Strategy and strategic management process

5 important questions on Strategy and strategic management process

Where is a firm's strategy based on? (2)

assumptions and hypotheses, about how the competition is likely to evolve, and how this evolution can be exploited to earn profits/competitive advantage

When is competitive advantage sustainable? 

when other companies find it difficult /too costly to 
imitate a value imitate a value-creating strategy which creating strategy which a given firm has a given firm has
implemented, or to offer something better

One concept of strategic management process SMP (7) explain

Mission (not affect, improve, hurt firms performances)
Objectives (specific measurable targets)
External Analysis: Threats, opportunities in competitive environment: interest rates, demographics, social trends technology 
/ Internal Analysis: strength and weaknesses: human resources, manufacturing abilities, technology
Strategic Choice: two large categories: business level(single market/industry), corporate level(multiple markets/industrie simultaneously)
Strategy Implementation: adopts organizational policies&practises that are consistent with firms strategy
Competitive Advantage: when a firm is able to generate more economic values than the rival
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Two types of competitive advantage

preferences of customers
cost advantage

difference is size of competitive advantage

Measure of competitive advantage

accounting performance ratio's  average:(profit, liquidity, leverage, activity)
economic performance (earning a return in excess of the cost of capital)

cause costumers perception difficult to measure. 

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