Chapter 1 - Strategic Management and Business Policy
UPDATED ACTUAL Questions and CORRECT Answers
Strategic Management Set of managerial decisions and actions that help determine the long-term
performance of an organization.
Four Phases of Strategic Management 1: Basic financial planning
2: Forecast-based planning
3: Externally oriented (strategic) planning
4: Strategic management
Basic financial planning Little analysis is done by managers, sales force provides external info. Time
horizon is usually one year.
Forecast based planning Managers propose 5 year plans; political as managers compete for larger shares
of limited funds. Time horizon 3 to 5 years.
Externally oriented (strategic) planning Top management takes control. Planning concentrated in planning staff. Formal
strategy formulation, leaves implementation to lower-management levels. top-
down
Strategic management Top management forms groups with people of all levels. Plans at this point detail
implementation, evaluation and control issues.
For success in long-run companies must... execute current activities to satisfy an existing market and adapt those activities to
satisfy new and changing markets
3 benefits of strategic management -Clearer sense of strategic vision for firm
-Sharper focus on what is strategically important
-Improved understanding of a rapidly changing environment
John Elkington - Triple Bottom Line (sustainability) 1. Traditional Profit/Loss
2. People Account - The social responsibility of the organization
3. Planet Account - the environmental responsibility of the organization
Population Ecology suggests that once an organization is successfully established in a particular
environmental niche, it is unable to adapt to changing conditions
Institution theory organizations can and do adapt to changing conditions by imitating other
successful organizations
Strategic choice perspective not only do organizations adapt to a changing environment, but they also have
the opportunity and power to reshape their environment
Organizational learning theory organization adjusts to changing environment and uses knowledge to fit between
itself and its environment
UPDATED ACTUAL Questions and CORRECT Answers
Strategic Management Set of managerial decisions and actions that help determine the long-term
performance of an organization.
Four Phases of Strategic Management 1: Basic financial planning
2: Forecast-based planning
3: Externally oriented (strategic) planning
4: Strategic management
Basic financial planning Little analysis is done by managers, sales force provides external info. Time
horizon is usually one year.
Forecast based planning Managers propose 5 year plans; political as managers compete for larger shares
of limited funds. Time horizon 3 to 5 years.
Externally oriented (strategic) planning Top management takes control. Planning concentrated in planning staff. Formal
strategy formulation, leaves implementation to lower-management levels. top-
down
Strategic management Top management forms groups with people of all levels. Plans at this point detail
implementation, evaluation and control issues.
For success in long-run companies must... execute current activities to satisfy an existing market and adapt those activities to
satisfy new and changing markets
3 benefits of strategic management -Clearer sense of strategic vision for firm
-Sharper focus on what is strategically important
-Improved understanding of a rapidly changing environment
John Elkington - Triple Bottom Line (sustainability) 1. Traditional Profit/Loss
2. People Account - The social responsibility of the organization
3. Planet Account - the environmental responsibility of the organization
Population Ecology suggests that once an organization is successfully established in a particular
environmental niche, it is unable to adapt to changing conditions
Institution theory organizations can and do adapt to changing conditions by imitating other
successful organizations
Strategic choice perspective not only do organizations adapt to a changing environment, but they also have
the opportunity and power to reshape their environment
Organizational learning theory organization adjusts to changing environment and uses knowledge to fit between
itself and its environment
