Strategic Management Process

Components of SM :
Company Mission & Social Responsibility

External Environment Remote Industry (global & domestic) Operating

Internal Analysis

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Strategic Analysis & Choice

Long Term Objectives

Generic & Grand Strategies Policies that empower action

Short Term Objectives

Functional Tactics

Restructuring, Reengineering & Refocusing the organization Strategic Control & Continuous Improvement

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Company Mission :
Mission of a company is its unique purpose that sets it apart from other companies of its type & identifies the scope of its operations. In short, mission describes the companys product , market and technological areas of emphasis in a way that reflects the values & priorities of the strategic decision makers. The mission statement must express how the company intends to contribute to the societies that sustain it.

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Internal Analysis : The company analyses the quantity & quality of the companys financial, human & physical resources. It also assess the strengths & weaknesses of the companys management & organizational structure. It analyses the company's past success with the companys current capabilities in an attempt to identify the companys future capabilities.

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External Environment : A firms external environment consist of all the conditions & forces that affect its strategic options & define its competitive situation.

Remote :Economic, Social, Political, Technological, Ecological Industry : Entry Barriers, Supplier Power ,Buyer Power, Substitute Availability, Competitive Rivalry Operating Environment : Competitors, Creditors, Customers, Labour, Supplier

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Strategic Analysis & Choice : Simultaneous assessment of the external environment and the company profile, enables a firm to identify a range of possibly attractive interactive opportunities.

These opportunities are possible avenues for investment.

Options in line with company mission is generated from which strategic choice is made.

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The process is meant to provide the combination of long term objectives & generic & grand strategies that optimally position the firm in its external environment to achieve the company mission.

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Long Term Objectives :
The result the organisation seeks over a multi year period are its long term objectives.

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Generic & Grand Strategies :
Many businesses adopt one or more generic strategies characterizing their competitive orientation in the market place. Low Cost, differentiation or focus strategies are the three fundamental options. Intelligent managers seek to create ways their firms possess both low cost and differentiation competitive advantage as part of their overall generic strategy.

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Companies combine these capabilities with a comprehensive, general plan of major actions through which their firm intends to achieve its long term objectives in a dynamic environment called the Grand Strategy.

Every grand strategy is a unique package of long term strategies : concentration, marker development, product development, innovation, horizontal integration. vertical integration, joint venture, strategic alliances, diversification, liquidation.

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Action Plans & Short Term Objectives :
Action Plans translate generic & grand strategies into action by incorporating four elements. First : they identify specific functional tactics & actions to be undertaken in the next week, month or quarter as part of the business effort to build Competitive Advantage.

The second element is a clear time frame for completion.

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Third, action plans create accountability by identifying who is responsible for each action in the plan.

Fourth, each action in an action plan has one or more specific immediate objectives that are identified as outcomes that the action should generate.

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Functional Tactics : Business functions need to identify & undertake activities unique to the function that help build a sustainable competitive advantage. Functional tactics are detailed statements of the means or activities that will be used to achieve short term objectives & establish Competitive Advantage.

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Policies that Empower Action : Policies guide & preauthorize the thinking, decisions and actions of operating managers and their subordinates in implementing the business strategy is essential for establishing & controlling the ongoing operating process of the firm in a manner consistent with the firms strategic objectives. Policies often increase managerial effectiveness by standardizing routine decisions & empowering or expanding the discretion of managers & subordinates in implementing business strategies.

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Restructuring, Reengineering & Refocusing the organisation : Until this point in the SM process, managers have maintained a decidedly market oriented, focus as they formulate strategies & begin implementation through action plans & functional tactics.
Now the process stakes an internal focus, getting work of the business done effectively & efficiently so as to make the strategy successful. - What is the best way to organise ourselves to accomplish the mission?

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- What values should guide our daily activities - what should the organisation & its people be like?

- How can we shape rewards to encourage appropriate action?

The intense competition in the global market place has made this tradition internally focused set of questions. The company's structure, leadership, culture and reward system may all be changed to ensure cost competitiveness and quality demanded by unique requirements of its strategies.

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Strategic Control & Continuous Improvement : Strategic Control is concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises & making necessary adjustments. Continuous improvement provides a way for strategic control that allow their organisation to respond more proactively and timely to rapid development in hundreds of areas that influence a business success.

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SM as a Process : A process is the flow of information through interrelated stages of analysis towards the achievement of an aim.

Thus, SM is a process. the flow of information involves historical, current & forecast data on the operations & environment of the business.
Managers evaluate these data in light of the values and priorities of influential individuals & groups (often called stake holders) that are vitally interested in the actions of the business.

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The aim of the process is the formulation & implementation of strategies, that work achieving the companys long term mission & short term objectives. Viewing SM as a process has several important implications: First a change in any component will affect several; or all of the other component. Most of the arrows in the model point two ways, suggesting that the flow of information is reciprocal.

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The second implication is that strategy formulation and implementation are sequential. The process begins with development or reevaluation of the company mission. Followed by development of a company profile & assessment of the external environment. Then follow in order, strategic choice, definition of long term objectives, design of the grand strategy, definition of short term objectives, design of operating strategies, institutionalisation of the strategy ,review & evaluation

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The third implication is the necessity of feedback from institutionalisation, review and evaluation to the early stages of the process.
Feedback can be defined as the collection of post implementation results to enhance future decision making.

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The fourth implication is the need to regard it as a dynamic system. The term dynamic characterizes the constantly changing conditions that affect interrelated and interdependent strategic activities.
Since change is continuous, the dynamic strategic planning must be monitored constantly for significant shifts in any of its components as a precaution against implementing an obsolete strategy.