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Strategy and the

Management of Technology
and Innovation
• Strategy Defined
–A coordinated set of actions that fulfill the firm’s objectives,
purposes, and goals.
–It is not a single act in a firm.
• Without a strategy, managers have:
–No well-defined business path to follow
–No roadmap to manage by
–No cohesive, reasoned action plan to produce successful
Characteristics of Strategy

• Ongoing Process
• Defines the nature of the businesses in
which the firm will compete
• Purposeful
• Indicates decision making direction
• Defines the firm’s contribution to
society and other constituent groups
Establishing the Strategy
• Strategic Planning
–The process that lays the groundwork and direction of the firm over the
next several years as outlined in a formal written strategic plan.
• Strategic Management
–An ongoing process in which the organization defines:
• the nature of the businesses in which it will be active
• the kind of economic and human organization it intends to be
• The nature of the contribution it intends to make to its various
FIGURE 2.1 External and Internal Strategic Interactions
Types of Capabilities
• Technical Capabilities
–How the firm approaches technology
• Destroy—eliminating and replacing technology
• Preserve—maintaining technology; continuous improvement
• Develop—leaping others with new technological capabilities
• Market Capabilities
–the ability to place the product or technology appropriately.
Competitive Advantage
• Competitive Advantage
–Something that the firm does better than any of its competitors.
–Goal: To have a sustainable competitive advantage
• Requires that the advantage:
–Must be valued by customers
–Cannot be easily duplicated by competitors
FIGURE 2.2 The S-Curve of Technological Progress
© 2007 Thomson/South-Western. All rights reserved. 2–9
Key Activities in the Strategic Management Process
SOURCE: Adapted from UC Santa Cruz Leadership Convocation, Kristine Hafner, Director Business Initiatives, UCOP, February 4, 1999.
The Strategic Process in MTI—the strategic management process can be broken
down into three principal activities. The activities occur simultaneously
and continuously.
1.Planning—the systematic gathering of information that leads to the generation of
feasible alternatives for the firm, selection of the most appropriate action,
and ultimately to setting of direction for the firm .
Information Gathering as Part of Planning
General External Information
Porter’s Five Forces Model is an industry level tool. An important
point to remember is to stay focused on one industry. Definition
of the industry determines many of the key elements.
» Bargaining power of buyers
» Bargaining power of suppliers
» New entrants threat
» Substitutes
» Complementors—products that sell will with another product
» Strategic Group analysis—a group of firms that competes in
a similar manner. This can be determined in a number of
ways.—customer base, geography, product, combination of
factors, etc.

FIGURE 2.6 Porter’s Five-Forces Model Plus
2.Implementation—after planning, the firm must put the plan into action.
• Key actions in implementation:
– What to do—execute the plan
– When to do it—when priorities dictate
– How to do it—make or buy
– Who will do it—us, them or combination
• Common implementation concerns
– Structure
– Personnel issues such as hiring, job assignments, training,
– Decision making
– Communication to whom, how, when, etc.
– Culture of the firm—norms and values
– Employee incentives—rewards, awards, etc
Tool to conceptualize elements of the implementation process—
value chain analysis which breaks down the firm’s activities into
primary and support activities

3.Evaluation and Control—is concerned with how well the
firm’s strategies are working and making adjustments to
meet changing conditions.
• Evaluation—comparison of actual outcomes with
expected outcomes.
• Control—adjustments, as needed to either the plan or
the implementation.
• Balanced Scorecard is a tool for evaluation and to define
issues to be considered for adjustment.
The Planning Process

1. Data gathering
2. Mission generation
3. Objective setting
4. Strategy establishment
Mission Statement
• A simple statement of the basic purpose or reason for a firm to
–It should:
• Identify what is unique about the firm
• Identify the scope of activities it wants to pursue
• Help the firm stay focused by defining who and what it is.
FIGURE 2.4 Levels of Strategy
• Corporate level Strategy
The pattern of decisions in a company that:
–Determines and reveals the firm’s objectives, purposes, or goals
–Produces the principal policies and plans for achieving those
objectives, purposes, or goals
• The range of businesses the firm is to pursue
• The kind of economic and human organization it is or intends
to be
• The nature of contribution it intends to make to its
• Business Level Strategy
–How to operate the businesses that the firm decides to enter into.
• Porter’s model of low cost and differentiation is the most
popular business level strategy model.
• Functional level Strategy
–How each functional area in a given business will operate to aid
the firm’s business level strategy.
–Examples: marketing strategy, and financial strategy

FIGURE 2.5 External Environment
FIGURE 2.7 Strategic Implementation Process
FIGURE 2.8 Technologies in the Value Chain
FIGURE 2.10 Characteristics of a Technology-Driven
Corporate Cycle