Strategic Management Process - Definition, Importance, Steps & Example
This article covers meaning & overview of Strategic Management Process from marketing perspective.
Strategic Management Process Definition
Strategic Management Process is an ongoing iterative process of implementing organization's strategies through proper analysis and evaluation to achieve planned goals. This helps in gaining competitive edge. Strategic Management Process is achieved through the 5 steps - setting goals, analyzing, formulation, implementation and strategy evaluation. Using this process, an organization decides to implement a selected few strategies along with stakeholders, details the implementation plan and keeps on appraising the progress & success of implementation through regular assessment.
Importance of Strategic Management Process
The strategic management process enables the organization of plan ahead through proper approach in order to gain competitive advantage wrt competitors. The process equips the organization to deal various internal and external factors. The process can differ for various organization depending on their size, domain, focus and core competency but the importance of strategic management process remains the same.
It ensures that the implementation of any strategy is not without proper due-diligence and analysis. Also it makes sure that the evaluation is done after the implementation to test if the results are desirable or not.
If not, organization can go back to the start to rectify the issues.
The strategy or tactic which works today may or may not work in future at all. Hence every business needs to properly keep analyzing, improving, modifying its strategies over time. This process needs to be continuous in nature. Many organizations do not revisit the strategies and find themselves losing competitive advantage in the market.
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5 Steps in the Strategic Management Process
The process is not a one time implementation but we can think strategic management process as a loop which keeps on going to achieve the objectives as per the need.
The five stages of strategic management process are shown in the figure below.
1. Goal Setting
Goal setting is one of the most crucial steps in the entire strategic management process journey as it established the foundation.
The vision and goals of the organization are clearly stated. The short-term and long-term goals are defined, processes to achieve the objectives are identified and current staff is evaluated to choose capable people to work on the processes. This can be done through proper environmental scanning.
The problem statement should be clearly defined at this step. Unclear goals can lead to issues at later stages and con cost organizations.
2. Analysis
Data relevant to achieve the goals of the organization is gathered, potential internal and external factors that can affect the sustainable growth of the organization are examined and SWOT analysis is also performed.
3. Strategy Formulation
Once the analysis is done, the organization moves to the Strategy Formulation stage where the plan to acquire the required resources is designed, prioritization of the issues facing the business is done and finally the strategy is formulated accordingly.
4. Implementation
After formulation of the strategy, the employees of the organization are clearly made aware of their roles and responsibilities. It is ensured that funds would be available all the time. Then the implementation begins.
5. Strategy Evaluation
In this process, the strategies being implemented are evaluated regularly to check whether they are on track and are providing the desired results. In case of deviations, the corrective actions are taken.
As shown in the figure, the five stages are not stand-alone and constantly interact with each other in order to ensure better management of the business.
Advantages of Strategic Management Process
There are certain benefits of using this process:
1. Makes an organization agile
The process if followed correctly will ensure that the organization can quickly see the market trends and changes in consumer behavior and adjust the goals, objective and strategy to achieve them.
2. Time Benefit
If an organization properly plan the strategies and tactics to be used, then it gives them time to test and analyze them before pushing them to market. A well analyzed strategy has more probability of being successful.
3. Increase in market position
The ultimate goal of the strategic management process is to provide a clear advantage as compared to the competitors. If implemented successfully, it will improve or strengthen the overall market position of an organization which follows the process correctly.
4. Growth
The organization will definitely see financial and revenue growth if it is able to achieve the goals it sets. The 5 steps discussed above can help achieve growth for an organization in present as well as future.
Limitations of Strategic Management Process
Strategic Management process is not an objective one time process which would yield the expected results in the first attempt. Optimizing the strategic management process for the organization may take time. The 5 steps stated above may have to be revisited multiple times and still the results may differ.
The main limitation is the time it would take to completely tune and manage the process for a particular organization in order to see real benefits but having said that strategic management process if mastered properly can lead to serious advantage for the organizations.
Strategic Management Process Example
A good example of the strategic management process can be New Product Launch in a geography. It starts with goal setting of launching a particular product along with its package and SKU details followed by the geographies. Analysis would include analyzing the markets, segment, potential etc. before finalizing on the quantity and markets. it will be followed by strategy on how it would be launched and rolled out in the markets shortlisted and what all processes need to be done prior to and after the launch.
This is followed by the actual launch. This can be through a test market and then a proper launch. After the launch has been completed, the organization would evaluate the results whether the strategy worked and the required sales are being produced along with the market response. In case the results are not as expected, the processes needs to repeat to correct the product or reconsider it.
Hence, this concludes the definition of Strategic Management Process along with its overview.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.
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