Strategic management is a broad term that encapsulates the mission and objectives of an organization. Strategic management requires strategic planning and strategic control. A strategic management model determines the development of strategies required to define an organization’s mission and accomplish it.
The process of strategic management has four components – situation analysis, strategy formulation, strategy implementation, and strategy evaluation. Each level of strategy management has different functionality. These elements are steps that are performed while developing a strategic management plan. All major strategic management models include the following steps:-
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- Performing an environmental analysis (external and internal)
- Establishing a direction
- Formulation of organizational strategy
- Implementation of organizational strategy
- Evaluating and controlling strategy
The executive strategy & leadership certificate trains you in the in-depth application of each of these elements. Businesses that have an existing strategy management plan will revisit these steps as per their requirements to make necessary changes and improvements. A strategic plan is at the heart of everything that happens in a business.
Analysis of a situation is the first and foremost step in the strategic management process. The situation analysis provides the necessary information that defines the company mission statement. The process involves “scanning and evaluating the organizational context, the external environment, and the organizational environment”. Several techniques are used to perform the evaluation – of them, observation and communication are elementary.
- Observation – To begin the process, organizations must observe the internal company environment. This includes interactions with other employees, interaction with management, other managers, and shareholders.
- Communication – Discussions, interviews, and surveys are used to analyze the internal environment. All the interactions must be effective and strategic managers must be careful in laying down their objectives.
Organizations must also analyze the external environment. This includes customers, suppliers, creditors, and competitors. To analyze the external environment, several questions must be asked.
- What is the relationship between a company and its customers?
- What is the relationship between the company and its suppliers?
- How good is the company’s rapport with its creditors?
- Is the company making an effort to increase the value of the business for its shareholders?
- Who are the competitors and what advantages do they have?
An executive strategy & leadership certificate is designed to equip you with the knowledge and instinct required to pick up on these forms of observation and communication.
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Formulation of Strategy
Strategy formulation involves designing and developing company strategies. Determining the strengths of a company aids the formulation of strategies. Formulation of strategies is generally broken down into three organizational levels – operational, competitive, and corporate.
These strategies are short-term and are associated with the various operational departments of a company, such as human resources, finance, marketing, and production. Such strategies are specific to departments. For example, human resource strategies are in pertinence to the act of hiring and training employees.
Competitive strategies are associated with the methods of competing in a certain business or industry. Knowledge of competitors is essential to formulate a competitive strategy. The company must learn who its competitors are and how they operate. It also has to identify the strengths and weaknesses of the competitors and use those to its advantage. With relevant information, a company can develop an effective strategy to gain a competitive edge over its competitors.
Corporate strategies are long-term and are associated with deciding the optimal mix of businesses and the overall direction of the organization. Both operating as a singular business or operating as a business with several divisions are part of the corporate strategy.
Implementation of Strategy
Strategy implementation, as the term suggests, involves putting strategies into practice. This includes developing steps, methods, and procedures to successfully implement the strategy. It includes prioritization as well. The strategies should be placed in a hierarchy based on the prioritization of underlying issues.
The company must consider how the strategies will be executed while they are being created. For example, while developing a human resources strategy involving employee training, things that must be considered include – how the training will be delivered, when and on what platform the training will take place, and how the cost of training will be compensated for.
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Evaluation of strategies involves “examining how the strategy has been implemented as well as the outcomes of the strategy”. This entails determining whether deadlines are being met, whether the implementation steps and processes are effective and whether the expected results have been achieved. If the evaluation shows that deadlines are not being met, processes are not working as anticipated, or that results are not in tandem with the end goal, then the strategy is likely to fail and needs modification or reformulation.
Management and the workforce are both involved in strategy evaluation because they can look at the implemented strategy from different perspectives. An employee may recognize a problem in a specific implementation step that management would not be able to identify. Differential assessment is helpful.
Strategy evaluation is likely to include challenging metrics and timetables that are attainable. If it is not possible to adhere to the metrics and timetables, then the expectations are unrealistic and the strategy is likely to fail.
The Bottom Line
Strategic management process is a constant and developing process. Also, as the company expands and evolves, so will the various strategies. Each level of strategy management will have to undergo up-gradation as per the requirements. Existing strategies must change and new strategies will be developed. This is all part of the developing process of improving the business in an effort to succeed and reach for higher organizational aspirations. The executive strategy & leadership certificate qualifies you to engineer the ideal strategic management model.