Strategic Management Process

The strategic management process mainly involves identifying the strategies of high-level managers so that they can gain a competitive advantage and achieve better performance for their organisation. In this article, we will discuss the definition of strategic management and a brief analysis of the strategic management process.

Definition of Strategic Management Process

A strategic management process is defined as a bundle of decisions that a manager makes that mainly decide the result of the firm’s performance. Therefore, it is significantly important that the managers who make such decisions have a thorough knowledge and analysis of the competitive and general environment. 

Importance of Strategic Management Process

A strategic management process clarifies and determines the organisation’s identity and helps sustain it in an intensely competitive market. 

Some of the points that highlight the importance of strategic management:

A. Enhances the speed of the decision-making process

With the help of a strategic management process, you can make tactical decisions quickly and efficiently. By understanding the outcome of the organisation, managers can prioritise their tactics and act upon the outcomes.

B. Improving Employee Engagement

 A strategy management process helps set a common goal at the organisational level. By having a common and well-understood goal with a set plan, employees can associate themselves with it, thereby improving their engagement with employees.

C. Makes Hiring Decisions Easier

When a firm has a proper strategy, they know exactly what they want and what are some of its capability gaps. This makes the hiring process relatively easy and reduces the number of poor hires.

D. Enhances Interest in the Organisation

When an organisation has a proper strategic plan, it is easy for external stakeholders like prospective investors to understand what an organisation is doing. This helps them to make their investment accordingly. 

Steps of Strategic Management

The strategic management process essentially involves four major steps:

• Environmental Scanning

This mainly refers to collecting, analysing and providing information about strategic purposes. It essentially involves analysing the external and internal factors that can affect an organisation. After the process for environmental analysis is complete, the management must evaluate it continuously and work to improve it.

• The Strategy Formulation

The process of strategy formulation is a process that decides a proper course of action to accomplish certain objectives at an organisational level and pave a path for successfully achieving the organisational purpose. Hence, mainly after the strategy formulation is complete, managers try to develop corporate as well as functional strategies.

• The Strategy Implementation

The strategy implementation mainly pertains to the implementation of the strategy so that it works according to the plan set. The strategy implementation includes majorly designing the structure of the organisation, distribution of resources, developing the decision-making process, and effectively managing the human resources.

• Strategy Evaluation

Evaluation of the strategy is the final step in the strategic management process. The main steps for strategy evaluation activities include evaluating the internal and external activities, measuring the performance, and taking corrective and remedial actions. The evaluation ensures that the strategy, as well as implementation, is in sync with organisational goals.

SWOT Analysis: A Strategic Analysis Tool

One of the unique ways to work on an external and internal strategic analysis is through a SWOT Analysis. This technique is immensely beneficial as it helps an organisation understand the four most essential elements. They are as follows:

A. Strengths

Strengths of an organisation include their skills, their success points, and their essential advantage areas. The strategic management process helps to amplify these skills.

B. Weaknesses

These help you understand your weak and failure points. Then, with the help of a strategic management process, you can solve these weaknesses and can avoid situations that can cause any significant impact on your organisation.

C. Opportunities

This helps you understand the potential opportunities in the market you can take advantage of. Also, it allows you to understand how you can use your strengths to capitalise on the opportunities and give a competitive edge.

D. Threats

These help you understand the upcoming threats in the market and how you should be aware of them so that it does not negatively affect your organisation. The strategic management process helps to understand these threats and mitigate them accordingly.

In-Depth Strategy Formulation

Since you know about the strategy-making steps, let us understand more about the in-depth formulation of strategy.

• Business Level Strategic Objectives

During the strategic management process, you generally formulate a strategy for the entire organisation. However, it is also essential to categorise and develop a strategy as per business units.

• Projects

In-depth strategy formulation also involves working on projects. Projects are specific deliverables with a set deadline and certain tasks assigned to particular individuals. 

• KPIs

This is the last step in in-depth strategy formulation. KPIs help in measuring the objectives of an organisation. Mainly strategy formulation involves two types of KPIs.

a. Leading KPIs:

 These are indicators that help in understanding your progress regarding your objective, thereby helping you be proactive.

b. Lagging KPIs

These help you understand whether you have reached your objective and are only measured when the project is completed.

Conclusion

Strategic formulation plays a very important role in achieving the ultimate goal of business. Hence today the major focus of most businesses has been to formulate a proper strategy so as to create a competitive advantage in the market field.