The Strategic Management Process

Assessing
“What we are”

Deciding and implementing

“where we intend to be and how we
are going to get there”
The Strategic Management Process

Process of identifying and executing the

organization’s strategic plan, by matching the
company’s capabilities with the demands of the
environment.
 Step 1: Define the Current Business

• What products it will sell

• Where it will sell
• How its products or services will differ from
competitors

“What business”
• Chooses strategy to get there
• Vision statement
• Mission statement
 Step 2: Perform external and internal
Audits

• Analyzing the external and internal

situations
• External opportunities and threats
• Internal strengths and weaknesses
• SWOT analysis
 Step 3: Formulate new Business &
Mission Statement

• Based on situation analysis

• Products, services, market
• Mission
• Vision
 Step 4: Translate the Mission into
Strategic Goals

• Needs strategic goals

• To guide action, it needs goals
 Step 5: Formulate Strategies to
Achieve Strategic Goals

• Strategy
– Course of action
– Strategies to achieve strategic goals
– Clear and concise strategy
 Step 6: Implementing Strategies

• Transferring strategies into actions

• Drawing on and implementing
– Planning
– Organizing
– Leading
– Controlling
 Step 7: Evaluate Performance

• Strategies don’t always succeed

• Managing strategy is an ongoing process
• Strategic control
– Keeping the company’s strategy up to date
 Types of Strategies

• Corporate strategy
• Competitive strategy
• Functional strategy
 Corporate Strategy

• Identifies the portfolio of businesses of

company
– Diversification corporate strategy
– Vertical integration
– Consolidation
– Geographic expansion
 Competitive / Business level Strategy

• Identifies how to build and strengthen the

business’s long term competitive position in
the market
– Cost leadership
– Differentiation
– Focusers
 Functional strategy

• Identify basic course of action that each

department will peruse in order to help the
business attain its competitive advantage
 Achieving Strategic Fit

• Fit
– Functional strategy align with corporate
strategy
• Leverage
– Must pursue opportunities
– Supplementing what you have and doing more
with what you have
 3 views of HRM

• HR activities involve “putting out fires”,

making sure employees are “paid on time”
• Role is simply to “fit” and to help execute
the company’s strategy
• HR is an equal partner in the strategic
planning process
 HR and competitive advantage
• Competitive advantage means “any factors
that allow an organization to differentiate its
product or service from those of its
competitors to increase market share”
HR as competitive advantage

• There is greater recognition

that distinctive
competencies are obtained
through highly developed
employee skills, distinctive
organizational cultures,
management processes, and
systems.
 Strategic Human Resource
Management

The linking of HRM with strategic goals and

objectives in order to improve business
performance and develop organizational
cultures that foster innovation and flexibility .

Formulating and executing HR systems- HR policies and

activities- that produce the employee competencies and
behaviors the company needs to achieve strategic aim
 HR’S STRATEGIC CHALLENGES

• The central challenge • The need to support

facing HR is to provide a corporate productivity and
set of services that make performance improvement
sense in terms of the efforts
company’s strategy. • Employees play an
expanded role in
employer’s performance
improvements efforts
 HR’S STRATEGIC CHALLENGES

• Most firms’
strategies • HR must be more
increasingly stress involved in designing
building —not just
organizational implementing—
competitiveness companies’ strategies
and performance
 Human Resource Management Strategic
Roles

• Should be part of the strategic planning

team
• About 75% of HR managers surveyed said
their companies had strategic plans in place
• 56% of them, said that their HR dptt. Had
their strategic plan
 HR’s Role in Executing Strategy  

• HR is heavily involved in the execution of

most firms’ downsizing and restructuring
strategies, through out-placing employees,
instituting pay-for-performance plans,
reducing health care costs, and retraining
employees.
 HR’s Role in Formulating
Strategy   

• HR participates in the strategy formulation

process by supplying information regarding
the company’s internal human strengths and
weaknesses
The Strategic Future of the HR
Department  

Human resource departments will face

further downsizing and “reengineering, as
they face pressure from senior management
to add value to the organization or have
their functions contracted out.”