The strategic management process means defining the organizationâ€™s strategy. It is also defined as the process by which managers make a choice of 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 in which the organization is involved; appraises itâ€™s competitors; and fixes goals to meet all the present and future competitorâ€™s and then reassesses each strategy.
Strategic management process has following four steps:
1. Environmental Scanning-
Environmental scanning refers to a process of 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 on a continuous basis and strive to improve it.
2. Strategy Formulation-
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 corporate, business and functional strategies.
3. Strategy Implementation-
Strategy implementation implies making the strategy work as intended or putting the organizationâ€™s chosen strategy into action. Strategy implementation includes designing the organizationâ€™s structure, distributing resources, developing decision making process, and managing human resources.
4. Strategy Evaluation-
Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as itâ€™s implementation meets the organizational objectives.
These components are steps that are carried, 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 situationâ€™s requirement, so as to make essential changes.
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 chorus.