Strategic Management Process
Every successful organization must have a clear strategy in place. A strategy determines the basic short/long-term goals and objectives of an organization, the course of action to achieve the goals and the resources necessary for carrying out those goals. By following the strategic management process an enterprise can easily plan for their success.
The Five Stages of the Strategic Management Process:
- Goal Setting
Clarify the vision for your business by setting clear goals. Where do we want to be? This is the first question to be asked in a strategic planning process. Once you have come up with clear goals, write a mission statement that tells your employees and shareholders these plans. For example, the Microsoft vision 30 years ago was “a computer on every Desk”. Goals can be created by Founders and CEO of a company and communicated downwards or by a process involving all members of an organization.
- Situation Analysis
Once you have the vision of the company gather information that will help you accomplish your goals. A good place to start is by doing a SWOT analysis. Here you look at the organizations,
- Strengths– These are things a company is good at doing or characteristics that give it enhanced competitiveness e.g., physical assets, intangible assets etc.
- Weaknesses– These are what a company lacks, does poorly or a condition that puts it at a disadvantage. A weakness represents a company’s competitive liability.
- Opportunities– An opportunity is that which enables a company excel in achieving its objectives. It is external to the organization and can be a source of growth, profitability or gaining competitive advantage
- Threats– These are factors which could inhibit a company’s ability to achieve its targets. They inhibit growth, profitability, erode competitive advantage and are also external to the organization.
When doing a SWOT Analysis, you look at both External (macro environment, industry, competition, customers) and internal factors (resources, culture, competencies). The external analysis aims to identify opportunities and threats in the environment. The internal analysis identifies strengthens and weaknesses of the organization.
- Strategy Formulation– Once you have discovered your strengthens, weaknesses, opportunities and threats you can begin creating your strategy. Strategy Formulation entails coming up with both long and short-term goals. In this phase, you need to answer four key question.
- Where are you now? The SWOT analysis will help you answer this question.
- Where do you want to go? You answer this by outlining the future desired position of the company.
- How do you get there? Come up with sets of action to be pursued towards the realization of objectives. Use SWOT to identify possible strategies by building on strengthens, resolving weaknesses, exploiting opportunities and avoiding threats.
- How will you know you’ve got there? Answering this question means developing mechanism on how to monitor the strategy you decide on.
Answering those questions will give you a clear strategy for your company.
- Strategy Implementation-once you’re done with the strategy formulation it is now time for action. A strategy must be put into action for it to deliver results otherwise it will be just another document. Implementation happens to be a more challenging and delicate task than strategy formulation. Some delicate and sensitive issues involved at this stage are resource mobilization, restructuring, cultural changes, leadership changes, etc. To operationalize the new strategy, you need to ensure daily activities, work efforts and resources are directed fully toward implementing the strategy. A typical action plan would entail having
- Objectives (i.e. operational objectives)
- Person responsible
Implementing the strategy, therefore involves recasting and translating the strategy into shorter time frames appropriate for implementation. The culture and leadership of the organization may have to change to be compatible with the strategy being implemented. Given that strategy, implementation will definitely face hurdles consider having a strategy and reward system. The reward system should match strategy so as to motive its execution. Rewards can take various forms such as promotions, salary increments, bonuses, awards and so on. Actions that are consistent with strategy implementation should be rewarded. Such actions could include attitudes, behaviour or performance that fosters accomplishment of strategic objectives.
- Strategy Evaluation
This is the final stage of the strategic management process. At this stage, your strategy is already in action and you need to measure the effectiveness of the strategy. Measure the progress by comparing the plan against actual results. If the company is properly implementing its strategy results should be as expected in the strategy or not far off. If results are below par something is wrong with the implementation and corrective actions should be taken. At evaluation, the key thing is the feasibility of the strategy. Check if the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information. Tools used to evaluate feasibility include cash flow analysis and forecasting, break-even analysis and resource deployment analysis.
Latest posts by Team ManagementStudyHQ (see all)
- Enterprise Risk Management Strategy & Protecting Your Corporate Website - October 18, 2018
- What is Enterprise Risk Management and How is it Important? - October 18, 2018
- Groundbreaking HR Advice: 7 Tips Every New HR Professional Must Follow - September 27, 2018