Strategic Management Process

The overall strategic management process is illustrated in exhibits below: It begins when executives evaluate their current position with respect to missions, goals and strategies. They then scan the organization’s internal and external environments and identify strategic factors that might require change. Internal or external events might indicate a need to redefine the mission or goals or to formulate a new strategy at either the corporate business or functional level. The finals stage in the strategic management process, is implementation of the new strategy.
Strategy Formulation versus implementation:
Strategy formulation includes the planning and decision making that lead to the establishment of the firm’s goals and the development of a specific strategic plan. Strategy formulation may include assessing the external environment and internal problems and integrating the results into goals and strategy This is in contrast to strategy implementation which is the managerial and organizational tool to direct resources toward accomplishing strategic results. Strategy implementation is the administration and execution of the strategic plan. Managers may use persuasion, new equipment, changes in organization structure or a revised reward system to ensure that employees and resources are used to make formulated strategy a reality.
Situation Analysis
Analysis of the strengths weaknesses opportunities, and threats (SWOT) that affect organizational performance.
Strategy implementation
The stage of strategic management that involves the use of managerial and organizational tools to direct resources towards achieving strategic outcomes.
Formulating strategy often begins:
With an assessment of the internal and external factors that will affect the organization’s competitive situation. Situation analysis typically includes a search for SWOT – strengths, weakness, opportunities and threats that affect organizational performance. Situation analysis is important to all companies but is crucial to those considering globalization because of the diverse environments in which they will operate. External information about opportunities and threats may be obtained from a variety of sources, including customers , government reports, professionals journals, suppliers, bankers, friends in other organization consultants or association meetings. Many firms hire special scanning organizations to provide with newspaper clippings, internet research and analysis of relevant domestic and global trends. In addition, many companies are hiring competitive intelligence professionals to scope our competitions as we discussed.
Executives acquire information about internal strengths and weaknesses from a variety of reports including budgets, financial ratios, profit and loss statements and surveys of employee attitudes and satisfaction. Managers send 80 per cent of their time giving and receiving information. Through frequent face to face discussions and meetings with people at all levels of the hierarchy executives build an understanding of the company’s internal strengths and weaknesses.
Internal Strengths and Weaknesses:
Strengths are positive internal characteristics that the organization can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that might inhibit or restrict the organization’s performance. Some example, of what executives evaluate to interpret strengths and weaknesses are given in the exhibit below. The information sought typically pertains to specific functions such as marketing, finance, production, and R&D. Internal analysis also examines the overall organization’s structure, management competence and quality and human resource characteristics. Based on their understanding of these areas, managers, can determine their strengths or weaknesses vis-à-vis other companies.
Checklists for analysing organizational strengths and weaknesses
Management and Organization
1) Management quality
2) Staff quality
3) Degree of Centralization
4) Organizations charts
5) Planning, information control systems.
1) Distribution channels
2) Market share
3) Advertising efficiency
4) Customer satisfaction
5) Product quality
6) Service reputation
7) Sales force turnover
Humans Resources (HR)
1) Employees experience, education
2) Non status
3) Turnover absenteeism
4) Work satisfaction
5) Grievances
1) Profit margin
2) Debt equity ratio
3) Inventory ratio
4) Return in on investment
5) Credit ratings
1) Plant location
2) Machinery obsolescence
3) Purchasing systems
4) Quality control
5) Productivity / efficiency
Research and development
1) Basic applied research
2) Laboratory capabilities.
3) Research programs
4) New product innovations
5) Technology innovations
Source: New Era Management