Important Stages of Strategic Management Process
The Strategic Management Process is an ongoing process that assesses the business and industry in which the organization is involved, assesses its competitors and refines its objectives to meet all current and future competitors and then reassesses each strategy.
This Strategic Management Process determines long-term competitive advantage. Whatever will happen, strategic decisions have consequences for various major functions and long-term effects on an organization.
4 Important Stages of the Strategic Management Process
There are four components in the Strategic Management Process:
1) Srtategy of Environmental Scanning
Environmental scanning strategies are carried out in the process of gathering, researching and providing adequate information for strategic purposes. It helps in analyzing internal and external factors affecting an organization.
After carrying out the environmental analysis process, management must evaluate it on an ongoing basis and seek to improve it. Internal environmental analysis is the first step in environmental scanning. The organization must pay attention to the internal organizational environment.
2) Formulation Strategy
At this stage, it includes activities to develop the organization's vision and mission, identify opportunities and threats to the organization's external, determine the internal strengths and weaknesses of the organization, establish long-term goals for the organization, create a number of alternative strategies for the organization, and select specific strategies to use.
Strategy Formulation is the process of deciding the best course of action to achieve organizational goals. After scanning the environment, managers formulate corporate, business and functional strategies.
In external analysis, the correlated environment must be studied and analyzed. These environments include: The immediate or industrial environment, the national environment, and the broader socio-economic or macro environment. An analysis of the organization's external environment reveals opportunities and threats to the organization.
3) Implementation Strategy
This stage requires the company to set annual goals, create policies, motivate employees, and allocate resources so that strategic formulation can be implemented.
Strategic implementation includes developing a culture that supports the strategy, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems, and linking compensation for employees to organizational performance.
Implementing strategy means making the strategy work as intended or putting the organization's chosen strategy into action. Strategy implementation includes planning the organizational structure, distributing resources, developing processes in decision making, and managing man power. Strategy implementation is the translation of the selected strategy into organizational action to achieve strategic goals and objectives.
4) Evaluation Strategy
Strategy evaluation is the last stage of the strategy management process. The main strategy evaluation activities are: assessing the internal and external factors that are at the root of the current strategy, measuring performance, and taking corrective or change action.
The evaluation must ensure that the organization's strategy and implementation can meet the goals of the organization. Strategy evaluation is as important as strategy formulation as it provides the efficiency and effectiveness of a comprehensive plan in achieving the desired results.
There are three main activities in strategy evaluation, namely:
• Review the external and internal factors that form the basis of the current strategy formulation
• Measure performance, and
• Take corrective actions. Strategy evaluation needs to be done because today's success is not a guarantee for tomorrow's success.
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Stages in Developing a Good Business Strategy
In general, we can also see the Stages in Developing a Good Business Strategy, as follows:
• Forming a strategic vision of where the organization will move
• Goal setting - transforms the strategic outlook into the specific performance outcomes the organization should achieve
• Formulate strategic options to achieve the desired results
• Execute the chosen strategy efficiently and effectively
• Evaluating the effectiveness of the strategy and its impact on business performance