Strategic management process is way through which management able to make and implement strategies, which are helpful for business organizations to achieve their objectives and goals. We may also says that strategic management process is a set of decisions along with actions done by managers to conclude long time performance of the organization. All the basic functions of an organization can be demonstrated through strategic management, such as planning & organizing, leading and controlling.
- Strategic management is involved in various decisions made by managers.
- The findings state that organizations having proper strategic management systems have greater financial results than those having no any systems.
- It is applied in all types of organizations, whether they are profitable organizations or non-profit organizations.
Strategic Management Process
Strategic management process consist of eight steps including strategic planning, evaluation and implementation.
01– First step is the identification of mission, goals and strategies.
- All the organizations have missions that define the significance of those organizations with practical.
- It is important to know about the goals and strategies of the organization.
02– Second step is the analysis of external environment affecting the organization. It is under the options of strategies by management.
- Successful strategies support the environmental effects in well manner.
- This step is completed only when the managers have environmental information about trends, norms and values going out there.
03– Third one is the identification of threats and opportunities after analysis of external environmental conditions.
- Positive environmental aspects are the opportunities. While,
- Negative factors of the environment are threats for organizations.
04- Fourth step is analysis of organizational reserves in which management look through the available assets of the organization such as skilled manpower, work activities and etc.
- Management keeps closed sights over core competencies of the organization that are valuable skills, resources and capabilities to provide competitive advantages.
- In this step, managers are forced to realize the parameters affecting goals in any way.
05- Fifth step is to identify the strength and weakness through assessment of internal organizational resources.
- The activities that control the solo resources of the organization in well manner are the strength of the organization.
- Weaknesses are inverse activities to the strengths.
- The personality of an organization must be kept in mind that is its culture. It is the result of understanding and supporting the values of the organization by the employees.
- It becomes easy for the managers to transfer the distinguishing competencies to the employees of the organization.
- Strategic choices also affect the innovation and performance due to strong cultural tolerance of an organization.
- SWOT Analysis and TOWS are very compulsory for an organization to improve the performance in achieving goals and targets by avoiding threats and hindrances. The mission of an organization should be evaluated by the managers in the sense of SWOT Analysis.
06- Sixth one is the formulation of strategies for commercial, business and practical levels of organization. It provides Competitive advantage to the organization.
07- Second last step is the implementation of strategies in practical shape.
08- Last step includes the evaluation of results in strategic management process. Managers should evaluate the results in order to compare the achievements and corrections, if needed.
Importance of Strategic Management
It supports the organizations for identification of competitive advantages and to deal with significant competitive actions.
- Organizations are provided a directional sense through it, by which organizational members come to know that where to make certain efforts.
- It also helps to recognize the demand of innovation along with the techniques to apply new ways for improving strategies.
To achieve long-term goals and objectives, strategies are used to interact with environment as significant action plans.
Specification of Competitive Analysis for the Formulation of Strategy
Organization’s competitive levels should be analyzed carefully before formulating effective strategy for acquiring a competitive advantage. SWOT Analysis is a method to evaluate the strength of a competitive level of an organization for taking competitive advantage. SWOT involves assessment of organizational strength, weakness, and opportunities along with threats.
01- Strength and Weakness are the internal characteristics of an Organization
- Strength is the internal virtue of an organization that improves the potential of competitive situations of an organization.
- Weakness is also an internal characteristic of an organization, which causes the reduction in potential of an organization of competitor’s strategic movement.
02- Opportunities and Threats are the external effects of the environment.
- Opportunity is the environmental condition offering specific visions for the improvement of organizational competitive situations.
- The threat is classified as an environmental condition offering important aspects destabilizing organizational competitive situations.