Strategy is one of the primary levers at top leaders’ disposal in their never-ending quest to maintain organizational viability and effectiveness. The strategy offers a formal logic for the organization’s goals and orients the people around them. It relies on plans and sets of choices to mobilize people and can often be enforced by both concrete rewards for achieving goals and consequences for failing to do so. Ideally, it also incorporates adaptive elements that can scan and analyze the external environment and sense when changes are required to maintain continuity and growth.
What is Strategy Management
Strategic management is the process of decision-making and planning, which leads to developing an effective strategy to help achieve organizational objectives.
What Strategy Management is not
Periodic management meetings, corporate communication, and knowledge management are similarly not focused on strategy execution.
Effective Strategy Development
The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers choose a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries the organization is involved in, appraises its competitors, fixes goals to meet all the present and future competitors, and then reassesses each strategy.
The strategic management process has the following four steps:
- Environmental Scanning- Environmental scanning refers to collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it continuously and strive to improve it.
- Strategy Formulation- Strategy formulation is deciding the best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business, and functional strategies.
- Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing the decision-making process, and managing human resources.
- Strategy Evaluation- Strategy evaluation is the final step of the strategy management process. Evaluation makes sure that the organizational strategy and its implementation meet the organizational objectives. The key strategy evaluation activities are: appraising internal and external factors that are the root of current strategies, measuring performance, and taking remedial/corrective actions.
These components are steps carried out in chronological order when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement to make essential changes.
“Management Study Guide” – https://www.managementstudyguide.com/strategy-implementation.htm
Components of Strategic Management Process
Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in the chorus
Why Strategy Management
Following are a few top reasons that lead to a lack of effective strategy Management
- On average, 95% of organization employees are unaware of its strategy or do not understand it.
- 67% of Human Resources and IT Managers reveal that their effort is not aligned with the organization’s strategy.
- Budgeting is similarly disconnected, with 60% of organizations do not link their financial budgets to strategic priorities.
- 70-90% of employee’s compensation and evaluation initiatives are not aligned with the success of the organization’s strategy
- In 2004, despite a weak domestic automobile market, Chrysler successfully launched a series of exciting new cars and generated $1.2 billion in earnings.
- The U.S. Army’s Balanced Scorecard project produced an office of strategy management in much the same way. A central project team at the Pentagon headquarters, under the leadership of the Army chief of staff, developed the initial scorecard, which the Army called the Strategic Readiness System (SRS).
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