STRATEGIC

MANAGEMENT
AND
INNOVATION
Presented by: Kristelle Joy L. Tuburan,RL
Learning Outcomes:

Apply effective strategic management;

Analyze product and service; and
Develop product and service innovations

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A strategy is a plan of action designed to achieve a specific
goal or set of goals within a specific time frame while operating
within an organizational framework.

“Strategic management is the process of building capabilities that

allow a firm to create value for customers, shareholders, and society
while operating in competitive markets,” write Rajiv Nag, Donald
Hambrick, and Ming-Jer Chen.

The process of strategic management entails:

➢ Specifically pointing out the firm's mission, vision, and objectives

➢ Developing the policies and plans to achieve the set objectives
➢ allocating the resources for implementing these policies and plans

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Types of Strategies

1. Intended Strategy. An intended strategy addresses the organization's intentions. It is the strategy that a
market organization hopes to implement. As a result, intended strategies are frequently described in detail
in an organization's strategic plan. A business plan is a strategic plan created for a new company. This plan is
a rough strategy for keeping the organization on track. As a result, it is a deliberate strategy.

2. Emergent Strategy. An emergent strategy is one that develops over time. It is an unplanned strategy
developed by an organization in response to various unexpected threats, opportunities, and challenges.
Emergent strategies are also inherently dynamic. Depending on the effectiveness of the strategy, emergent
strategies can result in both success and failure. Here's an example of a failed emergent strategy.

3. Realized Strategy. A realized strategy is one that is both real and practical. It is the strategy that a
company actually employs. Realized strategies are frequently a by-product of an organization's intended
strategy (i.e., the firm's plans), deliberate strategy (i.e., the portions of the intended strategy that an
organization pursues over time), and emergent strategy (i.e., what the firm does in response to unexpected
opportunities and challenges).

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Five Steps of Strategic Management
A. Formulation

1.Analysis. The analysis process entails conducting extensive market, financial, and business
research on the external and competitive environments. Conducting Porter's Five Forces,
SWOT, PESTEL, and value chain management analyses, as well as combining expertise in
each industry that is part of the strategy, are all part of the process.

2.Strategy Formulation. After analysing the internal and external environments, the
organization develops a generic strategy (for example, low-cost, differentiation, etc.) based
on the value-chain implications. It is done in order to derive and maximize core
competencies as well as prospective competitive advantages.

3. Goal Setting. The next step in strategy development is goal setting. With the defined
strategy in hand, management now seeks out and communicates the company's goals and
objectives, which are linked to the predicted results, strengths, and opportunities.

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Five Steps of Strategic Management

B. Implementation

4. Structure. The primary function of the implementation phase is to structure

the management and operational processes. Because a strategy is in place, the
company now wishes to solidify the organizational structure and leadership patterns
(making many changes if required).

5. Feedback. The final stage of the strategic management process is

feedback. All budgetary figures are collected and disseminated for evaluation during
this final stage of strategy. Financial ratio calculations and performance reviews are
sent to the appropriate managers, executives, and departments.

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Strategic management is a continuous process. It starts with defining the vision,
mission, objectives, and goals of the organization.

Vision

In the major hierarchy of strategic intent, vision remains at the top. It explains what
the organization hopes to accomplish in the long run.

Alex Miller and Gregory Dess defined vision as, “the category of intentions that are
broad, all-inclusive and forward thinking.”
John Kotter defines vision as, “It is a statement of the organization in the future.”

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Strategic management is a continuous process. It starts with defining the vision,
mission, objectives, and goals of the organization.

Mission

Mission statements are responsible for the role an in th esociety. John L. Thompson states that mission is
“the essential purpose of the organization, concerning particularly why it is in existence, the nature of the
business it is in, and the customers it seeks to serve and satisfy.”

Objective and Goals

Objectives tell us about the ultimate end results the company wants to accomplish by making a strategy for
a selected duration of time. Goals include a broad category of financial and non-financial issues that a
company wants to achieve in a given amount of time. Objectives are the methods that specify how the
company's goals will be met. Importantly, objectives are manifestations of goals even when they are not
stated explicitly.
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PESTEL ANALYSIS

Political, Economic, Social, Technological, Environmental, and Legal analysis are all part of PESTEL analysis. It is
an external environment analysis used for strategic planning or market research. It provides a high-level
overview of the various macro-environmental factors that the company must consider.

1. Political factors analysis is related with how and to what extent a government interferes in the
economy. Tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability are all
political factors. Political factors may also be associated with goods and services that the government
permits (merit goods) and those that the government does not permit (demerit goods).

2. Economic factors contain factors such as economic growth, interest rates, exchange rates and the
inflation rate. These elements may have an impact on how businesses operate and make decisions. Interest
rates, for example, can affect affirms cost of capital, influencing business growth and expansion.

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 3. Social factors contain issues such as health consciousness, population growth rate, age
distribution, career attitudes and emphasis on safety. Trends in social factors can have an impact on the
demand for a company's goods as well as how the company operates. For example, an aging population
results in a smaller and less willing labor force (and increases the cost of labor).

4. Technological factors include ecological and environmental aspects, such as R&D activity,
automation, technology incentives and the rate of technological change. They can determine entry barriers,
the minimum efficient level of production, and influence outsourcing decisions. Furthermore, technological
shifts can have an impact on costs, quality, and innovation.

5. Environmental factors are the conditions such as weather, climate, and climate change, which
may especially influence tourism, farming, and insurance sectors. As people become more aware of climate
change, they are becoming more interested in how businesses operate and what products they offer; this is
both creating new markets and harming existing ones.

6. Legal factors include laws pertaining to discrimination, consumer affairs, antitrust, employment,
and health and safety. These factors can affect the operations, costs, and the demand for the products. Legal
factors can also influence the brand value and reputation of a company.
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Five types of business level strategies

1. Coordinating Unit Activities.

A common strategy is the coordination of all different individual unit activities found in a business.
Departments, sections of departments, and individual job positions can all be used to differentiate these unit
activities.

2. Utilizing Human Resources.

Utilization of available human resources as well as the overall economy is required for success. Human labor
is always required to achieve business goals and objectives. Companies typically develop a business-level
strategy to ensure that they have enough employees to produce specific goods or services.

3. Developing Distinctive Advantages.

A company's success depends on its distinct core competencies or competitive advantages. Core
competencies are the activities or abilities that a company possesses in order to out perform another
company. These strategies may include acquiring economic sources at a lower cost than competitors, more
efficient and effective production, one-of-a-kind goods or services, and a cost-effective supply chain.

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Five types of business level strategies

4. Identifying Market Niches.

Market niche identification typically entails economic analysis and the identification of a specific consumer
demand that is unmet or where there is insufficient supply to meet the demand. Other niches may include
product modification, targeting specific demographic groups, and so on.

5. Monitoring Product Strategies.

It is necessary to conduct a review of the business level strategies involved in the operation of an
organization. To stay on track, a review of the acquisition process, equipment, and business facilities, as well
as administrative costs for a sufficient rate of return, is required. Reviewing business level strategies allows
you to stay flexible in business and make necessary changes as they arise

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INNOVATION
Innovation itself is a very broad concept that can be understood in a variety of ways. One of the
more comprehensive definitions is offered by Myers and Marquis (1969):

“Innovation is not a single action but a total process of interrelated sub processes. It is not just the
conception of a new idea, nor the invention of a new device, nor the development of a new market. The
process is all these things acting in an integrated fashion.”

It is important to clarify the use of the term ‘new’ in the context of innovation. Rogers and
Shoemaker (1972) do this eloquently:

“It matters little, as far as human behavior is concerned, whether or not an idea is ‘objectively’ new as
measured by the lapse of time since its first use or discovery . . . If the idea seems new and different to
the individual, it is an innovation.”

Innovation = theoretical conception + technical invention + commercial exploitation

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Innovation is the management of all the activities involved in the process of idea generation, technology
development, manufacturing and marketing of a new (or improved) product or manufacturing process or
equipment.

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Innovation is the management of all the activities involved in the process of idea generation, technology
development, manufacturing and marketing of a new (or improved) product or manufacturing process or
equipment.

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Factors influencing consumers’ adoption of an innovation

1. Product.
a. Complexity – “Is the innovation difficult to use, or understand?”
b. Relative Advantage – “Does the innovation offer significant benefits than existing product, etc.?”
c. Observability – “Does the innovation offer observable results?”
d. Compatibility – “Does the innovation fit my beliefs, lifestyles, values, needs?”
e. Trialability – “Can the innovation be tested or tried on a limited basis?”

2. Consumer. 3. Message.
Age Gender The content of the message affects the adoption of innovation.
Occupation Income The sound, text, fonts,
Personality Reference Group
colors, pictures, white space affect how the message is
Perception Education
perceived.
Attitude Culture
Belief

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4. Messenger.
The medium that carries or conveys the
message to the receiver.

Radio Magazine
Newspaper Opinion leader
Spokesperson Fan-boys / fan-girls
Social Media Direct Mail
Television Internet
Leaflet

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1. Ideas Generation.
a. Formal Approach – a deliberate effort designed to encourage innovative ideas. Capture
innovative ideas from consumers by:
Conduct survey
Observing consumer’s behaviours
Experimentation
b. Informal Generation – accidental sources, chanced occurrences, emergent ideas.
c. Merchant Approach – “if you can’t generate it, buy it”
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2. Idea Screening.

a. Suitability – “Is the new product idea an excellent fit with the company” “Does it have potential
to improve the growth of the company?” “Is it a good fit with the company’s product portfolio?”
b. Acceptability – “Does the new product idea meet the expectations of stakeholders?” “What’s the
potential return on investment of the new product idea?” “What and how much risks are
involved?”
c. Feasibility – “Does the firm has the resources to develop the new product idea?” “Can the
required resources be mobilized in time?” 12
3. Concept Development and Testing. 4. Business Analysis
a. In-house testing a. Marketing Audit b. “How much sales are we aiming for?”
b. Off-house testing PESTEL Analysis “What’s the projected profit?” “How
Industry Audit much costs would be incurred?”
Consumer Audit : Market
Segmentation
Competitors Audit
Internal Audit 12
New Service Development

Service Firms Types

1. Traditional – Small and weak technology with

undemanding customers and limited managerial
skills.
2. System Firms – Large and sophisticated: banks,
retailers, insurers, airlines, with heavy dependence
on technology and excellent managerial skills.

3. Knowledge Intensive Firms – All sizes (legal and

accounting, engineering and design, advertising,
market research and management consultancy)
with heavy dependence on professional
employees and close connections to customers.

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Design Focus
Elements of Service Innovation
1. Standardisation of the Service
2. Mix of physical goods and intangible services 1. Capture and use information
3. Customer contact (high/low level) in delivering the service Anticipate customer needs
Market and competitor trends
Levels of Service Innovation Analyse own performance

1. Radical 2. Management / People Skills

a. Major Innovation – new service driven by information and Respond to opportunities, threats
computer based technology Exceed customer expectations
b. Start-up Business – new service for existing market
c. New Services for the Market presently served – new services to 3. Quality Framework
customers of an organisation Standards
Business planning, processes
2. Incremental
a. Service Line Extensions – augmentation of existing service line
(e.g. new menu items)
b. Service Improvements – changes in features of currently
offered service
c. Style Changes – modest visible changes in appearances 12
Thank you
for listening