6.1

This section distinguishes among strategy, strategic management, and strategic planning. We describe three reasons why strategic management and strategic planning are important and how they may work for both large and small firms.

business plan, a document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success.

strategy is a large-scale action plan that sets the direction for an organization.

Strategic management is a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals.

Why Strategic Management & Strategic Planning Are Important
1. Providing Direction & Momentum
2. Encouraging New Ideas
3. Developing a Sustainable Competitive Advantage

strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.

6.2

The strategic-management process has five steps: Establish the mission and the vision, establish the grand strategy, formulate the strategic plans, carry out those plans, and maintain strategic control. In addition, all the steps may be affected by feedback that enables taking constructive action.

The Five Steps of the Strategic-Management Process Step 1: Establish the Mission & the Vision Step 2: Establish the Grand Strategy Step 3: Formulate Strategic Plans Step 4: Carry Out the Strategic Plans Step 5: Maintain Strategic Control: The Feedback Loop

grand strategy, which, after an assessment of current organizational performance, then explains how the organization's mission is to be accomplished.

A growth strategy is a grand strategy that involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served.

A stability strategy is a grand strategy that involves little or no significant change.

defensive strategy or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts.
Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization's needs.

Putting strategic plans into effect is strategy implementation

Strategic control consists of monitoring the execution of strategy and making adjustments, if necessary.

6.3

To develop a grand strategy, you need to gather data and make projections, using the tools of competitive intelligence, SWOT analysis, and forecasting.

competitive intelligence means gaining information about one's competitors’ activities so that you can anticipate their moves and react appropriately

environmental scanning, careful monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firm's plans.

SWOT analysis—also known as a situational analysis—which is a search for the Strengths, Weaknesses, Opportunities, and Threats affecting the organization.

The SWOT analysis is divided into two parts: inside matters and outside matters—that is, an analysis of internal strengths and weaknesses and an analysis of external opportunities and threats.

organizational strengths—the skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.

organizational weaknesses—the drawbacks that hinder an organization in executing strategies in pursuit of its mission.

organizational opportunities—environmental factors that the organization may exploit for competitive advantage.

organizational threats—environmental factors that hinder an organization's achieving a competitive advantage.

forecast is a vision or projection of the future.

trend analysis is a hypothetical extension of a past series of events into the future.

Contingency planning—also known as scenario planning and scenario