Plan

◦ Topic 2 – Strategic Process

• Phases of strategic management process
• Levels of strategy
• Strategy Business Unit
◦ Discussion and Practice
◦ Mott Macdonald Case Study
◦ Topic 3 – External Analysis
• Opportunities and Threads
• Levels of External Environment
• PEST Analysis
• Stakeholders Analysis

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 STRATEGIC
PROCESS
Topic 2
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Natalia Fursenko
n.fursenko@g.nsu.ru
 Phases of an integrated strategic management process

Strategic analysis

Strategy development

Strategy implementation

Evaluation and control

Using this feedback, managers compare what is actually happening with what was
originally planned and then use the results of monitoring to take corrective actions.
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 Strategic analysis

◦ Scanning external environment to identify a

company's external opportunities and threats.

◦ Scanning internal environment to determine a

company's internal strengths and weaknesses.

◦ Summarizing the factors that are most important

to the company’s future with SWOT technique.

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Strategy development or strategy formulation
◦ Developing a company vision and mission

◦ Establishing strategic aims and objectives

◦ Generating alternatives, viable competitive

strategies

◦ Evaluating and selecting specific strategies to be

implemented

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Strategy implementation or strategy execution
Strategy implementation is the process by which
strategies are put into action through the development
of: - programs
- budgets
- procedures

This process might involve changes within the entire

organization concerning
- the overall culture
- structure
- management system.
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 Evaluation and control
Evaluation and control is the process in which
performance results are monitored so that actual
performance can be compared with desired
performance.

To monitor and evaluate broad-scale results

management of large company uses key performance
indicators, such as return on investment, net profits,
earnings per share, net sales.

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 Levels of strategy
The strategy literature makes a distinction on
strategic issues at the following three levels in an
organisation:
● The corporate level deals with development of
Corporate strategy
corporate strategies and defines a guideline for
developing business strategies
Business strategy ● The business (or business unit) level deals with
development of business strategies and defines
a guideline for developing functional strategies
Functional strategy ● The functional level deals with the development
of functional strategies.

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Corporate strategy describes a company’s overall direction to
achieve a balanced portfolio of products and services.

Strategic decisions on corporate level regard to:

- the types of businesses and the markets in which a firm should
operate
- the flow of financial and other resources to and from its
divisions
- the relationship of the corporation to key groups in its
environment
- corporate values

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Business strategy usually occurs on divisional level and
focuses on improvement of the competitive position
of a company’s product in the specific industry or
market segment served by the division.

A division may be organized as a Strategic Business

Unit (SBU) around a group of similar products. TM
usually treats a SBU as semi-autonomous unit with the
authority to develop its own strategy within corporate
strategy.

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Functional strategies are developed by functional
departments within the constraints of the corporate
and business strategy.

Functional departments develop strategies in which

their various activities and competences are pulled
together for the improvement of performance.

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Think point
Homework
1. Strategy in the context of strategic management process can be developed for those,
who didn’t
by an individual, or by a group.
send
- Who in organization is responsible for strategy formulating and execution?
-Many companies use strategic sessions (meetings) as the mechanism of
creation strategy. Please identify strengths and weaknesses of team working.
This is about making decisions in groups vs individually.
Strengths Weaknesses

2. Explain what is meant by corporate and business strategy. Give examples of

possible strategic decisions on corporate and business levels. Does every firm
have business strategies?

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In a multidivisional structure, there's one parent company that consists of a
number of different divisions operating separate businesses. Legally, the
parent company owns all of the divisions, but the parent company gives the
divisions significant autonomy, which allows them to act independently.
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 EXTERNAL
ANALYSIS
Topic 3
14

Natalia Fursenko
n.fursenko@g.nsu.ru
 Strategic analysis

◦ Scanning external environment -

to identify a company's new opportunities for profit
and growth and threats for its sustainable
development.

◦ Scanning internal environment -

to determine a company's internal strengths and
weaknesses.

◦ Integrating the factors that are most important to the

company’s future with SWOT technique.

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 Environmental scanning

Opportunities are external activities or trends that the organization may

benefit for growth or improvement of its performance.
◦ Favorable changes in government policy related to its field
◦ Changes in lifestyle (increasing commitment to sports)

Threats are external activities or trends that threaten the current and
future success of
the organization.
◦ New technology threatens to replace current technology
◦ Aggressive actions of competitors

Environmental scanning should be a continual process of

identifying organizational threats and opportunities.
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 Levels of External Environment

(1) Macro-environment
(2) Micro-environment
(3) Industry

Macro-environment includes general forces that do not directly touch

the short-term activities of the company but can influence its long-run
decisions. The analysis of external forces on macro- level classified into 4
categories (economic, sociocultural, technological and political – legal
forces) is denoted by acronym PEST.
Micro-environment includes those elements or groups that directly
affect the company and, in turn, might be affected by it (stakeholders).
These are customers, creditors, suppliers, competitors, shareholders, and
other stakeholders.
Industry is defined as a group of firms that produce or sell the same or
similar products to the same market. Unlike the broader macro-
environment, the industry (competitive) environment presents a more
focused field of study. 17
 Macro Environment (PEST)

Political –Legal Forces Economic Forces

Micro environment

Customers Creditors
Internal

Company
Public Competitors

environment

Suppliers Marketing intermediaries

Technological Forces Sociocultural Forces

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PEST analysis

PEST is a tool used to identify the key external forces on macro-

environmental level.
These forces can create both opportunities and threats for an organization.
The aims of doing PEST are:
- to find out the current external factors affecting an organization;
- to identify the external factors that may change in the future;
- to take advantage of opportunities or defend against threats better than
competitors would do.

The outcome of PEST is an understanding of the overall picture surrounding

the company.
PEST analysis may also be useful in assessing the potential of a new market.
The general rule is that the more negative forces are affecting that market the
harder it is to do business in it. The firm can simply decide not to engage in
any activity in that market.
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More detailed classification of Macro Environment

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 Stakeholder analysis
In the contemporary world large companies are connected with great number
of stakeholders: customers, suppliers, partners and other.
The purpose of stakeholder analysis is to indicate
- whose interests should be taken into account when making a decision
- how to deal with different stakeholders.
Why it is important?
- a group may be in a position to damage or weaken organization
- a group can support strategic initiative of the company (to bring new
resources, provide entry into a new market).
Additionally different stakeholder groups might have different priorities, for
example:
Shareholders expect the business to make a profit and receive a return on their
investment.
Employees require good working conditions.
It is important for a business to balance the interests of its various
stakeholders. 21
 Steps of stakeholder analysis

Generally, stakeholder analysis focuses on the following:

- identifying key groups which are to be analyzed

- clarifying their interests concerning the company (particular strategic initiative)

- analyzing their power and mechanisms of influence on the company (First of

all, does the group have mutual or opposite goals)

- developing how to deal with particular groups (relanship)

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PEST Analysis
Homework
Complete the table for imaginary company

Political –Legal Forces Economic Forces

Socio-cultural Forces Technological Forces

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