Strategic management refers to the process by which organizations analyze, make decisions and take appropriate courses of action in order to create and sustain competitive advantage over their competitors and to achieve better performance. In my opinion, strategic management is the systematic analysis of external environmental factors such as political instability, level of competition in the industry and government regulations, and internal environmental factors such as high competence of workers and accessibility to resources that are likely to affect the operations and performance of an organization with an aim of providing a strong basis for attaining and sustaining optimal productivity within the organization. Strategic management usually enables organizations to achieve their target goals and objectives through adequate resource allocation and establishment of unambiguous roles and responsibilities for the organizational members that would facilitate attainment of the set goals and objectives.
According to Zimmerer, Scarborough and Wilson (2008), strategic management is also used for establishing the mission, vision and values of the organization. Zimmerer, Scarborough and Wilson (2008) further stress that the main objective of strategic management is to facilitate the realization of organizational goals and objectives through proper prioritization of policies and integration and alignment of economic resources with the goals of the organization.
On the other hand, strategic management process refers to an outline of steps, procedures or activities to be undertaken by organizational managers in order to enable the company achieve its set goals and objectives. The main steps in a strategic management process include the definition of the business, environmental scanning, formulation, implementation and evaluation of strategies.
Defining the Business
This involves determining what the organization wants to achieve in the future. It involves setting the vision, mission, goals and objectives of the organization. For example, an organization would want to increase net profits by twenty percent or enlarge market share by thirty percent.
Environmental scanning refers to the assessment, evaluation or examination of both internal and external environments of an organization in order to identify the various factors that are likely to affect the operations and performance of the company. Environmental scanning involves the use of evaluation tools such as SWOT analysis to identify factors in the internal and external environments that affect organizational performance. SWOT analysis is the examination of Strengths, Weaknesses, Opportunities and Threats in an organization. After conducting an environmental scanning, the strengths of the organization are reinforced, whereas the weaknesses are eliminated or improved in order to enable the organization grab opportunities that exist in the industry.
Formulation of Strategies
Strategy formulation is the process of setting new business goals and objectives based on the information obtained from the environmental scanning. Kaiser and Ringlstetter (2011) define strategy formulation as the process of choosing the most appropriate courses of action for realizing the goals and objectives of an organization. During the formulation of the new strategies, organizational managers usually focus on the new business opportunities, how to fully utilize the strengths of the organization and eliminate or improve organizational weaknesses in order to grab the available opportunities in the industry. Similarly, strategy formulation also entails devising methods or ways of minimizing impacts of the external threats on the performance of the organizations. For example, a manager set new strategies to ensure maximum utilization of organizational resources or adopt effective conflict management techniques that would help in minimizing disagreements among workers in the organization. Likewise, the manager may also restructure or change policies of the organization in order to facilitate compliance with new government regulations, hence reduce conflicts with the regulatory authorities. The formulated strategies must be clear, concise, attainable and time-bound. The three major types of strategies that are formulated at this stage include corporate-level strategies, business-level strategies and functional-level strategies.
Implementation of Strategies
This is the process by which the organization puts into practice or applies the various strategies formulated in the previous stage. It involves actual execution of the activities proposed during strategy formulation. For example, it may involve equitable distribution of resources within the organization, acquisition of new equipments and training of workers to enable them provide better services to customers. Implementation of strategies also involves matching the set goals and objectives with the organizational structure, as well as designing of control mechanisms.
Evaluation of Strategies
This is the final stage of the strategic management process. It involves determining or appraising whether or not the set goals and objectives have been achieved successfully. Evaluation of strategies usually involves measuring the level of performance in the organization, comparing actual achievements against target goals and spotting drawbacks. It also involves consistent reviews and monitoring of factors in the internal and external environments. Upon successful evaluation of the strategies, appropriate remedial or corrective measures are taken in order to prevent further deviations from achieving the goals.
In my view, strategic management is a continuous process that evaluates the progress and performance of an organization. Strategic management also helps in determining whether or not an organization has achieved its target goals and objectives, thus keeps the organization focused on its goals and objectives. Through the strategic management, organizations are able to remain up-to-date, as well as able to effectively tackle emerging problems such as increased competition, technological changes and declining productivity that would impede the success of the company. Strategic management is also used as a management tool for forecasting of the future of an organization.