The primary components of a strategic management process and an explanation of the significance of a strategic management process in a company.
Strategic management is a vital component for enhancing business competitiveness in the contemporary economy. This means that the key aspect of success of any competitive organisation entails effective utilization of management knowledge assets and information resources by taking advantage of their experiences in outshining competitors. Strategic management process is therefore the mean of defining and executing organisation strategies (Coulter, 2005). Strategic management is also a process in which managers choose a set of strategies in an organisation in order to achieve its immediate and long-term goals. The knowledge on the components and importance of strategic management is essential in enhancing the success of a business in modern competitive economy.
Strategic management process is composed of four main components that include strategy evaluation, strategy implementation, strategy formulation, and situation analysis. Being the first step in strategic management process, situation analysis presents information and facts that are necessary in creating the company’s mission and vision. Situation analysis entails evaluating and scanning the organisation internal environment, external environment, and organisational context in order to formulate a realistic and attainable plan. Situation analysis is exercised using various techniques including communication and observation. Moreover, effective situation analysis should involve all players in the organisation including customers, employees, managers, suppliers, and shareholders (Hitt, Ireland & Hoskisson, 2001).
Strategy formulation entails developing and designing the firm’s strategy and the determination of the company strength in formulating and executing the identified strategy. Strategy formulation is in most cases is broken down into three main levels which are corporate, competitive and operational. Operational level involves using operational department in a company such as production, finance and marketing in the formulation of the Company’s strategy. Competitive strategy is the method of competing in the new and existing markets. Competitive strategy also aims at identifying the strength of the organisation competitors. Corporate strategy is associated with making a decision on an optimal mix of business and the entire direction of the company.
Strategy implementation involves putting strategy into practice (Hitt, Ireland & Hoskisson, 2001). The component includes developing procedures, methods, and steps of executing the identified strategy. The process also includes identifying activities that require first priority. In the ideal situation, the organisation needs to prioritise strategies that can solve the firm’s immediate problems. Strategy evaluation entails examining and assessing the manner in which the company execute the identified strategies and their immediate outcome. The process also involves identifying whether the deadlines are met and the implementation process and steps are being implemented as planned. This component also offers an opportunity for rectifying the proposed strategy.
Besides fostering the establishment of effective operation components, strategic management process is essential in facilitating the development of the Company’s mission statement and vision. The process ensures that the organisation attains its immediate and long-term goals and objectives. Strategic management is essential in aligning the organisation strategy and enhancing consistency while creating a favourable environment for business activities. Furthermore, strategic management process seeks to integrate and coordinate activities and functions in all departments in an organisation (Barney and Hesterly, 2006).
It is apparent that strategic management process is a continuous process that helps in the realisation company’s goals and objectives. The outcomes of a strategic management are realised in all organisational levels and all players have an opportunity of accessing the process of strategic management process. The adoption of realistic and cost effective strategic management process is therefore a vital exercise in modern competitive economy.
References
Barney, J.B. and Hesterly, W.S. (2006). Strategic Management and Competitive Advantage:Concepts and Cases, Upper Saddle River, NJ: Pearson Prentice Hall
Coulter, M. (2005). Strategic Management in Action. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E. (2001). Strategic Management: Competitiveness and Globalization, 4th ed., New York, NY: South-Western
