Process of Strategic Management ( 8 Important Steps )

Read this article to learn or gain knowledge about the Process of Strategic Management…

Formulation of a strategy involves not only the statement of organizational goals., but also specifying the ways of accomplishing. The broad steps in strategic planning are as described below:

The process of Strategic Management-

1. Determination of Mission or Purpose

2. Environmental Scanning

3. Organizational Analysis

4. Developing Strategic Alternatives

5. Evaluation of Strategic Alternatives

6. Choice of Strategic Alternative

7. Implementation of Strategy

8. Evaluation of Strategy

• Determination of Mission or Purpose-

This is the first or primary Process of Strategic Management and it means this process begins with spelling out the business mission or tentative purpose that might be pursued in future. It represents the long-term vision of what the organization seeks to do and the reasons why it exists.

A clear statement of the organization’s mission would help to identify the functions it performs for the society and also its basic character and philosophy.

• Environmental Scanning-

This is the second or secondary Process of Strategic Management and it means is the diagnostic phase of strategic and human resource planning. External Environment of a firm consists of an economic, social, technological, market, and other forces which affect its functioning. The firm’s external environment is dynamic and uncertain. The management must systematically monitor it to determine threats and opportunities for the firm in the future.

The external environment provides the setting for the functioning of the individual organization. The management should try to find answers to the following questions:

(a) What are the economic, social, and political trends to be considered?

(b) What are the trends in the market for the company’s products and services??

(c) What technological adoption or changes are anticipated?

(d) What competition will be faced?

• Organizational Analysis-

This is the third or territory Process of Strategic Management and it means in order to analyze strengths and weaknesses, it is important to know the current domain of the firm. It includes:

(a) the range of products or services provided by the firm,

(b) geographic coverages of the firm- local, national, or international.

Organizational Analysis involves a review of the financial position, productive capacity, marketing effectiveness, the extent of research and development, human resource management skills and so on.

• Developing Strategic Alternatives-

This is the fourth Process of Strategic Management and it means this alternative may be developed and analyzed in the light of an organization’s strengths and weaknesses and the opportunities and threats it faces. This involves SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.

After the identification of environmental opportunities and threats and organizational strengths and weaknesses, the next tasks in the strategic planning process are the consideration of the strategic alternatives and the choice of the most appropriate strategies.

• Evaluation of Strategic Alternatives-

This is the fifth Process of Strategic Management and it means is each strategic alternatives has its own advantages and disadvantages which need to be analyzed carefully. The management should examine various alternatives in the light of forecasted opportunities and constraints and also the strengths and weakness of the company.

For the choice of best alternative, the management can also use quantitative tools of analysis such a PERT, CPM, ratio analysis, etc.

In evaluating alternatives, it is also important to focus on a particular product or service and on those competitors who are direct rivals on offering it.

• Choice of Strategic Alternative-

This is the sixth Process of Strategic Management and it means the last stage in strategic planning is the choice of an appropriate strategy for the attainment of specified objectives. The management should select the strategic management should select the strategic alternative which is best suited to the organization’s capabilities.

In simple words, it must utilize the existing strengths of the organization to the maximum extent.

• Implementation of Strategy-

This is the seventh Process of Strategic Planning and it means after the strategy has been finalized, it must be incorporated into the operations of the organization. It must be translated into appropriate operational and tactical plans, programmes, budgets, etc. so that it could be implemented.

After the strategy has been put into practice, its effectiveness should be reviewed to know if it has been also achieving the intended results.

• Evaluation of Strategy-

This is the eighth Process of Strategic Planning and it means is the last phase of strategic management which is concerned with the appraisal of the implementation of strategies and measurement of actual organizational performance.

The actual performance is evaluated in light of the mission and objectives of the organization. This helps in exercising strategic control.