Fast-paced innovation, dynamic technologies, and ever-so-challenging customer expectations have forced organizations to think and make decisions strategically to remain successful. The concept of strategic management involves a continuous process of planning, monitoring, analyzing, and assessing everything necessary for an organization to meet its goals and objectives. As simple as it may sound, it involves various complexities that cover formulating strategies to match the ultimate goal and vision and act in line with the organization’s objectives.
The concept of strategic management helps the leaders or owners of various companies to access their company’s present position, develop strategies, deploy and analyze the effectiveness of the implemented strategies.
What Is Strategic Management Process?
Before we try to understand the phases of strategic management, it is essential first to understand what it is and how critical it is for companies. We can describe it as a process that helps establishments achieve their goals intelligently using available resources. Isn’t that what every company is supposed to do? Yes, but companies get a direction to reach goals by creating plans and policies in this procedure. Resources are allocated based on these plans.
What is most important is that all these strategies must percolate down to the last level. This method is suitable for companies of all sizes. It helps them know their position in comparison with competitors. It enables them to gain an edge over others. As this process is entirely objective oriented it specifies clearly what each employee must do. They can get an idea about how to perform their duties, how to do and when to do them.
As everyone is talking about in almost all industry segments, it is good to know what factors lead companies to adopt this process of strategic management.
Why is Strategic Management Essential for a Business?
Strategic management creates a necessity to commit to the strategic planning that represents an organization’s ability to set its short-term and long-term goals and determines the actions that need one must take to achieve those goals. Various factors necessitate companies to adopt this method.
The business environment in any country is prone to uncertainties. But companies cannot succumb to such forces. They are started with a lot of investment and hope. A lot of people, including promoters and employees, depend on it for their survival and growth. Strategic management is best to protect companies from all these risks and ensure smooth progress to achieve their objectives.
Markets are changing rapidly. New technologies are invading all business activities. Customer demands are increasing, and there are many companies to satisfy them. The quality of the workforce is also changing fast. All these need to be managed and company goals achieved at any cost. This has forced managers to look at a change in direction, so managers started using strategic management.
Globalization Of Business
Today companies must compete not just with local players but also combat competition from across borders. It is not enough to manage things traditionally. One must keep track of global changes and trends. Firms must develop long-term competitiveness. Strategic management is the way to achieve all these. Only those who adopt this way of running organizations can survive this challenge of globalization.
Also Read : Understanding The Basics Of Strategic Management
Success Is Unsure
In this fast-paced commercial environment, one cannot guarantee success with traditional ways of working. Companies that were conveniently flourishing saw that suddenly their survival itself was becoming difficult. Firms with modern managers and technology were zipping ahead. The only way was to employ strategic planning that ensures low production costs and excellent service to customers.
Also Read : How to Advance to the Strategic Leadership Role?
Lack Of Managerial Skills
Managers in traditional companies were not equipping themselves with modern skills. To complete the strategic management process, managers will need to acquire additional capabilities. Establishments have found that employing this planning method was helping their officials learn new technologies and techniques. Improving managers’ quality is suitable for any firm.
It is no more enough for companies to carry on with old concepts of business. Companies are employing modern techniques like data analytics for getting various insights. By adopting strategic management, organizations can integrate these new processes with existing ones and ensure more efficient functioning.
Many firms can see that their competitors are employing this method. They see positive results because of this. Such extensive use of strategic management is forcing others to adopt it. Employees are also seeing the way other companies are moving forward quickly. Unless this type of governance is used, it may be difficult for a company to retain its staff. Getting talented recruits will also become difficult.
Fulfilling social responsibilities is becoming more and more critical for firms. They must give back to the society where they are working. This is not just something mandated by law, but most youngsters give importance to such things when they join a company. When there is so much change in society, companies also must go with them. Only strategic management methods will help to meet these requirements.
Use Of New Technologies
Web-based technologies and e-commerce firms are bringing a drastic change in the way business happens. With these technological invasions, risks are also increasing. New challenges are being thrown at firms. To cope with all these issues, companies must adopt new methods of management. Strategic planning is an excellent way to remain competitive even in changing times.
An important factor that pushes companies to adopt new methods is a change in goals. Organizations are no more just looking at profits. Market reach, industry leadership, brand building, international competitiveness, social values, environment protection, etc., have all become targets that modern companies aim to achieve. If establishments must reach such lofty aims, it is essential to adopt this new method.
Now that it is clear why companies should change tracks and adopt this method of management, we must see what the process is.
Explaining The Strategic Management Process Steps
Preparing A Strategy Statement
When we discuss various steps involved in the process of strategic management, it is essential to mention the strategic statement. It confirms the activities that a firm intends to perform through a document. This will help in giving better direction to all. We will see what components constitute this statement.
Also Read : The Ideal Strategic Management Model: Decoded
This is what tells everyone why a firm exists. It will inform the reason for creating a company and what activities it will perform at present and in the future. This document is very helpful in providing direction. It will specify the priorities of an organization. A company’s vision and mission will also be described in this message. It encourages people to work towards the company’s objectives. This also helps in allocating resources as required.
It states how a company is going to serve its stakeholders. There will be a description of how this firm will progress towards its goals. This statement mentions about what products this firm will sell and how they will differ from others. A mission statement must also specify how society will benefit from this company’s activities. This statement must be inspiring to management and staff alike.
Every company management has an idea about where they will be a few years later. It is with this goal that organizations will make strategies. Companies must announce what it is and how they will achieve it. A vision statement is a document that is for use by a company’s staff. The company’s staff must get direction from this document and encourage them to work towards their objectives.
These are what a company must achieve to realize its mission and vision. They comprise a set of actions that will help organizations move forward. Goals are made for every department of an establishment. They must be specific and measurable. There must be a time frame to reach these goals. Strategic management enables to fulfill this. They must be flexible and take into account both external and internal uncertainties.
Also Read: What Are the Functions of Strategic Management?
Now that we have understood the concept of strategic management and its importance, let’s study the important seven stages of the strategic management process:
Stage 1: Setting the Goal
The first stage of strategic management is to set the goals your company wants to achieve. The goals will include both the short-term and long-term goals of the organization. Share these goals with the entire organization and explain how each goal will impact the organization’s future. This will give each team member a sense of purpose and meaning to their job. One must also make sure that there are individual goals for every department and team. These should all combine to arrive at the organizational objective.
Also Read : Leadership Excellence In A VUCA World
Stage 2: Internal and External Environment
The second stage involves gathering as much data and information as possible. This information will be an integral part of identifying the organization’s mission and vision. The mission component describes the company’s business and everything related to the products, customers, markets, values, employees of the organization, etc. The vision component answers the question: What does an organization want to become?
Stage 3: Situation Analysis
After identifying the mission and vision component of the organization, the next stage arrives, where the organization has to assess its current situation in the market. This stage involves evaluating the internal and external environments of the business and analyzing its competitors. This assessment will include available resources and those that need to be acquired. Companies must also decide where and how different levels of management will implement the strategies.
Stage 4: Strategy Formulation
A Situation Analysis is followed by the creation of long-term goals and objectives. These long-term objectives indicate how a company can improve its competitive position in the long run. In any goal-oriented organization, strategies are chosen at three different levels: Business level, Corporate level, and global/international level. One must keep in mind that these strategies must not cost a company heavily. They must also not have many potentially negative consequences.
Stage 5: Strategy Implementation
Even the best strategic plans will give the best results when executed so that it successfully creates a competitive advantage for the company. At this stage, the managerial skills are of utmost importance rather than using analytics. Communication is essential at this stage of strategic management because all departments in a firm must support new strategies for its effective implementation. Strategies are useful only when implementing them properly. There must be an alignment between strategy and company dimensions like organizational structure and resource allocation.
Stage 6: Strategy Monitoring
After implementing the strategy, managers must monitor it constantly to make it successful. Due to the dynamic conditional, managers must do a SWOT analysis that prepares the organization for any new strengths, weaknesses, opportunities, and threats that may arise. The other important part is to prepare a supporting plan. Organizations must undertake various activities to make the strategies work well. These actions must also be taken and ensured they help make plans work.
Stage 7: SWOT Analysis
SWOT analysis is a very crucial element in strategic management that most organizations forget about. It helps the organization identify its strengths, weaknesses, opportunities, and threats. Also, it helps prepare the organization for its future by detecting and analyzing the internal and external environments and other factors that may impact the business. It is not enough to do this analysis, but companies need to take corrective action wherever necessary. Weak elements must be rectified or replaced so that the organization can progress without obstacles.
Also Read: Strategic Human Resources Leadership
It is not enough to know the process. Companies must know what results they can expect after completing all procedures properly if companies must implement this.
Results Of Implementing Strategic Management
Helps Being Proactive To Changes
A popular argument against strategic management is that conditions change so fast that it is impossible to make long-term plans. But it is exactly for this reason that companies must use this method. When there are already plans in place, it helps a company to be proactive about change. Enough resources have to be planned so that managers can use them for exploiting the changed conditions too. Instead of reacting late, these firms can take time to adjust to changes. They must make enough room in strategies for unexpected situations.
Provides Clear Goals And Direction
Another reason usually quoted for opposing the implementation of strategic management process steps is that nobody can fix goals in a rapidly changing market. But it has been observed that neither employers nor their staff can work without a clear objective. This method shows employees where an organization is moving and what one can expect from them. It also provides a reason to put in hard work to achieve organizational goals. When there is a target to be reached, it gives management a benchmark to assess everyone.
Helps Achieve Better Financial Results
Various studies have proved that employing this type of planning helps companies achieve better profitability. There is a clear relationship between strategic management and financial results. A major advantage is that this procedure facilitates better use of resources. As there is a clear strategy in place, companies are able to use their resources in a more effective manner. There is no wastage, and this helps in reducing costs. Because of being planned in advance, there is never a shortage of materials that prevent the achievement of goals.
Facilitates Best Choice
Interaction between all concerned parties is one of the 7 steps of strategic management process. When collecting information from inside an organization, everyone gets an opportunity to present their views. Alternative strategies can arise when there is group interaction before a decision is being taken. This helps companies to find better alternatives than those suggested by executives. Group members also feel more involved in this process when their opinions and suggestions are taken.
Also Read: Understanding A-Z of Strategic Leadership
Workers in a company need continuous motivation to perform better. Those who are doing routine work can soon feel bored. This will reduce their interest and affect productivity. By including all of them in discussions before making any decisions, strategic management motivates employees to work harder. Being part of the decision-making group can encourage employees as nothing else can. There is nothing of more pride than being part of a team that takes important decisions with regard to a company’s future.
Reduces Resistance To Change
In a world that is changing fast, what people fear the most is a shift out of their comfort zones. This is especially true with older employees in a company. They don’t like to move out of their space or take up new jobs. As the steps in strategic management process include employee participation in decision-making, everyone understands why there must be a change in procedures. This makes them accept transformation without much resistance. By this, companies can use employees in different areas and get the best out of them.
Better Organizational Effectiveness
What is most important in strategic management is that resources must be used to get maximum benefits from them. They are made to give their maximum contribution. Most companies that adopted this method are able to reach their goals with available resources. In this type of planning, every item or person has a specific purpose at any given time. They are used only for that reason, and this means more effective use of these assets. This makes firms increase their organizational effectiveness.
If employees in a company are happy, there will be less attrition and better efficiency. Staff members in a firm will work without complaints when their roles are clearly specified. A big advantage of using strategic management is that workers have their work defined without any ambiguity. This helps them work with better results. They know what contributions to achieving company objectives are expected from them. It also makes it easy to measure everyone’s performance.
How Companies Benefit From Integrating Strategic Management Processes ?
Achieve Long-Term Objectives
All companies have both long-term and short-term objectives. Their long-term goals will include a higher rate of return on investment, better productivity, industry leadership, market dominance, establishing the brand, etc. Such objectives can be achieved if strategic management is implemented. This process helps make clear action plans to reach that goal. It will not allow companies and their employees to lose focus of such goals while struggling to achieve short-term aims.
Study Business Environment
One of the important stages of strategic management is where companies study both internal and external factors. It is especially important to know changes happening in the environment where these organizations are working. Even small changes in market conditions can affect a company’s performance greatly. They must be aware of every activity in their market and of their competitors. This will help in formulating strategies to exploit positive factors and protect themselves from adverse situations.
Identify Business Opportunities
An important part of the strategic management process is a SWOT analysis. This is a very important step for all organizations. This helps to know what opportunities exist for a business. These opportunities may be already existing or can be created by changes in marketing strategies or product characteristics. What is important is to know where they can sell their products and use that knowledge to increase business. This information also helps to form clear strategies to improve brand awareness and sales.
Gain Awareness Of Advantages
It is necessary for every company to know where they stand vis-a-vis competitors. There can be various advantages that a company has. It can be in technology, marketing, production, finance, workforce, or research capabilities. Only when all employees and management sit together to discuss opportunities will these advantages be discovered. This information is highly valuable when fighting competitors. It will also help in establishing dominance in the market. Such steps of the strategic management process give companies a competitive edge.
Overcome Organizational Weaknesses
Every company has strengths and weaknesses. It is not often that negative aspects are identified or talked about. But strategic management is a process that analyzes all factors that can impact a company’s achievement of objectives. Once those weak areas are identified, they can be taken care of. Suggestions to overcome weaknesses may appear from employees themselves during discussions. Whatever resources are needed to overcome such organizational issues can be arranged to resolve such issues.
Match Strength With Opportunities
Another big support that this process extends to companies is to match their strengths with outside opportunities. It is not enough to identify both these using a SWOT analysis. One must know how they can be matched and used to the firm’s advantage. Once this is accomplished, it is very easy to grow and achieve objectives. Knowing that there are positive factors that can exploit a market gives a boost to employee morale and encourages them to work harder.
Also Read: What are the Different Kinds of Strategies?
Bring Internal Controls
The steps involved in strategic management process helps to bring controls in an organization. An important part of this procedure is to set up monitoring and tracking systems for various tasks. Once this is completed, it is easy to have good control over the working of different departments. Such close watching of activities helps in ensuring that all employees are working towards a common goal. Any deviation can be corrected. It makes achieving desired results easier.
Also Read : Steps involved in Strategic Management Process
Prepare For Uncertainties
All businesses face an uncertain future. The pandemic situation has proved it to all of us. But those businesses that employ strategic management will be better prepared for any adverse events that may occur. Business forecasting is a technique that is used in strategic management to help companies know what can happen in the future. This information will help to prepare for any situation and tide over it without getting affected adversely. Those firms that implement this method will continue to work profitably even when others suffer.
Another big advantage of the strategic management process is that it helps improve profits. This is what every organization wants and works towards. This process considers every aspect of business that is internal and external. It enables companies to know what activities will result in maximizing profits. Focusing on such tasks makes it easy to improve earnings and reduce costs. With better market knowledge, organizations can take maximum advantage of their strengths to improve revenue.
Manage Risks Effectively
Risk management is a very important task for every business organization. There can be many types of threats for a company. These can come from outside and inside. Market conditions can change suddenly, leading to a drop in sales. Failure of machines can stop production, which can result in an inability to fulfill orders. When all steps of strategic management process are followed correctly, companies can find ways to avoid or mitigate risks effectively.
We have seen what are the 7 steps of the strategic management process in detail. It is not enough to just know what they are. Implementation of any strategy that must reach the lowest level is not an easy job. It involves a lot of people from different backgrounds, and a lot of bargaining and negotiating will be needed to succeed in this process. A manager who wishes to deploy strategic management must possess special capabilities to complete this job successfully. Let us see what these skills are.
Also Read : Risk Management and Its Importance
Seeing The Full Picture
A manager must be able to see everything in totality. When implementing strategies, it is essential to take into account both internal and external factors that can affect its realization. Challenges that are not in their control, like government policies, economic fluctuations, and competitors, must also be considered and adequate plans kept in place.
Ability To Delegate
It is not very easy for many managers to delegate work. The strategy management process cannot be accomplished alone. It is necessary to have a few trusted assistants who can complete various tasks in this procedure. Getting others to do this work is also a way of developing them to become managers soon. Delegation doesn’t come naturally to many people. Such officials must learn this skill. A leadership management course can teach you this tactic.
Learning To Listen
Listening is a very important skill for strategic management. One must get everyone’s nod for carrying forward a plan. This means that it is necessary to listen to what they have to say. Some may have apprehensions. Others may provide valuable inputs that will help implement strategies successfully. Listening can provide a lot of information that will help in this job. It also helps in getting people to support this program.
This is an essential quality because unless one knows about what commercial benefits a firm will earn from this activity, it will not be possible to implement it successfully. This skill will help managers to select activities that are most profitable for an organization and give them a priority. Strategies can be formulated with that in mind. All plans are made for earning better revenue.
One must possess excellent organizing skills to complete all stages of strategic management process successfully. This process focuses on utilizing available resources for achieving company objectives. Managers must be able to organize and bring together all available resources, including manpower. It is important to select the right people for each task to ensure that they are completed on time and as required.
Ability To Collaborate
Managers must be able to work with an open mind. They must be ready to hear and accept ideas from others. In many cases, this will result in completing tasks more successfully and quickly. The person has to exhibit flexibility so that others will speak without fear. Working with others without any reservation will also result in reducing one’s workload. Such collaboration will also lead to others getting motivated and encouraged.
Experts explain strategic management process as a method of achieving company objectives in a planned manner. This procedure is intended to make it easy to see future goals and make plans to achieve them. In such cases, there are always bound to be problems that can prevent a company’s journey towards that end. Critical thinking is a necessary skill that helps to find solutions for such issues and continue towards the objectives.
Making a strategic plan will include changes to be brought into an organization. This can lead to many employees feeling worried about their future. A good manager is one who can exude confidence and make others feel positive about such changes. Showing confidence will also help to motivate team members into action. Even when some plans fail, one must keep calm and remain positive.
Using Different Approaches
When it is a question of leading people who are from different social and educational backgrounds, one cannot use the one-size-fits-all approach. Each person must be dealt with in a different way. When bringing into practice the 7 steps involved in the strategic planning, it is essential to use different approaches with team members to get work done. This will also help to keep everyone happy.
Virtues like honesty help a lot in leadership. When a leader shows such values, teammates are also sure to follow. Being honest when a plan fails will gain support from everyone. It is necessary for a manager to see what other values colleagues and employees find appreciable. Trying to cultivate such qualities will help in getting better cooperation.
Also Read : What Do You Gain From Leadership Programs?
Plan for The Future
Planning for the future is essential for operating a successful organization. The concept of strategic management is a great first step towards your end goal. There are several strategic management courses that will guide you to keep track of opportunities and any unexpected shifts in the strategy. This will help you achieve your goals easily.
You have been working long and working hard – but your career? It is not quite moving forward. In fact, it could not be more stagnant. But you go on living with it until one day – when your worst nightmare comes alive: you are replaced at your job with someone better.
You aren’t going to let that happen to you now, are you?
It is true. Everyone wants to move up the corporate ladder. What’s also true is most people either don’t know how to get there or what to do to get there. But if you are serious about putting your career on the fast track, we’ve got just a course for you.
When organizations strategize and plan for achieving their goals, it is important for them to keep in mind their resources and assess internal & external environments in which they compete. Strategic Management is just that. Read on to know more about how a course in Strategic Management will help you in your career.
A Better Future
There is always a difference between reactive and proactive actions. Practicing strategic management prepares your organization for any situation. While it is not possible to foresee every issue, being proactive helps businesses come out on top in any competitive situation. Managing the actions of an organization strategically ensures that the business does not suffer any losses.
For a business to be successful, it is necessary that all its employees are working in the same direction towards a common goal. Strategic Management clearly defines the goals of an organization. It defines realistic goals and objectives while aligning the same with the vision of the company. The organization’s progress can be measured on the basis of these objectives.
Better Business Decisions
Having no set goal for the organization can result in scattered efforts and no progress. With a clear vision stated for the organization, you are better equipped to transform that vision into a mission. You are always aware of the goal, and accordingly, you invest your time, efforts, and money in that direction. If you are looking to move into a senior leadership role, strategic management will help you identify the different talents of your team members and leverage each of their potential towards achieving the goal of the organization.
Longevity of the Business
We live in a fast-paced world where changes happen every day. Better preparedness for events and strategic decisions help organizations last longer. Industries worldwide are constantly changing, making new trends, and keeping up with the others. Your expertise in strategic management will help you score better opportunities for your organization. You are able to plan for long-term goals and drive efforts in that direction.
Increase Market Share and Profitability
It is possible to increase the market share and profitability of the company in the market with the help of strategic management. With strategic thinking and focused planning, you can help your organization to explore other better customer segments, various products, and services. Strategic Management skills will help you target the right market as well while understanding the market conditions of the industry in which you are operating. Improve your sales and marketing approaches along with a better network of distribution, and you will see that your business decisions will result in profit.
Also Read : What are Some Essential Marketing Strategies?
Avoiding competitive convergence
It is a competitive world. In an attempt to be better than the rest, most businesses have started focusing on the competitors and imitating their good practices, and limiting their own potential. While it is good to implement new strategies for growth, it is necessary to be identified as a brand not get lost in the clutter. A course in Strategic Management will help you learn all the best practices in the industry and build a unique brand for your organization.
Organizations that follow the process of strategic management have proved to have better profits over a period of time as compared to their counterparts that don’t. These companies invest in the talent of a pool of Strategic Management professionals to ensure better planning for and control over their financial future. That is why there is a growing need for professionals with Strategic Management skills.
Ready to take up a course yet? Check out the Executive Certificate Program in Strategic Management and get ready to move up the corporate ladder.