MGT680 Unit 3 The Effect of Technology and Innovation on Strategy Formulation

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American InterContinental University *

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680

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Management

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Feb 20, 2024

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The Effect of Technology and Innovation on Strategy Formulation Introduction When formulating a strategic initiative, an organization will complete an internal and external analysis to determine the most effective and efficient route to competitive advantage within an industry. This process involves completing a SWOT analysis (strengths, weaknesses, opportunities, and threats) to find the strengths and weaknesses within the internal environment and the opportunities and threats of the external environment. Technology and innovation within an industry can be classified as either an opportunity or a threat depending on the current conditions within the industry and the research and development that is being implemented within the organization. Corporate strategy is developed for stability, growth, and retrenchment within an industry to achieve and maintain competitive advantage. Learning Materials External Analysis Completing the external environment analysis will show the current technology being implemented in the industry. Ideally, emerging trends will be evident enough to allow an organization to forecast future adaptations as a part of the strategic planning process. Technology advancements allow opportunities and threats from the external environment to threaten the competitive advantage an organization has attained in an industry. When the first MP3 player was introduced, it was new technology that shocked the industry and created competitive advantage for the company. As the competitors began creating substitutes, other products were introduced by the original company to continue the competitive advantage by offering new products that had higher value to the customer. Brand loyalty continues for the software company as long as the innovations continue to meet the consumer demand for increased technology and convenience. Technology advancements allow innovation to take a company to new heights and create a morphing external environment for all in the industry. Impact of Innovation Because innovation and technology have a direct impact on an organization’s current operations, capabilities, and resources, as well as the

strategic direction that will be pursued, it is important to understand the process an organization should take to understand the impact. Organizations that incorporate innovation will traverse through the industry life cycle with a higher level of competitive advantage if the process is handled correctly. When a new company is created through the introduction of a new innovation, it enters the industry in the introduction phase. During this time, the innovations of a company are used to gain a market share and create increased competition. As the company moves through the growth stage, the innovations and advancements must continue to keep the company competitive. If the company fails to continue research and development to create new innovations, the competitive stance within the industry can be lost. The company’s growth will level off during the maturity stage where products and services are established and new innovations are not introduced. Eventually, the industry life cycle will decline as new innovations bring about new industries in response to the consumer demands. Click on the icon below to learn more about implementing innovation into a business strategy: Incorporating Innovation Innovation can mean something completely different to an organization depending on the product or service that is central to the organization. Innovation can be new products or services, but it can also be the technology that is used to produce or deliver the product or service to the consumer. The organization must define what areas will be targeted for innovation and advancement. This is not to say that only one area of the organization can be subjected to innovation, but the choices must be well defined and clear. Creating a strategic plan that focuses on innovation will ensure the organization maintains the focus on the future integrations. The strategic plan must be well communicated to all stakeholders to foster support. The strategic plan for innovation should include both short-term and long-term goals. As with any other strategic plan, the implementation should be monitored to ensure it is flowing as planned. However, with this strategy it is just as important, if not more so, that the external environment be closely monitored for threats from the competitors within the industry. Fostering Innovation

Creating an internal environment that supports innovation is a vital step for an organization to take. Although there may be those individuals who are the thought leaders of the organization who develop a majority of the innovations that will be implemented, an environment that fosters innovation should encourage all employees to develop plans for improvement to be considered. Through this type of organizational culture, the employees develop a feeling of ownership in the future trends. When the culture supports innovation, the organizational values and principles should be examined to determine if modifications are needed to support the new culture. Dynamic Nature of Technology and Innovation Technology has advanced exponentially over the last few decades. Innovative minds have used emerging technology to push the imagination further than ever before. During the process of identifying possible end goals for a strategic plan, it is necessary to consider emerging trends in technology and innovation. A strategic plan is used to achieve or maintain competitive advantage, but if the emerging trends outreach the end goal being considered, the process is for naught. The strategic plan should be created to integrate the technology in a manner that will maximize the efficiency of implementation and integration. It is common for companies to spend a lot of time, money, and effort to collect data in support of a strategic initiative, only to find that the information becomes outdated before the plan can be implemented. Knowing that technology and innovation are not stationary should be a central focus that allows a company to use them to their advantage. __________ has a direct impact on an organization’s current operations, capabilities, and resources. Value Cost Innovation Price A multinational strategy strives to optimize the production structure by __________ the production business model. evaluating

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scrutinizing challenging maintaining Technology advancements cause __________ from the external environment to threaten the competitive advantage an organization has attained in an industry. weaknesses factors strengths threats Thanks to ongoing environmental scanning and benchmarking, the dynamic internal capabilities should __________. generate superior efficiency and quality increase decrease stay moderate The dynamic capabilities approach sees the firm as an open system where _________ is/are aimed at improving the strategic flexibility of the corporation. competence building managerial tasks external factors internal factors Completing a(n) __________ will show the current technology being implemented in the industry. internal environmental analysis case study analysis of the external environment environmental scan When a new company is created through the introduction of a new innovation, it enters the industry in the __________ phase. declining introduction to the industry plateau

mature What happens during the maturity stage? New innovations are introduced. New innovations are not introduced. The company settles into a relaxed mode of operation. New products and services are introduced. As the company moves through the growth stage, the __________ must continue to keep the company competitive. competitiveness changes strategic initiatives advancements Technology advancements cause __________ from the external environment to threaten the competitive advantage an organization has attained in an industry. factors weaknesses threats strengths Eventually, the industry life cycle will decline as new innovations bring about new industries in response to __________. the internal environment of the competitors the external environment customer demands the cycle of the industry The dynamic capabilities approach sees the firm as an open system where _________ is/are aimed at improving the strategic flexibility of the corporation. external factors managerial tasks leveraging internal factors A strategic plan for innovation should contain ___________. long-term goals

a lot of planning competitors' goals the inclusion of historical data

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