Strategic Management Process

The development of vision and mission statements is an essential part of the

strategic management process. Having clearly defined the vision and mission of the
organization, managers then can set strategic objectives that are aligned with the
company's long-term goals. Managers translate these strategic objectives into an
operational strategy that can be implemented, monitored and evaluated. The
outcome of the evaluation will determine whether any revision of the vision
statement, mission statement, objectives or operational strategy is required.

Alignment with Business Goals

Well-written vision and mission statements ensure that each element of the strategic
management process is aligned to the company's long-term goals. Managers use
clear and concise vision and mission statements to communicate their aspirations to
stakeholders. Employees understand where to focus their efforts if they align their
daily work with the vision and mission. Clear vision and mission statements allow
customers, suppliers and shareholders to choose whether or not they want to do
business with the company.

Creating Mission and Vision Statements

Setting a vision statement requires envisioning the future of your company as the
present. Picture the best outcome your enterprise can have and describe it while
avoiding specific measurable terms. For example, a local public relations firm may
have a simple vision statement of "To create the largest PR firm in northeast Texas"
instead of "To secure 10 contracts with Fortune 200 companies in year one."

A mission statement is a bit more specific and usually answers a few key questions.
Think about your business, who it serves, what it provides and how, then define it.
Consider the PR firm again: "It is the mission of NE Texas Grassroots PR to provide
local and global business owners with the public relations services they need to
succeed at a price balanced carefully against the results we provide. Our staff of
experts provide a comprehensive PR approach and consider client-service the top
priority."

Understanding Strategic Management

The strategic management model deals with the planning, analyzing, and assessing
different factors and inputs critical for production. It also entails the evaluation,
allocation, and exploitation of available resources to achieve specified business
objectives. The corporate culture, internal structure, and skills of human resources
influence the strategy development process of an organization.

By identifying and managing strategies, a company can make decisions about its
future direction and performance. Also, with strategic organizational management,
top officials can learn from past failures and devise an action plan. It further
necessitates evaluating potential threats and opportunities and analyzing possibilities
for operational improvement.
Let us understand this with a simple example:

Diana runs an apparel store that employs ten people, including herself. She
assigned two people to work on social media promotions of her store, two people for
physical advertisements in the local area, two software developers to design and
develop her e-commerce website, and two representatives to attend customers at
the store. Diana herself took the responsibility of supervising all the tasks and
coordinating with the teams.

As the business flourished, she decided to open more branches. Diana listed down
her business expansion goals, finalized the budget, and formulated strategies. She
also hired the best people and put them to work to achieve objectives.

Diana noticed that her products receive more attention online. So, she decided to
focus more on online promotions and her e-commerce website. Therefore, she
collaborated with the best logistics partners to ensure her products get delivered to
customers on time.

The planning and assessment of different inputs and factors helped Diana make
informed decisions, thereby assisting her in developing effective strategies.

Process Of Strategic Management

An organization must follow a set of processes for strategic planning to be effective

and fruitful. The following are the steps in the strategic management process:

#1 – Identifying Direction

The first step requires the organization to have a clear vision and direction. Before
developing plans, a business should determine its short- and long-term objectives.
The company will not have any clarity on processes and procedures unless it sets its
goals beforehand.

#2 – Analyzing Resources

An organization must first arrange its resources to carry out specific tasks to reap
the strategic management benefits. For example, someone who excels at marketing
may struggle to manage the organization’s public relations. Hence, the management
should assess its resources and select the best one for respective processes.

#3 – Framing Strategies

After selecting the best resource for every process, the organization frames its action
plan for accomplishing the goal. This strategic planning consists of elements needed
to achieve the set objectives effectively. The analysis, assessment, and supervision
of processes at every stage help the business resolve issues, whether internal or
external.
#4 – Implementing Strategies

Following the strategy development based on the organization’s objectives, the next
stage is to execute them. Every business must train its human resources, from entry-
level employees to managers, to ensure they fully understand the process. It will
bring core competencies into action within the organization for the best possible
output.

#5 – Evaluating Effectiveness

The review of strategies is the final step in the process. Looking into each aspect of
the business during the strategy formulation and implementation helps the
management identify the efforts of every individual. The organization can recognize
these efforts through performance appraisal schemes, which are essential aspects of
the business.

Examples

Let us understand the concept better with the below-mentioned strategic

management examples:

Example #1

Dave intends to extend his constrained furniture business by introducing a new

product category, i.e., all home decor goods. However, he is unsure how his brand
would perform as it took years for him to establish his furniture business due to a
delay in identifying negative factors. Thus, to avoid any risk this time, Dave conducts
SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis as part of the
strategic management.

He identifies the strong and weak points of business. He also analyzes potential
opportunities and threats based on the current market trend. Accordingly, Dave
strategizes and plans the processes, starting from manufacturing to advertising,
ensuring that he allocates the right resources at the right places.

Example #2

The old strategy calendar is a strategic management approach that signifies the
process execution in isolation without guidance, coordination, or collaboration. As a
result of the disconnect between enterprise strategy and strategic groups and units,
many businesses failed to achieve their goals.

Due to performance concerns, the economic slump, rising expenses, and invading
imports, Chrysler Group experienced massive losses in 2000. It was when the
automotive manufacturer decided to combine all strategy-related activities into a
single functional unit. As a part of this, it set up the Office of Strategy Management. It
aided in the management of company strategies. Furthermore, it helped in the
development of new products by business units.
The collaboration of employees and management resulted in core competencies
required to achieve business goals. In 2004, the automobile brand successfully
launched a series of new sedans and made a profit of $1.2 billion despite struggling
domestic market.

Importance of Strategic Management

Besides preparing organizations for market competition, strategic management helps

them identify opportunities that arise from time to time. In addition, businesses get a
clue of threats that might hurt them in the long run. Through step-by-step formulation
and implementation of strategies, companies can overcome hurdles coming their
way and grow efficiently.

Let us have a look at some more points that make strategic planning a crucial aspect
of any business:

 The past strategies act as a reference for future decisions that the
organization makes.
 It results in improved organizational performance.
 The formulation of plans considers the current market trends and gives
organizations a competitive advantage in the changing market.
 The step-wise strategic processes make goals achievable.
 It helps identify and select efficient individuals and recognize their efforts,
thereby allowing them to grow with the organizational growth.
 The synchronization of processes, workforce and strategies make sure
strategies align with organizational goals.