Strategic Management Process
Before talking about the stages of the strategic management process, it is important to know what is Strategic management process. Strategic management is the art & science which is related to formulating, implementing, and evaluating cross-functional decisions that are helpful in the accomplishment of the objectives of the organization.
In other words, the ongoing process, in which broad plans are formulated, implemented & controlled to lead the organization toward the achievement of its strategic goals under the provision of its internal & external environment.
Stages of Strategic Management Process
There are three stages of the strategic management process which are as follows:-
- Strategy Formulation
- Strategy Implementation
- Strategy Evaluation
Each one is discussed below
1. Strategic Formulation
The stages of the strategic management process start with strategic implementation. Business activities are executed by the formulation of strategy which is referred to as Strategy Formulation.
The 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 the important considerations that should be followed for best strategy formulation.
- Resources allocation
- Businesses to enter or maintain
- Mergers or joint ventures
- Businesses to liquidate or divest
- Entering the foreign markets
- Business expansion
- Resistance of takeover
2. Strategy Implementation
Strategy Implementation is the second stage of the strategic management process, annual objectives are established along with the devising of policies. Moreover, the employees of the organization are motivated & resources are allocated to execute formulated strategies.
Strategy implementation further includes the following.
- Development of a culture that is supportive of 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 the action stage of strategic management. The managers & employees are mobilized in the implementation phase so that the formulated strategies are put into action.
The 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 of utmost importance in the stages of the strategic management process.
3. Strategy Evaluation
Strategy evaluation is the last step of the stages of the strategic management process. The final stage of the strategic management process is strategy evaluation. The managers must 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 time therefore all the strategies also require modifications.
Nature of Strategic Management
The strategic management process is not limited to the formation & implementation of a particular set of strategies. 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 assisting 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 a perfectly developed plan fails to fulfill any purpose if it is not implemented properly.
A lot of money, time & effort 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 the plan.
When an imperfect plan is implemented effectively, then it can provide more fruitful results than any perfect plan which is not implemented properly.
Characteristics of Strategic Management
1. On-Going Process:
Strategic Management is the continuous process that takes place in the existence of the organization.
2. Broad Plans Shaping:
In this continuous process, the formulation & implementation of broader plans are made and finally, these are also controlled.
3. Strategic Goals:
Top management determines the strategic goals and the broader plans are activated to accomplish these goals.
4. Internal & External Environment:
The goals are generally set by internal & external environments. The internal environment is forced by the external environment to specify the goals and along with the guidance of the external environment to achieve these goals.
Why Strategic Management is Important?
Strategic management is a very important aspect of today’s business. Following are some of the reasons that provide the basis for the importance of strategic management.
1. 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 the recent era, the world is converted into a global village in such a way that now businesses are operated on a worldwide basis & worldwide standards.
So every organization needs to adopt the latest strategic management concepts & techniques to be successful in this tough global competition.
Electronic commerce is an important tool of strategic management through which an organization can perform its function in a convenient & beneficial way. The organization can be involved in direct selling through the internet or it improves its communication with its customers, suppliers, creditors & shareholders, etc.
Moreover, advertising is also effectively made through the 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.
3. The Natural Environment Issue
In this regard, the natural environment has become a serious strategic issue in such a way that it is threatened by the recent business community. Unlimited wants can be satisfied through limited natural resources through effective utilization.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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