6 important activities of Strategic Management process:
Strategic management process is most often described as a rational and analytical one.
The process consists of the following activities:
1. Environmental Scanning threats and opportunities analysis:
This involves analyzing each threat and opportunity according to its time frame (i.e. short-term or long-term). Significance and likelihood of occurrence can help to focus on the most important threats and opportunities. In identifying threats and opportunities in the organizations’ environment, three questions need to be kept in mind:
(i) Which threats are critical and how can they be avoided to turn into opportunities?
(ii) Which opportunities are critical and must be exploited?
(iii) Which threats and opportunities are short-term and which are long-term?
2. Organizational analysis mission, strength and weakness analysis:
An Organizational analysis begins with an analysis of how the organization is performing and why. It gives a board statement about purpose, philosophy and goals, which guides executive actions, by evaluating the present strengths and weakness of the organization.
3. Strategic goal setting:
Understandable; measurable, achievable and challenging long-term goals:
Fixing annual objectives in line with long-term objectives as well as specifying functional strategies consistent with the grand strategy. Goals are the ends toward which activity is aimed. Goals must have understandable; measurable, achievable and challenging. Goals have a starting point and an end point. Goals can be measured in terms of quality, cost and time-frame. This can be classified as follows:
4. Strategic actions:
Action plan to achieve the goals:
Strategic actions flow from goals of the organization. A strategy sets forth a general programme of action and an implied development of employees and resources to obtain goals. Strategic action can be taken from three approaches:
i. Functional approach
ii. Product approach; and
iii. Business unit groping approach
Functional and product approaches are useful in developing strategic business plans for single business and functionally organized organizations. A business unit grouping approach works well in diversified enterprises.
All these approaches involve choosing target markets and products. Product development plans, capital expenditure plans and marketing plans. For all major actions, two aspects- (i) timing and (ii) sequencing should be considered. All strategic actions will also need mobilizing and effective utilization of resources.
5. Strategy implementation:
Spelling out effective policies or operating procedures to channel actions for implementing the strategy:
This involves translating strategies into organizational actions, which involves strategies
leadership i.e., identifying policies; rules; key results areas, developing management teams, forming teams, allocating responsibilities, making operational plans and day to day decisions.
6. Strategy Control:
This includes both monitoring process and control resources by analyzing the deviation from standards and goals. Controlling is the measurement and correction of performance in order to ensure that enterprise objectives and plans are being accomplished. Strategic control can be done at individual level and group level through the periodic strategic meetings.
As the business environment is not static, strategic management process will be a continuous activity of the organization to fight competition and maintain market share on the one hand and how to exploit opportunities; grip more market and forge ahead on the other hand.