Explain Strategy Management Process
THE STRATEGIC MANAGEMENT PROCESS
Ford Motor Company, facing huge losses and hemorrhaging market share to Toyota and
Nissan, knew it needed a new strategic plan. Competition was fierce, Ford’s costs were higher than competitors’, and Ford’s unused plant capacity was draining profits. Ford’s managers devised “The Way Forward.” This new strategic plan entailed closing a dozen plants and terminating 20,000 employees. As at Ford, a strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage. The essence of strategic planning is to ask, “Where are we now as a business, where do we want to be, and how should we get there?” The manager then formulates specific (human resources and other) strategies to take the company from where it is now to where he or she wants it to be. A strategy is a course of action. Ford’s strategies included closing plants and terminating employees. We discuss various standard strategies shortly. First, we look more closely at the strategic management process.
Steps in Strategic Management
Strategic planning is part of the strategic management process. Strategic management entails both strategic planning and implementation, and is “the process of identifying and executing the organization’s strategic plan, by matching the company’s capabilities with
CHAPTER 3 • STRATEGIC HUMAN RESOURCE MANAGEMENT AND THE HR SCORECARD 79 the demands of its environment.” Strategic planning comprises (see Figure 3-1) the first 5 of 7 strategic management tasks: (1) defining the business and developing a mission,
(2) evaluating the firm’s internal and external strengths, weaknesses, opportunities, and threats, (3) formulating a new business statement, (4) translating the mission into strategic goals, and (5) formulating strategies or courses of action. In its simplest sense, however, strategic planning is remarkably simple:
Ford Motor Company, facing huge losses and hemorrhaging market share to Toyota and
Nissan, knew it needed a new strategic plan. Competition was fierce, Ford’s costs were higher than competitors’, and Ford’s unused plant capacity was draining profits. Ford’s managers devised “The Way Forward.” This new strategic plan entailed closing a dozen plants and terminating 20,000 employees. As at Ford, a strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage. The essence of strategic planning is to ask, “Where are we now as a business, where do we want to be, and how should we get there?” The manager then formulates specific (human resources and other) strategies to take the company from where it is now to where he or she wants it to be. A strategy is a course of action. Ford’s strategies included closing plants and terminating employees. We discuss various standard strategies shortly. First, we look more closely at the strategic management process.
Steps in Strategic Management
Strategic planning is part of the strategic management process. Strategic management entails both strategic planning and implementation, and is “the process of identifying and executing the organization’s strategic plan, by matching the company’s capabilities with
CHAPTER 3 • STRATEGIC HUMAN RESOURCE MANAGEMENT AND THE HR SCORECARD 79 the demands of its environment.” Strategic planning comprises (see Figure 3-1) the first 5 of 7 strategic management tasks: (1) defining the business and developing a mission,
(2) evaluating the firm’s internal and external strengths, weaknesses, opportunities, and threats, (3) formulating a new business statement, (4) translating the mission into strategic goals, and (5) formulating strategies or courses of action. In its simplest sense, however, strategic planning is remarkably simple: