Ans Strategic management process can be defined as ‘a combination of managerial decisions and actions that determines the long-run performance of a corporation.It includes environmental observation, strategic planning, formulation, implementation,evaluation and control.
Considerations in Strategic management
Demand: No businessman can expect demand forecasting for products unless he is having strategic planning for the organizational development.Hence, long-range planning is necessary to meet the demand.
Competition: Business entities should always fight for survival. When there are new entrants in the market there will be more competition. Hence, strategic planning is necessary to face competition and to become successful businessman.
Technology: Changes in technology also necessitate strategic planning.Technological advancements are useful for the development of business.More opportunities will be available to business.
Scarcity: Scarcity of the resources always forms the basis for strategic management when products are scarce and there is increase in demand.
Stages in Strategic management process
First Stage – Strategic intent which includes :-
1. Preparation of Mission: ‘Mission’ is the purpose for which organization is established. Mission includes both a statement of organizational philosophy and purpose. An organizational philosophy establishes the values, beliefs, and guidelines for the manner in which the organization is going to conduct its business. The first step of strategy formulation depends on well-defined mission statement or organizational purpose. The mission may be described as the scope of the operation in terms of nature of business.
2. Setting of Objectives: Objectives are defined as ends which the organization seeks to achieve. Objectives may be internal or external. Internal objectives are those which define how much is expected to be achieved with the resources that the organization commands.
3. Fixation of Goals: Goals are specific, and time-based points of measurement. Generally, goals are determined by the owner or entrepreneur of the organization. In case of large scale companies CEO (Chief Executive Officer) will determine the goals for its firm. Thus goal of the owner will be the goal of firm.
4. Policies: A policy is a definition of common purposes or organization components. The process of strategic planning sometimes encompasses the formulation of important policies. Policies help to ensure that all units of an organization operate under the same ground rules. They also facilitate coordination and communication between various organizational units. Policies of competitors also influence an organization’s policies.
5. Analysis of Environment: Business environment always influences decision-making. There may be external or internal factors that influence business. Buyers, suppliers, government and competitors are likely to react in accordance with changes in environment. Thus, business also should act in the same fashion.
Second Stage -Formulation
6. Formulation of Strategies: Strategies can be formulated after diagnosing the environment. Each strategy with suitable sub-strategies and alternative strategies should be available to top management. Thus, top management always mentors the administration with strategies which can be adapted from time-to-time.
7. Implementation of Strategies: This is an important stage in strategic management process. Well-designed strategies may fail in implementation. Hence, adaptability of strategies and implementation process should be clearly mentioned while formulating strategy. It is the strategist’s responsibility to take care of implementing strategies in accordance with the requirements of an organization.
Third Stage -Evaluation
8. SWOT Analysis: Strengths, Weaknesses, Opportunities and Threats simply termed SWOT. Every organization should go through SWOT analysis. It is an important tool for evaluating organizational capabilities.
9. Evaluation: This can be stated as the last stage of strategic management process. The strategist should evaluate each strategy after implementing them. The strategist should evaluate whether there is profit maximization or cost minimization or achievement of long-term or short-term goal whatever it may be.
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