Journal of Comprehensive Research, Volume 5, Page 17

Strategic Management Process

Dr I Chaneta
Department of !usiness Stu"ies
#acult$ of Commerce
%niversit$ of &im'a'(e
)'stract
*heelen an" +unger ,-..-/ sa$ that strategic management is a set of managerial "ecisions an"
actions that "etermines the long0run performance of an organi1ation It inclu"es environmental
scanning ,'oth e2ternal an" internal/ strateg$ formulation ,strategic or long0 range planning/,
strateg$ implementation an" evaluation an" control 3he stu"$ of strategic management
emphasi1es the monitoring an" evaluation of e2ternal opportunities an" threats in light of an
organi1ation4s strengths an" (ea5nesses ,6enneth, 1787/
3he strateg$ of an organi1ation consists of the moves an" approaches ma"e '$ management to
pro"uce successful performance of an organi1ation Strateg$ is management9s game plan for the
'usiness Management "evelops strategies to gui"e ho( an organi1ation con"ucts its 'usiness an"
ho( it (ill achieve its target o':ectives *ithout a strateg$, there is no cohesive action plan to
pro"uce the inten"e" results Core management functions are crafting an" implementing a
strateg$ for the 'usiness ;oo" management is e2hi'ite" '$ goo" strateg$ an" goo"
implementation Po(erful e2ecution of a po(erful strateg$ is a proven recipe for 'usiness
success 3he stan"ar"s for :u"ging (hether an organi1ation is (ell manage" are 'ase" on goo"
strateg$0ma5ing com'ine" (ith goo" strateg$ e2ecution
6e$ *or"s< environmental scanning, strateg$, monitoring, strategic planning, evaluation,
implementation
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page 18
Intro"uction
+o(ever, strateg$0ma5ing an" strateg$0implementation "o not guarantee superior
organi1ational performance continuousl$ =ven (ell manage" organi1ation can
sometimes hit the s5ills for short perio"s 'ecause of a"verse con"itions 'e$on"
management9s a'ilit$ to foresee or react to It is management9s responsi'ilit$ to a":ust
negative con"itions '$ un"erta5ing strategic "efenses an" managerial approaches that can
overcome a"versit$ +o(ever, the essence of goo" strateg$0ma5ing is to 'uil" a position
strong an" fle2i'le enough to provi"e successful performance "espite unforeseea'le an"
une2pecte" e2ternal factors
#ive tas5s of Strategic Management
#igure I
1 - > ? 5
Defining Setting Crafting a Implementing =valuating
the o':ectives strateg$ to an" e2ecuting performance
'usiness achieve the the strateg$ an"
an" performance initiating
"eveloping o':ectives corrective
a mission a":ustments
Developing a vision an" a mission
) @uestion senior managers of an$ firm as5 is A*hat is our 'usiness an" (hat (ill it 'eBC 3his
@uestion pushes managers to consi"er (hat the organi1ation4s 'usiness ma5e up shoul" 'e
an" to "evelop a clearer mission of (here the organi1ation nee"s to 'e hea"e" over the ne2t
five0 to 0 ten $ears Management9s vision of (hat the organi1ation see5s to "o an" to 'ecome
is commonl$ terme" the organi1ation4s AmissionC ) mission statement esta'lishes the
organi1ation4s future course an" outlines A(ho (e are, (hat (e "o an" (here (e are goingC
3his sets out a particular 'usiness position
Setting o':ectives
3he purpose of setting o':ectives is to convert the mission statement into specific
performance targets D':ectives serve as $ar"stic5s for trac5ing an organi1ation4s
performance an" progress 3he challenge of tr$ing to close the gap 'et(een actual an"
"esire" performance pushes an organi1ation to 'e more inventive, to e2hi'it some
urgenc$ in improving 'oth its financial performance an" its 'usiness position Setting
challenging 'ut achieva'le o':ectives helps in guar"ing against complacenc$
3he o':ectives set must i"eall$ em'race a time hori1on that is 'oth short0term an" long0
term Short0term o':ectives spell out the imme"iate improvements an" outcomes "esire"
'$ managements D':ective setting is re@uire" of all managers =ver$ unit in the
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page 17
organi1ation nee"s concrete, measura'le performance targets, in"icating its contri'ution
to the overall organi1ational o':ectives *hen organi1ation4s o':ectives are 'ro5en "o(n
into specific targets for each unit, lo(er0level managers are hel" accounta'le for
achieving them ) results0oriente" climate emerges, (ith each part of the organi1ation
striving to achieve results that (ill move the (hole organi1ation in the internal "irection
3(o t$pes of performance $ar"stic5s
3he t(o performance $ar"stic5s are financial an" strategic o':ectives<
#inancial o':ectives
3hese o':ectives are nee"e" 'ecause accepta'le financial performance is critical to
preserving an organi1ation4s via'ilit$ an" (ell0'eing #inancial o':ectives t$picall$ focus on
such measures as earnings9 gro(th, return on investment an" cash flo(
Strategic o':ectives
Strategic o':ectives provi"e consistent "irection in strengthening a compan$9s overall
'usiness position 3he$ relate more "irectl$ to a compan$9s overall competitive situation an"
involve such performance $ar"stic5s as gro(ing faster than the in"ustr$9s average an"
ma5ing gains in mar5et share Strategic o':ectives ma5e it e2plicit that management not onl$
must "eliver goo" financial performance 'ut also must "eliver on strengthening, the
organi1ations9 long0 term 'usiness an" competitive position
Crafting a strateg$
*hat is a strateg$B It is the pattern of organi1ational moves an" managerial approaches
use" to achieve organi1ational mission D':ectives are the Aen"sC an" strateg$ is the
AmeansC of achieving them Strateg$ is a management tool for achieving strategic targets
*hat is important to ta5e note of is forming a strateg$ that starts (ith the anal$sis of the
organi1ation4s internal an" e2ternal situation )rme" (ith an un"erstan"ing of 'oth
environments, managers can 'etter "evise a strateg$ to achieve, targete" strategic an"
financial results )n organi1ation4s strateg$ is al(a$s a 'len" of prior moves an"
approaches alrea"$ in place an" ne( actions 'eing mappe" out )n organi1ation4s
strateg$ that is mostl$ ne( most of the time, signals erratic "ecision0ma5ing an" (ea5
strategi1ing on the part of the managers ,3hompson an" Stric5lan"1 177-/ Euantum
changes in strateg$ can 'e e2pecte" occasionall$, especiall$ in crisis situations 'ut the$
cannot 'e ma"e too often (ithout creating un"ue organi1ational confusion an" "isrupting
performance
*h$ strateg$ is constantl$ evolving
3he tas5 of strategi1ing is al(a$s an ongoing e2ercise A3he (hatsC of an organi1ation4s
mission an" long0term o':ectives, once chosen, ma$ remain unaltere" for several $ears
!ut the Aho(sC of strateg$ evolve constantl$, partl$ in response to an ever0changing
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page -.
e2ternal environment, partl$ from the managers9 efforts to create ne( opportunities, an"
partl$ from fresh i"eas a'out ho( to ma5e the strateg$ (or5 'etter Dn occasion, changes in
strateg$ emerge (hen a 'ig strateg$ (or5s 'etter Dn occasion, changes in strateg$ emerge
(hen a 'ig strategic move is put to test (hen a crisis stri5es an" managers see that the
organi1ation4s strateg$ nee"s ra"ical reorientation
Refinements an" a""itions, intersperse" (ith perio"ic leaps are a normal part of
managerial strategi1ing !ecause strategic moves an" ne( action approaches are ma"e in
an ongoing stream, an organi1ation4s strateg$ forms over a perio" of time an" then
reforms, al(a$s consisting of a mi2 of hol"over approaches, fresh actions in process an"
unreveale" moves 'eing planne" )si"e from crisis situations an" ne( compan$ start0
ups, a compan$9s strateg$ is crafte" in 'its an" pieces as events unfol" an" as managerial
e2perience accumulates =ver$thing cannot 'e planne" out in a"vance an" even the 'est
lai" plans must 'e responsive to changing con"itions an" unforeseen events
Strateg$0ma5ing thus procee"s on t(o fronts0one proactivel$ thought through in a"vance,
the other conceive" in response to ne( "evelopments, special opportunities an"
e2periences (ith the successes an" failures of prior strategic moves, approaches an"
actions
Strateg$ Implementation
3he strateg$0implementation function consists of seeing (hat it (ill ta5e to ma5e the
strateg$ (or5 an" to reach the targete" performance on sche"ule 3he :o' of
implementing strateg$ is primaril$ an action0"riven a"ministrative tas5 that cuts across
man$ internal matters 3he principal a"ministrative aspects associate" (ith putting the
strateg$ into place inclu"e<
F !uil"ing an organi1ation capa'le of carr$ing out the strateg$ successfull$G
F Developing 'u"gets that steer resources into those internal activities critical to
strategic successG
Motivating (or5ers in (a$s that in"uce them to pursue the target o':ectives
energeticall$ so as to e2ecute the strateg$ successfull$G
Creating a (or5 environment con"ucive to successful strateg$ implementation<
F Installing strateg$0supportive policies an" proce"uresG
F Developing an information an" reporting s$stem to trac5 progress an" monitor
performanceG
=2erting the internal lea"ership nee"e" to "rive implementation for(ar" an" to
5eep improving on ho( the strateg$ is 'eing e2ecute"
3he a"ministrative aim is to create the lin5ing 'et(een the (a$ things are "one an" (hat it
ta5es for effective strateg$ e2ecution 3he stronger the lin5ing the 'etter the e2ecution of
strateg$ #itting the (a$ the organi1ation "oes things internall$ to (hat it ta5es for
effective strateg$ e2ecution is (hat unites the organi1ation firml$ 'ehin" the
accomplishment of strateg$
3he strateg$0implementation tas5 is the most complicate" an" time0consuming part of
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Journal of Comprehensive Research, Volume 5, Page -1
strategic management It cuts across virtuall$ all facets of managing an" must 'e initiate"
from man$ points insi"e the organi1ation as it has to thin5 through the ans(er to the
@uestion
A*hat has to 'e "one in m$ area of responsi'ilit$ to carr$ out an$ piece of overall
strategic plan an" ho( changes an" actions are i"entifie", the "etails of implementation an"
appl$ enough pressure on the organi1ation to convert o':ectives into actual resultsBC
Depen"ing on the amount of internal change involve", full implementation can ta5e
several months to several $ears
=valuating Performance an" Initiating Corrective )":ustments
)rnol" an" Ma:luf ,177-/ sa$ that none of the previous four tas5s are one0time e2ercises
He( circumstances al(a$s crop up that ma5e corrective a":ustments "esira'le Iong0
term range or plans ma$ nee" to 'e altere", the 'usiness re"efine" an" management9s
vision of the organi1ation4s future course narro(e" or 'roa"ene" Performance targets
ma$ nee" raising or lo(ering in light of past e2perience an" future prospects Strateg$
ma$ nee" to 'e mo"ifie" 'ecause of shifts in long0term "irection, 'ecause ne(
o':ectives have 'een set or 'ecause of changing con"itions in the environment
3he search for even 'etter strateg$ is also continuous Sometimes an aspect of
implementation "oes not go as (ell, as inten"e" an" changes have to 'e ma"e Progress
t$picall$ procee"s unevenl$0faster in some areas an" slo(er in others Some tas5s get
"one easil$G others prove nettlesomeG implementation occurs through the pooling effect
of man$ a"ministrative "ecisions a'out ho( to "o things an" ho( to create stronger
fittings 'et(een strateg$ an" internal operating practices !u"get revisions, polic$
changes, reorgani1ation, personnel changes an" revise" compensation practices are
t$pical (a$s of tr$ing to ma5e the chosen strateg$ (or5 'etter ) compan$9s mission,
o':ectives, strateg$ or approach to strateg$ implementation is never final =valuating
performance, revie(ing changes in the surroun"ing environment an" ma5ing
a":ustments, are normal an" necessar$ parts of the strategic management process
*h$ is strategic management an ongoing processB
!ecause each one of the five tas5s of strategic management re@uires, constant evaluation
an" a "ecision (ith things as the$ are or to, ma5e changes 0 the process of managing
strateg$ is ongoing Hothing is final as all prior actions are su':ect to mo"ification as
con"itions in the surroun"ing environment change an" (a$s for improvement emerge
Strategic management is a process fille" (ith constant motion Changes in the
organi1ation4s situation, either from insi"e or outsi"e or 'oth, constantl$ "rive strategic
a":ustments
3he tas5 of evaluating performance an" initiating corrective a":ustments are foun" in
'oth the en" an" the 'eginning of strategic management c$cle 3he match of e2ternal an"
internal events guarantees revision in the four previous components as this (ill 'e
imperative sooner or later It is al(a$s incum'ent on management to push for 'etter
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page --
performance to fin" (a$s to improve the e2isting strateg$ an" ho( it is 'eing e2ecute"
Changing e2ternal con"itions a"" further impetus to the nee" for perio"ic revisions in a
compan$9s mission, performance o':ectives, strateg$ an" approaches to strateg$
e2ecution )":ustments usuall$ involve fine turning, 'ut occasions for a ma:or strategic
reorientation "o arise0sometimes prompte" '$ significant e2ternal "evelopments an"
sometimes '$ sharpl$ sli"ing financial performance Strateg$ managers must sta$ close
enough to the situation to "etect (hen changing con"itions re@uire a strategic response an"
(hen the$ "o not It is their :o' to rea" the min"s of change, reorgani1e significant changes
earl$ an" capitali1e on events as the$ unfol"
*ho the strateg$ managers are
)n organi1ation4s Chief =2ecutive Dfficer is the most invisi'le an" important strateg$
manager 3he C=D, as captain of the ship, has full responsi'ilit$ for lea"ing the tas5s of
formulating an" implementing the strategic plans of the (hole organi1ation, even though
man$ other managers have a han" in the process 3he C=D functions as chief "irection
setter, chief o':ective setter, chief strateg$ 0 ma5er an" chief strateg$ 0 implementer for
the total enterprise *hat the C=D vie(s as important usuall$ moves to the top of ever$
manager9s priorit$ list an" the C=D has the final (or" on 'ig "ecisions Vice Presi"ent
,VP/ for pro"uction, mar5eting, finance etc an" other functional "epartments have
strateg$ ma5ing an" strateg$ implementation responsi'ilities as (ell Hormall$, the
pro"uction VP oversees pro"uction strateg$G mar5eting VP hea"s up the mar5eting
strateg$ effort an" so on
Managerial positions (ith strateg$ ma5ing an" strateg$0implementation responsi'ilit$ are
'$ no means restricte" to these fe( senior e2ecutives =ver$ manager is a strateg$0ma5er
an" strateg$0implementer for the areas +eJshe has authorit$ over an" supervises =ver$
part of the compan$ 0 'usiness unit, "ivision, operating "epartment, plant or "istrict office
has a role to carr$ out ,3hompson an" Stric5lan", 177-/ 3he manager in charge of unit,
(ith gui"ance from superiors, usuall$ en"s up "oing some or most of the strateg$0ma5ing
for the unit an" implement (hatever strategic choices are ma"e +o(ever, managers
further "o(n in the managerial levels have a narro(er, more specific strateg$0
ma5ingJstrateg$0implementing role than managers close to the top )nother reason
lo(er0echelon managers are strateg$0ma5ers an" strateg$0implementers is that more
geographicall$ scattere" an" "iversifie" an organi1ation9s operations are, the more
impossi'le it 'ecomes for a fe( senior e2ecutives to han"le all the strategic planning that
nee"s to 'e "one Managers in the corporate office "o not 5no( all the situational "etails
in all geographical areas an" operating units to 'e a'le to prescri'e appropriate strategies
%suall$, the$ "elegate some of the strateg$0ma5ing responsi'ilit$ to lo(er level
managers (ho hea" the organi1ational su'0units (here specific strategic results must 'e
achieve" Delegating strateg$0ma5ing role to those managers (ho (ill 'e "eepl$
involve" in carr$ing out roles in their areas, fi2es accounta'ilit$ for strategic
success or failure *hen the managers (ho implement the strateg$ are also its architects,
it is har" for them to shift the 'lame or ma5e e2cuses if the$ "o not achieve the targete"
results
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page ->
In "iversifie" or large companies (here the strategies of several "ifferent 'usinesses have to 'e
manage", there are usuall$ four "istinct levels of strateg$ managers< 0
F 3he C=D an" other senior corporation0level e2ecutives (ho have primar$
responsi'ilit$ an" personal authorit$ for 'ig strategic "ecisions affecting the total
enterprise an" the collection of in"ivi"ual 'usinesses the enterprise has "iversifie"
intoG
F Managers (ho have profit0an"0loss responsi'ilit$ for some specific 'usiness unit
an" (ho are "elegate" a ma:or lea"ership role in formulating an" implementing
strateg$ for that unitG
F #unctional area managers (ithin a given 'usiness unit have "irect authorit$ over a
ma:or piece of the 'usiness an" (hose role it is to support unit9s overall strateg$
(ith strategic actions in their o(n areas
F Managers of ma:or operating "epartments an" geographic fiel" units (ho have
frontline responsi'ilit$ for "eveloping the "etails of strategic efforts in their areas
an" for implementing an" e2ecuting the overall strategic plan at grass roots level
Managerial :o's involve strateg$ formulation an" implementation #or e2ample, a
multicampus state universit$ has four strateg$0managing levels<
1 3he Vice Chancellor is a strateg$ manager (ith 'roa" "irection0setting
responsi'ilit$ an" strategic0"ecision0ma5ing authorit$ over all the campusesG
- Pro Vice Chancellor for each campus customaril$ has strateg$0ma5ingJstrateg$
implementation authorit$ over all aca"emic matters plus 'u"getar$ control for that
campus,
> 3he aca"emic "eans have responsi'ilit$ for charting future "irection at the
facult$Jcollege levelG
? Departmental hea"s are strateg$0managers (ith first0line strateg$0ma5ingJstrateg$
implementation responsi'ilit$ an" other activities relating to the "epartment9s
mission o':ectives an" future "irection
3he :o' of crafting an" implementing strateg$ touches virtuall$ ever$ managerial :o' in one
(a$ or another at one time or another
Strategic role of the !oar" of Directors
Since the responsi'ilit$ of crafting an" implementing strateg$ falls on 5e$ managers, the
chief, strategic role of an organi1ation4s 'oar" of "irectors is to see that the overall tas5 of
managing strateg$ is a"e@uatel$ "one !oar"s of "irectors normall$ revie( important
strategic moves an" officiall$ approve the strategic plans that have 'een su'mitte" '$
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page -?
senior management a proce"ure that ma5es the 'oar" ultimatel$ responsi'le for the
strategic actions ta5en
+o(ever, "irectors rarel$ pla$ a "irect role in formulating strateg$ 3he imme"iate tas5 of
the "irectors in ratif$ing strateg$ an" ne( "irection 0 setting moves is to ensure that all
proposals have 'een a"e@uatel$ anal$1e" an" consi"ere" an" that the propose" strategic
actions are superior to availa'le alternatives
#lame" proposals are customaril$ (ith"ra(n for revision '$ management 3he longer
range tas5 of "irectors is to evaluate the cali'er of senior e2ecutive9s strateg$ ma5ing an"
strateg$ 0 implementing s5ills 3he 'oar" must "etermine (hether the current C=D is
"oing a goo" :o' of strategic management, ,as a 'asis for a(ar"ing salar$ increases an"
'onuses an" "eci"ing on retention or removal/ an" evaluate e2ecutives in line to succee"
the current C=D
!enefits of Strategic )pproach to Managing
3o"a$9s managers have to thin5 strategicall$ a'out their compan$9s position an" a'out the
impact of changing con"itions 3he$ have to<
F Monitor the e2ternal situation closel$ enough to 5no( (hen to institute strategic
changeG
F 6no( the 'usiness (ell enough to 5no( (hat 5in" of strategic change to initiate
3he fun"amentals of strategic management nee" to "rive the (hole approach to
managing organi1ations
3he a"vantages of strateg$ management inclu"e< 0
F Provi"ing 'etter gui"ance to the entire organi1ation on the crucial point of (hat it
is (e are tr$ing to "o an" (hat to achieveG
F Ma5ing managers more alert to the min"s of change, ne( opportunities an"
threatening "evelopmentsG
F Provi"ing managers (ith a rationale to evaluate competing 'u"get re@uests for
investment capital an" ne( staff rationale that argues strongl$ for steering
resources into strateg$ 0 supportive, results 0 pro"ucing areasG
F +elping to unif$ the numerous strateg$0relate" "ecisions '$ managers across the
F organi1ationG
F Creating a more proactive management posture an" counter0acting ten"encies for
F "ecisions to 'e reactive an" "efensiveG
F !eing proactive rather than merel$ reactive as trail0'la1ing strategies can 'e the
5e$ to 'etter long0term performance
Strategic Management Process
Journal of Comprehensive Research, Volume 5, Page -5
Conclusion
!usiness histor$ sho(s that high performing enterprises often initiate an" lea", not :ust
react an" "efen" 3he$ launch strategic offensive to secure sustaina'le competitive
a"vantage an" then use their mar5et e"ge to achieve superior financial performance
)ggressive pursuit of a creative, opportunistic strateg$ can propel a firm into a lea"ership
position, paving the (a$ for its goo"s an" services to 'ecome the in"ustr$ stan"ar"
In a "$namic an" uncertain environment, strategic management is important 'ecause it
can provi"e managers (ith a s$stematic an" comprehensive means for anal$1ing the
environment assessing their organi1ation4s strengths an" (ea5ness an" i"entif$ing
opportunities for (hich the$ coul" "evelop an" e2ploit a competitive a"vantage 3he
strategic management process inclu"es eight steps 0 i"entif$ing the organi1ation4s current
mission, o':ectives an" strategies, anal$1ing the environment, i"entif$ing opportunities
an" threats in the environment, anal$1ing the organi1ation4s resources, i"entif$ing the
organi1ation4s strengths an" (ea5nesses, formulating strategies, implementing strategies
an" evaluating results
References
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;luc5 #* 1785 ) #resh Ioo5 at Strategic Management Journal of !usiness
Strateg$, K Ho - pp ? 0 -1
+a2 )C, 1771 3he Strategic Concept an" Process< ) Pragmatic )pproach
Prentice +all
Euinn J! 178. Strategies for Change< Iogical Incrementalism Richar" D Ir(in
Peters 3 177? Successful =lectronic Changeovers Depen" on Daring,
Springfiel" !usiness Journal Ho 15
Ro''ins SP an" Coulter M 177K Management, K
th
="ition, Prentice +all
Strategic Management Process