Strategic short notes


Published on

Published in: Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Strategic short notes

  1. 1. 1Short Notes: Mgt 603STRATEGIC MANAGEMENTLecture No. 23 Strategy Analysis And ChoiceStrategic Management: Concepts and Cases. 9th editionFred R. DavidPowerPoint Slides by Anthony F. Chelte Western New England CollegeChapter Outline• The Nature of Strategy Analysis and Choice• A Comprehensive Strategy-Formulation Framework• The Input Stage• The Matching Stage• The Decision Stage• Cultural Aspects of Strategy Choice• The Politics of Strategy Choice• The Role of a Board of DirectorsStrategy Analysis & ChoiceWhether it’s broke or not, fix it—make it better. Not just products, but the whole company if necessary.- Bill SaporitoStrategy Analysis & ChoiceStrategic analysis and choice largely involves making subjective decisions based on objective information. information.The Nature of Strategy Analysis and Choice –– Establishing long-term objectives– Generating alternative strategies– Selecting strategies to pursue– Best alternative to achieve mission and objectivesAlternative strategies derive from –– Vision– Mission– Objectives– External audit– Internal audit– Past successful strategiesParticipation in generating alternative strategies should be broad –Stage 1: The Input StageStage 2: The Matching StageStage 3: The Decision StageFormulation Framework
  2. 2. 2Short Notes: Mgt 603 Internal Factor Evaluation Matrix (IFE) External Factor Evaluation Stage 1: Matrix (EFE)The Input Stage Competitive Profile Matrix Formulation Framework TOWS Matrix SPACE Matrix Stage 2: BCG MatrixThe Matching Stage IE Matrix Grand Strategy MatrixMatching Key Factors to Formulate Alternative Strategies Key Internal Factor Key External Factor Resultant Strategy 20% annual growth in theExcess working capacity + cell phone industry = Acquire Cellfone, Inc.(strength) (opportunity) Exit of two major foreign Pursue horizontal integrationInsufficient capacity + competitors form the = by buying competitors(weakness) industry (opportunity) facilities Decreasing numbers of Develop new products forStrong R&D (strength) + = young adults (threat) older adultsPoor employee morale Develop a new employee + Strong union activity =(weakness) (threat) benefits packageStrategy-Formulation Analytical FrameworkFormulation Framework
  3. 3. 3Short Notes: Mgt 603 Stage 3: Quantitative Strategic Planning MatrixThe Decision Stage (QSPM)Input Stage• Provides basic input information for the matching and decision stage matrices• Requires strategists to quantify subjectivity early in the process• Good intuitive judgment always neededMatching Stage• Match between organization’s internal resources and skills and the opportunities and organization’risks created by its external factors.Matching Key Factors to Formulate Alternative StrategiesLecture No. 24Matching StageTOWS Matrix– Threats– Opportunities– Strengths– WeaknessesDevelop four types of strategies– Strengths-Opportunities (SO)– Weaknesses-Opportunities (WO)– Strengths-Threats (ST)– Weaknesses-Threats (WT) 1. SO Strategies Use a firm’s internal strengths to take advantage of external opportunities 2. WO Strategies Improving internal weaknesses by taking advantage of external opportunities 3. ST Strategies Using firm’s strengths to avoid or reduce the impact of external threats. 4. WT Strategies Defensive tactics aimed at reducing internal weaknesses and avoiding environmental threats. 5. TOWS MatrixSteps in developing the TOWS Matrix – List the firm’s key external opportunities – List the firm’s key external threats – List the firm’s key internal strengths
  4. 4. 4Short Notes: Mgt 603 – List the firm’s key internal weaknessesTOWS MatrixDeveloping the TOWS Matrix• Match internal strengths with external opportunities and record the resultant SO Strategies• Match internal weaknesses with external opportunities and record the resultant WO Strategies• Match internal strengths with external threats and record the resultant ST Strategies• Match internal weaknesses with external threats and record the resultant WT Strategies Leave Blank Strengths-S Weaknesses-W List Strengths List Weaknesses Opportunities-O SO Strategies WO Strategies List Opportunities Use strengths to take Overcome weaknesses advantage of opportunities by taking advantage of opportunities Threats-T ST Strategies WT Strategies List Threats Use strengths to avoid Minimize weaknesses threats and avoid threatsLecture No, 25-26Formulation FrameworkSPACE MatrixStrategic Position and Action Evaluation Matrix Four quadrant framework Determines appropriate strategies  Aggressive  Conservative  Defensive  CompetitiveTwo Internal Dimensions  Financial Strength [FS]  Competitive Advantage [CA]Two External Dimensions  Environmental Stability [ES]  Industry Strength [IS]Overall Strategic position determined by: – Financial Strength [FS] – Competitive Advantage [CA] – Environmental Stability [ES]
  5. 5. 5Short Notes: Mgt 603 – Industry Strength [IS]Developing the SPACE Matrix:• EFE Matrix• IFE Matrix• Financial Strength• Competitive Advantage• Environmental Stability• Industry Strength• Select variables to define FS, CA, ES, & IS• Assign numerical ranking from +1 (worst) to +6 (best) for FS and IS; Assign numerical ranking from –1 (best) to –6 (worst) for ES and CA.• Compute average score for FS, CA, ES, & IS• Plot the average scores on the Matrix• Add the two scores on the x-axis and plot point on X. Add the scores on the y-axis and plot Y. Plot the intersection of the new xy point.• Draw a directional vector from origin through the new intersection point.• SPACE FactorsInternal Strategic Position External Strategic PositionFinancial Strength (FS) Environmental Stability (ES)Return on investment Technological changesLeverage Rate of inflationLiquidity Demand variabilityWorking capital Price range of competing productsCash flow Barriers to entryEase of exit from market Competitive pressureRisk involved in business Price elasticity of demand Internal Strategic Position External Strategic PositionCompetitive Advantage CA Industry Strength (IS)Market share Growth potentialProduct quality Profit potentialProduct life cycle Financial stabilityCustomer loyalty Technological know-howCompetition’s capacity utilization Resource utilizationTechnological know-how Capital intensifyControl over suppliers & distributors Ease of entry into market Productivity, capacity utilizationSPACE Matrix
  6. 6. 6Short Notes: Mgt 603 FS Conservative +6 Aggressive +5 +4 +3 +2 +1CA IS -6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6 -2 -3 -4 -5 Defensive -6 Competitive ESLecture No. 27-28BCG MatrixBoston Consulting Group Matrix• Enhances multidivisional firms’ efforts to formulate strategies• Autonomous divisions (or profit centers) constitute the business portfolio• Firm’s divisions may compete in different industries requiring separate strategyBoston Consulting Group Matrix• Graphically portrays differences among divisions• Focuses on market share position and industry growth rate• Manage business portfolio through relative market share position and industry growth rateRelative market share position defined:• Ratio of a division’s own market share in a particular industry to the market share held by the largest rival firm in that industry.BCG Matrix Relative Market Share Position High Medium Low 1.0 .50 0.0 High +20 Stars Question Marks II IMedium 0 Cash Cows Dogs III IV Low -20• Question Marks• Stars• Cash Cows
  7. 7. 7Short Notes: Mgt 603• DogsQuestion Marks • Low relative market share position yet compete in high-growth industry. • Cash needs are high • Case generation is low • Decision to strengthen (intensive strategies) or divestStars • High relative market share and high industry growth rate. • Best long-run opportunities for growth and profitability • Substantial investment to maintain or strengthen dominant position • Integration strategies, intensive strategies, joint venturesCash Cows • High relative market share position, but compete in low-growth industry • Generate cash in excess of their needs • Milked for other purposes • Maintain strong position as long as possible • Product development, concentric diversification • If becomes weak—retrenchment or divestitureDogs • Low relative market share position and compete in slow or no market growth • Weak internal and external position • Decision to liquidate, divest, retrenchmentLecture No. 29-30Grand Strategy Matrix• Popular tool for formulating alternative strategies• All organizations (or divisions) can be positioned in one of four quadrants• Based on two evaluative dimensions: – Competitive position – Market growth
  8. 8. 8Short Notes: Mgt 603 RAPID MARKET GROWTH Quadrant II Quadrant IMarket development Market developmentMarket penetration Market penetrationProduct development Product developmentHorizontal integration Forward integrationDivestiture Backward integrationLiquidation Horizontal integration Strong Postion Quadrant III Quadrant IV Concentric diversificationRetrenchment Concentric diversificationConcentric diversification Horizontal diversificationHorizontal diversification Conglomerate diversificationConglomerate diversification Joint venturesLiquidation SLOW MARKET GROWTHQuadrant I • Excellent strategic position • Concentration on current markets and products • Take risks aggressively when necessaryQuadrant II • Evaluate present approach seriously • How to change to improve competitiveness • Rapid market growth requires intensive strategyQuadrant III • Compete in slow-growth industries • Weak competitive position • Drastic changes quickly • Cost and asset reduction indicated (retrenchment)Quadrant IV • Strong competitive position • Slow-growth industry • Diversification indicated to more promising growth areas Stage 3: The Decision Stage Quantitative Strategic Planning Matrix (QSPM)Quantitative Strategic Planning Matrix• Only technique designed to determine the relative attractiveness of feasible alternative actions• Tool for objective evaluation of alternative strategies
  9. 9. 9Short Notes: Mgt 603• Based on identified external and internal crucial success factors• Requires good intuitive judgment• List the firm’s key external opportunities & threats; list the firm’s key internal strengths and weaknesses• Assign weights to each external and internal critical success factor• Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing• Determine the Attractiveness Scores (AS)• Compute the total Attractiveness Scores• Compute the Sum Total Attractiveness ScoreQSPMLimitations:• Requires intuitive judgments and educated assumptions• Only as good as the prerequisite inputsPositives:• Sets of strategies examined simultaneously or sequentially• Requires the integration of pertinent external and internal factors in the decision-making processLecture No. 31Chapter Outline• The nature of Strategy Implementation• Annual Objectives• Policies• Resource Allocation• Managing Conflict• Matching Structure with Strategy• Restructuring, Reengineering, and E-Engineering• Linking Performance and Pay to Strategies• Managing Resistance to Change• Managing the Natural Environment• Creating a Strategy-Supportive Culture• Production/Operations Concerns When Implementing Strategies• Human Resource Concerns When Implementing StrategiesImplementing Strategies: Management IssuesPretend that every single person you meet has a sign around his or her neck that says, “Make me feel important.” -- Mary Kay Ash, CEO of Mary Kay, Inc.Management Issues• Annual Objectives• Policies• Resources• Organizational structure
  10. 10. 10Short Notes: Mgt 603• Restructuring• Rewards/Incentives• Resistance to Change• Managers & strategy• Supportive culture• Production/operations• Human resources• DownsizingContrasting strategy formulation and strategy implementation– Formulation is positioning forces before the action– Implementation is managing forces during the actionContrasting strategy formulation and strategy implementation– Formulation focuses on effectiveness– Implementation focuses on efficiency– Formulation is primarily an intellectual process– Implementation is primarily an operational process– Formulation requires good intuitive and analytical skills– Implementation requires special motivation and leadership skills– Formulation requires coordination among a few individuals– Implementation requires coordination among many personsStrategy implementation –– Varies among different types and sizes of organizationsStrategy implementation Actions –– Altering sales territories– Adding new departments– Closing facilities– Hiring new employees– Cost-control procedures– Changing advertising strategies– Building new facilitiesFormulation to Implementation transition –– Shift in responsibility • From strategists to division and functional managers1. Management Issues2. Management Issues (continued)3. Annual Objectives• Decentralized activity• Involves all managers in the firmAnnual Objectives• Basis for allocating resources
  11. 11. 11Short Notes: Mgt 603• Primary mechanism for evaluating managers• Major instrument for monitoring progress toward long-term objectives• Establish organizational, divisional, and departmental priorities• Horizontal consistency of objectives• Vertical consistency of objectivesObjectives should state – – Quantity – Quality – Cost – TimePoliciesPolicies facilitate solving recurring problems and guide the implementation of strategyPolicies set – – Boundaries – Constraints – LimitsExample Issues requiring management policy -- – To offer extensive or limited management development workshops and seminars – To centralize or decentralize employee-training activities – To recruit through employment agencies, college campuses, and/or newspapers – To promote from within or hire from the outside – To establish a high- or low-safety stock of inventory – To buy lease, or rent new production equipmentLecture No. 32Resource Allocation –A central management activity that allows for strategy executionFour types of resources – • Financial resources • Physical resources • Human resources • Technological resourcesManaging ConflictConflict –Disagreement between two or more parties on one or more issues• Conflict is not always “bad” “bad”• Absence of conflict– Signal indifference or apathy• Can energize opposing groups to action
  12. 12. 12Short Notes: Mgt 603• May help managers identify problemsConflict Management and Resolution– Avoidance– Defusion– ConfrontationMatching Structure with Strategy 1. Changes in Strategy 2. Changes in Structure• Structure largely dictates how objectives and policies will be established.• Structure dictates how resources will be allocatedChandler’s Strategy-Structure Relationship OrganizationalNew strategy New administrative performanceIs formulated problems emerge declines Organizational New organizational performance structure is established improvesLecture No. 33Basic Forms of Structure 1. Functional Structure Groups tasks and activities by business function 2. Divisional Structure Decentralized and organized by geography, product, customer, or process 3. Strategic Business Unit Structure (SBU) Groups similar divisions; delegates authority and responsibility to SBU executive 4. Matrix Structure Most complex of all designs. Depends upon both vertical and horizontal flows of authority and communicationLecture No. 34Restructuring –Reducing the size of the firm in terms of number of employees, divisions, or units, and thenumber of hierarchical levels in the firm’s organizational structureAlso called – – Downsizing – Rightsizing – Delayering• Employed when ratios out of line with benchmarked competitors
  13. 13. 13Short Notes: Mgt 603• Primary benefit sought is cost reductionReengineeringInvolves reconfiguring or redesigning work, jobs, and processes to improve cost, quality, serviceand speed.ReengineeringAlso called – – Process management – Process innovation – Process redesignConcerned more with employee and customer well-being than shareholder well-beingLinking Performance and Pay to StrategiesMost companies practicing pay-for-performance• Dual bonus system becoming more common– Based on both annual objectives and long-term objectives• Profit Sharing– Incentive compensation used by 30% of companies• Gain Sharing– Performance targets set for employees or departmentsTests for Performance-Pay Plans 1. Does the plan capture attention? 2. Do employees understand the plan? 3. Is the plan improving communication? 4. Does the plan pay out when it should? 5. Is the company or unit performing better?Managing Resistance to ChangeChange raises anxiety over fear of:– Economic loss– Inconvenience– Uncertainty– Break in status-quoResistance to change –– Single greatest threat to successful strategy implementationChange Strategies• Force Change Strategy• Educative Change Strategy• Rational or Self-Interest Change StrategyManaging the Natural Environment• Wide appreciation for firms that conduct operations that “mend” rather than “harm” the “mend” “harm”environment.Creating a Strategy-Supportive Culture
  14. 14. 14Short Notes: Mgt 603Strategists should strive to preserve, emphasize, and build upon aspects of existing culture that support new strategies.Elements linking culture to strategy:• Formal statements of philosophy, charters, etc. used for recruitment and selection, and socialization• Designing of physical spaces, facades, buildings• Deliberate role modeling, teaching and coaching• Explicit reward and status system, promotion criteria• Stories, legends, myths about key people and events• What leaders pay attention to, measure and control• Leader reactions to critical incidents and crises• How the organization is designed and structured• Organizational systems and procedures• Criteria used for recruitment, selection, promotion, retirementLecture No. 35Production/Operations Concerns• Production processes typically constitute more than 70% of firm’s total assets• Decisions on: – Plant size – Inventory/inventory control – Quality control – Cost control – Technological innovationHuman Resource Concerns• Assessing staffing needs and costs• Develop performance incentives• ESOPs• Child-care policies• Work-life balanceLecture No. 36-37Marketing variables affect success or failure of strategy implementation• Market Segmentation• Production PositioningMarketing Decisions requiring polices –– Use exclusive dealerships or multiple channels of distribution– Use heavy, light, or no TV advertising– Limit (or not) the share of business done with a single customer– Be a price leader or price follower– Offer a complete or limited warranty– Reward salespeople based on straight commission or combination salary/commission
  15. 15. 15Short Notes: Mgt 603• Subdividing of a market into distinct subsets of customers according to needs and buyinghabits• Widely used in implementing strategies• Small and specialized firmsMarket Segmentation Important Variable:• Market and product development, market penetration, and diversification require increased sales through new markets or products• Firm can operate with limited resources. Enables a small firm by maximizing per-unit profits and per-segment sales.• Segmentation decisions directly affect marketing mix variables: - Product, place, promotion, and priceMarketing Mix – Component FactorsBases for Segmenting Markets –z• Geographic• Demographic• Psychographic• BehavioralGeographic Basis: – Region – County Size – City or SMSA size – Density – ClimateDemographic Basis: – Age – Family Size – Family Life Cycle – Income Occupation – Education – Religion – Race NationalityPsychographic Basis: – Social Class – Lifestyle – PersonalityBehavioral Basis: – Use occasion – Benefits sought – User status – Usage rate – Loyalty status
  16. 16. 16Short Notes: Mgt 603 – Readiness Stage – Attitude toward productDeveloping schematic representations that reflect how products or services compare tocompetitors’ on dimensions most important to success in the industryProduct Positioning based on: – Customers wants – Customers needsProduct Positioning Steps1. Select Key Criteria2. Diagram Map3. Plot competitors’ products4. Look for niches5. Develop Marketing PlanProduct Positioning Map Rental Car Market •Firm 1 Firm 2 • • Firm 3 Low ConvenienceProduct Positioning Map as Strategy-Implementation Tool— – Look for vacant niche – Avoid sub-optimization – Don’t serve 2 segments with same strategy – Don’t position in the middle of the mapLecture No. 38Finance/Accounting IssuesCentral to Strategy Implementation –– Acquiring needed capital– Developing pro forma financial statements– Preparing financial budgets– Evaluating worth of a business
  17. 17. 17Short Notes: Mgt 603Finance/Accounting IssuesAcquiring Capital to Implement Strategies –• Basic sources of capital:– Debt– EquityDebt vs. Equity Decisions –• EPS/EBIT analysis– Earnings per share/Earnings before interest and taxesPro Forma Financial Statements -• Allows an organization to examine the expected results of various actions andapproaches6 Steps in Pro Forma Financial Analysis• Prepare income statement before balance sheet (forecast sales)• Use percentage-of-sales method to project CGS and expenses• Calculate projected net income• Subtract dividends to be paid from Net Income and add remaining to Retained Earnings• Project balance sheet times beginning with retained earnings• List comments (remarks) on projected statementsFinancial Budget –Document that details how funds will be obtained and spent for a specified period of time.Types of Budgets – – Cash budgets – Operating budgets – Sales budgets – Profit budgets – Factory budgets – Capital budgets – Expense budgets – Divisional budgets – Variable budgets – Flexible budgets – Fixed budgetsEvaluating Worth of a BusinessCentral to strategy implementation as integrative, intensive and diversification strategies areoften implement through acquisitions of other firms.Evaluating Worth of a Business3 Basic approaches:1. What a firm owns2. What a firm earns3. What a firm will bring in the market
  18. 18. 18Short Notes: Mgt 603Lecture No. 39Same above given in chapter 38Central to Strategy Implementation –Evaluating Worth of a Business3 Basic approaches: TillDecisions Requiring Finance/Accounting Policies1. Raise capital w/ short-term, long-term preferred or common stock2. Lease or buy fixed assets3. Determine an appropriate dividend payout ratio4. Use LIFO, FIFO, or market-value accounting approach5. Extend time of accounts receivable6. Establish percentage discount on accounts for terms7. Determine the amount of cash kept on handLecture No. 40Systematic Review, Evaluation & Control –– Strategies become obsolete– Internal environments are dynamic– External environments are dynamic• Strategy evaluation is vital to the organization’s well-being• Alert management to potential or actual problems in a timely fashion• Erroneous strategic decisions can have severe negative impact on organizations3 Basic Activities – • Examining the underlying bases of a firms’ strategy • Comparing expected to actual results • Corrective actions to ensure performance conforms to plansStrategy evaluation –– Complex and sensitive undertaking– Overemphasis can be costly and counterproductiveIn many organizations, evaluation is an appraisal of performance –• Have assets increased?• Increase in profitability?• Increase in sales?• Increase in productivity?• Profit margins, ROI and EPS ratios increased?Four Criteria (Richard Rummelt):• Consistency• Consonance• Feasibility
  19. 19. 19Short Notes: Mgt 603• AdvantageConsistency– Strategy should not present inconsistent goals and policies. • Conflict and interdepartmental bickering symptomatic of managerial disorder and strategic inconsistencyConsonance– Need for strategies to examine sets of trends • Adaptive response to external environment • Trends are results of interactions among other trendsFeasibility– Neither overtax resources or create unsolvable sub-problems • Organizations must demonstrate the abilities, competencies, skills and talents to carry out a given strategyAdvantage– Creation or maintenance of competitive advantage • Superiority in resources, skills, or positionDifficulty in strategy evaluation –• Increase in environment’s complexity• Difficulty predicting future with accuracy• Increasing number of variablesDifficulty in strategy evaluation –• Rate of obsolescence of plans• Domestic and global events• Decreasing time span for planning certaintyStrategy evaluation should – – Initiative managerial questioning – Trigger review of objectives and values – Stimulate creativity in generating alternativesLecture No. 41Porter Supply Chain ModelThe Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive advantage.The activities of the Value Chain• Primary activities (line functions)
  20. 20. 20Short Notes: Mgt 603• Support activities (Staff functions, overhead)Primary activities (line functions)• Inbound Logistics• Operations• Outbound Logistics• Marketing and Sales• ServiceSupport activities (Staff functions, overhead)• Firm Infrastructure• Technology Development• Human Resource Management• ProcurementCreating a cost advantage based on the value chain• A firm may create a cost advantage:• By reducing the cost of individual value chain activities, or• By reconfiguring the value chain.10 cost drivers related to value chain activities• Economies of scale• Learning• Capacity utilization• Linkages among activities• Interrelationships among business units• Degree of vertical integration• Timing of market entry• Firms policy of cost or differentiation• Geographic location• Institutional factors (regulation, union activity, taxes, etc.).Lecture No. 42Same in above chapterFour Criteria (Richard Rummelt):Strategy evaluation should –Lecture No. 43Review of underlying bases of strategy – – Develop revised EFE Matrix
  21. 21. 21Short Notes: Mgt 603 – Develop revised IFE MatrixReview effectiveness of strategy –• Competitors’ reaction to strategy• Competitors’ change in strategy• Competitors’ changes in strengths and weaknesses• Reasons for competitors’ strategic change• Reasons for competitors’ successful strategies• Competitors’ present market positions and profitability• Potential for competitor retaliation• Potential for cooperation with competitorsMonitor Threats and Opportunities and Weaknesses and Strengths• Are our internal strengths still strengths?• Have we added additional strengths?• Are our weaknesses still weaknesses?• Have we other internal weaknesses?• Are opportunities still opportunities?• Other external opportunities?• Are threats still threats?• Are there other threats?• Are we vulnerable to a hostile takeover? Evaluation Framework I. Review Underlying Bases Differences? Yes NO III. II. Measure Firm Take Performance Corrective Actions Differences? Yes NO Continue present courseLecture No. 44• Comparing expected to actual results• Investigating deviations from plan
  22. 22. 22Short Notes: Mgt 603• Evaluating individual performance• Progress toward stated objectivesQuantitative criteria for strategy evaluation – – Financial Ratios: • Compare performance over different periods • Compare performance to competitors • Compare performance to industry averagesKey Financial Ratios – – Return on investment – Return on equity – Profit margin – Market share – Debt to equity – Earnings per share – Sales growth – Asset growthQualitative evaluation of strategy - – Internal consistency of strategy – Consistency of strategy with environment – Strategy appropriate in view of resources – Acceptable degree of risk – Appropriate time frame – Workability of the strategyLecture No. 45Basic requirements for effective strategy evaluation – – Economical – Meaningful – Generate useful information – Timely information – Provide a true picture of what is happeningStrategy-Evaluation Assessment Matrix
  23. 23. 23 Have major Have majorShort Notes: Mgt 603 changes changes occurred in occurred in Has the firm the firm’s the firm’s progressed internal external satisfactorily toward strategic strategic achieving its stated position? position? objectives? Result No No No Corrective actions Yes Yes Yes Corrective actions Yes Yes No Corrective actions Yes No Yes Corrective actions Yes No No Corrective actions No Yes Yes Corrective actions No Yes No Corrective actions No No Yes Continue coursePremise of sound strategic management – – Planning to deal with unfavorable and favorable events before they occur.Contingency Planning – – Alternative plans that can be put into effect if certain key events do not occur as expected• Financial audits to determine correspondence between assertions based on strategic plans and established criteria• Environmental audits to insure sound and safe practices.