Describe the basic model of strategic management and its components
illustrates how these four elements interact; Figure 1–2 expands each of these elements and serves as the model for this book. This model is both rational and prescriptive. It is a planning model that presents what a corporation should do in terms of the strategic management process, not what any particular firm may actually do. The rational planning model predicts that as environmental uncertainty increases, corporations that work diligently to analyze and predict more accurately the changing situation in which they operate will outperform those that do not. Empirical research studies support this model.41 The terms used in Figure 1–2 are explained in the follow- ing pages.
ENVIRONMENTAL SCANNING Environmental scanning is the monitoring, evaluating, and disseminating of informa- tion from the external and internal environments to key people within the corpora- tion. Its purpose is to identify strategic factors—those external and internal elements that will assist in the analysis of the strategic decisions of the corporation. The sim- plest way to represent the outcomes of environmental scanning is through a SWOT approach. SWOT is an acronym used to describe the particular Strengths, Weak- nesses, Opportunities, and Threats that appear to be strategic factors for a specific company. The external environment consists of variables (opportunities and threats) that are outside the organization and not typically within the short-run control of top management. These variables form the context within which the corporation exists.
1-5. Describe the basic model of strategic management and its components
FIGURE 1–1 Basic Elements of
the Strategic Management
Process
Environmental Scanning
Strategy Formulation
Strategy Implementation
Evaluation and
Control