Process of Strategic Management
The process of strategic management involves a series of steps that
organizations follow to develop and implement strategies that achieve their
goals and objectives. Here's an overview of the key stages in the strategic
management process:
1. Mission and Vision Statement
Mission Statement: Defines the organization's purpose and primary
objectives. It answers the question, "Why do we exist?"
Vision Statement: Describes what the organization aspires to become in
the future. It provides a long-term perspective.
2. Environmental Scanning
External Analysis: Involves analysing the external environment to
identify opportunities and threats. This typically includes:
o PESTEL Analysis: Examines Political, Economic, Social,
Technological, Environmental, and Legal factors.
o Industry Analysis: Evaluates the competitive environment using
models like Porter’s Five Forces.
Internal Analysis: Focuses on the organization’s internal environment to
identify strengths and weaknesses. Common tools include:
o SWOT Analysis: Assesses the organization’s Strengths,
Weaknesses, Opportunities, and Threats.
o Resource-Based View (RBV): Analyzes the organization’s resources
and capabilities to determine its competitive advantage.
3. Strategy Formulation
Corporate-Level Strategy: Determines the overall scope and direction of
the organization. Decisions include:
o Growth strategies (e.g., mergers, acquisitions, diversification)
o Stability strategies (e.g., maintaining current operations)
o Retrenchment strategies (e.g., downsizing, divestiture)
Business-Level Strategy: Focuses on how the organization competes
within a particular industry or market. Strategies include:
o Cost leadership
o Differentiation
o Focus (niche) strategy
Functional-Level Strategy: Involves developing strategies for specific
departments or functions (e.g., marketing, finance, operations) to
support the overall business strategy.
4. Strategy Implementation
Action Plans: Translating strategies into actionable steps. This includes
assigning responsibilities, setting timelines, and allocating resources.
Organizational Structure: Ensuring the organization’s structure supports
the strategy. This might involve restructuring, creating new roles, or
aligning departments.
Resource Allocation: Distributing resources (financial, human,
technological) in a way that supports strategic goals.
Change Management: Addressing resistance to change and fostering a
culture that supports the new strategy.
5. Evaluation and Control
Performance Measurement: Monitoring progress toward strategic goals
using key performance indicators (KPIs) and other metrics.
Strategic Control: Comparing actual performance with the strategic plan
and making adjustments as needed. This includes:
o Feedback Loops: Identifying areas where strategies are not
working and making necessary changes.
o Balanced Scorecard: A tool used to track performance from
multiple perspectives (financial, customer, internal processes,
learning, and growth).
6. Continuous Improvement
Review and Revise: Regularly reviewing and updating the strategy to
reflect changes in the internal or external environment.
Learning Organization: Encouraging a culture of continuous learning and
improvement to stay ahead of competitors and adapt to changing
conditions.
7. Feedback and Adjustment
Strategy Reassessment: Periodically reassessing the strategy to ensure it
remains aligned with the organization's mission, vision, and external
conditions.
Adaptation: Making necessary adjustments based on feedback,
performance results, and changes in the environment.
In summary, the strategic management process is cyclical and ongoing,
requiring continuous monitoring, evaluation, and adaptation to ensure long-
term success.
