Components of Strategic Management
Strategic management includes the following components: environmental scanning, strategy formulation, strategy implementation, evaluation and control (Hunger and Wheelen, 2007). The first stage – environmental scanning – is connected with gathering information relevant to accomplishing the vision. The main focus of external and internal analysis is to understand business needs and identify strategic direction together with relevant alternatives. The purpose of the environmental scanning is to identify strengths and weaknesses of the organization. Also, environmental scanning helps identify threats and opportunities that may arise during the implementation of a strategy. Conducting the environmental scanning is needed to assess the current position of the healthcare organization in the market (Hunger and Wheelen, 2007).
Strategy formulation is based on the results of the environmental scanning. It is important to determine the resources available to reach the goal set. Also, it is necessary to identify the areas of the business of the healthcare organization where the external resources might be needed. The issues that arise during the strategy formulation should be prioritized to formulate the strategy. Also, alternative approaches should be developed on this stage of strategic management (Hunger and Wheelen, 2007).
Strategy implementation is the action stage in the process of strategic management. Compliance of the strategy with the current structure of business should be tested on this stage. The employees working in the healthcare organization should have clear understanding of their duties and responsibilities. Also, the additional resources and funding should be secured at this stage. This stage is important because it is connected with initial implementation of the strategy outlined. In fact, the appropriateness and sustainability of the strategy is tested on this stage (Hunger and Wheelen, 2007).
The stage of evaluation and control includes performance measurement, continuous review of changing factors of external and internal environment, and making corrective actions. A successful evaluation of the strategy is based on effective performance measurement indicators since they mirror accomplishment of the goals. The progress could be measured by comparing the actual goals and plans. Continuous monitoring of changing external and internal environment is important to react to changes on time. If the strategy does not move the healthcare organization towards its goal, then the corrective actions should be taken. If these actions do not bring the desired results, then the strategic management process should be repeated (Swayne, Dunkan and Ginter, 2008).
The Role of Mission and Values in Strategy Formulation
The development of mission and values of the strategy is an important stage in the strategic management process because clear mission and values help set strategic goals that are aligned with the long-term goals of the healthcare organization. Strategic goals are translated into an operational strategy that should be implemented, evaluated, and monitored. The results of the evaluation determine the need in revision of the mission statement, goals and the operational strategy (Hunger and Wheelen, 2007).
Benefits of Strategic Management Process
Implementation of strategic management at healthcare organizations is beneficial from many perspectives. The main benefit of the strategic management is that it allows identification, prioritization and taking advantages of the opportunities that arise. Also, it provides an objective view of the organizational issues. In addition, it provides framework for coordination and control of activities. Implementation of strategic planning minimizes the effect of unfavorable changes in external and internal environment. Also, it helps more effective allocation of organizational resources. In addition, careful strategic planning can help allocate fewer resources on correcting erroneous decisions (Swayne, Dunkan and Ginter, 2008).
The Impact of Strategic Management on Organizational Decision Making and Financial Performance
Strategic management helps direct the efforts of the employees towards the achievement of the objectives of the healthcare organization. The decision making process that is not based on the principles of strategic management can be reactionary and lead to costly errors. Also, managers can make decisions that are not in line with the organizational goals, incorrect allocation of the resources available, increase of unnecessary expenses, and negative experience of the patients of the healthcare organization. Besides, effective strategic management makes positive impact on organizational performance because the goals are clear to the employees and they are motivated to perform well when they see the results of their efforts (Swayne, Dunkan and Ginter, 2008). According to Hunger and Wheelen (2007), the organizations that use strategic management outperform the organizations that do not use this approach.
The Impact of Strategic Management on Organizational Environment
Using strategic planning is beneficial for the organizations that are sensitive to volatility of the external environment. Strategic planning helps better understand changing needs of the stakeholders, technological developments, improve its competitive position, and to develop competitive initiatives. On the contrary to strategic planning, operational planning is more chaotic. Implementation of strategic planning helps better organize the process of analysis of external and internal environment and develop necessary steps to respond to the changes. Decisions made based on strategic management principles help better adapt the healthcare organization to the external environment, to better allocate the resources available, and to achieve the goals in a competitive environment (Swayne, Dunkan and Ginter, 2008).
References
Hunger, D.J. and Wheelen, T.L. (2007). Essentials of strategic management. (4th ed.). New
Jersey: Pearson/Prentice Hall.
Swayne, L.E., Dunkan, J.W. and Ginter, P.M. (2008). Strategic management of health care
organizations. (6th ed.). West Sussex: Jossey-Bass.
