Strategic Management Process | Why Strategic Management Needed?

Explanation of Strategic Management, Essential Strategic Management Process, Need or Importance of Strategic Management

Strategic Management

Strategic management is the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. In simpler words, it is the management of an organization’s resources to achieve its goals and objectives. Strategic management process activity involves goal setting/setting objectives, analyzing the competitive environment, analyzing the internal organization, strategy formulation, evaluating strategies and ensuring that management rolls out the strategies across the organization.

Using strategic management process, an organization decides to implement a selected few strategies along with stakeholders, details the implementation plan and keeps on appraising the progress and success of implementation through regular assessment.

Strategic management is all about identification and description of the strategies that managers carry so as to achieve better performance and a competitive advantage for their organization. Strategic management provides overall direction to the enterprise and involves specifying the organization’s objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans.

Strategic management helps planning for both predictable as well as unfeasible contingencies. It is not static in nature, the models often include a feedback loop to monitor execution and inform the next round of planning.

Strategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire organizational plan and how it is co-related to other organizational members.

Strategic management process

There are five stages of strategic management process and they are as follows;

1. Objectives/goal setting
2. Information analysis
3. Strategy Formulation
4. Strategy Implementation
5. Strategy Evaluation

1) Goal Setting

The purpose of goal-setting is to clarify the vision for your business. This stage identifies three key facets: First, define both short and long term objectives. Second, identify the process of how to accomplish your objective. Finally, customize the process for your staff, give each person a task with which he can succeed. Typically, the final step in this stage is to write a mission statement that succinctly communicates your goals to both your shareholders and your staff.

2) Information Analysis

Data relevant to achieve the goals of the organization is gathered, potential internal and external factors that can affect the sustainable growth of the organization are examined and SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is also performed.

3) Strategy Formulation

Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting information analysis, managers formulate corporate, business and functional strategies.

4) Strategy Implementation

This is the action stage of the strategic management process. If the overall strategy does not work with the business’s current structure, a new structure should be installed at the beginning of this stage. Everyone within the organization must be made clear of their responsibilities and duties, and how that fits in with the overall goal. Additionally, any resources or funding for the venture must be secured at this point. Once the funding is in place and the employees are ready, execute the plan.

5) Strategy Evaluation

This is the last stage of strategic management process. In this process, the strategies being implemented are evaluated regularly to check whether they are on track and are providing desired results. In case of deviations, the corrective actions are taken.

Need of a Strategic Management | Importance of a Strategic Management

Let's point out the need or importance of a strategic management as follows;

• Direction: Gives direction for company mission, vision and objectives.
• Overcomes increasing rate of changes: Concerned with effective strategy which optimizes profits over a long run.
• Entrepreneurship: Drives individuals, groups or companies to look for innovative ways to compete.
• Higher motivation of employees:  Considers employees motivation via different methods like rewards and promotional programme.
• Core competencies: Help business to identify and capitalize on its core competencies things within your business that you do best.
• Strategic decision making: Helps in smooth sailing of an enterprise. Strategic decision making adds the overall planning of operations for effective implementation of policies