Strategic management is a particular course of action that is meant to achieve a corporate goal. The Strategic Management Process defines the goals and objectives for a business, it creates the action plan so that a company can reach them and then it follows the plan. There are nine steps in Strategic Management Process which managers need to follow; which are defined as under:
- Identify the Organization’s Current Mission, Objectives and Strategies: It is important to identify the goals and objectives of the company. It defines the present purpose of the organization as a mission and the strategies currently being followed. The mission statement becomes the identification of an organization so it is very much necessary to identify it.
- Analyze the Environment: It is a process of monitoring the organizational environment to identify competitor’s actions and to confirm if it is suitable to let the firm goes to already set directions to reach its goals. It can be performed by using Porter’s five forces, which evaluates; the bargaining power of suppliers and the buyers, the threat of new entrants and substitutes, and the rivalry of competitors.
- Analyze the Organization’s Resources: By analyzing the organization’s resources, a firm can make a pictorial view of the available capabilities and resources inside and outside of the organization. It will help to determine the organization’s competitive weapons i.e. value creating skills, capabilities and resources.
- Identify Opportunities and Threats: It identifies the opportunities and threats outside the organization. It can be defined as SWOT analysis which has its two components i.e. Opportunities and Threats. Opportunities are the positive external environmental factors which need to be analysed for further growth of the organization. The threats are the negative external environmental factors which need to be identified to prepare the organization to compete and convert those threats into the opportunities.
- Identify Strengths and Weaknesses: It identifies the strengths and weaknesses within the organization. It also can be defined as SWOT analysis which has the remaining two components i.e. Strengths and Weaknesses. Strengths are internal activities being done well by an organization which helps an organization to achieve its goal. And the weaknesses are the activities that not being done by an organization which is unfavorable for the organization to achieve its goal.
- Reassess the Organization’s Mission and Objectives: Reassessing the organization’s mission and objectives helps to review the firm’s current performance and also to take better actions for the success of the organization. It defines as SMART which means Specific, Measurable, Achievable, Realistic, and Time-frame.
- Formulate Strategies: It is the process of determining appropriate courses of action for achieving organizational objectives. It follows the decision making process. It can be further describes by Michael Porter’s generic strategies, which are; a) Cost Leadership, b) Differentiation, and c) Focus. These generic strategies each have attributes that can serve to defend against competitive forces.
- Implement Strategies: It is the process of distributing resources and putting strategies into an action to achieve its goal and objectives. When the strategies are executed within the organization, it focuses on the process through which strategies are achieved.
- Evaluate Results: It controls the process to determine the effectiveness of a strategy. An organization can evaluate results by reviewing the process, adjusting the mission and objectives and strategies, and by initiating the corrective measures.