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Chapter 1
Strategic Management and Strategic Competitiveness
Important Definitions
Strategic Management Process
The full set of commitments, decisions, and actions required for a
firm to achieve strategic competitiveness and earn above-average returns
Strategic Competitiveness
Achieved when a firm successfully formulates and implements a value-creating
strategy
Above-Average Returns
Occurs when a firm develops a strategy that competitors are not simultaneously
implementing
Provides benefits which current and potential competitors are unable to
duplicate
Risk
An investor’s uncertainty about the economic gains or losses that will result
from a particular investment
Average Returns
Returns that are equal to those an investor expects to earn from other
investments with a similar amount of risk
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