strategic-management

136 PART 2 • STRATEGY FORMULATION
FIGURE 5-1
Strategy
Formulation
evaluate strategies on items other than financial measures. This is the basic tenet of the
Balanced Scorecard. Financial measures and ratios are vitally important. However, of
equal importance are factors such as customer service, employee morale, product quality,
pollution abatement, business ethics, social responsibility, community involvement, and
other such items. In conjunction with financial measures, these “softer” factors comprise
an integral part of both the objective-setting process and the strategy-evaluation process.
These factors can vary by organization, but such items, along with financial measures,
comprise the essence of a Balanced Scorecard. A Balanced Scorecard for a firm is simply
a listing of all key objectives to work toward, along with an associated time dimension of
when each objective is to be accomplished, as well as a primary responsibility or contact
person, department, or division for each objective.
Types of Strategies
A Comprehensive Strategic-Management Model
Develop Vision
and Mission
Statements
Chapter 2
Perform
External Audit
Chapter 3
Perform
Internal Audit
Chapter 4
The model illustrated in Figure 5-1 provides a conceptual basis for applying strategic
management. Defined and exemplified in Table 5-4, alternative strategies that an enterprise
could pursue can be categorized into 11 actions: forward integration, backward
Chapter 10: Business Ethics/Social Responsibility/Environmental Sustainability Issues
Establish
Long-Term
Objectives
Chapter 5
Generate,
Evaluate,
and Select
Strategies
Chapter 6
Implement
Strategies—
Management
Issues
Chapter 7
Chapter 11: Global/International Issues
Strategy
Implementation
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988): 40.
Implement
Strategies—
Marketing,
Finance,
Accounting, R&D,
and MIS Issues
Chapter 8
Measure
and Evaluate
Performance
Chapter 9
Strategy
Evaluation