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This overview of the strategic management process was prepared by Megan Remy while an accounting major in the College of Business at Southeastern Louisiana University.
The strategic management process is a series of six steps designed to help organizations adapt their decisions based on the organization’s goals and its environments. The key points one should know about strategic management are included in this overview. Also included, are some of the several important factors to consider that could either enhance or inhibit the overall effectiveness of this process. There is a description of the steps and the significant affects on the organization if properly followed.
The Idea in a Nutshell
Strategic management is focused on the long-term performance of an organization. This process is a strategy managers use to ensure the decisions they are making line up with the goals that have been set for the entity. In business there is always going to be a target to be reached and the first step of the strategic management process is to identify that mission. After identifying the goals of the company an external analysis and internal analysis need be conducted in order to distinguish the company’s standing. The fourth step is to formulate strategies to propel the enterprise in the intended direction and then management would implement the strategies developed. The final task is to evaluate the results achieved by conducting this process because it’s vital to know how effective the chosen strategies were on the organizations performance. If any adjustments would be needed then that could be determined after a thorough evaluation.
The Top Ten Things You Need to Know About the Strategic Management Process
1. There are apparent benefits of following the strategic management process which include the enhancement of long-run performance of an organization. It serves as a means to adapt the operations of an entity to the changes in the market and the economy. Integrating the separate functional segments of a business is more easily achieved when strategy is implemented.
2. Like most models this six-step process is designed for more stable environments, so it doesn’t provide for major unexpected events therefore, the effectiveness of this as a forecasting device may be more ambiguous for organizations in highly dynamic markets. This is one of many approaches that can be used and may not be successful for all enterprises.
3. The need for this process to be carried out will not end. Even if implementing strategies developed allows management to reach their target outcomes, the context in which the company operates is constantly evolving and there will inevitably be a need to alter strategies, modify programs, or other restructuring.
4. A mission identifies the reasons for the company to operate, so it reflects to the employees and customers the company’s image. This is the first thing that needs to be done because you have to know where you want to go in order to get there. Some of the main things a mission statement needs to address are the key market in which it is doing business in, what it will be contributing to the market, and what sets it apart from its competitors.
5. The second and third steps of the strategic management process are external and internal analysis. These two steps combined make up what is known as SWOT analysis, which identifies the strengths, weaknesses, opportunities, and threats of the organization. This is important information to have when formulating the strategies for the entity.
6. Managing by objectives can be very useful for strategy making, considering the strategy is for long-term success. Management by objectives is a way for managers and non-managerial employees to agree on the objectives of the organization and this leads to a better understanding of what the organization is trying to accomplish. Setting agreed upon objectives to be achieved can provide an avenue to have the mission be performed more accurately by employees and managers alike.
7. Implementation is the expression of the strategy through the organization’s activities and it involves making environmental factors a priority to the organization’s structure. Implantation is carried out through policies being made, technologies being adapted to match competitors, changing the incentive structure of the company, budgets, or many other things, but it involves changing things from how they are to how they need to be.
8. There are many different types of organizational strategies that are all based on the goals to be achieved. Some are targeted to expand the company or increases the stability of its operations others are focused on combining operations or offsetting the weaknesses of the organization. The main thing about strategic management is how well it advances over its current competitors or potential competitors.
9. Evaluating the strategic management process is necessary to determine whether the changes made were effective enough in terms of the mission, it helps to see where you are. Evaluations need to be performed continuously to keep up with the changes in the environments and usually they are done quarterly or yearly. Managers may have to change things to make progress toward their goals or their findings may reveal that they have developed an effective strategy and their only concern would be to maintain the execution of it.
10. It’s a drawback to the process that the business setting is constantly changing and adjustments always have to be made. Depending on the dynamics of the surroundings one change can lead to a change in the entire strategy.
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I think that it is relevant for companies to develop strategies with regards to their environments, strengths, threats, and other factors because of the way things change so rapidly. This process affects every member of an organization and in turn is affected by every member of the organization. It all boils down to implementation of the strategy because no matter how wonderful the plans for change may be, without proper execution there would be no valid indication of how well it worked. Managers need to allow for supervision or incentives for employees and hire individuals based on their capacity to achieve organizational goals. Robert Kaplan and David P. Norton asked “Why is there such a persistent gap between ambition and performance?” and their answer to that question is “The gap arises, we believe, from a disconnect in most companies between strategy formulation and strategy execution…”
You can draw a map to get you to where you want to go but unless you follow it you won’t get there, but if you do pursue the route you need to take you’ll surely meet your destination.
(2002). The strategic management process. Retrieved from http://www.netmba.com/site/about/.
Coulter, Mary, and Stephen P. Robbins. Management. 10th. Upper Saddle River, New Jersey: Pearson, 2009.
Lagace, Martha. (2006). The office of strategy management. Retrieved from Harvard Business School Working Knowledge Web site: http://hbswk.hbs.edu/item/5269.html.
To contact the author of “Top Ten Management on the Strategic Management Process: An Overview of How to Craft a Strategy for Your Organization,” please email Megan Remy Megan.Remy@selu.edu.
David C. Wyld (firstname.lastname@example.org) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also maintains compilations of his student’s publications regarding management concepts (http://toptenmanagement.blogspot.com/), book reviews (http://wyld-about-books.blogspot.com/), international foods (http://wyld-about-food.blogspot.com/).
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