Strategic management:

Strategic management is the process of implementing systems to help a company reach its objectives. Or Strategic management is the art and science of formulating, implementing and evaluating cross function decision that enable to business to achieve its objectives.

Strategic management process:

Definition:
The on-going process of formulating, implementing and controlling broad plans guide the Organization in achieving the strategic goals given its internal and external environment.

Interpretation:
1. On-going process: Strategic management is an on-going process which is in existence through out the life of organization. 2. Shaping broad plans: First, it is an on-going process in which broad plans are firstly formulated than implemented and finally controlled. 3. Strategic goals: Strategic goals are those which are set by top management. The broad plans are made in achieving the goals. 4. Internal and external environment: Internal and external environment generally set the goals. Simply external environment forces internal environment to set the goals and guide them that how to achieve the goals?

Step 1: Identifying the organizations current mission, goals and strategies.

Every organization needs a mission. Defining a mission forces manager to identify what the organization is in business to do. Mission Statement: A mission statement is a brief description of a company's fundamental purpose. A mission statement answers the question, "Why do we exist?" Goal: A goal is an observable and measurable end result having one or more objectives to be achieved within a more or less fixed timeframe. Strategy: Strategy is the mean by which objectives are consciously and systematically pursued and obtained over time. Strategy is a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem. Its important for managers to identify the current goals and strategies. So managers have a basis for assessing whether they need to be changed or not.

Step 2: Doing an external analysis:

Definition: The External Analysis examines opportunities and threats that exist in the environment. Both opportunities and threats exist independently of the firm. The way to differentiate between a strength and weakness from an opportunity or threat is to ask: Would this issue exist if the company did not exist? If the answer is yes, it should be considered external to the firm. Opportunities: Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted upon properly. That is, opportunities are situations that exist but must be acted on if the firm is to benefit from them. Threats: Threats refer to conditions or barriers that may prevent the firms from reaching its objectives.

Step 3: Doing an Internal Analysis

After external analysis it is now time for internal analysis. Internal Analysis is such analyses which provide important information about an organizations specific resources and capabilities. Resources: An organizations resources are its assets (financial, physical, human and intangible) that it uses to develop, manufacture and deliver products to its customers. They are what the organization has. Capabilities: Capabilities are a firms skills and abilities in doing the work activities needed in its business. It means how the firm does its work. The internal analysis examines strengths and weaknesses. Both strengths and weaknesses exist to the firm. Strengths: The activities that an organization does well or any unique resources it has are called strengths. Weaknesses: Weaknesses are activities the organization doesnt do well or resources it needs but doesnt possess.

S.W.O.T analysis: The combined external and internal analyses are called S.W.O.T analysis, which is an analysis of a firm strengths, weaknesses, opportunities and threats. After completing SWOT analysis managers are ready to formulate appropriate strategies---that is strategies that: 1) Exploit an organizations strengths and external opportunities. 2) Protect the organization from external threats. 3) Correct critical weaknesses.

Step 4: Formulating strategies:

Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate strategies. As managers formulate strategies, they should consider the realities of the external environment and their available resources and design strategies that will help organization achieve its goals. There are 3 major types of strategies managers formulate: a) Corporate strategies b) Business strategies c) Functional strategies

Corporate strategy: A strategy that recognizes the factors that are currently affecting the firm and its competitors and the factors that may affect the firm and its competitors in the future. The firm develops policies and practices to establish a new and creative role that will address those factors, giving the firm the competitive advantage.

Business Strategy: The definition of business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives.

Functional Strategy: It offers Organizational plan for human resources, marketing, research and development and other functional areas.

Step 5: Implementing strategies:

Plans don't make goals come to fruition, so implementation is vital. During implementation, plans are broken into manageable objectives for each department or the organization as a whole. Strategic plans are concerned with who is involved, when the plans will be implemented, how they will be implemented and where the implementation will take place. Implementation of the strategic plan should involve budgeting and employee incentives. Communication between employees and managers and managers and owners will be critical for the successful execution of the strategic plan.

Step 6: Evaluating Results:

Plans should be re-evaluated regularly to identify progress and make any necessary adjustments. If plans are failing or falling short, managers should review the plan for common pitfalls. These include problems with employee buy-in, insufficient communication, letting daily duties become more important than long-term goals and failure to break the plan down into manageable steps. Other problems might be management's apathy toward the plan and business values, failure to review the plan more often that once a year, not providing an evaluation method and plan, not giving employees the skills and responsibility to accomplish the tasks and failure to keep employees and management accountable for achieving the plans. An evaluation schedule should be set when the strategic plan is created.