ts: Don't be vague or incomplete; Don't dwell on the present; Don't use overly broad language; Don't state the vision bland or uninspiring terms; Don't be generic; Don't rely on superlatives only; Don't run on and on
 Mission Statementdescribes the enterprise's current business and purpose
 Difference between vision and missionA strategic vision portrays a company's aspirations for its future, whereas a company's mission describes its purpose and its present business.
  A well-conceived mission statement conveys a company's purpose in language specific enough to give the company its own identity.
 ValuesA company's values are the beliefs, traits and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.
 ObjectivesAre an organization's performance targets - specific results management wants to achieve.
 Financial objectivesrelate to the financial performance targets management has established for the organization to acheive.
 Strategic Objectivesrelate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
 Balanced ScorecardThe Balanced Scorecard is a tool that is widely used to help a company achieve its financial objectives by linking them to specific strategic objectives derived from the company's business model.
  Masterful strategies come from doing things differently from competitors where it counts - out-innovating them, being more efficient, being more imaginative, adapting faster - rather than running with the herd.
  In most companies, crafting and executing strategy is a collaborative team effort in which every manager has a role fro the area he or she heads. It is flawed thinking to view crafting and executing strategy as something only high-level managers do.
 A Company's Strategy-Making HierarchyCorporate Strategy
Business Strategy (one for each bus. the co. has diversified into)
Functional Area Strategies (within each bus.)
Operating Strategies within Each Business
 Strategic PlanA company's strategic plan lays out its future direction and business purpose, performance targets, and strategy.
 Strategic IntentA company exhibits strategic intent when it relentlessly pursues an exceptionally ambitious strategic objective, committing to do whatever it takes to achieve the goals.
  A company's vision and mission, objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process.
 The Board of Director's Four Roles1. Critically appraise the company's direction, strategy and business approaches.
 The Board of Director's Four Roles2. Evaluate the caliber of senior executives' strategic leadership skills
 The Board of Director's Four Roles3. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholder interests - especially those of shareholders.
 The Board of Director's Four Roles4. Oversee the company's financial accounting and financial reporting practices.
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