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14 PART 1 • OVERVIEW OF STRATEGIC MANAGEMENT

TABLE 1-2 Percentage of People Who
Smoke in Selected Countries
Country Percentage
Greece 50
Russia High
Austria
Spain
U.K.
France
Germany
Italy
Belgium
Switzerland Low
USA 19

Source: Based on Christina Passariello, “Smoking Culture Persists in
Europe, Despite Bans,” Wall Street Journal (January 2, 2009): A5.

corporate, divisional, and functional levels in a large organization. Annual objectives should
be stated in terms of management, marketing, finance/accounting, production/operations,
research and development, and management information systems (MIS) accomplishments.
A set of annual objectives is needed for each long-term objective. Annual objectives
are especially important in strategy implementation, whereas long-term objectives are
particularly important in strategy formulation. Annual objectives represent the basis for
allocating resources.

Policies
Policies are the means by which annual objectives will be achieved. Policies include guide-
lines, rules, and procedures established to support efforts to achieve stated objectives.
Policies are guides to decision making and address repetitive or recurring situations.
Policies are most often stated in terms of management, marketing, finance/accounting,
production/operations, research and development, and computer information systems
activities. Policies can be established at the corporate level and apply to an entire organiza-
tion at the divisional level and apply to a single division, or at the functional level and
apply to particular operational activities or departments. Policies, like annual objectives,
are especially important in strategy implementation because they outline an organization’s
expectations of its employees and managers. Policies allow consistency and coordination
within and between organizational departments.
Substantial research suggests that a healthier workforce can more effectively and effi-
ciently implement strategies. Smoking has become a heavy burden for Europe’s state-run
social welfare systems, with smoking-related diseases costing well over $100 billion a
year. Smoking also is a huge burden on companies worldwide, so firms are continually
implementing policies to curtail smoking. Table 1-2 gives a ranking of some countries by
percentage of people who smoke.

The Strategic-Management Model

The strategic-management process can best be studied and applied using a model. Every
model represents some kind of process. The framework illustrated in Figure 1-1 is a widely
accepted, comprehensive model of the strategic-management process. 13 This model does
not guarantee success, but it does represent a clear and practical approach for formulating,
implementing, and evaluating strategies. Relationships among major components of the
strategic-management process are shown in the model, which appears in all subsequent