strategic-management

124 PART 2 • STRATEGY FORMULATION
Key Terms and Concepts
Activity Ratios (p. 109)
Benchmarking (p. 120)
Breakeven Point (p. 112)
Capital Budgeting (p. 107)
Communication (p. 94)
Controlling (p. 102)
Core Competence (p. 120)
Cost/Benefit Analysis (p. 106)
Cultural Products (p. 97)
Customer Analysis (p. 103)
Data (p. 118)
Distinctive Competencies (p. 93)
Distribution (p. 105)
Dividend Decisions (p. 107)
Empirical Indicators (p. 96)
Financial Ratio Analysis (p. 95)
Fixed Costs (p. 112)
Financing Decision (p. 107)
Functions of Finance/Accounting (p. 107)
Functions of Management (p. 99)
Functions of Marketing (p. 103)
Growth Ratios (p. 111)
Human Resource Management (p. 102)
Information (p. 118)
Internal Audit (p. 93)
Issues for Review and Discussion
organizational health. Many companies still prefer to be judged solely on their bottomline
performance. However, an increasing number of successful organizations are using
the internal audit to gain competitive advantages over rival firms.
Systematic methodologies for performing strength-weakness assessments are
not well developed in the strategic-management literature, but it is clear that strategists
must identify and evaluate internal strengths and weaknesses in order to effectively
formulate and choose among alternative strategies. The EFE Matrix,
Competitive Profile Matrix, IFE Matrix, and clear statements of vision and mission
provide the basic information needed to successfully formulate competitive strategies.
The process of performing an internal audit represents an opportunity for managers
and employees throughout the organization to participate in determining the
future of the firm. Involvement in the process can energize and mobilize managers
and employees.
Internal Factor Evaluation (IFE)
Matrix (p. 122)
Investment Decision (p. 107)
Leverage Ratios (p. 109)
Liquidity Ratios (p. 109)
Management Information System (p. 118)
Marketing Affiliate (p. 93)
Marketing Research (p. 106)
Motivating (p. 101)
Organizational Culture (p. 97)
Organizing (p. 100)
Personnel Management (p. 102)
Planning (p. 100)
Pricing (p. 105)
Product and Service Planning (p. 104)
Production/Operations Function (p. 113)
Profitability Ratios (p. 109)
Research and Development (R&D) (p. 115)
Resource-Based View (RBV) (p. 96)
Selling (p. 103)
Staffing (p. 102)
Synergy (p. 100)
Test Marketing (p. 104)
Value Chain Analysis (VCA) (p. 119)
Variable Costs (p. 113)
1. List three firms you are familiar with and give a distinctive competence for each firm.
2. Give some key reasons why prioritizing strengths and weaknesses is essential.
3. Why may it be easier in performing an internal assessment to develop a list of 80
strengths/weaknesses than to decide on the top 20 to use in formulating strategies?
4. Think of an organization you are very familiar with. Lit three resources of that entity that are
empirical indicators.
5. Think of an organization you are very familiar with. Rate that entity’s organizational culture
on the 15 example dimensions listed in Table 4-2.