THE STRATEGIC MANAGEMENT PROCESS
The strategic management process is a six-step process that encompasses strategic planning, implementation, and evaluation.
A. Step 1: Identifying the Organization’s Current Mission, Objectives, and Strategies
1. Every organization needs a mission, which is a statement of the purpose of an organization. The mission statement addresses the question: What is the organization’s reason for being in business?
2. The organization must identify its current objectives and strategies, as well.
B. Step 2: External Analysis
1. Managers in every organization need to conduct an external analysis. Influential factors such as competition, pending legislation, and labor supply are included in the external environment.
2. After analyzing the external environment, managers must assess what they have learned in terms of opportunities and threats. Opportunities are positive trends in external environmental factors; threats are negative trends in environmental factors.
3. Because of different resources and capabilities, the same external environment can present opportunities to one organization and pose threats to another.
C. Step 3: Internal Analysis
1. Internal analysis should lead to a clear assessment of the organization’s resources and capabilities.
2. Any activities the organization does well or any unique resources that it has are called strengths.
3. Weaknesses are activities the organization does not do well or resources it needs but does not possess.
4. The organization’s major value-creating skills and capabilities that determine its competitive weapons are the organization’s core competencies.
5. Organizational culture is important in internal analysis; the company’s culture can promote or hinder its strategic actions.
6. SWOT analysis is an analysis of the organization’s strengths, weaknesses, opportunities, and threats.
D. Step 4: Formulating Strategies
1. After the SWOT, managers develop and evaluate strategic alternatives and select strategies that are appropriate.
2. Strategies need to be established for corporate, business, and functional levels.
E. Step 5: Implementing Strategies
1. A strategy is only as good as its implementation.
F. Step 6: Evaluating Results
1. How effective have the strategies been? Are adjustments necessary?