Perform External and Internal Audits: Ideally managers begin their strategic planning by methodically analyzing their external and internal ituations. The strategic plan should provide a direction for the firm that makes sense, in terms of the external opportunities and threats the firm faces and the internal strengths and weaknesses it possess. To facilitate this strategic external/internal audit many managers use SWOT analysis. This involves using a SWOT chart to compile and organize the process of identifying company Strengths, Weaknesses, Opportunities, and Threats.
Formulate New Business and Mission Statements: Based on the situation analysis, what should our new business be, in terms of what products it will sell, where it will sell them, and how its products or services will differ from its competitors? What is our new mission and vision?
Translate the mission into Strategic goals: saying the mission is to make quality job one is one thing operating that mission for your managers is another. The firm’s managers need strategic goals. What exactly does that mission mean, or each department, in terms of how we’ll boost quality? As an example, WebMD’s sales director needs goals regarding the number of new medical related content providers vitamin forms, hospitals, HMOs it must sign up per year, as well as sales revenue targets. The business development managers needs goals regarding the number of new businesses such as using WebMD to help manage doctors’ office online – he or she is to develop and sign. Similarly, Citicorp can’t function solely with a mission, provide integrated, comprehensive financial services worldwide. To guide managerial action, it needs goals in terms of things like building shareholder value, maintaining superior rates of return, building a string balance sheet and balancing the business by customer, product and geography.
Formulate Strategies to achieve the strategic goals: Again a strategy is a course of action. It shows how the enterprise will move from the business it is in now to the business it wants to be in (as laid out by its vision, mission, and strategic goals) given the firm’s opportunities, threats, strengths, and weaknesses. The strategies bridge where the company is now, with where it wants to be tomorrow. The best strategies are concise enough for the manager to express in an easily communicated phrase that resonates with employees.
Figure below illustrates these principles. For example, the essence of Dell’ strategy is be direct. Wal-Mart’s strategy boils down to low prices every day.
Dell: Be Direct
eBay: Focus trading communities
General Electric: Be number one or number two in every industry in which we compete, or get out.
Southwest Airlines: Meet customer’s short haul travel needs at a fresh competitive with the cost of automobile travel
Vanguard: Unmatchable value for the investor owner
Wal-Mart: Low prices, every day.
Keeping the strategy clear and concise helps ensure that employees all share that strategy and so make decisions that are consistent with it. For example the executive team’s shared understanding of Nokia’s strategy reportedly helps explain how the form can make thousands of decisions each week so coherently.
Evaluate Performance: Strategies don’t always succeed. For example, Procter & Gamble announced it was selling its remaining food businesses – Jif, Crisco, and Folger’s coffee – because management wants to concentrate on household and cosmetics products.
Strategic Control: The process of assessing progress toward strategic goals and taking corrective action as needed
Managing strategy is an ongoing process. Competitors introduce new products, technological innovations make production processes obsolete and social trends reduce demand for some products or services while boosting demand for others. Strategic control keeps the company’s strategy up to date. It is the process of assessing progress toward strategic goals and taking corrective action as needed. Management monitors the extent to which the firm is meeting its strategic goals, and asks why deviations exist. Management simultaneously scans the firm’s strategic situation (competitors, technical advances, customer demographics and so on) to see if it should make any adjustments. Strategic evaluation addresses several important questions: for example, are all the resources of our firm contributing as planned to achieving our strategic goals? What is the reason for any discrepancies? And do changes in our situation suggest that we should revise our strategic plan?