Basic Model of Strategic Management. “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 – external and internal elements that will determine the future of the corporation” (Xxxxxxx, X. X., & Xxxxxx, X. X., 2008, pp. 11). On the other hand, strategy formulation is the development of long-range plans for the effective management of environmental opportunities and threats, considering corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies, and setting policy guidelines. An organization’s mission is the purpose or reason for the organization’s existence. It tells what the company is providing to the society. The mission statement promotes a sense of shared expectations in employees and communicates a public image to important stakeholder groups in the company’s task environment. In addition, objectives are the end results of planned activity. Followed by the objectives, the development of strategies consists of the plans to achieve the mission and the objectives themselves. “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” (Xxxxxxx, X. X., & Xxxxxx, X. X., 2008, pp. 14). One can consider the following three types of strategy: corporate, business and functional. 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. Corporate strategies typically fit within the three main categories of stability, growth, and retrenchment. 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. Business strategies can be grouped into two overall categories: competitive and cooperative. Functional strategy is the approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or a business unit with a competitive advantage. Lastly, the policies represent broa...
