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GBA 490 chapter 2 notes

by: Sody Gentry

GBA 490 chapter 2 notes GBA 490

Sody Gentry

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chapter 2 notes will be included in exam 1
Strategic Management
Joyce L. Meyer
Class Notes
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This 4 page Class Notes was uploaded by Sody Gentry on Sunday September 11, 2016. The Class Notes belongs to GBA 490 at University of Alabama - Tuscaloosa taught by Joyce L. Meyer in Fall 2016. Since its upload, it has received 5 views. For similar materials see Strategic Management in Business at University of Alabama - Tuscaloosa.


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Date Created: 09/11/16
CH 2 CHARTING A COMPANY’S DIRECTION: Its Vision, Mission, Objectives, and Strategy What does the strategy-making, strategy-executing process entail? 1. Developing a strategic vision, a mission statement, and a set of core values.  Strategic vision describes “where we are going” management’s aspirations for the company and the course direction charted to achieve them o Delineates management’s future aspirations for the firm to its stakeholders.  Mission statement: “who we are, what we do, and why we are here.” o Uses specific language to give the firm its own unique identity. o Describes the firm’s current business and purpose  A company’s core 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 2. Setting objectives for measuring the firm's performance and tracking its progress.  The Purpose of Setting Objectives: To convert the vision and mission into specific, measurable, timely performance targets.  Specific, measurable, deadline for achievement, challenging/motivating  Setting stretch objectives promotes better overall performance 3. Vision: the future 4. Executing the strategy  Converting strategic plans into actions requires: 1. Directing organizational action. 2. Motivating people. 5. Evaluating performance and initiating corrective adjustments A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.  Indicates firm’s intent to making quantum gains  Involves establishing a grandiose performance target  Entails sustained, aggressive actions Short-Term Objectives: Many business operators will set a short term objective for their staf in order to assist them in moving gradually toward the company's longer term goals. Long-Term Objectives: Performance goals of an organization, intended to be achieved over a period of five years or more  Long-term objectives usually include specific improvements in the organization's competitive position, technology leadership, profitability, return on investment, employee relations and productivity, and corporate image. Financial Objectives  Communicate top management’s goals for financial performance. Examples:  An x percent increase in annual revenues  Annual increases in after-tax profits of x percent  Annual increases in earnings per share of x percent  Annual dividend increases of x percent  Profit margins of x percent  An x percent return on capital employed (ROCE) or return on shareholders’ equity investment (ROE)  Increased shareholder value—in the form of an upward-trending stock price  Bond and credit ratings of x  Internal cash flows of x dollars to fund new capital investment Strategic Objectives  Are the firm's goals related to marketing standing and competitive position. Examples:  Winning an x percent market share  Achieving lower overall costs than rivals  Overtaking key competitors on product performance or quality or customer service  Deriving x percent of revenues from the sale of new products introduced within the next five years  Having broader or deeper technological capabilities than rivals  Having a wider product line than rivals  Having a better-known or more powerful brand name than rivals  Having stronger national or global sales and distribution capabilities than rivals  Consistently getting new or improved products and services to market ahead of rivals A balanced scorecard measures a firm’s optimal performance  Tracks both measures Good financial performance is not enough:  Lagging indicators- a financial sign that becomes apparent only after a large economic shift has taken place  Stretch strategic objectives: That cannot be achieved by incremental or small improvements but require extending oneself to the limit to be actualized.  Leading indicator: Measurable factors of economic performance that change before the underlying economic cycle starts to follow a particular direction or trend. Strategy making involves managers at all organizational levels  Chief Executive Officer (CEO) o Ultimate responsibility  Senior Executives o In charge of diferent subsidiaries  Managers of subsidiaries, divisions, geographic regions, plants, and other operating units (and key employees with specialized expertise) Corporate level  business level  functional level  operational level Obligations of the Board of Directors:  Oversee the firm’s financial accounting and reporting practices compliance with the Sarbanes-Oxley Act.  Critically appraise the firm’s direction, strategy, and business approaches.


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