Fundamentals of Strategic Management

Components of a Strategic Management Process

The process of strategic management involves four primary components. These components define the steps conducted in a chronological sequence when designing a new strategic management plan.

Environmental scanning: this is described as the process of gathering, analyzing and offering information for strategic reasons. It assists to scrutinize the internal and external elements that influence a company. After the environmental scanning process, management evaluates it regularly and strives to improve it.

Strategy formulation: this is a process whereby the best course of action is described for achieving organizational goals and thus, accomplishing organizational purpose. After scanning the environment, the organization formulates business, corporate and functional strategies.

Strategy implementation: this is the process of making the strategy work as intended. The chosen strategy is put into action. This process entails designing the structure of the organization, distributing resources, formulating decision-making process, and human resource management.

Strategy evaluation: this is the final step of the process of strategic management. It involves key activities like internal and external factors appraisal based on current strategies and performance. Evaluation calls for appropriate remedial actions to ensure the organizational strategy and its implementation fulfills the organizational goals (Bateman & Snell, 2007).

Why a strategic management process is needed for a company

Every company has both a strategy and action agenda for implementing it. However, sometimes, management openly states strategic plans and at times they remain implicit the company's pattern of operation and management decisions. Some companies choose courses of action after an exhaustive analysis and others emerge from historical accidents and haphazardly from chance occurrences of the business. A company's recipe of strategic approaches and actions is driven by all the knowledge acquired by the company in the assessment of what the future holds, environmental analyses and evaluation of what worked and what did not in the past. Every organization requires a strategic management process. It offers guidance to the overall hierarchy of management in making clear what the company is trying to do and what it intends to achieve. A high performing company uses its expertise and knowledge intentionally to influence their target markets with a solid strategy. In this perspective, the real value and purpose of the process of strategic management is to create an action plan, which will successfully attract customers, generate a sustainable competitive advantage, exert competitive pressure on contenders, boost a company's market stature and drive performance to superior heights (Orcullo, 2008).).

Ford's strategic management process