Components of Strategic Management
- 1. Strategic Planning: ...
- 2. The Analysis of Environmental Forces (SWOT Analysis) ...
- 3. Matching Organizational Structure, Managerial Activities and Policies With Explicit Business Strategies ...
- 4. Managing Resources Strategically For Achieving A Competitive Advantage ...
- 5. Strategy Implementation ...
- 6. Strategic Control ...
- Goal Setting. ...
- Strategy Formulation. ...
- Strategy Implementation. ...
- Strategy Evaluation. ...
- The Start. ...
- Analyzing. ...
- Forming the Strategy. ...
- Implement the Strategy.
What are the five stages of Strategic Management?
The five stages of the strategic management process
- Clarify Your Vision. The purpose of setting goals is to clarify the vision for your business. ...
- Gather and Analyze Information. The analysis is a key stage because the information gathered in this stage will form the next two stages.
- Strategy Formulation. ...
- Strategy Implementation. ...
- Evaluate and Control. ...
What are the aspects in strategic management?
Strategic management is the process of strategic analysis of an organization, strategy-focused objective-setting, strategy formulation, strategy implementation, and strategic evaluation and control. Strategic analysis is involved with analyzing the industry in which the organization is operating its business and analysis of both the external ...
What are the key elements of the strategic management process?
The major steps involved in the strategic management process are as follows:
- Strategic Analysis and Inputs
- Strategy Formulation
- Strategy Implementation
- Strategic Evaluation and Control.
What are the steps of Strategic Management?
Process of Strategic Management
- Developing Organization Vision and Mission. Strategic management process begins with recognizing and formulating the vision and mission of the organization.
- Analysis of Organization. ...
- Setting Objectives. ...
- Strategy Formulation. ...
- Strategy Implementation. ...
- Strategy Evaluation and Control. ...
- SWOT Analysis. ...
What are the six major components of the strategic management process?
The strategic management process has six major components:Establishment of mission, vision, and goals.Analysis of external opportunities and threats.Analysis of internal strengths and weaknesses.SWOT (strengths, weaknesses, opportunities, and threats) analysis and strategy formulation.Strategy implementation.More items...
What are the five major components of the strategic management process?
The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation and strategy monitoring.
What are the three major components of strategic management?
Strategic management has three major elements, which include strategic analysis, strategic choice, and strategy implementation.
What are the four basic components of strategic management?
After goal setting, strategic management includes four basic elements:Environmental Scanning.Strategy Formulation.Strategy Implementation and.Evaluation and control.
What are the components of management?
At the most fundamental level, management is a discipline that consists of a set of five general functions: planning, organizing, staffing, leading and controlling.
What are the types of strategic management?
The five types of strategic management enumerated from most simplistic to most complex are linear, adaptive, interpretive, expressive, and transcendent. These five types of strategic management represent a continuum of organizational focus and action.
What is strategic management?
Strategic management is the formulation and implementation of major objectives and projects, by an organization’s management on behalf of its shareholders (or owners). Shareholder A shareholder can be a person, company, or organization that holds stock (s) in a given company. A shareholder must own a minimum of one share in a company’s stock ...
What is management theory?
Management Theories Management theories are concepts surrounding recommended management strategies, which may include tools such as frameworks and guidelines that can be implemented in modern organizations. Generally, professionals will not rely solely on one management theory alone
What is the competitive advantage of a company?
Competitive Advantage A competitive advantage is an attribute that enables a company to outperform its competitors. It allows a company to achieve superior margins. the company has over its competitors. #2.
What is the competitive force model?
The Competitive Forces Model (Porters 5 Forces)#N#Competitive Forces Model The competitive forces model is an important tool used in strategic analysis to analyze the competitiveness in an industry. This model is more commonly#N#is a framework used to assess the competitiveness of the industry.
What is organizational analysis?
Organizational Analysis Organizational analysis is the process of appraising the growth, personnel, operations, and work environment of an entity.
What is growth share matrix?
The Growth-Share Matrix, developed by the Boston Consulting Group, helps corporations analyze the value of their individual business units by plotting the business on an axis. The two parameters of judgment are market share – a measure of a business unit’s competitive position in regards to its peers – and industry growth rate – a measure of the prospects of the particular industry in which the unit operates.
What is implementation in business?
Implementation includes the deployment of an organization’s resources to meet the desired objectives.
What is strategic management?
Strategic management is the process of employing that kind of large-scale, objective-oriented approach through the use of three major components: environmental scanning, ...
What are the factors that influence a company?
Factors both inside and outside the company can influence a business. Managers are usually familiar with what’s going on inside their companies, so internal factors may be more obvious initially. For example, if your company is experiencing an unusually high rate of employee turnover, it's an issue management needs to address. Other kinds of internal factors include sales numbers, productivity rates and profit margins.
Why is strategy evaluation important?
The strategy evaluation process is crucial in strategic management . This is how managers and businesses learn what’s working and what still needs to be adjusted to achieve the best possible results.
How should a company communicate its plans?
At a minimum, the company should communicate its plans through the appropriate corporate channels. Today’s technology makes it much easier for busy companies to keep external stakeholders informed. Blogs, email newsletters and social media mean it’s easier than ever before to communicate clearly with key constituencies.
Is smart strategy sufficient?
Implementing a smart strategy isn’t sufficient by itself to meet goals. Once the company’s employees are carrying out the planned actions, the company must also periodically assess the results of those actions.
What is strategic management?
Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises it’s competitors;
What is strategy evaluation?
Strategy Evaluation - Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as ...
What is the purpose of evaluation in organizational planning?
Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives. These components are steps that are carried, in chronological order, when creating a new strategic management plan.
Is strategic management an ongoing process?
Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.
What is strategic management?
Strategic management in essence is a fancy name given to the planning process in action. It involves the creation and execution of the major goals agreed upon by the top-level management of a business. Strategic management can also be observed as the set of decisions undertaken by a manager impacting the results of the organization’s competitive ...
What is the purpose of strategy in business?
Every business strategize. It is an essential management process to strategize and prepare for different odds. Strategy in the simple sense of the word is a plan designed to achieve an objective and planning as we all know is the primary function of management that lays down the base for the entire business.
What are the strengths and weaknesses of a company?
Strengths – These are things a company is good at doing or characteristics that give it enhanced competitiveness e.g., physical assets, intangible assets, etc. Weaknesses – These are what a company lacks, does poorly or a condition that puts it at a disadvantage. A weakness represents a company’s competitive liability.
What happens if the company is properly implementing its strategy?
If the company is properly implementing its strategy results should be as expected in the strategy or not far off. If results are below par something is wrong with the implementation and corrective actions should be taken.
What are rewards in strategy?
Rewards can take various forms such as promotions, salary increments, bonuses, awards, and so on. Actions that are consistent with strategy implementation should be rewarded. Such actions could include attitudes, behavior, or performance that fosters the accomplishment of strategic objectives. 5. Strategy Evaluation.
What are the delicate and sensitive issues involved in the implementation of a new strategy?
Some delicate and sensitive issues involved at this stage are resource mobilization, restructuring, cultural changes, leadership changes, etc. To operationalize the new strategy, you need to ensure daily activities, work efforts and resources are directed fully toward implementing the strategy. A typical action plan would entail having
What is the key thing in evaluating a strategy?
At the evaluation, the key thing is the feasibility of the strategy. Check if the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time, and information. Tools used to evaluate feasibility include cash flow analysis and forecasting, break-even analysis, and resource deployment analysis.
What are the elements of strategic management?
The strategic management process is made up of four elements: situation analysis, strategy formulation, strategy implementation, and strategy evaluation. These elements are steps that are performed, in order, when developing a new strategic management plan. Existing businesses that have already developed a strategic management plan will revisit ...
What should be considered when implementing strategies?
The approaches to implementing the various strategies should be considered as the strategies are formulated. The company should consider how the strategies will be put into effect at the same time that they are being created. For example, while developing the human resources strategy involving employee training, things that must be considered include how the training will be delivered, when the training will take place, and how the cost of training will be covered.
What is strategy formulation?
Strategy formulation involves designing and developing the company strategies. Determining company strengths aids in the formulation of strategies. Strategy formulation is generally broken down into three organizational levels: operational, competitive, and corporate.
Why are both management and employees involved in strategy evaluation?
Both management and employees are involved in strategy evaluation, because each is able to view the implemented strategy from different perspectives. An employee may recognize a problem in a specific implementation step that management would not be able to identify.
How should strategies be prioritized?
The strategies should be prioritized based on the seriousness of underlying issues. The company should first focus on the worst problems, then move onto the other problems once those have been addressed. The approaches to implementing the various strategies should be considered as the strategies are formulated.
What is corporate strategy?
Corporate strategies are long-term and are associated with deciding the optimal mix of businesses and the overall direction of the organization. Operating as a sole business or operating as a business with several divisions are both part of the corporate strategy. 3. Strategy Implementation.
What is operational strategy?
Operational strategies are short-term and are associated with the various operational departments of the company, such as human resources, finance, marketing, and production. These strategies are department specific. For example, human resource strategies would be concerned with the act of hiring and training employees with the goal of increasing human capital.
How does strategic management work?
Strategic management requires setting objectives for the company, analyzing the actions of competitors, reviewing the organization's internal structure, evaluating current strategies and confirming that strategies are implemented company-wide.
How does strategic management help organizations?
Achieving organizational goals takes planning and patience. Strategic management can help companies reach their goals. Strategic management ensures the steps necessary to reach a business goal are implemented company-wide.
What is the first step in strategic management?
The first step in strategic management is evaluating the company’s current direction. This often includes understanding the company’s goal, mission and overall strategic direction. Assessing where the company’s current process will help you achieve your goal.
How to create an action plan for a goal?
Once you have the information you need, it is time to create an action plan for reaching the goal. Make sure the steps are clear, focused and directly related to the goal. Prepare easy-to-understand implementation guidelines if the process or procedure will impact many people within the organization.
Is strategic management descriptive or prescriptive?
Strategic management can be either prescriptive or descriptive.
Goal Setting
- The American entrepreneur and life coach Tony Robbins says, “Setting goals is the first step in turning invisible to visible.” How well-said! Unless the organization knows what it wants to achieve, there is no point in planning ahead. This component is all about setting short-term as w…
Gathering Information
- The next component of strategic management pertains to collecting information about all those internal and external factors that could influence the implementation and hence, the achievement of goals. For example, 1. Are there enough resources in terms of finances and manpower to execute a process? 2. Are there any laws or regulations to be taken care of? 3. What are competi…
Strategy Implementation
- Well, you have the strategy ready in the written format. The next component is to execute it seamlessly. This is the practical and most rigorous part of strategic management. Whatever you have planned is converted into actual activities and actions geared towards the delivery of goals. Also Read: Executive Development Program In Transformational Leadership
Strategy Evaluation
- A strategy on paper may look perfect and doable. But, implementation can prove otherwise. There can be certain loopholes or deviations from the original planning which may render the strategy futile. In order to ensure that this doesn’t happen, the implementation has to monitor and evaluate at regular intervals. If there are any issues, they should be plugged immediately. Predicting the f…
The Start
- The most essential element of strategic management revolves around the concept of identifying and understanding specific organization goals. Setting short term goals is an ideal way to start, as they act as a direct blueprint in achieving long term objectives. Segregating roles and responsibilities to individuals and team management should be carried out in this initial stage. T…
Analyzing
- To build an efficient strategic management module, thorough marketresearch must be conducted. The data collected from within the organization and the market help in formulating a productive plan that acts as a foundation for strategic management. This process allows the company to identify internal loopholes that have been affecting the operations of the firm.
Forming The Strategy
- Here, all the data and information collected are utilized to form a unique strategy that fulfills all the needs and requirements of the company. Based on the manpower available, the firm has to decide and control the asset purchase and recruitment of professionals. Knowing the potential of your resources becomes important in strategic management.
Implement The Strategy
- Planning is only one side of the coin as it needs to be effectively backed by the implementation. During this stage, all the employees and team involved should have a clear idea of the organization’s goal and the plan formulated such that the execution can be completed with perfection. IIM Kozhikode strategic managementcourses are ideal that train individuals about th…
Monitoring
- This stage involves managing, analyzing, tracking, and evaluating all the steps that were incorporated into the strategic management plan. By this time you will be able to measure the desired results with the current outcome. Likewise, a new plan must be enforced along with certain adjustments. To learn more about the art of strategic management be sure to get in touc…
Components of Strategic Management
- #1 Formulation
Formulation includes an assessment of the environment in which the organization operates and then creating a strategy on how the organization will operate and compete. This is similar to the first step of the budgetingprocess. - #2 Implementation
Implementation includes the deployment of an organization’s resources to meet the desired objectives.
Frameworks For Strategic Management
- #1. Competitive Advantage
An organization may achieve either lower cost of production or product differentiation as an advantage against its rivals. It is important to look at the market positioning of the brand and company and also to pinpoint all the competitive advantagesthe company has over its competit… - #2. Corporate Strategy and Portfolio Theory
The Modern Portfolio Theory provides a framework for allocating assets so that, for a given level of risk, the expected returnis maximized. Portfolio Theory allows corporations to perform a cost-benefit analysis on the deployment of resources and view the merit of individual resource place…
Generic Competitive Strategies
- Companies should concentrate their strategy on either cost leadership, focus, or differentiation. According to famed business strategist Michael Porter, if a company does not place focus on a singular factor, it risks wasting its resources. Such a strategy places emphasis on either specializing in a product or service by creating a unique selling proposition or creating economie…
Industry Structure and Profitability
- The Competitive Forces Model (Porters 5 Forces) is a framework used to assess the competitiveness of the industry.
SWOT Analysis
- SWOTis an acronym for Strengths, Weaknesses, Opportunities, Threats. This framework is employed to assess internal strengths and weaknesses, to explore the external scope of opportunities available for the business to exploit, and to confront threats presented by opponents or policies.
Value Chain
- The value chain consists of a list of processes or activities that a company performs to bring a product or service into the market. The activities are divided into two functions:
Related Readings
- Thank you for reading CFI’s guide to Strategic Management. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below: 1. Corporate Strategy 2. CVP Analysis 3. Management Theories 4. Organizational Analysis