A strategic management process is an organized way to achieve a company’s short and long-term objectives. It helps an organization to identify its core competencies and maximize its resources. This includes analyzing and addressing issues that can affect its performance. The goal of this approach is to create a plan that provides a sustainable competitive advantage. Ultimately, the strategic management process will help to keep an organization viable in a volatile marketplace.
There are three stages to the process: evaluation, formulation, and implementation. Evaluation is the first and often most important step in a strategic management plan. During this phase, an organization identifies the key challenges it faces, including the competition, the business environment, and internal issues. They can also identify and utilize potential opportunities. In particular, the process is useful for evaluating and testing new ideas.
Formulation is the next phase of the process. During this phase, an organization considers a variety of issues, such as whether to diversify, enter international markets, merge with a partner, or enter a joint venture. Moreover, it will determine how to best utilize the organization’s strengths and weaknesses. Some examples include assessing which markets the firm will target, designing products and services that meet consumer needs, and implementing strategies to make sure the firm survives the market’s upcoming changes.
Implementation is the third and final stage of the process. During this phase, the company implements the strategy it has developed, making sure all necessary resources are in place. For example, if the firm has invested in a new technology, it may need to develop a strategy to ensure the technology is effective in the field. Alternatively, it may be necessary to change the business structure to accommodate the new technology.
Using a scenario analysis is a common method of determining how an organization can respond to a changing environment. Companies can use this type of analysis to develop a variety of plans, based on the goals set in Stage 1. The most common method involves using three or four key variables. However, companies can employ other approaches, such as conducting a more sophisticated multi-variable analysis.
Using the same model, companies can then evaluate the strengths and weaknesses of the strategy they have developed. The strengths and weaknesses can be grouped into categories, ranging from strategic attributes to external factors that drive the business. These can include the competition, the business environment, and the organization’s internal strengths and weaknesses. If the business is struggling, it can then focus on its strengths and take steps to improve its weaknesses.
The strategic management process can be used in many business sectors, including manufacturing, healthcare, retail, and more. In general, the best strategies take advantage of the organization’s strengths while minimizing its weaknesses.
While it can be a difficult task to formulate a strategy that has a long-lasting effect, it is worth the effort. Whether it is a large corporation or a small startup, a well-defined plan is an important step toward success.