The Definitive Guide on Strategic Management Process
Strategy can be understood that how we achieve a certain goal. For example, to memorize 300 new words in a month, we can learn 10 new words a day or learn 20 new words every day. To lose 3kg of weight, we can choose a particular sport or diet or go to plastic surgery, etc.
The term strategy comes from the military field to designate large and long-term plans based on certainty that what the opponent can do, what the opponent can not do. In strategic warfare is our way of defeating the enemy. Strategic speed of victory, fighting, and enduring prolonged time, etc. Strategy in the military is based on one-to-one resistance.
In business, it is not only us but also many other companies. The market pie also has a limit. We eat, then they rest; if they eat, we cannot eat, so even though it is not as fierce as in war, its nature is still alive. Since then, the term business strategy came into being. From the traditional viewpoint, the strategy is to determine the fundamental, long-term goals of an organization. To develop specific action programs with the appropriate use of resources to achieve the goals have been set.
So, you want to know what is strategic management? And why should every business practice strategic management?
These questions will be analyzed and answered in detail in The basic guidance on strategic management and its process below. Let’s dive right in!
Table of Contents:
- What is the Strategic Management Process?
- The Importance of Strategic Management Process
- Overview on the Strategic Management Process
- 5 Main Stages of the Strategic Management Process
What is the Strategic Management Process?
Strategic management is the art and science of making policy, implementing, and evaluating functional decisions, allowing an organization to achieve its goals.
Strategic governance is the process of specifying an organization’s goals, developing policies and plans to achieve these goals, and allocating resources to implement policies and plans to achieve them. Therefore, strategic management combines activities of many functional divisions in the organization to achieve set goals. It is the top management activity, usually the Board of Directors, setting the policy, and the CEO and senior management team will do the policy. Strategic management provides direction for the whole business.
The author Boyden Robert Lamb in Competitive Strategic Management published in 1984 defined: “Strategic management is an ongoing process that assesses the business process and the industries in which a business is involved; Evaluate your competitors and set your goals and strategies to catch up and surpass all current and potential competitors and then re-evaluate each strategy annually or quarterly to determine whether the How has this strategy been implemented and whether the company has successfully implemented it or need to be replaced by another strategy to adapt to changing conditions promptly, new technologies, new competitors, new business environments, or the new social, financial or political environment.”
Strategic Management is an issue that is concerned by many economists as well as managers. Because the content of strategic management is very wide in scope of research and rich in practical application, people give different views and definitions of strategic management in each angle. Although each of these views is not completely complete and comprehensive, on the whole, these views have contributed significantly to the perception and implementation of governance in enterprises.
Strategic Management focuses on combining the aspects of management, marketing, finance, accounting, products, research and development, and information systems to achieve business success.
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The Importance of Strategic Management Process
More than ever, in today’s business climate, the only thing companies can know for sure is change. The strategic management process is a direction that helps these organizations overcome the storms in the marketplace, reach a future by their efforts and capabilities.
This is the result of scientific research based on the business practices of many companies. It is a management science product because if organizations build a good governance process, they will have a good prop to move forward. However, the level of success depends on the implementation level, which will be mentioned in applying strategy, which represents art in governance.
The strategic management process is based on the view that companies continually monitor events occurring both inside and outside the company and trends to make timely changes. Both the number and extent of changes that substantially impact companies have increased rapidly in recent times. To survive, all organizations must be able to change and adapt to change. The strategic management process designed helps the company focus on adapting best to long-term changes.
According to the latest statistics, most companies and enterprises today are often caught up in the spiral of daily work. Specifically, jobs related to production or buying, searching for customers, selling, delivering, collecting money, managing inventory, debt, etc. These things are resolved according to arising requirements, where it happens, resolves there, not being methodically planned, or managed systematically and scientifically evaluated.
Implementation in any way up to that has taken up all the time of management. Yet, it’s still confusing and always in a passive state. Senior administrators, especially executives, are often “led” by the arising jobs they do not know how to do correctly and appropriately.
Without strategic management, businesses are like people who walk in the forest, do not have a clear orientation, only see where there is a path making the more and more lost. Therefore, the introduction of strategic management will help organizations and businesses clearly define goals, directions, outline reasonable paths, and optimally allocate resources to ensure that the goal is reached.
Overview on the Strategic Management Process
Each company will have different strategic management processes depending on the actual situation of each business. Basically, however, a perfect strategic management process involves the following main points:
- Plan in detail
The business will analyze the situation, self-assess, and evaluate competitors both inside and outside the environment, both micro and macro environment. Along with these reviews, set goals. This issue must be consistent with the organization’s vision, the organization’s mission, the organization’s overall goals, the goals of the strategic business units, and the strategic goals. These goals, combined with case analysis, result in a strategic plan. The plan will provide details on how to achieve these goals.
- Execute correctly
In the implementation step, businesses will have to appropriately allocate their resources, such as finance, human resources, time, and technology. Then form implementing groups eg, groups made up of individuals from many different departments. Assign responsibilities to specific tasks to specific individuals or groups.
Performance work involves monitoring the process, including checking results, comparing with standards, evaluating process effectiveness, controlling deviation, and making adjustments. This includes acquiring necessary resources, developing processes, training, testing processes, and documenting in implementing specific programs.
- Evaluate carefully
Strategy evaluation is used to measure the effectiveness of the implemented strategy.
In theory, the corporate strategy management process is clearly defined through the steps described above. However, this activity is not wholly divided; administrators do not have to do it but can ignore the steps above.
The first thing is that the boundary between the stages in the strategic management process is sometimes difficult to distinguish clearly in practice. Establishing a strategic vision includes outlining the goals to be achieved by the business, setting goals, including analyzing the capabilities and methods to achieve set objectives.
Second, the mission of strategic planning can never be separated from the vision of the strategic manager. A strategy is planned and implemented in a dynamic environment, interacting from within and outside the business, with deadlines, unexpected problems arising and crises, and internal momentary or corporate environment. Strategic management is not the managers’ sole job, although this is their most important function to bring the business to the desired success.
The third is the time and schedule factor. Strategic problems, new opportunities, innovative strategic ideas, or their implementation do not always appear on schedule but, in many situations, need to be dealt with right now point arising.
Finally, strategic management must be seen as an ongoing issue and continually evolving and changing. The “strategic” mission is not a one-off one, while the long-term strategic directions and goals, once set, are usually stable. Therefore, the strategy and corporate strategy management must be flexible before changes in both the enterprise’s internal and external environments. Most timing strategies are implemented sequentially, but sometimes in a crisis context, several strategy-related decisions must be made in a timely, reasonable, and timely manner. Therefore, the strategy’s implementation is also the result of continuous improvement, constant updating, internal refinement, the aggregate result of the management decisions, and behavioral adjustment of the whole business, the home strategic management, and members.
5 Main Stages of the Strategic Management Process
1. Missions and Goals
The first step in every process is always setting strategic goals. Specific goals in every activity, every level of management, from the top to the bottom of the organizational structure, impact the survival and success of the business. Planning the official goals is to turn orientations and visions into specific goals that need to be achieved and avoid deviations and confusion about the business’s long-term orientation. Both short-term and long-term goals are necessary.
The overall strategic goals are the market position and the competitive position the business aims for, the annual profitability, financial performance, and production and business. Since goals need to be set at every level and department of the business, setting strategic management goals involves all managers; Each manager must clearly identify and measure his scope of work, goals, and contribution to the success of the business strategy.
Determining current and future production and business activities is an essential first step in setting the business’s development direction. This activity is associated with the business’s strategic mission, ie, the desired future and the implementation direction to achieve that desire in the long term. Because long-term directional decisions fall under senior managers’ authority, the corporate strategic mission reflects the vision and thinking of senior managers.
2. Environmental Analysis
Environmental checking is the method of collecting, scrutinizing, and giving data for key purposes. It makes a difference in analyzing the inner and outside variables impacting an organization. After the Environmental examination is prepared, the strategist ought to assess it on a ceaseless premise and plan ways to move forward. The organizational environment comprises both outside and inside variables.
The environment is checked to discover the improvement taking and figure out the components that will impact organizational victory. Environmental filtering alludes to the ownership and utilization of data, almost events, designs, patterns, and connections inside an organization’s inner and outside environment. It makes a difference for the managers to choose long haul way of the organization. Environmental filtering makes a difference in distinguishing the dangers and openings existing within the environment. Whereas defining methodology, the organization must take advantage of the openings and min.
3. Formulate Strategy
The third step is strategic planning, including strategic vision development, business mission planning, strategic goals, external environmental analysis, internal environmental analysis and building, and choosing strategy. Develop a critical business strategic vision and mission to answer questions about the business’s purpose of survival. The mission’s message often has to cover three main points: the purpose of the organization, the industry in which it operates, and the values it will bring.
Setting strategic goals is to answer the question of what the business wants to achieve, at what point in time. The goal given must be linked to the mission and must be established based on careful scientific analysis. A very important step in this step is to analyze the environment inside and outside the business to ensure that the business strategy is well-grounded and highly feasible.
The business environment is related to human resources, finance, management, etc. The external environment is the cultural, economic, social, industry environment, competitors, etc. After analysis, Combined with the goals, the strategist will build and choose a strategy to find the answer to the question of which path to achieve the goal.
4. Implement Strategy
Step four is to execute the strategy. This step includes the following stages: setting annual goals, planning policies, allocating resources, restructuring the organization, promoting corporate leadership culture, and style. A good strategy will help the business go in the right direction during its operations. Still, if the strategy is not implemented properly, it will not bring any business results.
Sometimes, managers ideal that when they have the right track, they will inevitably reach their destination. However, strategic management is a process, not just an act of an enterprise; in that process, many unexpected factors and challenges may arise that require managers to respond promptly in a reasonable time and resource allocation to maintain strategic direction and achieve set goals.
5. Evaluate Strategy
The final step in the strategic management process is to examine and evaluate the strategy to review the business’s internal and external environment, establish a success evaluation matrix, and recommend corrective actions if needed. Companies need to always evaluate and review their strategy as part of their organizational monitoring task. The contents that need to be carefully analyzed are:
What is the value of the current corporate vision? Whether the vision for the future that the business wants is still relevant to the actual situation, the growing business path, and the changes occurring in the business’s business environment?
Are the critical contents of the strategy still correct? Does the company need to implement new additions or adjust the existing content in the strategy due to the changing business landscape, the emergence of new technology, external factors, and changes or change in the business’s internal resources? Businesses also need to consider whether any strategic content is no longer suitable for the list of tasks to do or not?
What process is using to implement strategic content and does it need to re-prioritize activities? Or do you need to re-plan to ensure compliance with business requirements?
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In general, the goals of organizations and enterprises are determined on the basis of careful and scientific analysis of the market situation, customers, consumer trends, competitors, changes in public sector. technology, legal environment, socio-economic situation, strengths, weaknesses, opportunities and threats come from outside or within the business.
Objectives of organizations and enterprises are also rooted in the organization’s mission, vision and core values. The combination of the want and the can do, through scientific analysis, will help the organization not to sink into the baseless delusions or to miss development opportunities by relying on the set criteria. original out.
At this point, we can affirm that strategic management is an important activity, greatly contributing to raising the level as well as expanding the scale of business development in a methodical and professional direction. system.
Hopefully, with the Definitive Guidelines on Strategy Management Process above, you will have a right strategic management process to make your company grow stronger.