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A Descriptive Model of Strategic Management (Wheelen & Hunger)

A Descriptive Model of Strategic Management (Wheelen & Hunger)

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Published by dasboot69
The 'planning' approach to the strategy process (as compare to 'incrementalist' approach.
The 'planning' approach to the strategy process (as compare to 'incrementalist' approach.

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Published by: dasboot69 on Apr 15, 2010
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09/08/2012

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 1
A DESCRIPTIVE MODEL OF STRATEGIC MANAGEMENT
By: Thomas Wheelen and David HungerThe process of strategic management involves four basic elements:
(1)environmental scanning, (2) strategy formulation, (3) strategy implementation, and (4) evaluation and control
.At the corporate level, the strategic management process includes activities thatrange from environmental scanning to the evaluation of performance. Topmanagement scans both the external environment for opportunities and threats,and the internal environment for strengths and weaknesses. The factors that aremost important to the corporation's future are referred to as strategic factors andare summarized with the acronym SWOT; standing for strengths, weaknesses,opportunities, and threats. Once these are identified, top management evaluatesthe strategic factors and determines the corporate mission. The first step in theformulation of strategy, a statement of mission, leads to a determination of corporate objectives, strategies, and policies. These strategies and policies areimplemented through programs, budgets, and procedures. Finally, performanceis evaluated, and information is feedback into the system so that adequatecontrol of organizational activities is ensured;
Figure 2-2
depicts this process as acontinuous one.
FIGURE 2-2Strategic Management Model
 
 2
Environmental Scanning: External
The
external environment 
consists of variables (opportunities and threats) that areoutside the organization and not typically within the short-run control of topmanagement. These variables form the context within which the corporationexists. The external environment has two parts: task environment and societalenvironment. The task environment includes those elements or groups thatdirectly affect and are affected by an organization's major operations. Some of these are stockholders, governments, suppliers, local communities, competitors,customers, creditors, labor unions, special interest groups, and trade associations.The task environment of a corporation is often referred to as its industry. Thesocietal environment includes more general forces - ones that do not directlytouch the short-run activities of the organization but that can, and often do,influence its long-run decisions, such economic, socio-cultural, technological, andpolitical-legal forces are depicted in
figure 2-3
in relation to a firm's totalenvironment.
FIGURE 2-3Environmental variables
 
 3
Environmental Scanning: Internal
The
internal environment 
of a corporation consists of variables (strengths andweaknesses) that are within the organization itself and not usually within theshort-run control of top management. These variables form the context in whichwork is done. They include the corporation's structure, culture, and resources. The
corporate structure
is the way a corporation is organized in terms of communication, authority, and workflow. It is often referred to as the chain of command and is graphically described in an organization chart. The
corporation'sculture
is that pattern of beliefs, expectations, and values shared by thecorporation's members. In a firm norms typically emerge that define theacceptable behavior of people from top management down to the operativeemployees.
Corporate resources
are assets that form the raw material for theproduction of an organization's products or services. These assets include peopleand managerial talent as well as financial assets, plant facilities, and skills andabilities within functional areas.
Strategy Formulation
Strategy formulation
is the development of long-range plans for the effectivemanagement of environmental opportunities and threats, in light of corporatestrengths and weaknesses. It includes defining the corporate mission, specifyingachievable objectives, developing strategies, and setting policy guidelines.
Mission
The corporate
mission
is the purpose or reason for the corporation's existence.For example, the mission of a savings and loan (S&L) association might be toprovide mortgage money to people of the community. By fulfilling this missionthe S&L would hope to provide a reasonable rate of return to its depositors. Amission may be narrow or broad in scope. A
narrow mission
clearly limits thescope of the corporation's activities in terms of product or service offered, thetechnology used, and the market served. The above-mentioned S&L has thenarrow mission of providing mortgage money to the people of the community.The problem with such a narrow statement of mission is that it might restrict theuse of future opportunities for growth. A broad mission widens the scope of thecorporation's activities to include many types of products or services, markets,and technologies. A
broad mission
of the same S&L might be to offer financialservices to anyone, regardless of location. The problem with such a broadstatement of mission is that it does not clearly identify which area the corporationwishes to emphasize and might confuse employees and customers.

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