CHAPTER 1: THE NATURE OF STRATEGIC MANAGEMENT Strategy Evaluation, reviewing external and internal factors that are the

STRATEGIC MANAGEMENT bases for current strategies, measuring performance, and taking corrective
actions.
Defining Strategic Management
Strategic Management can be defined as the art and science of formulating, Strategy formulation, implementation, and evaluation activities occur at
implementing, and evaluating cross-functional decision that enable an three hierarchical levels in a large organization: Corporate, Divisional or
organization to achieve its objectives. Strategic Business Unit, and Functional.

Strategic management is used synonymously with the term strategic Strategic management helps a firm function as a competitive team.
planning. Sometimes the term strategic management is used to refer to
strategy formulation, implementation, and evaluation, with strategic planning Integrating Intuition and Analysis
referring only to strategy formulation. Most organizations can benefit from strategic management, which is based
upon integrating intuition and analysis in decision making. Intuition is
A strategic plan is a company’s game plan. A strategic plan results from tough particularly useful for making decisions in situations of great uncertainty or
managerial choices among numerous good alternatives, and it signals little precedent.
commitment to specific markets, policies, procedures, and operations.
Adapting to Change
Stages of Strategic Management The second-largest bookstore chain in the United States, Borders Group,
Strategy Formulation – Strategy Implementation – Strategy Evaluation declared bankruptcy in 2011 as the firm had not adapted well to changes in
book retailing form traditional bookstore shopping to customers buying
Strategy Formulation includes developing a vision and mission, identifying an online, preferring digital books to hard copies. Borders was on the brink of
organization’s external opportunities and threats, determining internal financial collapse before being acquired in July 2011 by Direct Brands.
strengths and weaknesses, establishing long-term objectives, generating
alternative strategies, and choosing particular strategies to pursue. Key Terms in Strategic Management
 Deciding what new business to enter  Competitive Advantage – anything that a firm does especially well
 What businesses to abandon compared to rival firms
 How to allocate resources  Strategists – the individual who are most responsible for the success
 Whether to expand operations or diversify or failure of an organization.
 Whether to enter international markets  Vision statement – answers the question “What do we want to
 Whether to merge or form a joint venture become”. Often considered the first step in strategic planning
 How to avoid a hostile takeover  Mission Statetements – enduring statements of purpose that
distinguish one business from other similar firms. Identifies the scope
Strategy Implementation requires a firm to establish annual objectives, of a firm’s operations in product and market terms. Addresses the
devise policies, motivate employees, and allocate resources so that basic question that faces all strategists: “What is our business?”
formulated strategies can be executed. It is often called the action stage.  External Opportunities and External Threats – refer to economic,
social, cultural, demographic, environmental, political, legal,
 governmental, technological, and competitive trends and events that
could significantly benefit or harm an organization in the future. I. Enhanced Communication
o Computer hacker problems are increasing. a. Dialogue
o Intense price competition is plaguing most firms. b. Participation
o Unemployment and underemployment rates remain high II. Deeper/Improved Understanding
o Interest rates are rising a. Of other’s views
o Product life cycles are becoming shorter b. Of what the firm is doing/planning and why
o State and local governments are financially weak. III. Greater Commitment
 Internal strengths and internal weaknesses – an organization’s a. To achieve objective
controllable activities that are performed especially well or poorly. b. To implement strategic
Determined relative to competitors. c. To work hard
 Objectives – specific results that an organization seeks to achieve in THE RESULTS: All Managers and Employees on a mission to Help the firm
pursuing its basic mission. Long-term means more than one year. succeed.
Should be challenging, measurable, consistent, reasonable, and clear.
 Strategies – the means by which long-term objectives will be Financial Benefits
achieved. May include geographic expansion, diversification, Businesses using strategic-management concepts show significant
acquisition, product development, market penetration, improvements in sales, profitability, and productivity compared to firms
retrenchment, divestiture, liquidation, and joint ventures. without systematic planning activities. High-performing firms seem to make
 Annual Objectives – short-term milestone that organizations must more informed decisions with good anticipation of both short- and long-term
achieve to reach long-term objectives. Should be measurable, consequences.
quantitative, challenging, realistic, consistent, and prioritized. Should
be established at the corporate, divisional, and functional levels in a Nonfinancial Benefits
large organization.  It allows for identification, prioritization, and exploitation of
 Policies – the means by which annual objectives will be achieved. opportunities.
Include guidelines, rules, and procedures established to support  It provides an objective view of management problems.
efforts to achieve stated objectives. Guides to decision making and  It represents a framework for improved coordination and control of
address repetitive or recurring situations. activities.
 It minimizes the effects of adverse conditions and changes.
Benefits of Strategic Management  It allows major decisions to better support established objectives.
Historically, the principal benefit of strategic management has been to help  It allows more effective allocation of time and resources to identifies
organizations formulate better strategies through the use of a more opportunities.
systematic, logical, and rational approach to strategic choice.  It allows fewer resources and less time to be devoted to correcting
erroneous or ad hoc decisions.
Communication is a key to successful strategic management. Through  It created a framework for internal communication among personnel.
dialogue and participation, managers and employees become committed to
supporting the organization.
 assumption of competition, whereas military strategy is based on an
Why Some Firms Do No Strategic Planning assumption of conflict.
 Lack of knowledge in strategic planning Both business and military organizations must adapt to change and
 Poor reward structures constantly improve to be successful.
 Firefighting
 Waste of time Excerpts from Sun Tzu’s The Art of War Writings
 Too expensive War is a matter of vital importance to the state: a matter of life or death, the
 Laziness road either to survival or ruin. Hence, it is imperative that it be studies
 Content with success thoroughly. Know your enemy and know yourself, and in a hundred battles
 Fear of failure you will never be defeated. Skillful leaders do not let a strategy inhibit
 Overconfidence creative counter-movement.
 Prior bad experience
 Self-interest
 Fear of the unknown
 Honest difference of opinion
 Suspicion

Pitfalls in Strategic Planning

 Using strategic planning to gain control over decisions and resources
 Doing strategic planning only to satisfy accreditation or regulatory
requirements
 To hastily moving from mission development to strategy formulation
 Failing to communicate the plan to employees, who continue working
in the dark.
 Top managers making many intuitive decisions that conflict with the
formal plan
 Too managers not actively supporting the strategic-planning process
 Failing to use plans as a standard for measuring performance
 Delegating planning to a “planner” rather than involving all managers
 Failing to involve key employees in all phases of planning
 Failing to create a collaborative climate supportive of change

Comparing Business and Military Strategy

A fundamental difference between military and business strategy is that
business strategy is formulated, implemented, and evaluated with an
 CHAPTER 2: THE BUSINESS VISION AND MISSION
STRATEGIC MANAGEMENT Characteristic of a Vision
1. Any vision mist be clear. It should be direct, say something about the
Vision Statement is a one-sentence statement describing the clear and company’s destination.
inspirational long-term desired end-state. A vision statement is a short phrase 2. It has to be realistic. It has to be within the company’s ability to
the future your brand is ultimately working towards. achieve it.
Should be short, preferably one statement, and as many managers as 3. The vision statement must be shorter. Easy to communicate,
possible should have input. memorize, and explained clearly.
4. It must reflect the uniqueness of the organization.
What to we want to become? 5. It must be focused. It must be specifies enough to provide managers
- is a basic question to answer in creating a Vision statement with guidance in decision making and allocating resources
- foresight or power of seeing 6. Aligned with organizational values and culture.
- Vision must focus on future
- Serve as a concrete foundation for the organization Mission Statement Components
- Vision never change but it serves as an enduring promise-remained 1. Customers – clients
fixed. 2. Products or services – what to offer
3. Market – geographically, where does the firm compete.
Mission Statement. Organizations reason for being. Essential for effectively 4. Technology – Technologically current
establishing objectives & formulating strategies. Reveals what an organization 5. Concern for survival, growth, & profitability
wants to be and whom it want to serve. Specific objectives in order to 6. Philosophy – basic beliefs, values, ethical priorities
achieve long-term objectives 7. Self-concept – distinctive competitive
What is our business? 8. Concern for public image – corporate social responsibility
- A mission statement declares an organization’s reason for its 9. Concern for employees – Employees as valuable asset.
existence.
- Mission is defined as “Essential purpose of the organization, Characteristics of a Mission Statement
concerning philosophical questions like What is our business, the 1. Broad in scope; does not include monetary amounts, numbers,
nature or business it is in, who are our customers it looks to satisfy. percentages, ratios or objectives.
2. Less than 250 words in length
Shared Vision – commonality of interest that can lift workers out of the 3. Inspiring
monotony. A new world of opportunity & challenges. 4. Identifies the utility of a firm’s product
Job Rotation – to avoid being stagnant. Strategy in order to maximize human 5. Reveals that the firm is socially responsible
resources. 6. Reveals that the firm is environmentally responsible
7. Includes the 9 components: customer, products or services, markets,
Importance of Vision and Mission Statements technology, concern for survival/growth/profits, philosophy, self-
1. To ensure unanimity of purpose within the organization concept, concern for public image, concern for employees.
2. To provide a basis, or standard, for allocating organizational resources 8. Reconciliatory
3. To establish a general tone or organizational climate 9. Enduring
Mission – What you do now, for whom, how you do it, what this achieves.
Vision – Where you’re going. What you want your mission to ultimately
achieve, for you, your customers, and/or society.
Goals – Tangible ways you’ll carry out your mission and progress toward your
vision.
Values – What you stand for. Beliefs through which you create and carry out
your goals.
 CHAPTER 3: THE EXTERNAL ASSESMENT Competitive Advantage is determined largely by competitive positioning
STRATEGIC MANAGEMENT within an industry, according to I/O advocates. Many thousands of internally
strong firms in 2006-2007 disappeared in 2008-2009.

Given the vision and mission statements and set goals and objectives,
Economic Forces
it is for organizations to conduct themselves clearly, deliberately and
Economic Variables to be Monitored: Inflation rates, Gross domestic product
strategically.
trend, Unemployment trends, Import/export factors, Price fluctuations, Tax
To achieve this, organizations should develop “organizational
rates, Federal government budget deficits.
intelligence”
 An economic variable of significant importance in strategic planning
Organizational intelligence refers to the expertise, insight and
is gross domestic product (GDP), especially across countries. Trends
wisdom possessed by an entity. It serves as a valuable guide to its journey to
in the dollar’s value have significant and unequal effects on
become competitive.
companies in different industries and in different locations.
 For example, the pharmaceutical, tourism, entertainment, motor
The Nature of External Audit
vehicle, aerospace, and forest products industries benefit greatly
- Environmental Scanning is the study and interpretation of the forces
when the dollar falls against the yen and euro. Agricultural and
existing in the external and internal environments.
petroleum industries are hurt by the dollar’s rise against the
- External environment includes social, economic, political, technical
currencies of Mexico, Brazil, Venezuela, and Australia.
and environmental forces that may influence an organization, an
 When the value of the dollar falls, tourism-oriented firms benefits
industry or entity.
because Americans do not travel abroad as much as when the value
- The competitive environment covers competitors, suppliers,
of the dollar is low; rather, foreigners visit and vacation more in the
customers, stakeholders, culture and the government.
United States.
- Environmental scanning is carefully monitoring the surroundings with
the end goal of ascertaining early indications of prospects and
PESTEL. Political, Economic, Social, Technological, Environmental, Legal.
challenges that may influence the organization’s present and future
plans.
Social, Cultural, Demographic and Natural Environment Forces.
Social, cultural, demographic, and environmental changes have a major
Environmental Scan
impact on virtually all products, services, markets, and customers. Small,
1. The speed of the organization to conduct scanning
large, for profit, and nonprofit organizations in all industries are being
2. The presence and availability of complete information
staggered and challenged by the opportunities and threats arising from
3. The physical and financial capabilities to do so
changes in social, cultural, demographic, and environmental variables.
The Industrial Organization (I/O) View
Technological Forces
The Industrial Organization (I/O) approach to competitive advantage
Technological changes and discoveries are having a dramatic impact on
advocates that external (industry) factors are more important than internal
organizations. The internet has changed the nature of opportunities and
factors in a firm achieving competitive advantage. ‘Proponents of the I/O
threats altering the life cycles of products, increasing the speed of
view, such as Michael Porter, content that organizational performance will be
distribution, creating new products and services.
primarily determined by industry forces.
  To effectively capitalize on e-commerce, a number of organizations Competitive Forces
are establishing two new positions in their firms: Chief Information Competitive Forces’ collecting and evaluating information on competitors is
Office (CIO) and Chief Technology Office (CTO). This trend reflects essential for successful strategy formulation. Identifying major competitors is
the growing importance of information technology (IT) in strategic not always easy because many firms have divisions that compete in different
management. industries.
 A CIO and CTO work together to ensure that information needed to  Many multidivisional firms do not provide sales and profit
formulate, implement, and evaluate strategies is available where and information on a divisional basis for competitive reasons. Also,
when it is needed. These individuals are responsible for developing, privately held firms do not publish any financial or marketing
maintaining, and updating a company’s information database. information. Addressing questions about competitors is important in
 Example of Impact of wireless technology: performing an external audit.
1. Airlines – many airlines now offer wireless technology in flight
2. Automotive – Vehicles are becoming wireless Competitive Analysis: Porter’s Five-forces Model
3. Banking – Visa sends text message alerts after unusual Model focus on conditions within a specific industry
transactions  The 5 forces decide whether or not a business in the industry is
4. Education – many secondary (and event college) students may profitable
use smart phones for math because research shows to be greatly  Generally, the greater forces, the lower the prospective profit
helpful potential.
5. Health Care – patients use mobile devises to monitor their own  Success lies in these forces so as to increase one’s potential profit,
health, such as calories consumed.
6. Politics – President Obama won the election partly by mobilizing 1. Competitive rivalry
Facebook and Myspace users revolutionizing political campaigns. 2. Threat of substitutes
Obama announced his vice-presidential selection of Joe Biden by 3. Threat of New Entrants
a text message. 4. Bargaining power of suppliers
7. Publishing – eBooks are increasingly available. 5. Bargaining power of customers

Competitive Intelligence (CI) Sources of External Information

Competitive Intelligence (CI), as formally defined by the Society of External business information comes from sources outside an organization
Competitive Intelligence Professionals (SCIP), is a systematic and ethical and can include company reports, industry reports, consumer data,
process for gathering and analyzing information about the competition’s demographic information, and business theories and concepts. This
activities and general business trends. information comes in various forms like printed materials, broadcast, and
 Good Competitive intelligence in business, as in the military, is one of online. Good information is useful, valuable, accessible, accurate, reliable,
the keys to success. The more information and knowledge a firm can relevant, complete, and objective. It provides the key details needed in an
obtain about its competitors, the more likely it is that it can formulate easy to obtain format.
and implement effective strategies. Major competitors’ weaknesses
can represent external opportunities: major competitors’ strengths
can represent key threats.
Forecasting tools and techniques

A. Industry Analysis: The External Factor Evaluation (EFE) Matrix

External Factor Evaluation (EFE) is a strategic management technology that
assesses and evaluated an organization’s external opportunities and threats.

It provides an organized framework for studying a business’s external

environment. The EFE matrix considers market developments, industry
competition, legislative changes, economic situations, technology
advancements, and customer preferences.

Key Advantage of using the EFE Matrix

 External Environment Analysis
 Strategic Decision Making
 Enhances Competitiveness
 Resource Allocation
 Comprehensive Analysis

B. Competitive Profile Matrix (CPM)

Competitive Profile Matrix (CPM) is a strategic tool used to compare the
performance and position of an organization’s products or services against
those of its main competitors. It tells how well a company is performing
against its competitors. As a competitive performance matrix, CPM helps you
analyze both your competitors and your business in a competitive landscape.
Key Components of CPM
 Critical Success Factors
 Weighting
 Score
 Total Score
 CHAPTER 5: STRATEGIES IN ACTION 6. Product Development – Seeking increased sales by improving
STRATEGIC MANAGEMENT present products or services or developing new ones.
7. Related Diversification – Adding new but related products or
Integration Strategies. Forward integration, backward integration, and services.
horizontal integration are sometimes collectively referred to as vertical 8. Unrelated Diversification – Adding new, unrelated products or
integration strategies. Vertical integration strategies allow a firm to gain services.
control over distributors, suppliers, and/or competitors. 9. Retrenchment – Regrouping through cost and asset reduction to
reverse declining sales and profit.
Intensive Strategies. Market penetration, market development, and product 10. Divestiture – Selling a division or part of an organization.
development are sometimes referred to as intensive strategies because they 11. Liquidation – Selling all of a company’s assets, in parts, for their
require intensive efforts if a firm’s competitive position with existing product tangible worth.
is to improve.
FORWARD INTEGRATION. Guidelines indicate when forward integration may
Diversification Strategies. There are two general types of diversification be an especially effective strategy:
strategies: related and unrelated. Business are said to be related when their  When an organization’s present distributors are especially expensive,
value chains posses competitively valuable cross-business strategic fits; or unreliable, or incapable of meeting the firm’s distribution needs.
businesses are said to be unrelated when their value chains are so dissimilar  When an organization competed in an industry that is growing and is
that no competitively valuable cross-business relationships exists. expected to continue to grow markedly.
 When an organization has both the capital and human resources
Defensive Strategies. In addition to integrative, intensive, and diversification needed to manage the new business of distributing its own products.
strategies, organizations also pursue retrenchment, divestiture, or liquidation.
BACKWARD INTEGRATION. Guidelines for when backward integration may be
Alternatives Strategies Defined and Exemplified an especially effective strategy:
1. Forward Integration – gaining ownership or increased control over  When an organization’s present suppliers are especially expensive, or
distributors or retailers. unreliable, or incapable of meeting the firm’s need for parts,
2. Backward Integration – Seeking ownership or increased control of a components, assemblies, or raw materials.
firm’s suppliers.  When the number of suppliers is small and the number of
3. Horizontal Integration – Seeking ownership or increased control over competitors is large.
competitors.  When the advantage of stable prices are particularly important.
4. Market Penetration – Seeking increased market share for present  When present suppliers have high profit margins, which suggests that
products or service in present markets through greater marketing the business of supplying products or services in the given industry is
efforts. a worthwhile venture.
- Can include adding salesperson, increasing advertising expenditures,
couponing, and using similar actions to increase market share in a HORIZONTAL INTEGRATION. Guidelines indicate when horizontal integration
given geographic area. may be an especially effective strategy:
5. Market Development – Introducing present products or services into
new geographic area.
  When an organization can gain monopolistic characteristics in a DIVESTITURE. Guidelines indicate when divestiture may be an especially
particular area or region without being challenged by the federal effective strategy:
government for “tending substantially” to reduce competition.  When an organization has pursued retrenchment strategy and failed
 When an organization competes in a growing industry. to accomplish needed improvements.
 When competitors are faltering due to lack of managerial expertise or  When a division needs more resources to be competitive than the
a need for particular resources that an organization possesses. company can provide.
 When a division is responsible for an organization’s overall poor
MARKET PENETRATION. Guidelines indicate when market penetration may performance.
be an especially effective strategy: Four Levels of Strategies
 When the current markets are not saturated with a particular Corporate Level – Divisional Level – Functional Level – Operational Level
product or service.
 When the usage rate of present customers could be increased Michael Porter’s Five Generic Strategies
significantly. According to Porter, strategies allow organizations to gain competitive
 When the market shares of major competitors have been declining advantage from three different bases: cost leadership, differentiation, and
while total industry sales have been increasing. focus.
1. Cost leadership emphasizes producing standardized products at a
MARKET DEVELOPMENT. Guidelines indicate when market development may very low per-unit cost for consumers who are price-sensitive.
be an especially effective strategy: o Type 1: Low-cost strategy. Offer products or services to a
 When new channels of distribution are available that are reliable, wide range of customers at the best price-value available in
inexpensive, and of good quality. the market.
 When an organization is very successful at what it does. o Type 2: Best-value strategy. Offers products or services to a
 When a new untapped or unsaturated market exists. wide range of customers at the best price-value available in
 When an organization has excess production capacity. the market.
2. Type 3: Differentiation. Strategy that aimed at producing products
RETRENCHMENT. Guidelines indicate when retrenchment may be an and services considered unique industrywide and directed at
especially effective strategy: consumers who are relatively price-insensitive.
 When an organization has a clearly distinctive competence but has 3. Focus means producing products and services that fulfill the needs of
failed consistently to meet its objective and goals over time. small group of consumers.
 When an organization is one of the weaker competitors in a given o Type 4: Low-cost focus strategy. Offers products or service to
industry. a small range (niche group) of costumers at the lowest price
 When an organization is plaques by inefficiency, low profitability, available on the market.
poor employee morale, and pressure from stockholders to improve o Type 5: Best-value focus strategy. Offers products or services
performance. to a small range of customers at the best price-value
available in the market but loaded with features so the
offerings are perceived as the best value.
SAMPLE QUIZ: CHAPTER 3-5 12. The country that has instituted the most protectionist measures in
recent months by raising tariffs on most imports and subsidizing its
1. It reveals key opportunities and threats confronting an organization own exports
so that managers can formulate strategics to take advantage of the = Russia
opportunities and avoid or reduce the impact of threats. 13. Political relations between Japan and China have thawed
= External Audit considerably in recent years, which is good for the world economy
2. Aside from being offensive, what is the other way the firms can because China’s low-cost manufactured goods have become essential
respond to the factors assessed in formulating strategies? for the functioning of most industrialized nations.
= Defensive = True
3. It affects the types of products developed, the nature of positioning 14. What is the initiative done by higher learning institutions because of
and market segmentation strategies, the type of service offered, and decline in monies received from the state?
the choice of businesses to acquire or sell. = Fund raising
= External Forces 15. It changed the very nature of opportunities and threats just like
4. The increasing complexity of business today is evidenced by more altering the life cycles of products.
countries developing the capacity and will to compete passively in = Internet
world markets. 16. It is more a technician, focusing on technical issues such as data
= False acquisition, data processing, decision-support systems, and software
5. Involvement in the strategic-management process can lead to and hardware acquisition.
understanding and commitment from organizational members. = Chief Technological Officer
= True 17. It can dramatically affect organizations’ products, services, markets,
6. It is an approach to competitive advantage advocating that external suppliers, distributors, competitors, customers, manufacturing
(industry) factors are more important than internal factors in a firm processes, marketing practices, and competitive position.
achieving competitive advantage. = Technological Advancement
= Industrial Organization 18. What industry is the identification and evaluation of key
7. _____ and understanding of both external and internal factors is the technological opportunities and threats can be the most important
key to securing and keeping a competitive advantage. part of the external strategic-management audit.
= Effective Integration = High-tech Industries
8. It has direct impact on the potential attractiveness of various 19. Not all sectors of the economy are affected equally by technological
strategics. For example, when interest rates rise, funds needed for developments.
capital expansion become costlier or unavailable. = True
= Economic Forces 20. What is the systematic and ethical process for gathering and
9. A low value of the dollar means lower imports and higher exports. analyzing information about the competition’s activities and general
= True business trends to further a business’s own goals?
10. It created a different type of consumer and, consequently, a need for = Competitive Intelligence
different products, different services, and different strategies. 21. It allows areas of a firm to access consistent and verifiable
= New Trends information in making decisions.
11. Who make more and more purchases online in America? American = Intelligence Program
22. It can be defined as the number and significance of markets that a 37. What is the key to organizational success, aside from understanding
firm competed in with rivals. among managers from all functional business areas?
= Market Commonality = Effective Coordination
Five Forces Model of Competition 38. It exemplifies the complexity of relationships among the functional
23. Rivalry among Competing Firms areas of business.
24. Potential Entry for new competitors = Financial Ratio Analysis
25. Potential development of substitute products Criteria for the resource to be valuable
26. Bargaining power of consumers 39. Rare
27. Bargaining Power of Suppliers 40. Hard to imitate
28. Free-flowing information on the internet is driving down prices and 41. Not Easily Substitutable
deflation worldwide. 42. It captures the subtle, elusive and largely unconscious forces that
= False shape the workplace.
29. There are educated assumptions about future trends and events. =
= Forecasting/Forecast 43. It takes place largely within a particular organization’s culture.
30. These are most appropriate when historical fate are available and = Strategic Management Process
when the relationships among key variables are expected to remain 44. These are resources that other competing firms do not possess.
the same in the future. = Clear Resources
= Quantitative Forecast 45. It helps ensure that the firm can be prepared for all reasonable
31. It allows strategists to summarize and evaluate economic, social, eventualities and for all changes that will be needed.
cultural, demographic, environmental, political, governmental, legal, = Planning
technological, and competitive information. 46. 3 MIS Questions
= External Factors Evaluation 47. 3 MIS Questions
These are established with the intention of capitalizing upon 48. 3 MIS Questions
internal strengths and overcoming weaknesses. 49. It refers to the process whereby a firm determines the costs
32. Objectives associated with organizational activities from purchasing raw
33. Strategies materials to manufacturing product(s) to marketing those products.
34. It requires gathering and assimilating information about the firm. = Value-Chain Analysis
= Internal Audit 50. It is an analytical tool used to determine whether a firm’s value chain
35. Compared to the external audit, the process of performing and activities are competitive compared to rivals and thus conducive to
internal audit provides more opportunity for participants to winning in the marketplace.
understand how their jobs, departments, and divisions fit into the = Benchmarking
whole organization.
= True
36. It is a highly interactive process that requires effective coordination
among management, marketing, finance/accounting,
production/operations, R&D, and management information system
managers. = Strategic Management