PROCESS OF STRATEGIC MANAGEMENT

 The standard approach to strategic management involves the 5

steps (Wright, 1998)
1. External Analysis
Management needs to assess the environment in which it
operates. This includes the environment at large, such as
economic, demographic, and political situation, as well as the
more immediate competitive environment which includes
competitors and potential substitutes. This is done in order to
discover possible opportunities and potential threats ahead of
time.
2. Internal Analysis
Management needs to assess the internal environment of the
firm: what are its competitive advantages or strengths? What
are its limitations or weaknesses. Knowing these will help
management understand what it can and cannot do to formulate
strategies that will build competitive advantages.
3. Strategy Formulation
Management goes through a process of creating strategies that
best leverage the firm’s strengths while avoiding having its
weaknesses exposed all in pursuit of possible opportunities or
to evade potential threats