Introduction to Strategic Management
Strategic management is a process that involves identifying and enforcing your organizational business strategy. It consists of specifying organizational objectives, developing policies and devising plans to achieve objectives. More importantly, it helps you gather resources to pursue the plan.
The strategic management framework gives you the ability to analyze both internal and external disadvantages and advantages. It’s a continuous process that can be re-evaluated and re-constructed at any time.
In addition, it gives you the ability to evaluate your mission and strategic issues. Ultimately you can strengthen your current business activities and determine the need for new programming.
Strategic Management Processes
The strategic management process helps organizations increase awareness & competitiveness. It is one of a few frameworks that enables companies to attain sustainable success.
Imagine, for illustration, that you have an elaborate blueprint that provides instructions. Now imagine possessing the same blueprint, but this time there are no instructions. You can easily make mistakes without instructions. By the same token, you can easily navigate through the blueprint if you have directions. Similarly, without strategic management, it is easy for organizations to get off course.
As you may already know, the strategic management process involves examining internal/external components of an organization. If you are considering a startup, the framework will help you achieve your business goals. This particular framework provides tools for scanning disadvantages and advantages.
Pivitol Stages of Strategic Management
Briefly, the strategic management process helps you gather resources to tackle your strategy. The allocation of these resources enables you to set the tone of your organization. More importantly, it supplies your representatives with a blueprint to carry out marketing goals and objectives. Pivotal stages of strategic management include:
- Initial analysis — the initial analysis consists of examining the internal, external and remote environment
- Strategy formation— a complete diagnosis of opportunities and deciding how the business will compete
- Goal setting — identifying, examining and determining guiding policies, corporate and business objectives
- Strategy implementation — gathering resources, then determining how they will be used towards the strategy
- Establish structure — process of defining day-to-day operations to gain an edge in the marketplace
- Strategic control and feedback — an ongoing process that involves scanning and reviewing strengths, weaknesses, opportunities and threats
All in all, the strategic management process can be a pivotal stage of a productive marketing strategy. Therefore, it’s essential to keep innovating as time goes by, so you don’t get left behind. In other words, you must continuously adapt to the environment.
Strategy formulation is a decision-making process that focuses on how the organization will compete. To illustrate: let’s say competition in your market is competitive. Therefore, you perform a SWOT analysis and discover the price of your products are well above the market average. Of course, the next step would be to reassess and formulate a competitive pricing strategy.
The two most common tools for this process are PESTLE and SWOT analysis. Addressing your strengths and weaknesses early on will enable you to be proactive. You can turn your organization’s disadvantages into strengths. By the same token, the political & environmental analysis will also help you avoid trials and tribulations.
The initial analysis involves analyzing business environments in your market which include; remote environment, external business environment and internal business environment.
- Industry environment analysis – The industry environmental analysis involves examining elements in the industry. As an illustration, several companies began analyzing and exploiting social media channels early on. Consequently, these organizations were able increase their revenue. Whereas, the organizations that failed to take advantage of these digital marketing channels were left behind. These companies either lost their business, or they’re still playing catch-up.
- Internal environment analysis – The internal environment refers to business components within the company. These are elements like the brand image, brand equity, company philosophy, value proposition, sources of income and physical resources. Basically anything associated within the company.
- Remote external environment analysis – The remote external environment refers to elements that exist beyond the business operating situation. These are factors which include political, environmental, social, technological, legal and environmental.
Many companies fail to analyze their initial situation. Or they fail to investigate it on a consistent basis. However, it’s important to identify where you’re at to get to where you’re going.
You must evaluate your company resources after identifying your strengths and weaknesses. To be more specific, determining if the 4 P’s (price, product, promotion, place) of the marketing mix meet your organization’s financial goals.
Strategy formation is an critical stage of strategic management. The strategy formation process is an ongoing process that involves assessing and re-assessing strategic techniques to gain an edge.
In the end, the objective of strategy formation is identifying and establishing tactics to gain an advantage in your respective marketplace. Once you have gathered enough information to increase your competitiveness, setting goals to achieve these strategies would be the next step.
It’s vital for companies to stay up to date. Staying up to date is essential because it allows organizations to stay a step ahead of competitors. For this purpose, businesses must make goal setting a habit.
- Objectives (Business, Functional, Corporate) – Business objectives are measurable goals of a business plan. Functional objectives are elements that relate to business (e.g., financing, marketing, human resources, technology, operations) designed to support corporate objectives.
- Guiding policies – An approach to identify solutions for obstacles. A plan of action or activities to carry out guiding policies.
- Measures and scoreboards – To put it in perspective, the balanced scorecards and strategy maps are designed to measure your performance and success regarding your strategy.
Setting goals helps your organization add clarity to the mission and vision. It enables the organization to convert the company mission and vision into organizational objectives. This provides the executives and managers with a target to reach.
The next phase of strategic management is the implementation of the strategy. Strategy execution is perhaps the most pivotal phase of strategic management.
Strategy implementation helps you determine what resources are used towards your objectives. It involves identifying mergers, acquisitions and divestures. This process also involves identifying financial plans and budgets.
Establishing structure is essential for growth. The process involves defining components of your day-to-day operations. This includes establishing the structure of your leadership, communication and incentives.
What is a formation of organizational structure? It is a system to define the hierarchy structure of company representatives. More specifically, a system to identify CEO’s, CFO’s, manager’s, board members, staff etc.
As you may already know, business and technology will always change. Therefore, your organization must establish an organizational structure so your organization is grounded for the long haul. Your company must be prepared to adapt both internally and externally as time passes.
Strategic Evaluation Control and Feedback
Many organizations neglect evaluation control and feedback. Or they fail to investigate it on a consistent basis. Nonetheless, strategy evaluation is as important as any other process. Evaluation allows your organization to identify both qualitative and quantitative data.
Control and feedback is a process that allows managers to determine if their team is achieving the goals established. These could be financial goals, production goals or marketing goals.
Strategy monitoring is the last step of strategic management. This step helps you to increase your market position; which is a key component to developing or enhancing your growth strategy.