Strategic Management Theory & Cases: An Integrated Approach 13th Edition by Charles test bank

Answers will vary for the crafting of the possible mission statement, vision statement and values statement for this company, but should address the fictional company’s goals and framework for a mission statement, a vision statement and a values statement.


 
86. Contrast the purpose and environments included in an external and an internal analysis. How are these used together in the business model?
ANSWER:  
The essential purpose of the external analysis is to identify strategic opportunities and threats within the organization’s operating
environment that will affect how it pursues its mission. Three interrelated environments should be examined when undertaking an external analysis: the industry environment in which the company operates, the country or national environment, and the wider socioeconomic or macroenvironment. Analyzing the industry environment requires an assessment of the competitive structure of the company’s industry, including the competitive position of the company and its major rivals. It also requires analysis of the nature, stage, dynamics, and history of the industry. Because many markets are now global, analyzing the industry environment also means assessing the impact of globalization on competition within an industry. Such an analysis may reveal that a company should move some production facilities to another nation, that it should aggressively expand in emerging markets such as China, or that it should beware of new competition from emerging nations. Analyzing the macroenvironment consists of examining macroeconomic, social, governmental, legal, international, and technological factors that may affect the company and its industry.
 
Internal analysis focuses on reviewing the resources, capabilities, and competencies of a company to identify its strengths and weaknesses.
 
The generation of a series of strategic alternatives, or choices of future strategies to pursue, given the company’s internal strengths and weaknesses and its external opportunities and threats. The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. The central purpose is to identify the strategies to exploit external
opportunities, counter threats, build on and protect company strengths, and eradicate weaknesses. The goal of a SWOT analysis is to create, affirm, or fine-tune a company-specific business model that will best align, fit, or match a company’s resources and capabilities to the demands of the environment in which it operates. Managers compare and contrast various alternative possible strategies, and then identify the set of strategies that will create and sustain a competitive advantage. These strategies can be divided into four main categories: Functional-level strategies, Business-level strategies, Global strategies and Corporate-level strategies.