Innovation Strategy 2

Lecture 4.2
Basic Model of Strategic Management

Strategic management consists of four basic

elements:
_ Environmental scanning
_ Strategy formulation
_ Strategy implementation
_ Evaluation and control
ENVIRONMENTAL SCANNING
Environmental scanning is the monitoring, evaluating,
and disseminating of information from the external and
internal environments to key people within the
corporation. Its purpose is to identify strategic factors—
those external and internal elements that will determine
the future of the corporation. The simplest way to
conduct environmental scanning is through SWOT
analysis. SWOT is an acronym used to describe the
particular Strengths, Weaknesses, Opportunities, and
Threats that are strategic factors for a specific company.
STRATEGY FORMULATION
Strategy formulation is the development of long-range
plans for the effective management of environmental
opportunities and threats, in light of corporate strengths
and weaknesses (SWOT). It includes defining the
corporate mission, specifying achievable objectives,
developing strategies, and setting policy guidelines.
 Mission
An organization’s mission is the
purpose or reason for the
organization’s existence.
DO YOU HAVE A GOOD MISSION STATEMENT?
There are 10 suggests to be done.
1. Does the statement describe an inspiring purpose that
avoids playing to the selfish interests of the stakeholders?
2. Does the statement describe the company’s
responsibility to its stakeholders?
3. Does the statement define a business domain and
explain why it is attractive?
4. Does the statement describe the strategic positioning that the company prefers in a way that helps to
identify the sort of competitive advantage it will look for?
5. Does the statement identify values that link with the organization’s purpose and act as beliefs with
which employees can feel proud?
6. Do the values resonate with and reinforce the organization’s strategy?
7. Does the statement describe important behavior
standards that serve as beacons of the strategy and
the values?
8. Are the behavior standards described in a way
that enables individual employees to judge
whether they are behaving correctly?
9. Does the statement give a portrait of the
company, capturing the culture of the organization?
10. Is the statement easy to read?
 
 Objectives
Objectives are the end results of
planned activity. They should be
stated as action verbs and tell
what is to be accomplished by
when and quantified if possible.
Some of the areas in which a corporation might establish its goals
and objectives are:
_ Profitability (net profits)
_ Efficiency (low costs, etc.)
_ Growth (increase in total assets, sales, etc.)
_ Shareholder wealth (dividends plus stock price appreciation)
_ Utilization of resources (ROE or ROI)
_ Reputation (being considered a “top” firm)
_ Contributions to employees (employment security, wages,
diversity)
_ Contributions to society (taxes paid, participation in charities,
providing a needed product or service)
_ Market leadership (market share)
_ Technological leadership (innovations, creativity)
_ Survival (avoiding bankruptcy)
_ Personal needs of top management (using the firm for personal
purposes, such as providing jobs for relatives)
 Strategies
A strategy of a corporation forms a
comprehensive master plan that
states how the corporation will
achieve its mission and objectives.
It maximizes competitive
advantage and minimizes
competitive disadvantage.
 The typical business firm usually considers three
types of strategy: corporate, business, and functional.
1. Corporate strategy describes a company’s overall
direction in terms of its general attitude toward growth and
the management of its various businesses and product lines.
2. Business strategy usually occurs at the business unit or product
level, and it emphasizes improvement of the competitive position of
a corporation’s products or services in the specific industry or market
segment served by that business unit.
3. Functional strategy is the approach taken by a functional
area to achieve corporate and business unit objectives and
strategies by maximizing resource productivity.
 Policies
A policy is a broad guideline for decision making that links the formulation of a strategy with its
implementation. Companies use policies to make sure that employees throughout the firm make
decisions and take actions that support the corporation’s mission, objectives, and strategies.
 Strategic Planning and SWOT Analysis

https://www.youtube.com/watch?v=VTH_WsyoEeM
 Do it Together
Divide the class into groups of three to five students.
After 15 minutes each group should present its
recommendations and answers to the class.

Task :
Make a SWOT analysis on Erasmus study stays in Prague

Discussion Questions:
How to promote study stays among university students
To carry out a SWOT Analysis on International Student Mobility it is necessary to
write down answers to the following questions. Where appropriate, it is possible
to use similar questions:

Strengths:
· What are your advantages?
· What do you do well?
· What do other people see as your strengths?

Weaknesses:
· What could you improve?
· What do you do badly?
· What should you avoid?

Opportunities:
· Where are the good opportunities facing you?
· What are the interesting trends you are aware of?

Threats:
· What obstacles do you face?