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What is a Strategy and the Strategic Management Process? (Strategic…
What is a Strategy and the Strategic Management Process?
Strategy and Strategic Management Process
Strategy is defined as its theory about how to gain competitive advantages
Based in hypotheses and assumptions
Strategic Management Process
Is a sequencial set of analyses and choices that can increase the likelihood that a firm will choose a good strategy
Mission
Define both what a firm aspires to be in the long run and what it wants to avid in the meantime
Objectives
Are specific mesuarable targets a firm can use to evaluate the extent to which isrealizing its mission
External and internal Analysis
External
A firm identifies the critical threats and opportunities in its competitive environment
Internal
Helps a firm identify its organizational strenghts and weaknesses. It also helps a firm to understand which of its resourses and capabilities are likely to be sources of competitive advantage
Strategic Choice
Business-level strategies
Actions firms take to gain competitive advantages in a singles market industry (cost leadership and product differentiation)
Corporate-level strategies
Are actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously
Strategy Implementation
Occurs when a firm adopts organizational polices and practices that are consistent with its strategy
Competitive Advantage
When a firm its able to create more economic value than rival firms (the difference between the perceived benefits gained by a customer thatpurchases a firm´s product or services and the full economic cost of these products or services)
Measuring Competitive Advantage
Accounting Measures of Competitive Advantage
Accounting performance is measure of its competitive advantage calculated by using information from a firm´s published profit and loss and balance sheet statements
Acocounting ratios are simpli numbers taken from a firm´s financial statements that are manipulated in ways that describe various aspects of a firms performance
Profitability ratios
Liquidity ratios
Leverage ratios
Activity ratios
Cost oof capital
Is the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm
Emergent versus Intended strategies
Emergent strategies
Theories of how tpo gain competitive advatage in an industy that emerge over time or that have been may simply not be available