How does the strategic management process operate?

Mission statement: The purpose of an organization.

In order to develop their strategy, organizational members must first identify the organization’s current mission, objectives, and strategies. Every organization has a mission statement that defines its purposes and answers the question. What business or businesses are we in? Defining the organization’s mission forces, management has to identify the scope of its products or services carefully. For example, the business magazine, The Smart Manager established its mission an set its sights to update readers on the latest thought provoking strategic ideas from experienced world class managers, academics and consultants from across the globe, ideas which are useful well researched and actionable, enabling readers to produce results in an era of transition and irruptive technologies.

Determining the nature of one’s business is as important for not for profit organizations as it is for business firms. Hospitals, government agencies, and colleges must also identify their missions. For example, in a college training students for the professions, training students for particular jobs, or providing students with a well rounded, liberal education. Is it keeping students from the top 5 per cent of high school graduates, students with low academic grades but high aptitude test scores, or students in the vast middle ground? Answers to questions such as these clarify the organization’s current purpose. Once its mission has been identified the organization can begin to look outside the company to ensure that its strategy aligns well with the environment. About offering Internet banking in 2000, most people in India were skeptical, given the low penetration of PC’s and email in India. Today’s more than 75 percent of the retail accounts at ICICI bank are Internet enabled. The cost per customer is Rs 4 for Internet banking as compared to Rs 13, Rs 14 and Rs 45 for ATM phone, and traditional banking. Today ICICI bank is the market leader on most retail products, and the second largest bank in India. The success of ICICI bank’s Internet based retail banking strategy was a result of understanding the technological and social changes that are taking place in India.

Management of every organization needs to analyze its environment. In the Netherlands, by law, proprietary information is public. But organizations in most other countries such as the United States must obtain that information on their own. That means that these organizations need to find out what their competition is up to what pending legislation might affect them, what is their customers desire and what the supply of labor is like in locations where they operate. By analyzing the external environment, managers are in a better position to define the available strategies that best align with their environment. In doing so, a company such as Tyco Electronics has maintained more than 18 per cent of the $ 32 billion global connector market and minimized its revenue loses at 8 per cent while its competition fell more than 26 percent.

The strategy process is complete when management has an accurate grasp of what is taking place in its environment and is aware of important trends that might affect its operations. The awareness is aided by environmental scanning activities and competitive intelligence.

To compete successfully in a fiercely competitive market, Nokia uses environmental scanning to spot emerging trends in fashion and youth culture and to observe the way people use their cell phones. Designers use information gleaned from scanning to create phones that combine aesthetics and function. Environmental scanning leads to products to products like Nokia’s new camera phone, shown here, with an integrated GPS, camera, video capture, MP3 player, Internet radio, and e-mail capabilities.