Components of strategic management
Introduction
An organization carrying out strategic management plan will have its implementation unit center its nerves on the chronologically carried out steps or components which include scanning of the environment, strategy formulation, strategy implementation and finally strategy evaluation. These components provide step by step guideline towards achieving this critical organizational management practice.
Components of strategic management
Environmental scanning is the process of crucial information elicitation, analyzing the elicited information and detailing accompanying report on the analysis. This eventually forms the basis on which critical decisions for strategic purposes are made. This process involves studying internal environmental factors and their impacts on the organization and the external ones. Upon execution of ecological analysis process, the management then employees a prose evaluation method which works to seal possibilities of gaps setting in.
A strategic formulation is the next component of consideration after environmental scanning. This is where the management makes a decision on the course of action to execute as far as organizational goals and objectives are concerned. This is where the purpose of existence of the organization is analyzed to determine its clear competitive advantage. It is at this stage where managers with all necessary information entirely synthesized in their possession, formulate business and functional strategies and corporate.
The strategic implementation which ordinarily means putting the organization’s strategy into concrete finality. This component forms the nucleus of an organization since it operationalizes what is deemed an abstraction into an organization with formidable structures, a well-developed chain of a decision-making process, management of human resources mechanisms and resource distribution methods. Strategic implementation component requires utmost impeccability since a mistake committed at this level presents far-reaching consequences with costly mitigation mechanisms.
Strategic evaluation which is the final primary component of strategic management entails some key management evaluation activities such as examining internal and external environmental factors that form the basis of current strategies, assessing performance by measuring it, and taking mitigation mechanisms. Evaluation which is a continuous process ensures that the policy of the organization and ensuring implementation in tunes the organization’s objectives and general purpose.
Internal and external analysis
Organization’s environment comprises of both external and internal factors that actively impact on its operations. It is essential to examine organization’s situation so that the management can determine forecasts and development of elements that will enable the organization to succeed. This process mainly entails to possess and utilize information relating to patterns, occasions, trends and their relationship with organization’s external and internal environment. It equips the managers with tools that assist them in making decisions relating to the future track of the organization. Scanning identifies opportunities and threats that exist in the organization’s environment. While strategy formulation and implementation, the organization must optimize advantages of the available opportunities and significantly minimize or if possible zero-rate the threats. Threats to an organization may turn out to be opportunities for other competing organizations.
Environmental analysis is a systematic process which commences with an internal review of the organizational environment. This sometimes can be as petty as employee-employee interaction, employee and senior management interaction, a horizontal interaction which involves managers themselves, and finally that between the shareholders and management of the organization. Also, access to natural resources, the structure of the organization, general awareness of the organization’s brand, staff, and potentiality of operation forms a significant part of the internal analysis. Discussions, observations, surveys, and interviews can accurately provide much-needed information to when it comes to subjective interpretation. Results obtained from internal environment helps in pointing out weaknesses and strengths of an organization.
Roles of strategic managers
Long-term plans for a business cannot be drawn while relying on internal analysis of business environment hence external analysis which encompasses crucial elements such as analyzing competitor actions and moves, updating core competencies and continually adapting to dynamics of the business environment. Factors relating to the environment are dynamic in nature and infinite. Hence, businesses must respond to that dynamism and infinity. For instance – if monitoring indicates that an initial forecast of the price of primary raw material is not credible anymore, then a more focused scanning would be conducted to enhance predictability. The external analysis should pay attention to three environments which include immediate or industry environment, national environment, and the sizeable socio-economic environment also known as the macro environment.
When business objectives are set, strategic managers are tasked to come up with the shortest path that can lead to achieving these objectives while optimizing profits and minimizing costs. Projects managed on operation basis tend to focus majorly on getting the work concluded. Concentrate on continually improving customer satisfaction levels, overcoming competition and analyzing the market are all activities of strategic positioning in an industry overseen by strategic managers.
Project managers ensure that organizations have the best human resource to execute job tasks. They oversee the efficient use of resources across various projects and monitor trends to ensure the application is in line with strategic goals. Active managers are assuring cost saving by eliminating delays that can result from lack of resources.
Benefits of strategic managers
For the sake of identifying, prioritizing, and exploring more opportunities, an organization must employee strategic management process. For instance, for new products to realize sales as per organization’s goals, for new markets to be identified, and making new forays into tight business lines, an organization may efficiently achieve them by first drawing a sound business strategic plan. Strategic management also allows organizations to take an objective view of the activities they conduct and have a cost-benefit analysis to ascertain profitability.
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