Strategic Management can be defined as “the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective.” it is an on-going process which is in existence throughout the life of organization. The purpose of strategic management is to explore and create new and different opportunities for tomorrow. Strategic management process is consists of three stages:
* Strategic Formulation:
Strategic formulation means a strategy formulate to execute the business activities. Strategy formulation includes developing:
. Vision and Mission (The target of the business)
. Strength and weakness (Strong points of business and also weaknesses) . Opportunities and threats (These are related with external environment for the business) Object
Strategy formulation is also concerned with setting long term goals and objectives, generating alternative strategies to achieve that long term goals and choosing particular strategy to pursue.
* Strategy Implementation
Strategy implementation requires a firm to establish annual objectives, devise policies, motivating employees and allocate resources so that formulated strategies can be executed. Strategy implementation includes developing strategy supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information system and linking employee compensation to organizational performance. Strategy implementation is often called the action stage of strategic management. Implementing means mobilizing employees and managers in order to put formulated strategies into action. It is often considered to be most difficult stage of strategic management. It requires personal discipline, commitment and sacrifice. Strategy formulated but not implemented serve no useful purpose. * Strategy evaluation:
Strategy evaluation is the final stage in the strategic management process. Management desperately needs to know when particular strategies are not working well; strategy evaluation is the primary means for obtaining this information. All strategies are subject to future modification because external and internal forces are constantly changing.
Adapting to change:
The strategic management process is based on the belief that organization should continuously monitor internal and external events and trends so that timely change can be made as needed. The rate and magnitude of changes that affect the organization are increasing dramatically. Key Terms in Strategic Management:
There are eight key terms: strategists, mission statements, external opportunities and threats, internal strengths and weaknesses, long-term objectives, strategies, annual objectives, and policies. Benefits of Strategic management
Following are the major benefits of Strategic management:
* Proactive in shaping firm’s future
* Initiate and influence actions
* Formulate better strategies (Systematic, logical, rational approach) * Financial benefits:
. Improved productivity
. Improved sales
. Improved profitability
* Non-Financial benefits:
. Increased employee productivity
. Improved understanding of competitors’ strategies
. Greater awareness of external threats
. Understanding of performance reward relationships
. Better problem-avoidance
. Lesser resistance to change
Why Some Firms Do No Strategic Planning?
Some firms do not engage in strategic planning and some firms do strategic planning but receive no support from managers and employees. Some reasons for poor or no strategic planning are as follows: 1. Poor Reward Structures.
3. Waste of Time.
4. Too Expensive.
6. Content with Success.
7. Fear of Failure.
9. Prior Bad Experience.
11. Fear of the...