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CHAPTER 02

KEY TERMS IN STRATEGIC


MANAGEMENT

ALMA.Shameem

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Learning Objective
After studying this chapter, you should be able
to know that:

• The Key Terms in Strategic Management

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Key Terms in SM
Before we further discuss strategic management,
we should define some key terms:

• strategists, vision statement, mission statement,


external opportunities and threats, internal
strengths and weaknesses, long-term objectives,
strategies, annual objectives, and policies.

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Strategists
• Strategists are individuals who are most
responsible for the success or failure of an
organization.
• Strategists are individuals who form strategies.
• Strategists have various job titles, such as
chief executive officer, president, and owner,
chair of the board, executive director,
chancellor, dean, or entrepreneur.

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Vision
• “Vision is the art of seeing things invisible”
.. . . . Jonathan Swift
• Vision statement answers the question,
“Where do we want to go?” OR “What do we
want to become?”
• Developing a vision statement is often
considered the first step in strategic planning.

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Vision
For example the vision statements:
• “Our vision is to take care of your vision”
Stokes Eye Clinic in Florence, South Carolina
• "Global leadership in education, certification, and practice of
management accounting and financial management.“
The Institute of Management Accountants
• “Helping individuals and organizations discover and develop
their God given potentials to achieve the ultimate Success”.
University of Management & Technology, Lahore

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Vision
• A vision usually precedes the mission
statement

• It is usually short, concise and preferably


limited to one sentence

• Organization-wide management involvement


is advisable
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Mission
• Mission statements are "enduring statements
of purpose that distinguish one business from
other similar firms.
• A mission statement identifies the scope of a
firm's operations in product and market
terms. It addresses the basic question that
faces all strategists: What is our business?

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Mission
Components and corresponding questions that a mission
statement should answer are given here.

• Customer: Who are the firm’s customers?


• Products or services: What are the firm’s major products or
services?
• Markets: Geographically, where does the firm compete?
• Technology: Is the firm technologically current?
• Concern for survival, growth, and profitability: Is the firm
committed to growth and financial soundness?

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Mission
Components and corresponding questions that a
mission statement should answer are given here.
• Philosophy: What are the basic beliefs, values, aspirations,
and ethical priorities of the firm?
• Self-concept: What is the firm’s distinctive competence or
major competitive advantage?
• Concern for public image: Is the firm responsive to social,
community, and environmental concerns?
• Concern for employees: Are employees a valuable asset of
the firm?

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MISSION V/S VISION
• The mission statement answers the
question, what is our business?

• The vision statement answers the


question, What do we want to become?

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AMOCO Corporation

Mission Statement:
• Amoco is a worldwide integrated petroleum and
chemical company. We find and develop petroleum
resources and provide qualify products and services
for our customers. We conduct our business
responsibly to achieve a superior financial return
balanced with our long-term growth, benefiting
shareholders and fulfilling our commitment to the
community and the environment.

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AMOCO Corporation

• Vision Statement:
Amoco will be as global business enterprise, recognized
throughout the world as preeminent by employees,
customer, competitors, investors and the public. We
will be the standard by which other businesses
measure their performance. Our hallmarks will be
the innovation, initiative and teamwork of our
people and our ability to anticipate and effectively
respond to change and to create opportunity.

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Importance of Vision and Mission
Statements
• Unanimity of purpose within the organization
• Basis for allocating resources
• Establish organizational climate
• Focal point for direction
• Translate objectives into work structure
• Cost, time and performance parameters
assessed and controlled

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External Opportunities and
Threats
• Political, legal, governmental, technological,
and competitive trends and events that could
significantly benefit or harm an organization in
the future.
• A basic tenet of strategic management is that
firms need to formulate strategies to take
advantage of external opportunities and to
avoid or reduce the impact of external threats.

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Internal Strengths and
Weaknesses/Internal assessments
• Internal strengths and internal weaknesses are
an organization's controllable activities that
are performed specially well or poorly.
• They arise in the management, marketing,
finance/accounting, production/operations,
research and development, HRM and
management information systems activities
of a business.

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Long-Term Objectives

• Objectives can be defined as specific results


that an organization seeks to achieve in
pursuing its basic mission.
• Strategies represent the actions to be taken to
accomplish long-term objectives.
• Objectives should be challenging, measurable,
consistent, reasonable, and clear.

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Strategies

• Strategies are the means by which long-term


objectives will be achieved.

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Annual Objectives
• Annual objectives are short-term milestones that
organizations must achieve to reach long-term
objectives.
• Like long-term objectives, annual objectives should be
measurable,quantitative,challenging, realistic,
consistent, and prioritized.
• Annual objectives are especially important in strategy
implementation, whereas long-term objectives are
particularly important in strategy formulation.

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Policies
• Policies are the means by which annual objectives
will be achieved.
• Policies include guidelines, rules, and procedures
established to support efforts to achieve stated
objectives.
• Policies are guides to decision making and address
repetitive or recurring situations.
• Policies can be established at the corporate level and
apply to an entire organization, at the divisional level
and apply to a single division or at the functional
level and apply to particular operational activities or
departments.
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Key Reference

• Chapter 02 - Thompson and Strickland,


Strategic Management: Concept and Cases
(12th Edition), McGraw Hill.

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Thank You
Chapter Roundup and Discussions

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