Before talking about the stages of strategic management process, it is important to know what is Strategic management process? Strategic management is that art & science which is related to formulate, implement and evaluate cross functional decisions is helpful in the accomplishment of objectives of the organization. In other words the on-going process, in which broad plans are formulated, implemented & controlled in order to lead the organization towards the achievement of its strategic goals under the provision of its internal & external environment.
Stages of Strategic Management Process
There are three stages of strategic management process which are as follow:-
- Strategy Formulation
- Strategy Implementation
- Strategy Evaluation
Each one is discussed below
- Strategic Formulation:
The stages of strategic management process start with the strategic implementation. Business activities are executed by the formulation of strategy which is referred to as Strategy Formulation. Following elements are developed in the strategy formulation stage.
Vision & Mission: Include the target of the business
Strengths & Weaknesses: Strong & weak points of business
Opportunities & Threats: Associated with the external business environment
Besides the above elements, long term goals & objectives are also set in the strategy formulation. Alternative Strategies are generated to accomplish long term goals & particular strategy is selected to be pursued.
Following are some of important considerations that should be followed for best strategy formulation.
- Resources allocation
- Business to enter or maintain
- Mergers or joint ventures
- Business to liquidate or divest
- Entering in the foreign markets
- Business expansion
- Resistance of take over
- Strategy Implementation:
Strategy Implementation is the second stage of strategic management process, annual objectives are established along with the devising of policies. Moreover the employees of the organization are motivated & resources are allocated in order to execute formulated strategies. Strategy implementation further includes the following.
- Development of culture that is supportive to the strategy
- Development of potential organizational culture
- Re-direction of the efforts of marketing
- Preparation of budgets
- Preparation & usage of information
- Connecting compensation of employees with the organizational performance
The stage of strategy implementation is also referred to as action stage of strategic management. In fact the managers & employees are mobilized in implementing phase so that the formulated strategies are put into some action. Strategy implementation stage is the most difficult stage among all other stages of strategic management. Personnel discipline, sacrifice & commitment are required in this stage of strategy implementation. The strategy that is formulated but not implemented lacks any useful purpose. Strategy implementation is considered as utmost important in the stages of strategic management process.
- Strategy Evaluation:
Strategy evaluation is the last step of the stages of strategic management process. The final stage of the strategic management process is the strategy evaluation. It is the duty of the managers to have sufficient know-how about the problems and improper working of strategies. This task of the management is better accomplished through strategy evaluation which provides needful information to the managers in this regard. Moreover forces of external & internal environment changes with the passage of time therefore all the strategies also require modifications.
Nature of Strategic Management
The strategic management process is not limited to the formation & implementation of particular set of strategies. In fact the strategic thought is translated into action in strategic management. The translation is made quite easier when all the employees and managers of the organization know the business & consider them as part of the organization. Moreover all of them are committed to assist the organization to become successful by involving in the activities of strategy formulation. Strategy implementation efforts bear problems when the employees lack proper understanding & commitment.
The organization is affected from top to bottom through strategy implementation. All the divisional & functional areas are affected. Proper implementation is so important that even perfectly developed plan fails to fulfill any purpose if it is not implemented properly. A lot of money, time & efforts are spent by the organizations for the development of strategic plans along with the circumstances & means for the implementation of that plans. The change emerges from the implementation & evaluation efforts rather than from the formulation stage of plan. When imperfect plan which is implemented effectively, than it can provide more fruitful results than from any perfect plan which is not implemented properly.
Characteristics of Strategic Management
- On-Going Process:
Strategic Management is the continuous process that takes place to the existence of the organization.
- Broad Plans Shaping:
In this continuous process, the formulation & implementation of broader plans is made and finally these are also controlled.
- Strategic Goals:
Top management determines the strategic goals and the broader plans are activated to accomplish these goals.
- Internal & External Environment:
The goals are generally set by internal & external environment. In fact the internal environment is forced by the external environment to specify the goals and along with the guidance of external environment to achieve these goals.
Why Strategic Management is Important
Strategic management is very important aspect of today’s business. Following are some of the reasons that provides basis for the importance of the strategic management.
- The Survival of the Business:
The most important reason for the importance of strategic management is that the success of the business depends upon it. In recent era, the world is converted into global village in such a way that now businesses are operated on worldwide basis & worldwide standards. So every organization needs to adopt latest strategic management concepts & techniques to be successful in this tough global competition.
Electronic commerce is an important tool of the strategic management through which an organization can perform its function in convenient & beneficial way. The organization can be involved in direct selling through internet or it improves it communication with its customers, suppliers, creditors & shareholders etc. Moreover the advertising is also effectively made through internet which greatly influences the sales of the organization. E-commerce not only reduces the expenses but also the time & distance of the organization in performing its functions.
- The Natural Environment Issue:
In this regard, the natural environment has become serious strategic issue in such a way that it is threatened from the recent business community. The unlimited wants can be satisfied through limited natural resources through effective utilization.