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94 PART 2 • STRATEGY FORMULATION

FIGURE 4-1
A Comprehensive Strategic-Management Model

Chapter 10: Business Ethics/Social Responsibility/Environmental Sustainability Issues

Perform
External Audit
Chapter 3

Implement
Generate, Implement
Develop Vision Establish Strategies— Measure
Evaluate, Strategies— Marketing,
and Mission Long-Term and Select Management and Evaluate
Statements Objectives Finance, Performance
Strategies Issues Accounting, R&D,
Chapter 2 Chapter 5 Chapter 9
Chapter 6 Chapter 7 and MIS Issues
Chapter 8

Perform
Internal Audit
Chapter 4

Chapter 11: Global/International Issues

Strategy Strategy Strategy
Formulation Implementation Evaluation
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988): 40.

fit into the whole organization. This is a great benefit because managers and employees
perform better when they understand how their work affects other areas and activities of
the firm. For example, when marketing and manufacturing managers jointly discuss issues
related to internal strengths and weaknesses, they gain a better appreciation of the issues,
problems, concerns, and needs of all the functional areas. In organizations that do not use
strategic management, marketing, finance, and manufacturing managers often do not inter-
act with each other in significant ways. Performing an internal audit thus is an excellent
vehicle or forum for improving the process of communication in the organization.
Communication may be the most important word in management.

FIGURE 4-2

The Process of Gaining Competitive Advantage in a Firm

Weaknesses ⇒ Strengths ⇒ Distinctive Competencies ⇒ Competitive Advantage