Running head: WEEKLY REPORT 1 1
Strategic Management Chapter 2 & 3
University Canada West
Professor: Dr Michele Vincenti
MGMT 661: Strategic Management
October 20th, 2018
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Strategic Management
Strategic management of a company consists of three processes namely decisions, actions
and analyses. The primary purpose is to analyse the strategic goals of the company which helps
in a clear understanding of the external and internal environments of the company. Leaders are
the decision takers which answers questions like the market we compete in and how should the
company compete. This involves global decisions. Lastly, the action taken is the most crucial
step as the choice is of no use until it is acted upon. Every company needs to take the vital steps
to implement the strategies planned. Strategic management is a process which helps the company
understand the performance of other firms which are doing better in the market. (Dess,
McNamara, & Eisner, 2019). The two vital questions to be asked by each manager of a firm are:
• How should the company have a competitive advantage in the market?
• How can a firm innovate a competitive advantage in the market which is unique, cannot
be duplicated by other companies and has a superior value in the market?
Key attributes of Strategic Management
Organisational goals and objectives
This feature focuses on the overall well being of the company instead of one particular
department. It is also referred to as the “organisational versus individual rationality”.
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Multiple stakeholders in decision making
Managers of any company would not achieve success unless they focus many
stakeholders at the same time.
Long-term and short-term perspectives
Managers of any company should focus on the vision which the company has for its
future and the current operational activities.
Trade-offs between effectiveness and efficiency
The difference between doing the right thing and doing it the right way. The managers of
any organisation should look at the broader goal of an organisation and simultaneously ensure to
use the allocated resources efficiently.
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Chapter 2: Analyzing The External Environment Of The Firm
Managers and CEO must possess an ability called the perceptual acuity to develop a
sense of what is stored in the future for the company. There are several ways to build this talent
such as continuous learning and development by interacting with the team and outsiders of the
business to get a different perspective. There are three essential methods to generate a forecast;
scanning, monitoring, and collecting competitive information (Dess, McNamara, & Eisner,
2019).
Scanning of the business environment
The scanning process includes supervising the external factors to help in envisioning the
alterations and any current undergoing changes. The surveillance helps the company to be
proactive and to recognise any information that might be beneficial to achieve a competitive
advantage. The identifying of any possible trends will aid in the companies achieving an edge.
Monitoring of the business environment
The monitoring process keeps track of the developments of trends, events, and activities.
The method allows companies to analyse the extent of the changes or trends and its impacts.
There are several indicators established or created by executives to assess the progress of their
strategy.
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Collecting competitive information
Competitive information or intelligence enables organisations to assess their industry and
spot the strengths and weaknesses of competitors. The process involves the collecting of
information about competitors and to make sense of it. Using the data, companies can predict
moves of rivals and gain a competing edge. Many companies use this method to achieve a
competitive advantage over other companies. The data collected can help shape the marketing
strategy and executive decisions. Caution must be taken to remain ethical and legal (Dess,
McNamara, & Eisner, 2019).
Environmental Prediction
All the processes mentioned above which help to make a forecast for business are
essential for evaluating the external factors of the business environment. The forecasting or
prediction model includes the creation of credible estimation about the organisational aspects.
The objective is to calculate the changes and the measures that can be taken. Issues are
surrounding the predictions which can be specific to an organisation or the industry itself. Also,
the predictions may be perceived by executives as plain and simple which can be detrimental if
the estimations of the uncertainty can bring forth strategies that are useless. The estimation must
be balanced.
Scenario Evaluation
It is a detailed method to attain a forecast. Scenario evaluation is derived from several
fields such as economics, sociology, demographics, and psychology. The process commences
typically with a brainstorming session to understand how trends in the economic, political,
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societal, and technological space influence a company. The evaluation includes the estimation of
probable events in the future and does not depend on historical data. Instead, it attempts to cover
probable developments that are linked to the past. Many scenarios are taken into consideration to
imagine future events.
Situational (SWOT) Analysis.
Evaluation of an organisation’s external environment is vital to comprehend the business
environment of a company. Every industry includes companies that provide similar services and
products using the same techniques and compete. Understanding the competition and its
dynamics is essential to derive effective strategic management.
One of the most useful tools to evaluate an organisation and its external environment is
SWOT analysis or also called situational analysis. The internal environment of an organisation is
referred to in the strengths and weakness. The strengths signify the areas and aspects of the firm
that are beneficial, and the gap indicates the components that are detrimental to the company’s
growth and should be worked upon. The opportunities and threats suggest the external
environment of the company. The idea is to build upon the strong points, work on the
weaknesses, utilise the possibilities, and insulate organisations against the threats (Dess,
McNamara, & Eisner, 2019).
Although it is a straightforward tool, SWOT is immensely popular. Firstly, executives are
forced to take the internal and external environment into account. Secondly, SWOT places
importance on being proactive by scanning the external factors like opportunities and threats.
Thirdly, it highlights the strategy in matching the external environment to the internal factors of
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the firm. Lastly, the output is achieved by proper analytical techniques in a structured system
which is simple. It is essential to be analytical and rational but also to be intuitive and make good
judgements.
General Environment
Components of the general environment can influence an organisation’s strategy. The
general environment consists of six factors; sociocultural, demographic, global, political,
economic, and technological (Dess, McNamara, & Eisner, 2019).
Sociocultural Element
Values, lifestyles, and beliefs of society are influenced by the sociocultural element.
