Hello Friends, Today, we are going to discuss the Process of Strategic Management. Let’s start with some basics of the process of strategic management.
Strategic Management Process
The strategic management process is a six-step process that encompasses (covers) strategic planning, implementation, and evaluation. Although the first four steps describe the planning that must take place, implementation and evaluation are just as important. Even the best strategies can fail if management doesn’t implement or evaluate them properly.
The following are the steps of the strategic management process.
Identifying the organization’s mission, objectives, and strategies
It is the initial step of the strategic management process. It is the reason for the existence of an organization. It states who we are and what we would like to become. It is developed by top-level management.
Mission defines the fundamental unique purpose that is different from the other organization of a similar type. The mission of eBay is “to build an online marketplace that enables practically anyone to trade practically anything almost anywhere in the world.” This statement provides a clue to what this organization sees as its reason for being in business.
The strategy is a comprehensive master plan that explains how the organization will achieve its mission and goals. It adopts a course of action and allocation of resources necessary to achieve the goals. Additionally, cascading the business’s goals to all employees is essential. Tools like strategy execution software allow employees to see how their roles contribute toward the company’s goals. This helps build accountability and improves communication within an organization.
Analyzing the external environment
Analyzing the environment is a critical step in the strategy process. The external environment refers to the forces and institutions outside the organization that affect the organization’s performance. The external environment consists of specific tasks and a general environment.
In analyzing the external environment, managers should examine both the specific and general environments to see what trends and changes are occurring. The task environment consists of customers, suppliers, competitors, government, pressure groups, etc and the general environment consists of politics, economy, society, culture, technology, etc. such external environmental forces must be carefully analyzed for the strategic management process.
After analyzing the external environment managers need to identify opportunities that can be capitalized; and threats that an organization may face. Opportunities are the positive trends and scope for an organization to grow and threats are the negative trends and challenges to the organization.
Analyzing the internal environment
The internal environment consists of all forces and conditions within the organization that affects business operation. Managers need to analyze the internal environment to understand the position of organizational resources such as financial capital technical experience, skilled employees, experienced managers, and so forth, and capabilities in performing the different functional activities such as marketing, manufacturing, information systems, and human resource management and so forth.
Analysis of the internal environment helps in identifying the strengths and weaknesses of an organization. Strength is a position of organization with unique resources and efficiency in activities. Weakness is the activities that the organization does not do well and the organization is lacking valuable resources. The management must identify the strength to capitalize on and weaknesses to overcome the organization’s limitations.
Formulating strategies are developed on the basic identification of mission and environmental analysis. Environmental analysis is also called SWOT analysis.
Once SWOT analysis is complete, managers need to develop and evaluate strategic alternatives and then select strategies that capitalize on the organization’s strengths and exploit environmental opportunities or that correct the organization’s weaknesses and safeguard against threats.
Strategies must focus on corporate and functional levels. Managers need to develop and evaluate strategic alternatives and then choose a strategy that gives the organization competitive advantages
After strategies are formulated, they must be implemented. No matter how effectively an organization has planned its strategies, it can’t succeed if the strategies aren’t implemented properly.
Select strategies are put into action through plans, policies, tactics, programs, and procedures. Translating strategy into the action phase is the strategy implementation phase. Team building and managing effective teams is an important part of implementing strategy.
Top management leadership is a necessary ingredient in a successful strategy. Moreover, a motivated group of middle and lower-level managers is needed to carry out the organization’s specific strategies.
The final step in the strategic management process is evaluating results. How effective have the strategies been? What adjustments, if any, are necessary? Such adjustments improve the company’s competitiveness. This step helps to assess the results of previous strategies and determines that changes are required.
Thus evaluation and control is the process by which corporate activities and performance results are monitored so that actual performance can be compared with desired performance.
Although the evaluation is the final step of the strategic management process, it also can pinpoint weaknesses in previously implement strategic plans and thus stimulate the entire process to begin again.
Suman(Kul Prasad) Pandit is an accomplished business professional and entrepreneur with a proven track record in corporate and start-up sectors in the UK and USA. With a focus on sustainable business practices and business education, Suman is highly regarded for his innovative problem-solving and commitment to excellence. His expertise and dedication make him a valuable asset for businesses seeking growth and success.