7 Process of Strategic Management

The strategic management process refers to the development of vision and mission to strategy
formulation and evaluation in order to achieve organizational goals and objectives. It helps
managers to how and which strategy to choose and gives proper direction on how to best
implement it. The strategic management process also called a model of strategic management,
is dynamic and continuous. Any modification in one of the model’s stages may demand
changes in all of the other components. A shift in the economy, for example, could create a
huge opportunity and necessitate a change in long-term aims and strategies; failure to meet
annual objectives could need a policy change, or a major competitor’s strategy change could
necessitate a change in the firm’s mission.

As a result, strategy design, implementation, and evaluation should be done on a regular basis
rather than only at the end of the year or semi-annually. The strategic-planning process is never
truly completed. The steps in the strategic management process include the seven – the
development of vision and mission, external and internal environment analysis, establishing
long-term objectives, generating, evaluating, and selecting strategies, implementation, and
strategy evaluation and control.

Development of Vision and Mission

In the first step of the strategic management model/process, organizational vision and mission
are developed. A vision is a representation of an organization’s anticipated future condition.
It’s a concise one-sentence remark. It identifies the course that a company intends to take in
order to grow and strengthen its business. The cornerstone for establishing a thorough mission
statement is a clear vision. Although many businesses have both a vision and a mission
statement, the vision statement should come first.

The mission statement is a declaration of an organization’s reason for existing. It is an

everlasting statement of purpose that separates one organization from others with similar
missions. In terms of customers, employees, suppliers, and the community, a mission statement
defines the company. It reflects all aspects of the company, including product range and
nature, pricing, quality, service, marketplace position, growth potential, technology use, and
relationships with customers, employees, suppliers, competitors, and the community. It also
aids in the clarification of the company’s scope and objectives. It also reflects the company’s
unique selling point.

External Environment Analysis

The firm’s external environment is examined in the second stage of strategic management. The
external environment refers to the circumstances that exist outside of a company. Operating
and remote environments make up a company’s external environment. Customers,
shareholders, suppliers, the media, the government, pressure groups, and financial institutions
are all part of the operating environment. Political, economic, socio-cultural, technological,
legal, and global forces all play a role in the remote or general environment.
The external environment is examined in order to determine whether an opportunity or a threat
exists. An opportunity is a situation in the general environment that, if properly utilized, can
assist a company in achieving strategic competitiveness. A threat, on the other hand, may
obstruct a company’s efforts to achieve strategic competitiveness. To deal with uncertainty and
achieve strategic competitiveness, businesses must be aware of and thoroughly grasp the
various sectors of the external environment.

Internal Environment Analysis

The internal environment refers to the conditions and resources that exist within a company.
It’s also known as the resource environment or the firm. In the long run, the corporation can
influence its internal environment. It establishes the firm’s relative strengths and weaknesses.
Positive internal features that the organization can use to attain its strategic goals are known as
strengths. Internal features that may limit or constrain an organization’s functioning are known
as weaknesses. For decision-makers, understanding how to harness the firm’s internal
components is critical. A healthy internal environment aids in the creation of a competitive
advantage that propels a company toward its objectives.

Establish Long-Term Objectives

Objectives are a term used to describe a company’s desired outcomes. They turn the strategic
vision into measurable performance goals. The objectives demonstrate the managerial
commitment to reaching performance targets. Long-term objectives should be defined as part
of the strategic management process when an environmental evaluation is completed. They
have to do with increasing market power, competitiveness, and future business potential for
the corporation. Long-term goals must be established as part of strategic management.

Generate, Evaluate and Select the Best Strategy

After proper analysis of the environment and the establishment of long-term objectives,
strategic alternatives are generated at different levels.

• Corporate-level strategies provide overall direction to the organization. They attempt

to obtain synergy among numerous product lines and business units.
• Business level strategies are formulated for different strategic business units. They
indicate how a firm competes successfully in an individual product market.
• Functional level strategies attempt to enhance the operational capability of an
organization in production, marketing, human resource, finance, and research and
development. They support the business-level strategy.
The strategic alternatives are evaluated on grounds of suitability, acceptability, and feasibility.

• Suitability is concerned with the strategic options’ environmental appropriateness. It

necessitates a wide examination of the extent to which new strategies would align with
future trends and changes in the environment, leverage an organization’s strategic
capability, and meet stakeholder expectations.
• Acceptability is concerned with expected performance outcomes. The acceptability of
the possible strategic options can be assessed in three broad ways: return, risk, and
stakeholders’ expectations.
 • Feasibility refers to the availability of resources and competencies to deliver a strategic
choice. The feasibility assessment determines whether or not the strategy alternative
can be successfully implemented. As a result, it determines the viability of a given
alternative in practice.
After the evaluation of strategic options or alternatives, the best one is selected that promises
to give better results.

Implementation of Strategy

This is the most crucial stage of the strategic management model. The overall essence of
strategic management lies in the implementation of the strategy. In this stage, the strategies are
translated into action i.e. they are implemented. The essential elements of strategy
implementation are given below.

• Structure Design: For the strategy to be implemented successfully, it must have a clear
organizational structure. Responsibility, accountability, the chain of command, and the
span of control are all established by organizational structure. For the implementation
of a strategy, a sound structure is critical.
• Resource Planning: The implementation of a specific strategy necessitates a long-term
commitment of resources. As a result, resource planning is critical in the
implementation of a strategy. Human and other resources, such as finance, technology,
and information, are included in resources. A good match between resources and
environmental potential is required. The allocation of resources in various enterprises
and divisions is also part of resource planning.
• Management System: A management system is critical for the strategy’s successful
implementation. It includes putting together a strong management team, managing
human resources effectively, managing information, and developing leaders. A
management system is created in such a way that changes are managed and change
barriers are gradually reduced or eliminated.

Strategy Evaluation and Control

Organizational performance or activities are monitored at this level of the strategic

management model to ensure that strategy implementation is going in the proper direction. The
present strategy’s assumptions about the internal and external environment are examined, and
the actual performance is measured.

If necessary, corrective action is done at some point. It’s a never-ending process. If necessary,
tweaks or alterations to the approach are performed. The corrections between the strategic plan
and strategy implementation are ensured by strategy evaluation and control.