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STRATEGIC MANAGEMENT PROCESS

The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises it’s competitors; and fixes goals to meet all the present and future competitor’s and then reassesses each strategy. Strategic management process has following four steps: 1. Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. 2. Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies. 3. Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources. 4. Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives. These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Components of Strategic Management Process

In a management information system. MANAGEMENT INFORMATION SYSTEM An organized approach to the study of the information needs of an organization's management at every level in making operational. Started at General Electric. growth.[7]     Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports.html#ixzz2KxOlNQZd Advantages The following are some of the benefits that can be attained for different types of management information systems. and timely manner. started in the 1960s and lasted for 19 years. and then moved to the Strategic Planning Institute in the late 1970s. processes. that attempted to understand the Profit Impact of Marketing Strategies (PIMS). The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. employees' performance record etc. modern. both from inside and outside an organization.com/definition/management-information-systemMIS. moved to Harvard in the early 1970s. Read more: http://www. This data is then processed. particularly the effect of market share. and stored in a centralized database (or data warehouse) where it is constantly updated and made available to all who have the authority to access it. The effective management of customer data can help the company to perform direct marketing and promotion activities. it now contains decades of information on the relationship between . integrated. tactical. consistent. computerized systems continuously gather relevant data. it must be realized that each component interacts with the other components and that this interaction often happens in chorus. The consumer buying trends and behaviours can be predicted by the analysis of sales and revenue reports from each operating region of the company. Therefore. and routines that provide suitably detailed reports in an accurate. The identification of these aspects can help the company improve their business processes and operations. Giving an overall picture of the company and acting as a communication and planning tool. Information is an important asset for any company in the modern competitive world.businessdictionary. The PIMS study was a long term study. in a form that suits their purpose. and strategic decisions. Its objective is to design and implement procedures. Growth and portfolio theory In the 1970s much of strategic management dealt with size.Strategic management is an ongoing process. and portfolio theory.

was developed by the Boston Consulting Group in the early 1970s.C. for example. B. the greater will be their rate of profit.profitability and strategy. There was also research that indicated that a low market share strategy could also be very profitable. This was the theory that gave us the wonderful image of a CEO sitting on a stool milking a cash cow. and strategies.[12] and later Traverso (2002)[13] showed how smaller niche players obtained very high returns. In the 1970s marketers extended the theory to product portfolio decisions and managerial strategists extended it to operating division portfolios. . Their initial conclusion was unambiguous: The greater a company's market share. diversification. By the early 1980s the paradoxical conclusion was that high market share and low market share companies were often very profitable but most of the companies in between were not.[9] The studies conclusions continue to be drawn on by academics and companies today: "PIMS provides compelling quantitative evidence as to which business strategies work and don't work" . The combined effect is increased profits. In the previous decade Harry Markowitz and other financial theorists developed the theory of portfolio analysis. but with centralized support functions. Shortly after that the G. The benefits of high market share naturally lead to an interest in growth strategies. The management of diversified organizations required new techniques and new ways of thinking. Several techniques were developed to analyze the relationships between elements in a portfolio. Schumacher (1973). Companies continued to diversify until the 1980s when it was realized that in many cases a portfolio of operating divisions was worth more as separate completely independent companies. The first CEO to address the problem of a multi-divisional company was Alfred Sloan at General Motors. joint ventures.[11] Levenson (1984). GM was decentralized into semi-autonomous “strategic business units” (SBU's). This was sometimes called the “hole in the middle” problem. One of the most valuable concepts in the strategic management of multi-divisional companies was portfolio theory.E. mergers and acquisitions. multi factoral model was developed by General Electric. It also provides experience and learning curve advantages. and organic growth were discussed. Analysis. costs. The high market share provides volume and economies of scale. franchises.Tom Peters. The most appropriate market dominance strategies were assessed given the competitive and regulatory environment. Each of a company’s operating divisions was seen as an element in the corporate portfolio. Each operating division (also called strategic business units) was treated as a semi-independent profit center with its own revenues. The relative advantages of horizontal integration. It was concluded that a broad portfolio of financial assets could reduce specific risk.[10] Woo and Cooper (1982). This anomaly would be explained by Michael Porter in the 1980s.G. objectives. vertical integration.

a firm needs to have a strong understanding of their own business and the market in which they operate. The key objective of marketing management is to determine how to appropriately allocate the resources of the organization towards marketing related activities. In order to create an effective marketing management strategy. make it available at the right price and distribute it properly. they will tend to be the person whose responsibility it is to control and direct the expenditure of funding that has been specifically set aside for marketing purposes. sales promotions and publicity. they can expand and diversify the exchange relationship. For a firm engaging in marketing management. An increased sales volume will. what quantity of good they produce based on a perception of anticipated demand • Developing an exchange relationship Marketing helps firms to establish a successful relationship with their customers. so that they can decide. • Profit maximization Marketing aims at maximizing customer satisfaction. in turn. Marketing management tends to go hand in hand with 'marketing strategy'. which in turn should result in an increased demand for products.Importance of marketing management strategies Marketing management is a business discipline that focuses on practically. • Building a link with society Communication between the firm and society can be improved through advertising campaigns. . Marketing helps in reducing the cost per unit of production. If firms produce the right produce. If someone has the job title of a 'marketing manager'. applying marketing techniques and managing a firm's marketing resources and activities. which is a term that tends to refer to the long-term goals a company has in terms of marketing. the whole concept of marketing is important for the following reasons: • Business planning and decision making Marketing activities need to collect information that will inform a firm's production plans. help a firm achieve increased profits.