Process of Strategic Management
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INTRODUCTION:
Strategic management involves the formulation and implementation of the major goals and initiatives taken by a companys top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.
Strategic management provides overall direction to the enterprise and involves specifying the organizations objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models often include a feedback loop to monitor execution and inform the next round of planning.
DEFINITION OF STRATEGIC MANAGEMENT:
Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives.
PROCESS OF STRATEGIC MANAGEMENT:
A strategy is a plan of action that one uses in order to achieve their goals.
Strategic Management involves the forming and implementing of that plan by all managers within an organization. A strategy map is usually created which will align all of the companies’ efforts to work toward one collective goal. It helps members at every level of the business to understand where they need to contribute and helps them see that they are part of something bigger. The actual decision-making involved within the strategic management process used to only consist of top executives. They would form the plan and then reiterate it to lower level managers however this is now shifting so that managers at all of the levels are involved in the whole process. This leads to better communication and more effective leadership.
The strategic management process itself consists of the following 6 steps:
Step1: Establish the vision, mission and goals of the organization:
This step involves the clarification of what company is and who they do business for. At the very basic level, it defines what product service or good is going to be offered. The vision of the company refers to the future of its existence and serves the purpose to inspire and motivate members to work hard to achieve this vision. Establishing these 3 things helps the company to zone in on the ultimate goal so they know where to focus their energies.
Step 2: Analyse opportunities and threats:
This step is to analyze outside resources and competition. Through market research and studying the industry and any regulation requirements, the organisation will be better able to anticipate the needs of its clientele. Studying competitors can help companies realize potential things that they should avoid doing or certain strategies that they can adopt that has worked for the company.
Step 3: Analyze the internal strengths and potential weaknesses of the organisation:
This step is meant for companies to see where they can improve within the confines of the business itself. Pinpointing any “weak links” or potential problems can save the company a lot of time and money if they can fix the issue before it becomes a bigger one. This includes an audit of every department and can be accomplished by performance reviews of employees and an audit of all assets and resources the company has.
Step 4: Analyzing strengths, weakness, opportunities, and threats (SWOT) and being forming the strategy:
This step consists of analyzing the information that was discovered in steps 2 and 3 in a side-by-side comparison. The strengths and weaknesses of the internal resources plus knowing the existing opportunities and threats that exist outside of the company help to identify the main issues an organisation needs to deal with when forming their strategy.
Step 5: Implementing the strategy:
In order to get a strategic plan to work effectively, it must be implemented and executed properly. Some of the ways that strategies tend to fail are because of miscommunication among different levels of the organisation and losing clarity of the tasks. Strategic tasks should be defined and the abilities of the organisation should be determined. There should be a timetable/agenda created that outlines the implementation as well as a plan. There are many different types of strategies but some of the main ones to note are corporate strategy, business strategy, low-cost strategy, differentiation strategy and functional strategies.
Step 6: Strategic Follow up:
After the strategy has been implemented, there needs to be a way to make sure that it is working. A control system should be put in place so that managers can evaluate the process. They need to be able to identify what is working and what is not. The faster problems can be identifies, the faster they can be resolved and improved.
Following these steps can help ensure that you create an effective, efficient and successful strategy.
IMPORTANCE OF STRATEGIC MANAGEMENT IN MODERN ORGANISATION:
Planning or designing a strategy involves a great deal of risk and resource assessment, ways to counter the risks, and effective utilization of resources all while trying to achieve a significant purpose.