This document defines key terms related to business strategy such as customers, competitors, industries, markets, goals, objectives, missions, visions, and strategies. It discusses developing goals and objectives, crafting a company mission and vision, and using strategic management processes to develop and execute business strategies. Various types of strategies are defined, including low-cost, differentiation, and focused strategies. The external environment a company operates in, including political, economic, social and technological factors, is also summarized.

1. Terms and Definition
Customer – wants and needs
Potentials Customers – lack purchase power
Companies – groups that can provide the wants and needs
of customers
Industry – a group of companies that offer the same
product and services
Competitors – another company in the same industry that
cater to the same needs and wants to the same customer
as the company.
Market – a group of potential customers who have the
same needs and wants
I. Goals and Objectives
Goals – Long term objectives
Objectives – short term performance target. It is
directional and graphic
Long term – beyond 2 years
Short Term – less than 2 years
Performance Targets to Objectives
 When P.T. are SMART
 Specific
 Measurable
 Attainable
 Result Oriented
 Time Bound
Types of Objectives
1. Financial – money
2. Strategic – operations
3. Social – CSR
4. Environment – stewardship
Def. Stewardship – preserve environment for
future generation
II. Mission and Vision
Mission: “ where are we going”
- convey company purpose in a language specific enough
that it gives the company its own identity
Vision: “who are we, what we do, and where are we”
- an organizations performance targets – the results
management wants to achieve
Characteristics of an Effectively Worded Vision Statement
 Graphic – paints a picture of what the company is
trying to create and the market position the
company is striving to strike out
 Directional – forward looking
 Focused – specific enough to provide guidance
 Flexible –
 Feasible – it can be done
 Desirable – why direction is a good
 Easy to communicate
Common Shortcomings of Company VisionStatement
 Vague or incomplete – short on specifics
 Not forward looking
 Too broad
 Bland or uninspiring
 Not distinctive
 To reliant or superlative – does not discuss
strategic course.
ex. A recognized leader, first choice, or global
leader
III. Strategic Management and Business Model
Company Strategy – companies approach to satisfy needs
and wants
Business Model – is the blue print that serves as a guide to
answering needs and wants
Five (5) Generic Strategy
1. Low – Cost Provider
2. Broad Differentiation
3. Focused Low – Cost Strategy
4. Focused Differentiated Strategy
5. Best Cost Provider
Strategy
Cost Differentiation
Market
Broad Broad Low Cost
Broad
Differentiation
Narrow Focused Low Cost
Focused
Differentiation
Best Cost
* Cost Based – ability to reduce cost

2. * Resource Based – resources are an advantage to change.
Companies change attributes/features to be competitive.
Business Models: “Blue Prints”
- sets forth how strategy and operating approaches will
create value, while at the same time generate ample
revenues to cover costs and realize a profit.
Two (2) Elements
1. Customer Value Positioning
2. Profit Formula
Elements to Strategy
1. Action to gain sale and market share
2. Action to respond to changing market conditions
3. Actions to enter new market or exit
4. Action to capture emerging market opportunities
5. Action to strengthen competitiveness
6. Action and approaches used key activities
7. Action to upgrade, build, or acquire resources
Primary Activities: Strategic Management Process
1. Develop mission, vision, and core values
2. Set goals and objectives
3. Craft Strategy to achieve objectives and to move
the company on its intended path
4. Executing Strategies
5. Monitoring development, evaluate performances
and initiate corrective adjustments
IV. Chapter 3 – External Environment
a. Macro Environment –
b. Industry – a group of companies that all cater to
the same wants and needs of the same group of
customers.
a. Macro Environment PESTELD
i. Political
ii. Economic
iii. Sociocultural
iv. Technology
v. Environmental
vi. Legal / Regulatory
vii. Demographic
b. Industry Environment (5 Forces of Competition)
1. Buyer
2. Substitute Products
3. Supplier
4. New Entrants
5. Rivalry among Competing Seller (strongest force)
Three (3) Pressures
1. Buying Power
a. Buyers
b. Suppliers
2. Threats
a. Substitution
b. New Entrants
3. Rivalry
a. Rivals
Three (3) Intensities
1. Weak
2. Mild
3. Strong
V. Chapter 4 – Resources (Assets); Cost Positioning
(Value Chain); Competitive Advantage / Strength
a. Resources
b. Cost Positioning (Value Chain)
- series of activities focused on strategy but not cost based.
 Primary Activities:
a. Supply Chain Management
- activities that involves the purchasing of
materials from supplies
b. Operations
- activities that involvethe conversion of
inputs to outputs.
c. Distribution
d. Sales and Marketing
- activities that brings output (products)
to sources such as outlets.
e. Service
- activities that support sales and
marketing
f. Profit Margin
- Profitability of Industry
measured based on the balance between
demand and supply
- Profitability of Company
measured based on the balance between
sale and cost of goods sold
SCM O D S&M S PM
 Secondary Activities
- backups all the line in the primary activities
a. Research and Development, Technology,
and System Development
b. Human Resource Management
- involves people and labor

3. c. Competitive Advantage
- based on capabilities VRIN Test
a. Valuable
- are the customers willingto buy?
b. Rare
c. Inimitable
- cannot be copied
d. Non Substitutionable
- cannot be replaced
VI. Chapter 5 – Generic Strategy
1. Low – Cost Provider
- cost based advantage
- cost is lower than competitors
2. Broad Differentiation
- differentiate products and service from rivals
through changes in attributes /features
3. Focused Low – Cost Strategy
- niche market focus
cost is lower than competitors
4. Focused Differentiated Strategy
- focused on narrowing buyers and out competing
rivals by offering niche members customized
attributes that meets their taste and requirements
5. Best Cost Provider
- gives customer more value for the money by
satisfying buyers expectation on key qualities /
features / performance / service attribute
VII. Chapter 6 – Supplement / Other Strategy
1. Blue Ocean
 discover or inventing new industry segment
that creates altogether a new demand.
2. Merge and Acquisition
a. Merge – two or more companies merge
into a single company. Often taking a new
name.
b. Acquisition – absorption of one
companies operation to another.
3. Vertical Integrated Strategy
 perform value chain activities along more
than one stage of an industries overall value
chain.
 appeals only if it significantly strengthens a
firm’s competitive position and/or boosts its
profitability
 become a new entrant
a. Backward Integration
- involves performing industry value
chain activities closer to suppliers and
other enterprise involved in earlier stage.
b. Forward Integration
- involves performing industry value
chain activities closer to buyers
c. Vertical Integration
- extends the firm’s competitive and
operating scope within the same industry.
4. Outsourcing
 foregoes attempts to perform certain value
chain activities internally. Instead, company
farms them out to outside specialist and
strategic allies.
5. Alliances
 companies stay as they are
 there is a collaboration between two or more
companies in order to achieve a mutually
beneficial strategic outcomes.
6. Joint Venture
 An independent company controlled equally
by two or more company.
VIII. Chapter 7 – Reasons to go international and Cross
Country Competition.
A. Reason to go international
1. access to new market
2. access to lower cost
3. access resources and capabilities
4. access to lower cost of funds
5. to spread risk across a wider market base
B. Cross Country Competition
1. Compete Internationally – many countries
2. Compete Globally – all countries
a. Asia e. Antarctica
b. Australia f. Europe
c. North America
d. South America