Chapter 1 Review Questions

1. How does strategy and sustainable competitive advantage relate

to each other?
2. What are the five general strategy approach?
3. What are the two elements of a business model?
4. What are the three tests of a winning strategy?

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 CHAPTER 2
Strategy formulation, execution and governance
Learning Objectives
1. Understand why it is critical for managers to have a clear
strategic vision of where the company needs to head.
2. Explain the importance of setting both strategic and financial
objectives.
3. Explain why the strategic initiatives taken at various
organizational levels must be tightly coordinated.
4. Recognize what a company must do to execute its strategy
proficiently.
5. Comprehend the role and responsibility of a company’s board of
directors in overseeing the strategic management process.

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The strategy formulation and
execution process

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Core Concept: Strategic Vision
•Astrategic vision describes management’s aspirations for the
company’s future and the course and direction charted to achieve
them.

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Developing a strategic vision
• Delineates management’s aspirations for the firm to its
stakeholders.
• Provides direction: “where we are going.”
• Sets forth a compelling rationale (strategic soundness) for
the firm’s direction.
• Uses distinctive and specific language to set the firm apart
from its rivals.

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Developing a strategic vision

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 Effective Short-
Company Vision Statement Elements comings
Whole Whole Foods Market is a dynamic leader in the quality food business. We are a • Forward-looking • Long
mission-driven company that aims to set the standards of excellence for food retailers. • Graphic • Not
Foods We are building a business in which high standards permeate all aspects of our • Focused memorable
company. Quality is a state of mind at Whole Foods Market. • Desirable
Our motto—Whole Foods, Whole People, Whole Planet—emphasizes that our vision
reaches far beyond just being a food retailer. Our success in fulfilling our vision is
measured by customer satisfaction, team member happiness and excellence, return on
capital investment, improvement in the state of the environment and local and larger
community support.
Our ability to instill a clear sense of interdependence among our various stakeholders
(the people who are interested and benefit from the success of our company) is
contingent upon our efforts to communicate more often, more openly, and more
compassionately. Better communication equals better understanding and more trust.
Dr. Pepper A leading producer and distributor of hot and cold beverages to satisfy every consumer • Focused • Not graphic
need, anytime and anywhere. • Desirable • Not distinctive
• Easy to
communicate
Caterpillar Our vision is a world in which all people’s basic needs—such as shelter, clean water, • Graphic • Too broad
sanitation, food and reliable power—are fulfilled in an environmentally sustainable • Desirable • Too reliant on
way and a company that improves the quality of the environment and the communities superlatives
where we live and work. • Not distinctive
Nike NIKE, Inc., fosters a culture of invention. We create products, services and experiences • Forward-looking • Vague
for today’s athlete* while solving problems for the next generation. • Flexible • Not focused
• Too reliant on
superlatives

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Essence of the vision in a slogan
• Disney
• To "create happiness by providing the finest in entertainment for people
of all ages, everywhere."
• The Mayo Clinic
• The best care to every patient every day.
• Greenpeace
• To halt environmental abuse and promote environmental solutions.

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Vision vs Mission Statement
•A strategic vision concerns a •Afirm’s mission statement
firm’s future strategic course focuses on its present
— business scope and purpose—
“where we are headed and our “who we are, what we do, and
future focus.” why we are here.”
• Current product and service
• Markets to be pursued. offerings.
• Future product, market, • Customer needs being
customer and technology focus. served.
• Company identity.

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Core Concept: Mission Statement
•Awell-conceived mission statement conveys a company’s
purpose in language specific enough to give the company its
own identity.

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Sample Mission Statements

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An Ideal Mission Statement
• Identifies the company’s product or services.
• Specifies the buyer needs it seeks to satisfy.
• Identifies the customer groups or markets it is endeavoring
to serve.
• Givesthe company its own identity that sets the company
firm apart from its rivals.
• Clarifies
the firm’s purpose and business makeup to
stakeholders.

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Core Concept: Values
•Acompany’s values are the beliefs, traits, and behavioral norms
that its personnel are expected to display in conducting the
company’s business and pursuing its strategic vision and mission.

• Fair treatment
• Honor and integrity
• Ethical behavior
• Innovativeness
• Teamwork
• A passion for excellence
• Social responsibility
• Community citizenship

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Illustration: IKEA
• Vision: create a better everyday
life for the many people
• Mission:offer a wide range of well-
designed, functional home
furnishing products at prices so
low that as many people as
possible will be able to afford
them
• Corevalues (8): togetherness,
cost-consciousness, caring for
people and planet, simplicity,
renew and improve, different with
a meaning, giving and take
responsibility, lead by example
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Exercise: Crafting Mission and
Vision Statement
• Now that you’ve developed and pitched your business idea in the
Shark Tank assignment, it’s time to solidify your company’s
strategic foundation. A well-crafted mission and vision statement
can guide your business’s growth and clearly communicate your
goals to stakeholders.
• Instructions:

• Mission Statement
Write a concise mission statement (1-2 sentences) that captures:
• What your business does: The core product or service you offer.
• Whom you serve: Your primary customers or target market.
• Why you do it: The purpose or value your business brings to society.

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• Vision Statement
Craft an aspirational vision statement (1-2 sentences) that reflects:
• Where you see your company in the future: Your long-term goals
and ambitions.
• What impact you want to have: How your business will shape its
industry or community.
• Yourmission and vision statements should reflect the unique
qualities of your business idea from the Shark Tank assignment.
• Be creative but realistic. Use clear and impactful language that
aligns with your company’s values and goals.

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