The strategic management process is essentially a set of steps a leader can use to help achieve better business outcomes. The process hinges on the philosophical approach that if a leader "thinks" strategically, they can better position themselves and the company for continued success. The strategic management process planning begins with environmental scanning and then continues systematically through the steps examining political, economic, sociocultural, technological, environmental, and legal factors.
The main components of the strategic management process are environmental scanning, assembling a strategy, implementing the strategy, and monitoring and evaluating the strategy beginning with environmental scanning, then continue examining political, economic, sociocultural, technological, environmental, and legal factors. Each step must be followed in order, from start to finish, for the process to be effective. If a step is skipped or missed, the results may not be as successful.
 |
The benefit of the strategic management process is the process helps prioritize the identification of strengths, weaknesses, threats, and opportunities. As each step is started, that step becomes the priority, and the leader will continue to focus their efforts and attention on that step until completion. Once the step is completed, the leader will then move on to the next step, focus all their attention on what that step needs, and then, once completed, move on to the next until all steps have been completed.
There are also financial benefits that accompany the strategic management process. Companies tend to be more profitable and successful as the leadership is engaged in forward-thinking and planning which helps with profitability as the company is always looking forward. In addition, the non-financial benefit of strategic management is the leader is more aware of external threats as they are in a constant state of evaluating and assessing strengths, weaknesses, opportunities, and threats. Leaders will have a heightened awareness of their competitors and more awareness of their own employee's stability and productivity. Employees also tend to be less resistant to change as strategic management sets clear goals and objectives and establishes clear links between performance and rewards.
As a member, you'll also get unlimited access to over 84,000 lessons in math, English, science, history, and more. Plus, get practice tests, quizzes, and personalized coaching to help you succeed.
Get unlimited access to over 84,000 lessons.
Try it nowThe steps in the strategic management process are to start with environmental scanning, progress to assemble a strategy, implement the strategy, and conclude with monitoring and evaluating the strategy. In order to accomplish this, the leader must first identify the primary goal by clarifying the vision for the project
To begin the strategic management process, the leader must first identify their clarifying vision of the goal or result they want for the project. They can begin identifying the goal by conducting the environmental scanning and all subsequent steps in order.
The first step, especially if a small company or one that is beginning the strategic management process, is to start with environmental scanning. Environmental scanning is when a leader looks at all the factors systematically, such as the political, economic, sociocultural, technological, environmental, and legal factors they and the company are facing, and helps with clarifying the vision for the leader.
The following are the key environmental factors a leader must assess.
The strategy formulation step begins after the key environmental factors are assessed. This step considers all the information gained during the analysis of the environmental factors, and the leader can now begin to formulate a strategy. For example, if during the sociocultural factors analysis, it was discovered that the company's primary customer base is primarily in the fifty to sixty-year-old age group, moving a branch to an area where the primary age of the population is in the twenty to thirty-year-old age group may not be beneficial to the company. To devise the best strategy, the leader should weigh their options. They could look at all the environmental scanning, not just the primary customer base, and use that to devise the best strategy. They could look at the information and decide what is best for the company, rather than just what is best for the branch. Another option is to look at the options solely from a growth standpoint or use a retrenchment strategy to assemble the strategy.
Strategy implementation is done after the strategy formulation step is completed. As the leader has formulated the strategy for where to open the new branch office based on all the environmental factors, they must now implement the strategy and bring the process to fruition.
Strategy evaluation and control is the final step when identifying key deliverables is established and checked to ensure the process is running on time and on track per the strategy. For example, setting key deliverable dates for when the new branch office management and staff transfer will occur, when the office will be ready for move-in, and when the office officially opens for business are all key deliverables that should be monitored to ensure the strategy is effective.
The strategic management process has evolved since its inception in the 1950s. Peter Drucker was a management theorist who, in 1954, developed his theory that business leaders must first know their business and ask questions. Theodore Levitt was a Harvard professor whose contribution was to bring marketing into the business strategy model. Philip Selznik, a University of California professor, developed the theory of how important it was to analyze the external environmental factors. Henry Mintzberg, A professor at McGill University, developed five types of management strategies that contributed to the Strategic management process used today.
The SWOT analysis is a tool used to easily indicate a company's strengths, weaknesses, opportunities, and threats. These four primary groups are commonly presented in a 2x2 grid, making it easier to pinpoint the primary leading elements of each one. The premise of the SWOT analysis is to help identify the company's internal strengths and weaknesses while also helping to identify the external opportunities and threats the company may face in the future.
The strategic management process are steps that help achieve better business outcomes. The main components of the strategic management process are clarifying vision, environmental scanning, assembling a strategy, implementing the strategy, and then monitoring and evaluating the strategy. The benefits of the strategic management process are prioritizing the identification of strengths, weaknesses, threats, and opportunities and improving profitability. The steps in the strategic management process begin with environmental scanning, especially if a small company or one that is just beginning, then assemble a strategy, implement the strategy, and end with monitoring and evaluating the strategy. Identifying key deliverables is essential to ensure the process stays on track. To devise the best strategy, the leader could use environmental scanning, use the information and decide what is best for the company, use a growth strategy or use a retrenchment strategy. Strategy formulation uses the environmental factors analyzed to formulate a strategy. Strategy implementation is the process of executing the strategy. Strategy evaluation and control is when key deliverables are checked to ensure it is on track per the strategy. Peter Druker, Theodore Levitt, Philip Selznik, and Henry Mintzberg contributed to today's strategic management process. The SWOT analysis helps identify a company's strengths, weaknesses, opportunities, and threats.
To unlock this lesson you must be a Study.com Member.
Create your account
The five steps in the strategic management process are environmental scanning, assembling a strategy, implementing the strategy, and then monitoring and evaluating the strategy. Environmental scanning looks at political, economic, sociocultural, technological, environmental, and legal factors. Strategy formulation uses environmental factors to formulate a strategy. Strategy implementation is when the strategy is executed. Strategy evaluation and control are when key deliverables are checked to ensure they are on track per the strategy and constantly monitored.
An example of the strategic management process is when a company decides when and where to open a new branch office. The company must first conduct environmental scanning to see what factors the company should anticipate. Strategy formulation uses the environmental factors analyzed to formulate a strategy for the branch move. Strategy implementation is executing the strategy decided upon, such as the location, moving arrangements, and grand opening target date. Strategy evaluation and control is when the company sets key deliverable dates throughout the process to ensure the move progresses on schedule and stays on schedule.
Already a member? Log In
Back