Introduction Definition Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of the firms objectives and nurturing policies to achieve the firms objectives
The model in the figure represents the strategic management process, which consist of seven interrelated management tasks.Major components of this model1. Develop vision and mission statement2. analyze external environment3. Analyze internal environment4. Establish long-term objective5. Generate ,analyze and select strategies6. Implement and chosen strategies7. Evaluate and control implementation
Develop vision and mission 1st step in Strategic Management processOrganization should have vision and missionVision- what it want to become ( long run) Mission – define company reason for its existenceVision and mission provide guideline for setting objectives and generating alternative strategies
Analyze external Environment2nd step in management processInvolve analysis of macro-environment for accessing opportunities and threatsMacro-environment – Political, Social, economic, demographic, technological factors which effect the businessOperating environment- Suppliers, Customers, creditors, competitors etc.Analyze industry character & competitive forces
Analyze Internal Environment3rd step in Strategic Management processOrganization access the internal environmentIdentifying the strength and weakness of resources and functional areas of organizationAnalyze- financial, physical, human & technical resources – helps to build competencies and competitive advantages
Establish Long term objectivesBased on internal, external and vision and mission the firm has to set long term objectives and goals- must be specific, measurable and achievable.Generate Evaluate and Select strategies5th step in Strategic Management processDevelop a no. of strategic opinion at corporate and business level.Alternatives are analyzed through portfolio analysis, industry life cycle etc..
Implement the chosen strategiesImplementation of strategies involves a number of decisions and actions.Basically involve change in management within the organization .involves:1.Allocation of resources2.Functional & operational strategies3. Formulating policies4.Change in organization structure, climate & leadership
Evaluate and control strategy Last step in Strategic Management process. Overall evaluation of the activities Critical examination by top authorities. It helps in the achievement of the organizational goals.