The strategic management process is a six-step process that encompasses (covers) strategic planning, implementation, and evaluation. Although the first four steps describe the planning that must take place, implementation and evaluation are just as important. Even the best strategies can fail if management doesn’t implement or evaluate them properly. The following are the steps of the strategic management process.
1. Identifying the Organization’s mission, Objectives, and Strategies
It is the initial step of the strategic management process. The mission is the reason for the existence of an organization. It states that who we are and what we would like to become. It is developed by top-level management. Mission defines the fundamental unique purpose that is different from the other organization of a similar type.
This mission of eBay is to build an online marketplace that enables practically anyone to trade practically anything almost anywhere in the world.” This statement provides a clue to what this organization sees as its reason for being in business. The strategy is a comprehensive master plan that explains how the organization will achieve its mission and goals. It adopts a course of action and allocation of resources necessary to achieve the goals.
2. Analyzing External Environment
Analyzing the environment is a critical step in the strategy process. The external environment refers to the forces and institutions outside the organization that affect the organization’s performance. The external environment consists of specific or tasks and a general environment.
In analyzing the external environment, managers should examine both the specific and general environments to see what trends and changes are occurring. The task environment consists of customers, suppliers, competitors, government, pressure groups, etc and the general environment consists of politics, economy, society, culture, technology, etc.
3. Analyzing Internal Environment:
The internal environment consists of all forces and conditions within the organization that affects business operation. Managers need to analyze the internal environment to understand the position of organizational resources such as financial capital technical experiences skilled employees, experienced managers, and so forth and capabilities in performing the different functional activities such as marketing manufacturing information systems.
Analysis of the internal environment helps in identifying the strengths and weaknesses of an organization. Strength is a position of organization with unique resources and efficiency in activities. Weakness is the activities that the organization does not do well and the organization is lacking valuable resources. The management must identify the strength to capitalize on and weaknesses to Overcome the organization’s limitations.
4. Formulating Strategies:
Formulating strategies are developed on the basis of identification of mission and environmental analysis. Environmental analysis is alco called SWOT analysis. Once the swOT analysis is complete, managers need to develop and evaluate strategic alternatives and then select strategies that capitalize on the Organization’s strengths and exploit environmental opportunities or that correct the organization’s weaknesses and safeguard against threats. Strategies must focus on corporate and functional levels. Managers need to develop and evaluate strategic alternatives and then choose a strategy that gives the organization competitive advantages.
5. Implementing Strategies :
After strategies are formulated, they must be implemented. No matter how effectively an organization has planned its strategies, it can’t succeed if the strategies aren’t implemented properly. Select strategies are put into action through plans, policies, tactics, programs, and procedures. Translating strategy into the action phase is the strategy implementation phase.
Team building and managing effective teams is an important part of implementing strategy. Top management leadership is a necessary ingredient in a successful strategy. Moreover, a motivated group of middle and lower-level managers is needed to carry out the organization’s specific strategies.